[Congressional Record Volume 159, Number 181 (Thursday, December 19, 2013)]
[Senate]
[Pages S9062-S9063]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. REED (for himself, Mr. Durbin, and Ms. Warren):
  S. 1873. A bill to provide for institutional risk-sharing in the 
Federal student loan programs; to the Committee on Health, Education, 
Labor, and Pensions.
  Mr. REED. Mr. President, student loan debt continues to climb. 
According to an analysis by the Institute for College Access, average 
student loan debt has increased by 6 percent each year since 2008. In 
2012, over 70 percent of college graduates had debt, owing an average 
of $29,400.
  This is a growing drag on our economy.
  In this summer's National Association of Realtors survey, 49 percent 
of the respondents identified student loan debt as a huge obstacle to 
home ownership--more than those who identified having enough money for 
a down payment or having enough confidence in their job security.
  It is clear that the more than $1.2 trillion in outstanding student 
loan debt has serious implications for the broader economy.
  We know that student loan borrowers are struggling. Default rates are 
on the rise. 13.4 percent of borrowers entering repayment in 2009 
defaulted within three years. The rate jumped to 14.7 percent for 
borrowers entering repayment in 2010.
  We cannot tackle the student loan debt crisis without States and 
institutions stepping up and taking greater

[[Page S9063]]

responsibility for college costs and student borrowing.
  States are critical partners in making college accessible and 
affordable. However, state support for higher education has declined in 
recent years, contributing to rising tuition costs at public colleges 
and universities. According to the latest State Higher Education 
Finance report published by the State Higher Education Executive 
Officers, state spending per full-time equivalent student reached its 
lowest point in 25 years in 2011.
  In the Partnerships for Affordability and Student Success, PASS, Act 
that I am introducing today, we will re-establish a robust, Federal-
State partnership for college affordability and student success. I long 
worked to fund the Leveraging Educational Assistance Partnership, LEAP, 
program, an initiative that engaged the states in matching federal 
funds to provide need-based grants to students. LEAP was modest in 
scale. The legislation I am introducing today calls for a more 
ambitious and comprehensive Federal-State partnership for higher 
education.
  The PASS Act will authorize $1 billion for a State formula grant 
program. In order to participate, states must make a commitment to 
maintain their investment in higher education and must have a 
comprehensive plan for higher education with measurable goals for 
access, affordability, and student outcomes. At least 70 percent of the 
funding must be dedicated to need-based student financial aid. States 
also have the option of awarding grants to colleges and universities or 
partnerships between institutions of higher education and non-profit 
organizations to improve student outcomes, including enrollment, 
completion, and employment, and to develop innovative methods for 
reducing college costs. I am pleased to have the support of the 
National Association of State Student Grant and Aid Programs, the 
National Association of Independent Colleges and Universities, and U.S 
PIRG in advancing this legislation.
  Institutions also have a critical role to play in curbing student 
loan debt. To ensure that institutions have more skin in the game, so 
they provide a better and more affordable education to students, which 
will in turn help put the brakes on rising student loan defaults, I am 
proud to be introducing the Protect Student Borrowers Act with Senators 
Durbin and Warren.
  The Protect Student Borrowers Act will hold colleges and universities 
accountable for student loan default by requiring them to repay a 
percentage of defaulted loans. Only institutions that have 25 percent 
or more of their students borrow would be included in risk sharing 
based on their cohort default rate. Risk-sharing requirements would 
kick in when default rate exceeds 15 percent. As the institutional 
default rate rises, so too will the institution's risk-share payment.
  The Protect Student Borrowers Act also provides incentives for 
institutions to take proactive steps to ease student loan debt burdens 
and reduce default rates. Colleges and universities can reduce or 
eliminate their payments if they implement a comprehensive student loan 
management plan. The Secretary may waive or reduce the payments for 
institutions whose mission is to serve low-income and minority students 
such as community colleges, Historically Black Institutions, or 
Hispanic-Serving Institutions, provided that they are making progress 
in their student loan management plans.
  The risk-sharing payments will be invested in helping struggling 
borrowers, preventing future default and delinquency, and reducing 
shortfalls in the Pell Grant program.
  With the stakes so high for students and taxpayers, it is only fair 
that institutions bear some of the risk in the student loan program.
  We need to tackle student loan debt and college affordability from 
multiple angles. We need all stakeholders in the system to do their 
part. With the PASS Act and the Protect Student Borrowers Act, we are 
providing the resources and incentives for states and institutions to 
take more responsibility to address college affordability and student 
loan debt and improve student outcomes. I urge my colleagues to 
cosponsor these bills and look forward to working with them to include 
these and other key reforms in the upcoming reauthorization of the 
Higher Education Act.
                                 ______