[Congressional Record Volume 160, Number 68 (Wednesday, May 7, 2014)]
[Senate]
[Pages S2775-S2780]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                           STUDENT LOAN DEBT

  Mr. FRANKEN. Thank you, Mr. President.
  I rise today to talk about the growing problem of student debt and 
the college affordability crisis that is gripping our Nation. I also 
rise to talk about one of the things we need to do

[[Page S2776]]

to address this crisis; that is, to pass the Bank on Students Emergency 
Loan Refinancing Act, which I was proud to join Senator Elizabeth 
Warren of Massachusetts in introducing yesterday.
  We have to take action on student debt because it is a huge problem 
in this country. The total amount of student loan debt held by 
Americans is more than $1.2 trillion today--surpassing the total amount 
of credit card debt in our Nation. More and more Americans are becoming 
saddled with large amounts of student debt and that limits their 
ability to buy homes, save for retirement, and make other purchases 
that will help keep our economy growing.
  My State--Minnesota--has the unfortunate distinction of being the 
State with the fourth highest average debt for students graduating from 
a 4-year college, at over $30,000 per student. Over the last several 
years, I have held college affordability roundtables in Minnesota to 
hear from students and families about the challenges they face in 
paying for college and to talk about ways to make the situation better. 
Let me tell you about one of the stories I heard.
  Last month, at the University of Minnesota in Minneapolis, I met 
Joelle Stangler, a sophomore who is the incoming student class 
president. With a 4.12 GPA, Joelle graduated from Rogers High School in 
Minnesota as their valedictorian. She was also senior class president 
and the captain of her volleyball team. Joelle does not lack motivation 
when it comes to school.
  Both of Joelle's parents were teachers, and, in fact, she comes from 
a long line of educators going back six generations. But a couple years 
ago, Joelle's mom Cassie Stangler made the difficult decision to quit 
her job as a fifth grade teacher to go to work in the private sector, 
where she could get more money, so she could help send her four kids to 
college.
  Among the fifth grade classes in her school district, Mrs. Stangler's 
students showed some of the highest rates of improvement on test 
scores. We lost a great teacher because of how expensive post-secondary 
education is.
  Not only that, even with her mom's sacrifice, Joelle, who is only in 
her second year of college, already has $12,000 in student loans. She 
estimates that her total debt will be around $30,000 by the time she 
graduates. Again, that is even with her mom leaving the job she loves, 
the job as a society we would want her to be in and that she is so 
great at.
  At the roundtables I have around the State of Minnesota, I always 
hear about students working multiple jobs, sometimes even putting in 40 
hours a week while going to school full time. Working and school is 
good. It is not bad necessarily. Some work can help students manage 
their time, become more productive, and of course help pay for college, 
but evidence shows that when a student starts to work more than 15 
hours a week, it becomes harder for the student to maintain good grades 
in school and to graduate from school on time. Students are working 
more because college is becoming less and less affordable and they are 
still taking out more and more student loans and graduating with more 
and more debt, despite having worked while they were in school.
  I do not think that is right. I do not think it is productive for our 
country. One student at the last roundtable I did told me: I can work 
40 hours a week and have less debt or I can work 20 hours a week and be 
more involved in school. That is not the kind of choice students should 
have to face in America. I have talked to students who work full time 
while going to school and actually sell their blood every once in a 
while to help pay maybe their rent or their housing.
  Recently, some encouraging things have happened in Minnesota. Thanks 
to the work of Gov. Mark Dayton and the State legislature, our State's 
public colleges and universities received an increase in funding from 
the State. Last year, after more than a decade of spending cuts to 
higher education and tuition increases in Minnesota, the State 
increased higher education funding for this academic year and next 
academic year by 10 percent, including a 15-percent increase in need-
based State grants.
  This much needed funding has allowed the public universities and 
colleges in Minnesota to hold their tuition steady, instead of passing 
on higher costs to Minnesota's students. This has been a significant 
victory for Minnesota students and families, but students are still 
facing daunting costs in paying for college and they are still 
graduating with far too much debt.
  In the Senate I have been working on a number of solutions to the 
college affordability problem. I have two bipartisan bills with Senator 
Chuck Grassley of Iowa that would help students and families understand 
college costs and compare the costs of different colleges as they go 
through the process of selecting a school. Our Net Price Calculator 
Improvement Act makes these online tools more user friendly in order to 
give students and their families a better estimate of college costs 
before they decide where to apply to college.
  Senator Grassley and I have another bill that will require schools to 
use a universal financial aid letter. Right now these letters are 
incredibly confusing. They do often clearly indicate what is a grant 
and what is a loan. A lot of people do not think--they say ``award 
letters'' on them sometimes and they include loans. A lot of people do 
not consider a loan an award. They use different terminology. If you 
get a Stafford subsidized loan in one letter, it might say ``Stafford 
subsidized loan,'' this amount.
  Another, it might have a code number, an X5382. When we put out this 
bill, I got all kinds of calls from college counselors and from high 
school counselors, saying thank you. Our bill would make sure students 
and their families and their counselors get clear and uniform 
information so they can make apples-to-apples comparisons between what 
the different schools are offering.
  Another part of the college affordability problem which is often 
overlooked is the price of textbooks. Students in Minnesota are 
spending an average of $1,400 per year on textbooks, $200 more than the 
national average. One Minnesotan I have heard from, Kari Cooper at 
Bemidji State, has to choose between paying for her textbooks and 
paying her rent. She ends up putting her textbook costs on her credit 
card.
  I introduced a bill with Senator Dick Durbin of Illinois called the 
Affordable College Textbook Act that would address this problem. Our 
bill would expand the use of free, online, open-source college 
textbooks, which are a great alternative to the traditional expensive 
kind. This is a great way to reduce the overall cost of going to 
college.
  College students such as Kari, Joelle, and countless others are 
working incredibly hard when they are still taking on significant 
amounts of debt. Part of the reason this debt will stay with them for a 
good portion of their lives is that they are paying such high interest 
rates.
  Many college graduates are locked into loans with interest rates as 
high as 10 percent, which makes it all the more difficult to pay off 
your student loan. The last thing our students need is to be saddled 
with high interest rates on student loans that continue to burden them 
long after graduation. There is a clear commonsense solution. That 
solution is contained in the bill I am proud to have joined Senator 
Warren in introducing, the Bank on Students Emergency Loan Refinancing 
Act.
  Students and graduates should be able to take advantage of lower 
interest rates and refinance their loans. When interest rates are low, 
homeowners, businesses, and even local governments regularly refinance 
their debt. Yet despite being the biggest student lender by far, the 
Federal Government offers no refinancing options to student borrowers.
  Once a person graduates, if they have a high interest rate on their 
student loans, they are stuck with that high interest rate forever. 
That is not right for our students and families and it is damaging to 
the long-term well-being of our country because it holds people back 
from making decisions that help drive economic growth: the decision to 
buy a home, to start a family, start a new business, to purchase big-
ticket items such as a car.
  Our new bill would allow students and graduates who have existing 
private and public student loan debt from

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their undergraduate education to refinance these loans at less than 4 
percent. Last summer we came together in Congress to prevent the 
interest rate on new student loans from doubling. Thanks to that 
effort, undergraduate students taking out new loans now have a rate of 
3.86 percent. The bill we introduced yesterday would enable students 
and graduates who are saddled with higher interest rates on their 
undergraduate loans to refinance at the same 3.86 percent rate.
  There are nearly 40 million Americans with outstanding student loans. 
Many of them face interest rates higher than 3.86 percent, some of them 
much higher. This legislation will give them a chance to cut down their 
debt and keep more of their hard-earned paychecks. It will help 
thousands of students in Minnesota who, similar to Joelle and Kari, are 
doing everything they can to get their college degree.
  So many Minnesotans in schools across the State show tremendous 
perseverance and grit in getting a college education and in cobbling 
together the resources to pay for it. They should not end up with 
crushing debt and be unable to take advantage of lower interest rates 
to reduce that debt, when so many other kinds of debt--almost every 
other kind of debt you are able to refinance.
  We have a lot to do and a long way to go to reduce student debt for 
our students and make college more affordable. Doing that will help 
more Americans find jobs to support their families, help more employers 
find qualified workers for their businesses, and help our economy 
prosper. Passing this bill will be one important step we can and we 
should take.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Ohio.
  Mr. BROWN. Mr. President, I applaud the efforts of Senator Franken 
and Senators Durbin and Warren and Jack Reed, who will speak after me, 
for their efforts on dealing with the terrible burden of debt that far 
too many young people in this country face. We know it is bad for them. 
We know this is a burdensome, onerous debt. We know it is bad for their 
families. In many cases, mothers and fathers cosign these loans and 
have to put off other kinds of things they want to and should do in 
their lives.
  We know what it means to those families and to the economy and those 
communities where these students come out of college with huge debt. 
They cannot buy a car. They cannot buy a home. They cannot start a 
business. In many cases they put off getting married and starting a 
family because of debt. None of this is good.
  Think back a generation. I heard Senator Klobuchar speak today on the 
floor. She went to what we consider in this country an exclusive, very 
expensive university. She scrounged together, her teacher mother, her 
father--I was in the Presiding Officer's chair as she was speaking. Her 
father is a reporter, a journalist, columnist, as my wife is. He did 
not make a lot of money. It was difficult to come up with tuition, room 
and board for Amy Klobuchar, a young 18-year-old student then, but they 
were able to do it. I looked back at my wife who graduated college 30-
plus years ago, the daughter of a maintenance worker in a powerplant, a 
union member, 35 years in the union. She is the oldest of four. Her 
parents absolutely had a commitment to send her to college but could 
not afford it. Her mother took a job as a home care worker as Connie 
was approaching college age. She is the oldest. She went to a State 
university, Kent State University, one of the fine State universities 
in our State.
  She graduated in 1979 with only about $1,200 in student loan debt. 
She worked part of that time, she got grants, but college tuition was 
so much less expensive then, not just at private, more elite schools 
but at State universities especially and community colleges. Now it is 
so out of reach for far too many families.
  As the students approach that day and have these discussions with 
their parents, it is important to try to think through how these 
students who do not necessarily have a lot of sophistication yet in 
finances, how they look at this. A recent study found that two-thirds 
of student loan borrowers were not as aware of the difference between 
Federal student loans and riskier, higher interest private student 
loans.
  So they go into this not necessarily always with eyes wide open. They 
are idealistic. They are enthusiastic about going off to school. They 
want to get ahead. They do not want to put too big a burden on their 
parents or obviously on themselves, but they are not, according to the 
study, aware of the differences between Federal student loans and these 
higher interest private student loans.
  Many students then take out private student loans, even though they 
are eligible for the more affordable Federal ones. You can't expect 
students to have a fair shot at building a successful livelihood if we 
don't give them the tools to succeed. That is why the Know Before You 
Owe Private Student Loan Act is so important. The bill would require 
private student loan lenders to clearly state the difference between 
the student's ultimate cost of attending college and the student's 
estimated financial assistance.
  They should be taking full advantage of any Federal financial aid 
packages they may qualify for before taking on any private student loan 
debt, although they so often don't know that because this is 
complicated.
  Second, our bill would provide loan statements to borrowers and their 
families at least once every 3 months so they can understand what they 
are getting into. Also, it would require private student loan lenders 
to submit an annual report to the Consumer Financial Protection Bureau 
about student loans.
  We know private student loans typically have significantly higher 
interest rates. They offer more limited payment options. They offer no 
relief for graduates who are underpaid, have been laid off or are 
unable to find work.
  That is why my Refinancing Education Funding to Invest for the 
Future, or REFIF Act, addresses this problem by authorizing the 
Treasury Department to make the private student loan market more 
efficient. It would allow borrowers to refinance their more costly 
private loans into more affordable loans at no cost to taxpayers.
  Now the Bank on Students Emergency Loan Refinancing Act would allow 
homeowners to refinance and lock in lower Federal interest rates. All 
of these pieces of legislation will give students a fair shot at the 
American dream of going to school--whether they choose to go to Lorain 
or Cincinnati State Technical and Community College, whether they want 
to go west to Otterbein, a private school in Ohio or Denison or Oberlin 
or whether they want to go to a larger State university such as Ohio 
State or usually Toledo or Youngstown State.
  It would allow those with private student loans into the Federal 
program, saving hundreds and possibly thousands of dollars by switching 
to the lower Federal interest rates.
  We all hear it. The Presiding Officer hears it from his Connecticut 
residents. Senator Reed hears it from Rhode Island, and we will hear 
from people in our States pleading for help. Let me share a couple of 
them, and then I will yield the floor for Senator Reed.
  Kelly McVicker, a father of three in Toledo--I spoke with him on the 
phone and I talked to him. We went to Perrysburg High School, a suburb 
of Toledo--an affluent suburb--but still a place where students 
struggle with student loans and student debt.
  When Kelly was 17, he took out a $48,000 student loan to get his 
degree. Today he is 31, working to pay down that original loan, which 
has now grown to $73,000, while also trying to support his family.
  He took out a $48,000 loan. He has been working, he has been going to 
school, and he has been doing what people and what society asked of 
him, and yet he is now saddled with this $73,000 debt.
  Andrea, from the same part of the State, the northeast corner of 
Ohio, wrote to me from Williams County saying:

       I have been repaying my student loan religiously for about 
     14 years, and I feel as though my payment never goes down.
       My interest rate is 7.75 percent. When I contact my lender, 
     they have no offer to lower the rate.
       I find it hard to believe when my mortgage is 3.25 percent, 
     and so is my auto loan. I can even get a credit card with 
     zero percent interest.
       I would be better off defaulting and let the companies take 
     care of it.

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       I am married with three children. At this rate, I will 
     still be paying off school loans when my oldest goes to 
     college.
       I did not have the luxury of having financial help from my 
     parents, and I am trying not to let that happen to my own 
     children.
       Higher education is extremely important to my husband and 
     me, and as a middle class family, there doesn't seem to be 
     much help in this area.
       I am a frustrated person who seems to be indebted to 
     student loans, and I don't want the same for my children.

  All of these pleas, whether they come from Providence or whether they 
come from Cleveland, are from people who want to do the right thing. 
They want to get out from under these loans, but they want to pay them. 
They want to pay them back. They just want an interest rate that is 
more competitive when they see what their home mortgage interest rates 
are.
  For Andrea from Williams County, her interest rates for her home 
mortgage are less than half of what she is paying for student loans. 
Why should that be? We need to respond to these pleas for help from so 
many of our constituents of all ages, of both genders, from all across 
our States in communities, small towns, big cities, and rural areas.
  Across the country there are responsible borrowers who have played by 
the rules and are still finding themselves coming up short. Unless we 
act, we will have a generation of Americans unable to build a life for 
themselves because they are in a nonstop cycle of dealing with costly 
loan repayment.
  It is important. We have the opportunity, by passing these bills, to 
give Americans the fair shot they need at paying off their loans, of 
going to school, of getting ahead, starting businesses, starting 
families, buying homes, and getting this economy back on track.
  We can do this, and it is important we start today.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Rhode Island.
  Mr. REED. I thank my colleagues Senator Franken and Senator Brown for 
their leadership and very wise comments on this issue, which is one of 
the most difficult ones that young Americans face, and that is paying 
for college and student loans.
  As my colleague had indicated, this is just really the tip of the 
iceberg because these debts that they have accumulated will prevent 
them from buying homes, from starting families, and ultimately affects 
our economy in a tremendously disruptive way.
  All of this is coming into very sharp focus as we begin the 
graduation season. We have high school seniors who are choosing a 
college to attend. We have college graduates who are leaving campus and 
facing a very difficult job market. Those who are going to college are 
looking at huge potential debt. Those who are leaving college already 
have, in most cases, those debts and are now thinking about how they 
can deal with them as they go forward.
  Outstanding student loan debt today is at an estimated $1.2 trillion, 
and it is growing.
  According to the Institute for College Access and Success, between 
2008 and 2012, average student loan debt increased by an average of 6 
percent per year--much, much faster than the rate of inflation. So we 
have an issue that is not only critical today, but it is getting worse 
each and every day.
  Seventy percent of the class of 2012 graduated with student loans, 
and the average student debt was $29,400. That is a lot of money. With 
that debt and with a job that is paying modest wages, or in many cases 
not being able to find such a job, it is very difficult to pay those 
loans.
  I just met with the presidents of all my colleges and universities in 
Rhode Island, and we talked about the urgency of this issue. Rhode 
Island ranked fifth in the Nation for average debt, with students owing 
an average of more than $31,000 when they graduate from college. We are 
fifth in the Nation.
  We are also, I would like to point out, regretfully, first in the 
Nation in unemployment. We have the classic situation of Rhode Island 
graduates leaving with an average of $31,000 of debt and struggling in 
one of the toughest job markets in the United States to find work. That 
is a very difficult combination to bear; that is so for so many young 
people not only in Rhode Island but in Ohio, Massachusetts, and people 
across this country.
  This debt is a huge drag on our economy. It is a threat to our 
future.
  We have to take action. We just can't sit back and watch this get 
worse each day as it is.
  First, we must commit to lowering costs for low- and middle-income 
families. The Pell grant is the foundation for making college 
affordable.
  It is the work of my distinguished predecessor, Senator Claiborne 
Pell, who understood that if you could make college affordable for 
talented Americans, they could remake this country and the world. For 
decades we did that. We provided the kinds of resources and grants that 
allowed talented, but not wealthy, students to go to school, to leave 
school without huge debts, and to begin immediately to apply their 
talents to the issues that confronted this country and this world.
  In fact, I would argue that his foresight back in the 1960s and 70s 
set the stage for all of these great sorts of revolutions.
  Why did we have a telecommunications revolution? Because we had not 
only the educated scientists and engineers to develop transistors, to 
develop all of these new technologies, but we also had the most 
educated population in the world to use them.
  That wasn't an accident. That was building on the GI bill in the 
1940s, with the Higher Education Act in the 1960s, adding the Pell 
grant in the 1970s, to make college affordable and accessible to the 
widest section of Americans.
  That has been the engine that has driven our growth and our economic 
progress over many decades. That engine is sputtering right now because 
of the debt that is being put on these students because the cost of 
college is going up.
  We certainly have to reject the proposal in the House by some of our 
Republican colleagues that would roll back investment in the Pell 
grant. We have to do more to make the Pell grant accessible to more 
citizens, more Americans.
  Second, we have to tackle this student loan debt crisis.
  The Federal Government should not be generating revenue from student 
loan interest payments. Instead, we should be offering lower rates. 
That is why I introduced the Responsible Student Loan Solutions Act to 
set interest rates to cover our costs and nothing more, and allow for 
refinancing of loans that are at high fixed rates.
  I was pleased to work with Senator Warren of Massachusetts, who is an 
extraordinary leader on this issue, to develop a new student loan 
refinancing bill that would enable student loan borrowers to refinance 
at the rate that was enacted under the Bipartisan Student Loan 
Certainty Act last year.
  We also have to hold loan servicers accountable for treating 
borrowers fairly. Students must get accurate and clear information 
about their repayment options, and that is why Senator Durbin's 
Borrowers' Bill of Rights Act is so critically important. I am proud 
that he has joined us on the floor, and I am very proud to be a 
cosponsor of this legislation.
  Third, States, colleges, and universities have to step up. They have 
to do more to provide the resources, to provide the efficiencies, so 
that we can make college more affordable for all of our citizens.
  I have introduced the Partnerships for Affordability and Student 
Success Act to reinvigorate the Federal-State partnership for higher 
education with an emphasis on need-based grant aid.
  One of the problems we have, frankly, is that in the 1970s, if you 
looked at the Pell grant, it would cover roughly three quarters of 
tuition at a public four-year university. Now it covers only about one-
third of tuition for those who can get the grant.
  If we could go back to those times where you could basically get--if 
you were a low-income deserving student--a grant, we wouldn't have such 
a crisis in student debt. So we have to make grant aid more accessible, 
and that requires a State, Federal, university, and college 
partnership. A recent report presented at the American Educational 
Research Association found that grant aid increased the likelihood of 
graduation for low-income students while unsubsidized student loans 
resulted in a decrease in graduation rates.
  If we are worried about graduating young people from college, the one

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thing we can do is take the worry of debt off their shoulders, take the 
uncertainty of trying to put together, cobble together, financing for 
education by giving them the grants that used to be something we 
thought were part and parcel of the American dream.
  We also know that one of the main reasons tuition has skyrocketed is 
that State appropriations for higher education have declined. According 
to the State Higher Education Finance report, State spending per full-
time equivalent students reached its lowest point in 25 years in 2011.
  States do have to put more into their State and university college 
systems. I say that knowing full well the challenges the States face, 
some of which are the result of policies and guidance that we have 
given them. But if the States are not willing to put more resources in, 
it ultimately is shifted on to the shoulders of students, and 
ultimately there is only so much weight they can bear.
  States have to reinvest in higher education, and we can help give 
them incentives to do that, rather than disincentives. I hope our 
legislation will do that.
  Finally, colleges and universities must take greater responsibility 
for affordability and student loan debt. This is not something that is 
beyond their prerogatives. They are not helpless in this. They have to 
not only advise students on the best course of action--in fact, in my 
view, colleges, public, private, for profit, nonprofit, should be 
fiduciaries, really. They should operate in the best interests of 
students, not the best interest of the bottom line, not to make up for 
lost State contributions, not to sign up for esoteric deals with 
financial companies because they get a huge payment back in return.
  Just as in the classroom, they should be trying to give these 
students the best education. In the financial aid office they should be 
giving them the best deal possible on paying for college.
  To ensure that, to basically make sure that all of these institutions 
have some, as they say, skin in the game, I introduced the Protect 
Student Borrowers Act with Senators Durbin and Warren. I must say this 
is also the result of some hard lessons we learned in the financial 
crisis. If institutions don't have an interest in the loans they are 
making--in fact, if they are encouraging people to take loans they 
cannot afford--disaster is just days, months, weeks away. It is coming. 
We want them to be more responsible. So we would ask them, as the 
percentage of their students who default rises, that these institutions 
start sharing some of the risk; that they start being conscious of the 
arrangements they are giving, the tuition they are charging, the 
courses they are offering; that they have a vested interest in their 
students succeeding, and not the institution getting as much money as 
possible.

  I know there are other colleagues on the floor, and I have more to 
say about this, but we have a great deal of work to do here. This is 
about a fair shot for all of our students and all of our families. 
Working with Senator Warren and Senator Durbin and my other colleagues, 
we are going to try to make a difference for students across this land.
  With that, Mr. President, I yield the floor.
  The PRESIDING OFFICER. The Senator from Illinois.
  Mr. DURBIN. Mr. President, I want to thank my colleague from Rhode 
Island, Senator Reed. Senator Elizabeth Warren, our new colleague from 
Massachusetts, and Senator Reed and I have started this effort, but we 
are welcoming ideas and supporters from both sides of the aisle to join 
us.
  The conversation tonight on the floor of the Senate may be the most 
important conversation that millions of American families could hear, 
because we are talking about student debt. Student debt in this country 
has reached the breaking point. It has reached the point where the 
cover of Time magazine would have a question mark. It shows a student 
headed off to college and the comment of the question mark is, Is It 
Worth It?
  It has reached the point where the cost of higher education is so 
high, the indebtedness associated with it so high, that many are 
stepping back now to ask that very basic question: Is it worth it, to 
go this deeply in debt for college courses--an associate's degree, a 
bachelor's degree, or more? That question would have been unthinkable 
in my day--unthinkable. If there was one driving idea in my mind from 
my mother and father, it was stay in school, go to college, do the best 
you can and don't quit, keep working at it. Thank goodness, for me--
thank goodness, for me--the Soviet Union decided to launch Sputnik. 
That was the biggest break I ever got in my life and I didn't even 
realize it.
  It was October 1957. They launched this basketball-sized satellite 
that circled the globe. We didn't have any rockets or satellites at the 
time, and this satellite, as it circled the globe, let off this beep 
and signaled it was out there. You couldn't hear that beep on Earth 
with the ordinary powers of individuals--some scientist could pick up 
that signal--but they heard that beep on the floor of the Senate. What 
happened is Members of the Senate came in here--Democrats and 
Republicans--scared to death. We knew Russia had the bomb and now they 
had satellites.
  We did a lot of work. We started preparing our Department of Defense 
to get ready; something may be coming our way. Then something happened 
which was nothing short of amazing. Somebody said: If we are going to 
beat the Russians, if we are going to beat the Soviets, we are going to 
need an awful lot of educated people, and so they came up with an idea. 
It was the first time in history the Federal Government had ever 
conceived of an idea of loaning money to college students to go to 
school, unless you were a veteran, with the GI bill. You didn't have to 
be a veteran. They would loan money to students to go to college, and 
they called it the National Defense Education Act. Sounds right, 
doesn't it? If we are going to defend America, we need education. So we 
will loan money to students all across America to go to college.
  What that did was to completely destroy the stereotypes of colleges 
and universities, which used to be for the very brightest and the sons 
and daughters of graduates. In the 1960s, after the National Defense 
Education Act, higher education was democratized and a young high 
school student from East St. Louis, IL, walked into the admissions 
office at Georgetown University and went to school with a National 
Defense Education Act loan from my Federal Government.
  I didn't borrow much money because it didn't cost much money, though 
it seemed like a lot at the time. The deal was you borrowed it, and 
then, in the 10 years after you graduated--you got 1 year grace 
period--you paid it off in 10 installments with 3 percent interest, 
which I did. I borrowed money for college and law school. Did I know 
whether that was a good idea to go in debt for college? I didn't, other 
than the fact I had been told over and over and over the best thing you 
can do with your life is to go to college.
  Fast forward 50 years. Fast forward from that experience in my youth 
to today. Imagine a student with the same motivation for college is 
sitting in an admissions office and, instead of being told they may 
have to borrow $500 or $1,000, they are told they may have to borrow 
$20,000 to go to school 1 year. Imagine a 19-year-old student making a 
decision about being $20,000 in debt. How in the world can they make 
that decision? They are still motivated, they want that college 
education, and so they basically say: I will sign up. The admissions 
officer has said classes start next week. If you sign these papers you 
will be in there. If you don't sign the papers, you won't be. So 
students are signing up.
  All across America, the indebtedness these students, and many times 
their parents, are incurring is building up to record levels. There is 
more student loan debt in America than credit card debt. There are 
tragic stories emerging from it--stories of students deeply in debt, 
dropping out of school with no degree; stories of students deeply in 
debt finishing school unable to find a job; and stories of students 
deeply in debt going to semiworthless, for-profit schools with diplomas 
not worth the paper they are written on.
  What happens at the end of the day? The debt of these students is not 
like any other debt. Luckily, we have as a colleague in the Senate 
Senator Elizabeth Warren, who once taught the bankruptcy course at 
Harvard Law School, so she can help correct me if I am wrong--at least 
fill in some blanks

[[Page S2780]]

for me here. Currently, if someone declares bankruptcy in America 
today, there are some debts you cannot discharge. I am going to try to 
remember a few of them; she can help me with the others.
  You cannot discharge taxes owed to the government. You still have to 
pay that. You cannot discharge money you owe for alimony and child 
support, if I am not mistaken.
  I don't know if there is another category, but I am going to add 
student loans here, and I yield to my colleague, with the permission of 
the Chair. Did I get an A on that or at least a B?
  Ms. WARREN. The Senator got an A.
  Mr. DURBIN. All right. So the fourth category is student loans. If 
you end up in debt with a student loan, it is one of the few loans in 
your life you can't discharge in bankruptcy. The money you borrowed for 
your home, yes, that is dischargeable; the money you borrowed for your 
car, yes, that is dischargeable; the money your borrowed for a boat, 
yes, that is dischargeable; the credit line you have just for your 
ordinary expenses, yes, that is dischargeable; but when it comes down 
to student loans, it is a debt you carry to the grave. You either pay 
it or they will hound you for as long as you live.
  That is why it is different than other debts. That is why we came 
together and said it is time for us to look at these student loans, the 
amount of debt which students and families are carrying, and do 
something about it.
  Three bills emerged. The first bill I call the student borrower bill 
of rights. It says when you sit down at that desk in the admissions 
office they have to tell you what your rights are. They have to tell 
you the government loan you could use to pay for your education has a 
lower interest rate, more reasonable terms, can be consolidated at a 
later point in your life, a limitation on how much money out-of-pocket 
you are going to have to pay based on your income, and you might have 
some forgiveness if you go into some areas such as teaching and 
nursing. You have to be told this.
  Right now, students sitting across from that admissions officer are 
being steered into the most expensive, worst loans. So the bill I have 
offered--the student loan borrower bill of rights--says, first, tell 
them the truth. Tell them the best circumstances for them to borrow 
money, if they need to borrow it.
  Secondly, the bill of Jack Reed of Rhode Island basically says that a 
university has a vested interest in making sure a student doesn't 
borrow too darned much money; that a student doesn't get so deeply in 
debt they can never pay it back. That university, if they do not accept 
that responsibility, could be on the line themselves for some of that 
debt.
  Think they will take it a little more seriously? You bet they will. 
That is the Reed bill, which I am cosponsoring.
  To discuss the third bill, I wish to defer to the Senator from 
Massachusetts, with the permission of the Chair. It is the one that is 
a really critical element in this approach to dealing with student 
loans and student debt. With the permission of the Chair, I ask to 
enter into a dialogue with the Senator from Massachusetts.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. DURBIN. I want to, at this point, yield to the Senator from 
Massachusetts to describe for the Record her refinancing proposal.
  Ms. WARREN. I thank the Senator from Illinois.
  It starts with the premise right where the Senator was, and that is 
the Federal Government, once upon a time, lent money to our students. 
My colleague remembers the NDEA loans that went out at 3 percent. The 
Federal Government was subsidizing those loans, making it easier for 
students to be able to borrow.
  Where we have ended up today is that instead of there, we have 
students with outstanding student loan debt at 6 percent, at 7 percent, 
at 8 percent, at 9 percent, and even higher. So this isn't just to 
cover the cost of the loans. This is double, in some cases, what it 
takes, triple, in some cases, what it takes to cover the cost of the 
loans. That means the administrative costs, the bad debt costs--the 
costs of borrowing the money.
  So last summer, we were looking at new student loans that were coming 
through--the interest rates were about to double--and Congress, 
Democrats and Republicans, said if the interest rate doubles up to 7 
percent, that is too high. So Congress said that for all new borrowers 
in 2013, the interest rate would be 3.86 percent on undergraduate 
loans, 5.41 percent on graduate loans, and 6.41 percent for PLUS loans. 
Make no mistake, the government still makes money--not a lot but the 
government still makes money on those loans.
  What we propose is to take all of the outstanding student loan debt 
and refinance it at those interest rates--exactly the same rates that 
virtually every Republican agreed to last summer, many Democrats agreed 
to last summer, and to say we are going to finance it down. So kids who 
are trapped in loans at 8 percent, at 9 percent, and even higher will 
be able to get these lower interest rates on their loans. It will save 
some people hundreds of dollars a year, it will save some thousands of 
dollars a year.
  We propose to pay for that by enacting the Buffet rule--closing some 
tax loopholes on millionaires and billionaires--so we can bring down 
the interest rate for our students.
  Mr. DURBIN. I thank the Senator from Massachusetts, and I see the 
majority leader is on the floor, so I will close with this:
  These three proposals--students being admitted to college should be 
told the truth about their debt and the best way to minimize their 
debt; that the colleges will not loan more money than is reasonable or 
be on the hook themselves, if they do; and that students have an 
opportunity to refinance their student loans--would have a dynamic 
impact on student debt in America today and give working families and 
students a fair shot at a higher education they can afford without a 
debt that would cripple them for life.
  I yield the floor.
  The PRESIDING OFFICER. The majority leader.

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