[Congressional Record Volume 160, Number 89 (Tuesday, June 10, 2014)]
[Senate]
[Pages S3515-S3517]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
Student Loan Debt
Mr. DURBIN. Mr. President, life is about choices. We make them all
the time, the choice about where you are going to school, what you are
going to study, what you are going to do with the rest of your life,
what kind of job you want, your car, a lot of other choices we make.
Tomorrow the Senate gets to make a choice. It is going to affect some
people. Here is the choice: We have in this country a serious problem
with college loan debt. It has grown dramatically over the last several
decades. Now we estimate the total amount of college loan debt in
America is over $1.2 trillion. What does that mean? How big is that?
More college loan debt than the sum total of all credit card debt in
America. More college debt than the sum total of all automobile debt in
America. The only other debt larger--mortgage debt.
This is growing, the college student loan debt. Forty million
families are affected by student loan debt out of a nation of 300
million. So we are dealing with somewhere in the range of 14, 15
percent of America making payments on college student loans.
The amount of debt has grown dramatically. I will not come to the
floor and tell you what I borrowed to go to school because it makes me
sound ancient. But I will tell you this: When I graduated from law
school, my student debt equaled one-half of my gross income the first
year, just to put it in perspective. Not so anymore.
What we are finding is that most students are so deeply in debt
coming out of college that they are making life decisions based on
their debt. I get emails in my office from young men and women who
always wanted to be teachers. They love teachers. They want to be a
teacher. They tell me they cannot be a teacher, because the cost of
getting an education to become a teacher is so high, that the starting
pay of a teacher is so low, and so they are going to do something else.
What a loss for this country, when someone who desperately wants to
teach does not get that chance.
Now 25 million of the 40 million Americans with student loan debt can
get a break tomorrow morning, because we have a bill coming to the
floor which will allow 25 million of these student loanholders to
refinance their debt. Ever own a home with a mortgage? I have. You
heard there was a lower interest rate available. You called the bank
and said: Hey, can I knock that interest rate down from 8 percent to 6
percent? Yes, let's do it, because a lower interest rate means a lower
monthly payment, or the same monthly payment is going to pay off more
principal on your debt.
So we are going to give college students tomorrow an opportunity, 25
million of them, to refinance their college student loans to lower
interest rates at 3.8 percent for undergraduate education. Currently
many of these students are paying 6 percent, 7 percent, 8 percent, 10
percent, and higher. Is this a good thing? You bet it is. For many of
these students, this is the lifeline they have been looking for.
That is one possibility. That is one of the choices: Help 25 million
in debt. But to pay for this, if we are responsible, we had to come up
with a source of revenue to make up for the lost interest payments to
the Federal Government when the debts are refinanced. We came up with
it. It is called the Buffett rule. It is named after Warren Buffett,
this seer of Berkshire Hathaway, a fellow I have come to know a little
bit through his family. He came to us a few years ago and he said,
something is wrong with the Tax Code. Here I am, Warren Buffett said,
one of the wealthiest men in America, and my income tax rate is lower
than my secretary's income tax rate. How can that be? Why would my
secretary pay a
[[Page S3516]]
higher income tax rate than me, a billionaire? So we created what we
called the Buffett rule. It said: If you are one of the fortunate few
in America who makes over $1 million a year, you are going to have a
minimum income tax rate of 30 percent, which at least puts you on par
with the people who work for you. You are going to pay an income tax
rate at least as high as they do, 30 percent.
How many Americans are like Warren Buffett, making over $1 million a
year? How many would have to pay this new income tax rate? Twenty-two
thousand Americans make over $1 million a year in 2009 and paid less
than a 15 percent effective tax rate. Okay, Senate, here is your
choice: Do you help 25 million students refinance their college debt
and reduce their loan payments by an average of $2,000, or do you
protect 22,000 millionaires from paying more in income tax? That is our
choice tomorrow. I think it is a pretty easy choice.
I do not have anything against wealthy people. If they made their
money honestly, God bless them. But I do not think it is unreasonable
to say to the wealthiest people in America: Count your blessings,
buddy. You are living in the greatest Nation in the world that gave you
a chance to get rich. Now give something back to that country. Give
something back to that next generation that wants to build this country
even to a higher standard and more success for more people. That is
what we face tomorrow.
I go around my State. I have had hearings at college campuses. Some
of these are worth repeating. Casey Graham Barrette at North Central
College up near Chicago graduated in 2010, got married, has an infant
boy she is very proud of. She and her husband both have jobs. His
paycheck pays living expenses, her paycheck pays student loans. She is
working to pay the student loans in her household. She worries about
the future of her family until she gets these loans paid off.
Joshua Schipp. I recently met him. He told me he graduated with a
student loan debt of $80,000--from a good school, do not get me wrong.
But $80,000. His interest rates on his debt range from 4\1/4\ percent
to 9\1/4\ percent. They could come down to as low as 3.8 percent under
our bill coming up tomorrow. That is the range of his current interest
rates on a variety of loans he has.
Joshua, at one point, said his student loan payment was $700 a month.
Now stick with me for basic math and forgive me if I miss this a little
bit but I think I have got it. Joshua has got a job making $11 an
hour--$11 an hour, 40 hours a week, $440 a week, 50 weeks a year. I
know there are 52, but let's assume 50 weeks a year. He is making
somewhere in the range of $22,000 a year.
His gross pay of $440 times four makes that right at $1,800--I am
rounding it off, $1,800. Let's assume after you take the taxes and all
of that out, he has about $1,200 net that he makes each month. Do you
remember what I said he paid in student loans? Seven hundred dollars a
month. Twelve hundred dollars net, seven hundred dollars on your
student loan. How could you possibly make it? That is Joshua, who stuck
it out, finished with his college diploma, did what he was told to do.
Now there he sits with that debt hanging over his shoulder.
Here is a story I know well because I met this young lady several
times, Hannah Moore from the city of Chicago. Hannah got off to a great
start. She was not sure what she wanted to do, so she went to a
community college. Affordable community colleges, I recommend them to
everybody. The hours can be transferred to universities. You have a lot
of different courses you can take, and it is affordable. That is where
Hannah started.
Everything was going well. Then she stumbled and made a bad decision
and did not even know it. She transferred from community college to a
for-profit college. For-profit colleges are different than public
universities. They are different than private schools. They are
different than not-for-profit schools. They are out to make money.
Hannah did not know it. She thought she was signing up for a real
college and a real education.
She went to something called the Harrington College of Design in
Chicago. Their parent company, Career Education Corporation, is under
investigation by 17 different State attorneys general. They have got
big problems. They create big problems for people such as Hannah.
So Hannah went to this Harrington College of Design and got her
``degree.'' Do you know, when it was all over, how much student debt
she had for her time at Harrington College of Design, the for-profit
school? It was $124,570. She cannot keep up with the payments. She has
fallen behind. And the debt from the interest keeps adding up. She is
now up to $150,000, lives in her parents' basement. Her dad came out of
retirement to try to help her pay off her college loans.
This for-profit college and university issue is a separate one I will
save for another day. But this outrageous sector of our higher
education economy accounts for 46 percent of all student loan default.
They overcharge their students and provide them with diplomas and
degrees which, in many cases, are worthless. But having said that,
there sits Hannah. Did I mention she is 32 years old and $150,000 in
debt, with a worthless diploma from a for-profit college run by the
Career Education Corporation? That is what she is up against.
This bill will help her some. It is not going to eliminate her
problem, because there is one point you cannot overlook when it comes
to college student loans. This is not like the mortgage on your home.
This is not like the money you borrow to buy a car. It is not like a
line of credit you might take out to start a business. A college
student loan is in a rare category of debt and loans in America, a rare
category of debts that cannot be discharged in bankruptcy, no matter
how bad things get for you, no matter how terrible your circumstances,
your economic circumstances. You go into court and say: I have got to
declare bankruptcy. They will help you with everything, but they cannot
do anything about your college student loan. It is with you for a
lifetime.
We are hearing the horror stories. Grandma decides her granddaughter
needs to go to college, cannot get the money to go through. Grandma
says: Let me cosign the note with you, honey. I want you to finish
college. The granddaughter finishes school, defaults on the loan. They
levy grandmother's Social Security check. That is the reality.
I just left a press conference where a young woman who was trying to
pay off her college student loan fell behind. Then she said: Well, at
least I have got my income tax refund coming back. It was claimed. She
did not get any of it. That is what these loans do to you. That is what
the collection agencies do to you.
So the question tomorrow morning for the Senate is: Whose side are
you on? Take your pick here. Are you on the side of 22,000 or so
millionaires in America? Do you want to protect them from paying a
penny more in taxes, or are you on the side of 25 million college
students and their families who are struggling, just like the ones I
have told you about? The choice is pretty clear to me. A college
diploma ought to open the door of opportunity.
It shouldn't open the door to debtors' prison, and that is what is
happening to thousands of students across America right now.
The first step here is to pass this bill. There is more to do, but
the first step is to pass this bill.
The President helped us yesterday. The President said he was going to
give 5 million of those paying off college student loans a chance to
really organize their debts and to limit the amount of money they had
to pay out to 10 percent of their income. That gives some relief to 5
million, but we can do more. We can help 25 million, and that is what
we ought to do tomorrow.
When you go back home and talk to people around the Senate, a lot of
them start gazing at the ceiling and saying: I don't know about you
politicians in the Senate. All you do is give speeches, put out press
releases, and take up valuable time on television. What do you do to
help us? What are you doing for working families?
Well, I have a speech--and it is pretty good--about what we try to do
with minimum wage and making sure people--women and men--are paid
fairly in the workplace, but this college student
[[Page S3517]]
loan thing haunts me. It haunts me to think that these young people,
who are convinced they are doing the right thing, who are borrowing
money for the right reason--higher education--are getting so trapped in
debt that their lives are compromised. People make speeches about,
well, it affects the economy. If you have a lot of student debt, you
may not buy a new car, a new home, get married, or have children once
married because of your debt. That is all true. That looks at the big
picture. But I can't get away from those smaller photographs in my mind
of the people I have met in Chicago and all over my State who are
trying to pay off these debts.
It comes down to this: We have 55 Democrats and there are 45
Republicans in the Senate. My job is to count votes. I think we are
going to get all of the Democrats. I think every one of them will vote
for it. But that is not enough. Fifty-five out of one hundred is not
enough. Tomorrow we need at least five Republicans to join us--five.
None of them have cosponsored the bill yet to refinance college student
loans, but they can get into this conversation and join us tomorrow in
an effort to help. If five will cross the aisle to make this a
bipartisan effort, we can get this moving.
I know the House of Representatives has been a dead end. So many
things have gone over there to die--immigration reform and a long
list--but I sense this is different. I sense that Members of the House
of Representatives in both political parties, if they go home, wherever
they live, if they have a real town meeting, if they invite real
people, real families, they are going to hear about this issue. Forty
million Americans are living with this issue.
Let's do our job in the Senate. Let's pass this college refinance
bill. Let's give these students a break, a chance. Let's do the right
thing for them. They did the right thing and went to school. Their debt
should not compromise their future.
I yield the floor, and I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The assistant legislative clerk proceeded to call the roll.
Mrs. SHAHEEN. I ask unanimous consent that the order for the quorum
call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mrs. SHAHEEN. I rise this morning to discuss the very pressing
challenge that too many of our young people are facing; that is, the
issue of college affordability.
As I travel throughout New Hampshire, I continue to hear young people
and their families express their deep concerns about the high cost of
college and about their student loans.
In New Hampshire this problem is especially significant because New
Hampshire ranks second highest in the Nation for the proportion of
students who are graduating from college with debt and also for the
average amount of debt per graduate. Seventy-four percent of students
in New Hampshire graduate with debt, and that debt is an average of
$33,000 per student. I have talked to some young people who worry that
they are never going to be able to get out from under that student debt
burden.
We all know that obtaining a college education has been viewed as a
step that can propel Americans into the middle class, allowing them to
pursue goals such as starting a family, opening a business, or
purchasing a home.
Unfortunately, education costs have increased at four times the rate
of inflation from 1985 to 2011. This is a problem that has both short-
term and long-term implications for our citizens who want to continue
their education after high school. It is also a problem that has
serious implications for the Nation's economy. According to the
Consumer Financial Protection Bureau, approximately 40 million
Americans hold more than $1.2 trillion in student loan debt. The agency
also indicates that student loan debt has exceeded credit card debt in
the country and is exceeded only by home mortgages in terms of total
amount of debt. So we have more student loan debt than credit card
debt, and only home mortgages exceed the student loan debt.
While Americans are struggling to pay back this staggering debt, it
is projected that the Federal Government will earn $66 billion in
profits from its role in student lending between 2007 and 2012. That is
just not right.
Clearly it is time for Congress to take action to help individuals
with student debt. It is time to help them reclaim their American
dream, to help them have a chance at pursuing the goals that drove them
to college in the first place.
To this end I am very pleased to join with so many of my colleagues
in supporting the Bank on Students Emergency Loan Refinancing Act. This
legislation would allow eligible borrowers who took out student loans
before July 1, 2013, to refinance those loans at rates currently being
offered to new borrowers.
It is clear that Congress needs to come together to work to reduce
the cost of college for aspiring students throughout the country, but
we also need to provide relief to those who have already borrowed to
pursue their education, many of whom have interest rates for their
student loans that are much higher than they would be if they were
purchasing a home or a car.
This action is also way overdue. The extent to which young people are
feeling this pressure really came home to me when I visited a veteran
from New Hampshire named Calvin, who served in Afghanistan. I first met
Calvin at Walter Reed Medical Center, where he was recovering after
losing his leg from stepping on an IED. He was married, had a young
child, and he was talking about the challenges he faced after he
recovered from his injuries. But what impressed me the most was his No.
1 concern was how he and his wife were going to repay their student
loans. That is why I think we have to do something about this problem.
We have to make sure young people such as Calvin don't spend their
professional lives worrying about how to pay back student loans.
I plan to file an amendment today as we take up the Bank on Students
Emergency Loan Refinancing Act that will address the challenge young
people have as they look at how to keep track of their student loans. I
think they need to have a portal that gives them a one-stop shop so
they can view all of their student loan information, public and
private, in one central online location.
I have heard stories from young people in New Hampshire about this
concern, from people like Kim, who is from Nashua. She is a 30-year-old
woman, and she has student debt from obtaining her bachelor's and two
master's degrees. Her student loan payments cost her more per month
than a home mortgage. She recently found a job that is helping her make
her loan payments, but before she got that offer she felt overwhelmed
by her debt and she found it difficult to communicate and work with her
lenders.
By providing a one-stop online shop for debt management, the
amendment I will be offering will give people like Kim an easier way to
track and understand their loans and their repayment options.
I am pleased that just yesterday the President announced a number of
initiatives to help borrowers, including plans similar to the
provisions in my Simplifying Access to Student Loan Information Act, so
we can encourage the use of innovative methods to communicate with
borrowers, but as we all know, we need to do more in this Congress to
ensure that we can help borrowers who are struggling to repay their
student loans.
I thank my colleague from Massachusetts, Senator Warren, for her work
on this bill. I look forward to continuing to work with her and my
other colleagues to ensure that student loan borrowers finally see some
relief.
The PRESIDING OFFICER. The Senator from South Dakota.