[Congressional Record Volume 168, Number 158 (Thursday, September 29, 2022)]
[Senate]
[Pages S5553-S5554]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. REED (for himself, Ms. Warren, and Mr. Durbin):
  S. 5065. 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, we all recognize that a postsecondary 
education is often the key to a family-sustaining, middle-class job. We 
also know that an educated workforce is essential to a modern, 
productive economy. However, our system that relies on student loan 
debt to finance that education is broken. At the end of fiscal year 
2021, over 43 million Americans owed more than $1.6 trillion in Federal 
student loan debt.
  The pandemic has forced a long-overdue reckoning with the cost of 
student loan debt to our society. But the warning signs have been clear 
for some time. A National Center of Education Statistics Report found 
that students who graduated in 2016 still owed 78 percent of the amount 
they borrowed. Black graduates owed more than they had originally 
borrowed. Thirty-four percent of graduates reported negative net worth. 
As student loan debt has

[[Page S5554]]

grown, young adults have put off buying homes or cars, starting a 
family, saving for retirement, or launching new businesses. They have 
literally mortgaged their economic future.
  In response to the pandemic, Congress and two administrations took 
unprecedented steps to ease the burden of student loan debt. While 
those steps provided urgently needed relief to current borrowers, we 
need to take steps now to reform the student loan system so future 
graduates are not saddled with crushing debt. Part of the answer is 
requiring institutions of higher education to have a greater stake in 
the outcomes for student loan borrowers.
  While institutions are largely shielded when student borrowers can't 
repay their loans, students who fall into default face catastrophic 
consequences with little opportunity for relief. Only in rare instances 
can the debt be discharged in bankruptcy, and the Federal Government 
has the power to withhold tax refunds, garnish wages, and even garnish 
Social Security benefits to collect defaulted student loans.
  We have seen the costs to students and taxpayers when institutions 
are not held accountable. The Department of Education has forgiven over 
$13 billion in student loans for students cheated by their colleges 
since 2021 alone. Just recently, Stratford University announced it 
would be shutting its doors leaving thousands of students in the lurch.
  We cannot wait until an institution is catastrophically failing its 
students before taking action. Institutions need greater financial 
incentives to act before default rates rise. Simply put, we cannot 
tackle the student loan debt crisis without States and institutions 
stepping up and taking greater responsibility for college costs and 
student borrowing.
  That is why I am pleased to reintroduce the Protect Student Borrowers 
Act with Senators Warren and Durbin. Our legislation seeks to ensure 
that institutions have more ``skin in the game'' when it comes to 
student loan debt. The bill will create stronger market incentives for 
colleges and universities to provide better and more affordable 
education to students, which should in turn help put the brakes on 
rising student loan defaults.
  The Protect Student Borrowers Act would hold colleges and 
universities accountable for high student loan defaults by requiring 
them to repay a percentage of defaulted loans. Only institutions that 
have one-third or more of their students borrow or have a repayment 
rate after 3 years below 50 percent would be included in the bill's 
risk-sharing requirements based on their cohort default rate. Risk-
sharing requirements would kick in when the default rate exceeds five 
percent. As the institution's 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, if they are making progress in their 
student loan management plans.
  The risk-sharing payments would be invested in helping struggling 
borrowers, preventing future default and delinquency, and providing 
additional grant aid to students receiving Pell grants at institutions 
that enroll a high percentage of Pell grant recipients and have low 
default rates.
  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. All stakeholders in the system must do their part. 
With the Protect Student Borrowers Act, we are providing the incentives 
and resources for institutions to take more responsibility to address 
college affordability, reduce student loan debt, and improve student 
outcomes. I urge my colleagues to cosponsor this bill and look forward 
to working with them to include it and other key reforms in the 
upcoming reauthorization of the Higher Education Act.

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