[Congressional Record (Bound Edition), Volume 158 (2012), Part 5]
[Senate]
[Pages 6091-6101]
[From the U.S. Government Publishing Office, www.gpo.gov]




STOP THE STUDENT LOAN INTEREST RATE HIKE ACT OF 2012--MOTION TO PROCEED

  The ACTING PRESIDENT pro tempore. Under the previous order, the 
Senate will resume consideration of the motion to proceed to S. 2343, 
which the clerk will report by title.
  The legislative clerk read as follows:

       Motion to proceed to S. 2343, a bill to amend the Higher 
     Education Act of 1965 to extend the reduced interest rate for 
     Federal Direct Stafford Loans, and for other purposes.

  The ACTING PRESIDENT pro tempore. Under the previous order, the time 
until 12 noon will be equally divided and controlled between the two 
leaders or their designees, with the majority controlling the first 30 
minutes and the Republicans controlling the second 30 minutes.
  The Senator from Washington.
  Mrs. MURRAY. Mr. President, we are here today because unless Congress 
acts, the interest rate for many of our students--over 100,000 of them 
in my home State of Washington--is going to double in 55 days.
  On July 1, the law we passed that held rates on federally subsidized 
Stafford loans to 3.4 percent will end, and rates are going to jump 
overnight to 6.8 percent. That is going to add $1,000 to the cost of 
loans for these young people, and it is going to be another huge strain 
for students and families who are already fighting to afford college 
and still struggling in this tough economy.
  This isn't an abstract issue for me. For me it is very personal. Pell 
grants and student loans were what allowed my six brothers and sisters 
and me to go to college when my dad got sick and had to leave his job. 
They were what made college affordable for us, and they were what 
allowed each one of us to pursue careers and give back to our 
communities. Because our government was there for us, at a very tough 
time for us, those seven kids in my family grew up to be a firefighter, 
a lawyer, a computer programmer, a sports writer, a homemaker, a 
middle-school teacher, and a United States Senator--a pretty good 
investment by our country. And our family's story is not unique.
  In fact, last week I went across my home State of Washington 
listening to student after student describe the real-life impacts this 
interest rate hike will have on their livelihood. The Columbian, a 
newspaper in Vancouver, Washington, wrote a story on the roundtable I 
held last week with local students. As the Columbian reported: the rate 
hike would impact students like Dora Hernandez, a first-generation 
college student at Washington State University in Vancouver. They 
reported that: Dora became a mother at the age of 18, 2 months after 
she graduated from high school. She worked two to three jobs at a time 
to support herself and her child. It was at one of those jobs working 
the concession stand on a college campus that inspired her to improve 
her own life by earning a postsecondary degree. She received some 
financial aid, but she will still have $29,000 in student loans to pay 
back when she graduates this month, she told me, proudly standing right 
in front of that concession stand she used to work at. She has no job 
lined up yet. She said:

       I was flabbergasted to find out how much student loan debt 
     I've accrued. Honestly, I'm scared. I hope Congress finds a 
     way to keep interest rates on student loans down for students 
     like me.

  The Columbian also reported the story of Diane Robinson, a 24-year-
old single mom who told me she decided to enroll at Clark College after 
a divorce left her with absolutely nothing. She told me:

       I would not be here without the loans. It would be 
     impossible.

  Through her tears, Diane told me that she was raised to repay her 
debts and worries about her looming student loan payments every single 
day. She said:

       If there is an increase on student loan interest rates, it 
     will compromise my quality of life. Repaying the debt I have 
     accrued will be essential for me to have a happy future.

  For millions of Americans, affordable college has been the ticket to 
the middle class. And for millions of small business owners, finding 
local workers with the education skills they need has been what has 
allowed them to expand and grow in our communities. We cannot afford to 
let that slip away. We can't allow access to college to become 
unattainable for so many of our families. As we all know, college costs 
are rising too quickly right now anyway. In fact, since 1985, the cost 
of a college education has increased by 559 percent because States have 
had to cut back their support for higher education and operating costs 
have increased. Student loan debt has spiked, and for the first time in 
U.S. history, the national student debt burden has surpassed $1 
trillion. That is more than the total amount of credit card debt.
  So the last thing our students right now need--the very last thing--
is for interest rates on this critical loan program to double. We 
cannot afford to allow that to happen. At a time when mortgage rates 
are under 4 percent, we should be doing everything possible to keep 
rates low for students today. In fact, we should be investing in our 
future and trying to get more high school students to continue their 
education. We should not be doubling interest rates on a critical loan 
program that students count on. It does not make sense.
  The Stop the Student Loan Interest Rate Hike Act that is before us is 
a commonsense measure that will prevent a rate hike on more than 7.4 
million college students, and it pays for it by closing a tax loophole 
that allows certain wealthy professionals to dodge paying their fair 
share of taxes. So I hope we can move to this today.
  I want to add, it is not just the students I talked about, Dora and 
Diane, who are speaking out against this rate hike. In fact, if our 
Republican colleagues do decide to block our ability to go to this bill 
today, I know that students all across our country are going to 
continue to make their voices heard about this--whether it is in person 
or in letters or on Twitter or on Facebook--and we will bring those 
stories right here to the Senate over and over until Republicans see 
that the students of America are not going to take no for an answer on 
this critical issue that will affect their lives far into the future.
  Mr. President, I yield the floor.
  The ACTING PRESIDENT pro tempore. The Senator from Ohio.
  Mr. BROWN of Ohio. Mr. President, I rise in support of the same 
legislation, and I appreciate the work of Senator Murray and Senator 
Klobuchar.
  I introduced this legislation with Senator Harkin of Iowa and Senator 
Reed of Rhode Island, and in the last couple of weeks I have been to 
the Cayuga County Community College, a community college in Cleveland, 
Ohio State University, Wright State University near Dayton, and the 
University of Cincinnati. There were student bodies, student government 
people in both political parties there. There is virtually universal 
support among students for this legislation. We have no business 
letting the interest rate double. The vote that will take place in less 
than 1 hour gives us an opportunity to help students in a huge way.
  The average Ohio graduate of a 4-year university has a $27,000 
student debt. If we are going to pile more money on that debt by 
allowing the interest rate to go from 3.4 to 6.8 percent, it means that 
student is less likely to be able to buy a house, less likely to 
probably start a family, and less likely to be able to start a 
business. It saps wealth from our community. If we can keep this 
interest rate at 3.4 percent, it will pay dividends much more than the 
cost of this.
  I would close by saying this was a bipartisan arrangement. Back in 
2007, when Senator Klobuchar and I were in our first year in the 
Senate, President Bush signed legislation brought forward and passed by 
a Democratic Senate and a Democratic House, with Republican support. So 
it had broad bipartisan support to lock in 3.4 percent for 5 years. Why 
are people making it partisan now?
  The fact is we should pass this legislation today. We should pay for 
it in a way by closing these tax loopholes that are called the Newt 
Gingrich-John Edwards tax loopholes, where both of them--Newt Gingrich, 
a Republican,

[[Page 6092]]

and John Edwards, a Democrat--in their private sector lives have 
legally been able to avoid tens of thousands of dollars in taxes. 
Lobbying firms, consulting firms, all have used this loophole. Governor 
Romney wanted to close this loophole when he was Governor of 
Massachusetts. It is something we should move forward on and put the 
partisanship aside and pass this. This is good for individual students, 
just like the GI bill after World War II was good for millions of 
individual students. Look what it did for our society as a whole. It 
made us a richer country, a more prosperous country, a more egalitarian 
country. What is not to like about that? That is why we should pass 
this legislation.
  I yield the floor.
  The ACTING PRESIDENT pro tempore. The Senator from Minnesota.
  Ms. KLOBUCHAR. Mr. President, I rise to speak in support of the Stop 
the Student Loan Interest Rate Hike Act.
  I want to first acknowledge my colleague Senator Brown of Ohio for 
his leadership. They have Ohio State, we have the University of 
Minnesota, and both of us have met with students from these States who 
have told us firsthand what they are experiencing every single day. I 
have talked to students at the University of Minnesota and Minnesota 
State in Mankato, where my father-in-law taught for many years, and 
they have told me about their own situations, where they may have five 
siblings and there is absolutely no way their parents, both of whom are 
working, can afford to send their kids to college without loans.
  I have talked to a young woman in Mankato whose mom was helping with 
the tuition, and then suddenly her mom lost her job and she couldn't 
help anymore, parents who have gone out on disability who can no longer 
help anymore.
  We have to ask ourselves as a country, when those things happen, when 
you have a student who may be the first in their family to ever go to 
college, are we going to turn our back on them and say: No, we don't 
want you to go to college? Well, that is not going to work in our 
country. That is not going to work, because in Minnesota the numbers 
just came out, and up to 2018, of all the new jobs created, 70 percent 
are going to require some kind of postsecondary education. Half of them 
are going to require 1-year to 2-year degrees, the other half are going 
to require 4-year degrees or more. We know those facts. We know how we 
are going to be able to compete in this world, and that is by having 
educated workers. To do that, we cannot turn our back on the students 
who may be in a situation where they can work part time.
  There was one girl I met at the University of Minnesota who was 
working a 50-hour paid job every week in addition to the classload, in 
addition to going to school. These students are working hard, and we 
must make sure they are able to complete their college and complete 
their degrees. College tuition and fees have been rising more rapidly 
than household income over the last two decades, and it is becoming 
more and more difficult for students and their families to afford these 
costs.
  We know that student loan debt has reached record levels. College 
seniors owed an average of $25,000 in student loan debt upon graduating 
in 2010, with a total loan debt reaching $1 trillion. This is what we 
are dealing with.
  I know when I had student loans I paid them off, and, Mr. President, 
you will be happy to know that I met my husband right after I had paid 
off my loans and he still owed over $20,000 in student loans, but I 
married him anyway. I have had firsthand experience in what it is like 
to pay off these loans but never in these amounts our students today 
are facing. While it is normally good to be above average, my home 
State is, unfortunately, above average in student loan debt. We rank 
fourth in the Nation. The average Minnesota student graduates from 
college with more than $29,000 in loan debt.
  As college costs skyrocket and student loan debt climbs, we have to 
consider what this means for students today and what effect this will 
have on our future. At a time when our global economy demands more of 
our workforce, we must focus on the foundation of our future 
prosperity, and that is education, particularly in science, technology, 
engineering, and math. To advance in those fields, you need at least a 
2-year degree or a 4-year degree. We know that. We must do more to 
expand higher education opportunities and make college affordable for 
our students. It is one of the best investments we can make in the 
long-term success for America. That is because education doesn't just 
pay off for students, it also pays off for our country in the form of a 
skilled workforce and a competitive economy.
  We have seen this in my own State, where we are home to one of the 
best skilled, most educated workforces in the country. That is the 
reason we are first per capita for Fortune 500 companies. I can tell 
you it is not the weather. These companies did not elect to move to 
Minnesota and to stay in Minnesota because of our winters. They came in 
large part because of the educated workforce, because we had people who 
could do the jobs and create the inventions. At 3M, Minnesota Mining 
and Manufacturing, they have as many inventions as they have employees. 
They average one invention for each employee. That is a fact. Look at 
the numbers. Why is that? Because we have the educated workforce to 
fill those jobs.
  We also know that students today, both those in college and those who 
are considering college, face many unexpected obstacles, including the 
pressure to pay for higher education. As I mentioned, when I visited 
students at the University of Minnesota and also Minnesota State at 
Mankato, I heard firsthand about their experiences and how hard they 
were working to get those degrees. These students face many hardships 
and many sacrifices, but they continue to move forward and they are 
determined to get their education. The reality is that students can 
work, save money, and be totally responsible about saving for and 
paying for college, but life can bring unexpected challenges, and 
students need help through access to low-interest loans. That is all we 
are talking about here, low-interest loans.
  Interest rates on Stafford student loans are set to double from 3.4 
percent to 6.8 percent on July 1 of this year. Unless Congress 
intervenes, 7 million students will see higher interest rates on their 
student loans--a dramatic increase in the interest rate that does not 
make sense at a time when the economy is still struggling to recover 
and students are facing ever higher college costs and young graduates 
are having a hard time finding jobs. I know how valuable these loans 
are to students, and that is why I am a cosponsor of the Student Loan 
Affordability Act, which would prevent the rate hike and ensure college 
remains affordable. That would affect this doubling of the interest 
rate for, in my State alone, 200,000 students. Think what we want those 
200,000 students to do. We want those students to be out there 
inventing the next Post-it note for 3M. We want them out there 
inventing the next pacemaker. We want them out there inventing the next 
Google. That is what this is about. That is how our economy has run. We 
are a country that makes and invents products, makes them and exports 
them to the world. The only way we do that is with affordable 
education.
  I have heard from hundreds of Minnesotans who say the costs are 
putting a strain on their families and making college seem out of 
reach. This is unacceptable, and we must act now.
  I know this firsthand, as I explained, not only from what I have seen 
in my State, what I have seen in the interrelationship between 
education and business, but in my own life. My grandpa was an iron ore 
miner. He worked 1,500 feet under the ground in the mines in north 
Minnesota. He never graduated from college. He never even graduated 
from high school. He saved money in a coffee can in the basement of 
their little house, this small house where they literally only had a 
shower in the basement. He saved money in that coffee can to send my 
dad and his brother to college. They were the first in that family of 
Slovenian immigrants--the first to go to college. They went to college. 
My uncle

[[Page 6093]]

became an engineer living in Rochester, MN. My dad went to the 2-year 
junior college, got a degree from what is now Vermilion Community 
College, then went on to the University of Minnesota, got his 
journalism degree, joined the AP, and then went on to the Minneapolis 
Star and Tribune, where he became an award-winning journalist. He 
traveled the world. He got to interview everyone from Ginger Rogers to 
Mike Ditka to Ronald Reagan. That is my dad's life, and it all started 
because his parents believed in education but, most importantly, his 
country believed in education--the United States of America. That is 
what this issue is about. It is about progress, it is about families, 
and it is about moving this country forward.
  Mr. President, I yield the floor.
  The ACTING PRESIDENT pro tempore. The Senator from Minnesota.
  Mr. FRANKEN. Mr. President, we just passed the deadline for students 
to decide where they are going to college this fall. This is one of the 
biggest financial decisions students will ever make. Nationally, 
student loan debt is over $1 trillion. It is higher than credit card 
debt. Over 60 percent of the class of 2010 graduated with outstanding 
student loans, college graduates. In Minnesota we are fourth in the 
country for the level of debt college graduates take with them. It is 
$29,000. This is hurting us as a nation in competition with other 
countries. It was not too many years ago that the United States was No. 
1 in the world in the percentage of its adult population that had 
graduated from college. Now we are something like 16th. That is going 
to hurt us.
  We have to do something about student debt. Behind every one of these 
statistics, there are stories. I had students from the board of MNSCU--
it is a Minnesota organization of colleges and universities--in my 
office, and there must have been about 15 or 20 of them. I said to 
them: How many of you work at least 10 hours a week while going to 
school? All of them. How many of you work 20 hours a week? Most of 
them. How many of you work at least 30 hours a week while going to 
school? A lot of them. How many of you work 40 hours a week while going 
to school? How many of you work full time while going to school? A few 
of them, a number of them. That is no way to go to school.
  Time after time when I talk to kids, I hear their stories.
  Mike Flannery is a graduate of Hennepin Technical College. He was 
forced to take out private student loans because Federal loans were not 
enough to pay for his college costs. He graduated from his associate's 
program with a total debt of $34,750. Michael is now struggling to deal 
with this massive debt load, and he told me he will likely have to drop 
out of his summer coursework due to college costs. He currently owes 
$45,250 and is still working toward his bachelor's degree.
  No wonder it takes our students 6 years to graduate--or longer. It is 
now not really a question; you have to graduate from college or at 
least get a 2-year degree to get a good-paying job in this country. In 
the next 7 years, 70 percent of jobs in Minnesota will require some 
type of postsecondary credential. Yet right now only 40 percent of 
working-age Minnesotans have one.
  If we are going to compete with other countries, we have to do 
something about this. What can we do? We have to get long-term costs 
under control. There is a lot to do there, but that is the long term. 
In the short term, at least we should do no harm. On July 1 Stafford 
loans, subsidized Stafford loans are set to double, from 3.4 to 6.8 
percent. That is unconscionable.
  This legislation was written in 2007, and that said it would double. 
If you look at interest rates, what they have done from 2007 to now, 
they have just shot down. This makes no sense whatsoever. This is going 
to affect over 7.5 million students nationwide, over 200,000 in 
Minnesota. If we fail to take action, this will cost every student in 
Minnesota about $1,000 in increased loan costs over the life of the 
loans. That is real money.
  We have an offset here we have tried to do. It is about S 
corporations. I don't want to get into the details of this. Basically 
what it is--let's say you have an S corp. You are a businessman, and at 
the end you take your salary and profits, and most honest businessmen 
pay taxes on all of that, including their withholding tax, their FICA. 
So you pay FICA on $107,000, approximately, in withholding tax. That 
pays into Social Security and Medicare. That is what FICA is.
  There are others who take advantage of a loophole. It is a loophole. 
It is legal. Let's say you are a businessman and you make $300,000. 
Well, you pay yourself a salary of $40,000 and you pay your FICA on 
that. Then at the end of the year you take out the profits. Now, these 
profits are not capital gains. They pocket the business's profits 
without paying payroll taxes. This is as clearly a loophole as anything 
that exists in our Tax Code. This is exactly the type of loophole that 
everyone, not just our friends on the other side of the aisle but that 
we are talking about taking out of the Tax Code so that we can maybe 
not raise marginal rates as much or, on the other side, they say we can 
take out the loopholes and lower it. If you can't get rid of this 
loophole, there is no loophole you can get rid of. This is so obviously 
a wrongheaded loophole. That extra money they take at the end of the 
year, it is not considered capital gains, it is income. They pay the 
top rate on that income--it is above the top rate. This offset would 
affect only people making over $250,000.
  We need to pass this legislation. This is a loophole we need to close 
because it just makes sense. It is a loophole that I don't think anyone 
can really defend. I really don't. I would love to hear someone try to 
defend this one. Again, I have heard over and over that we just have to 
close some loopholes, these crazy loopholes. This is the one we need to 
do so our kids can have a manageable debt, so they are not paying 
exorbitant costs on their debt.
  We have to be realistic about all of this, about what it takes to 
make it in this country. You need a college education or you need some 
postsecondary education. We have a skills gap in this country we need 
to close. Kids are borrowing and borrowing, and we are doing this 
generation a disservice. We have to look at reality.
  I heard Mitt Romney the other day in Ohio. He said to kids: Look, 
take a chance on yourself. Borrow money from your parents to start a 
business.
  That is not what is happening in this country. Kids cannot accumulate 
an average of $29,000 in debt and still be able to borrow from their 
parents. If they could borrow from their parents, they wouldn't have an 
average of $29,000 in debt; they would be borrowing from their parents.
  The reality is we are putting a burden on our children that we should 
not be putting on them. We should close this loophole that there is no 
rhyme or reason for so these students can be paying a reasonable 
interest rate and not some exorbitant interest rate. This is just 
common sense.
  I urge my colleagues on both sides of the aisle to vote for this bill 
and then we can move on to some other things.
  Mr. LEAHY. Today the Senate will vote on a vital piece of legislation 
that I am proud to cosponsor, to prevent the rise in interest rates on 
need-based student loans. Without action, millions of students across 
the country will see their interest rates double on their subsidized 
Stafford loans on July 1. At the very least, these students deserve a 
debate on this vital pocketbook question that affects millions of young 
Americans and their families.
  I have always strongly believed in the importance of a college 
education. I was the first in my family to have the opportunity to go 
to college. Every young person should have the chance to pursue higher 
education. Education is a path out of poverty, a road to personal 
growth, and an access ramp to professional accomplishment and economic 
security. Everyone wins when access to education expands.
  It should go without saying that student loan costs should not rise 
so high that students cannot repay. Yet in recent years, average 
college tuition rates have increased faster than inflation, far 
outpacing student financial aid. Since 1985, the cost of attending 
college has increased by 559 percent,

[[Page 6094]]

and last schoolyear alone, instate tuition and fees at public 4-year 
institutions averaged 8.3 percent higher than the previous year.
  I hear from Vermonters constantly about their struggles to afford 
college and their concerns about student loan debt after they graduate. 
Skyrocketing tuition is making it increasingly difficult for families 
to afford higher education. Many students are forced to take on 
significant debt, and too often they are not able to complete college 
because of soaring costs. For those students who do go on to graduate, 
record student loan debt has made getting ahead in today's job market 
next to impossible for many students. Unfortunately, along with the 
pressure from student loan debt has come an increase in default rates 
among borrowers, which will affect a student's financial stability for 
decades.
  Especially during these difficult economic times we need to be doing 
more to address the rising costs of higher education and the growing 
need for student financial aid. We have made significant investments in 
higher education and making college more affordable in recent years 
through historic investments in the Pell Grant Program, moving to a 
universal system of direct loans, and through the President's recent 
Executive order to reduce monthly payments for low-income borrowers. 
While these measures have certainly helped students, more must be done 
to ensure every American has access to a college education.
  While there is agreement on the need to prevent the interest rate 
increase, division remains on the way to finance the yearlong 
extension. The House passed a bill largely along partisan lines that 
would fund the student loan measure by eliminating the Prevention and 
Public Health Fund, created under the affordable care act. Prevention 
funding is vitally important in helping to lower health care costs and 
improving the health of Americans through chronic disease screenings, 
tobacco education, and immunization programs. An estimated 15 percent 
of college seniors have chronic diseases and could benefit from this 
funding. We should not force on students a choice made by Congress, not 
by students, between disease prevention and lower interest rates.
  The solution we offer is far better for students and for the Nation. 
The bill to which I hope we proceed today would prevent student loan 
interest rates from doubling by closing a loophole in the Tax Code. 
Right now, certain businesses can avoid paying employment taxes on 
their employees' paychecks. This measure would ensure that businesses 
employing individuals making over $250,000 would be subject to the same 
Medicare and Social Security taxes every business must pay. This is a 
commonsense reform that we should all support.
  Each opportunity for a young American to earn a college education is 
also an opportunity for the Nation's future. Our country's ability to 
compete in the global marketplace in the future depends on our 
children's ability to finance their education. This does not need to be 
a partisan issue and should be one where we can find widespread 
agreement.
  We must not tell the 7.4 million students who rely on subsidized 
Stafford loans that their interest rates will double because protecting 
a tax loophole is more important than their ability to afford college. 
I urge every Senator to help us move ahead today to support our 
students, their futures, and our country's future.
  I suggest the absence of a quorum.
  The ACTING PRESIDENT pro tempore. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. HELLER. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The ACTING PRESIDENT pro tempore. Without objection, it is so 
ordered.
  Mr. HELLER. Mr. President, I rise in support of efforts to prevent an 
increase in the student loan rates.
  For millions of Americans, education is the key to success and a 
better future for themselves and for their families. Workers with a 
bachelor's degree today earn about 70 percent more each year than those 
with only a high school diploma. We all want a better life for our 
children and for our grandchildren, and for many of them, a college 
education is part of achieving that goal.
  However, higher education carries an increasingly substantial 
pricetag. One of my children has already completed her higher 
education, both my sons are currently in college, and my youngest is 
preparing for her posthigh school education. I know firsthand the 
financial strain on both the college students and their families.
  The inflation-adjusted cost of college has almost tripled over the 
last 25 years, while median family income over the same period of time 
has risen only about 10 percent. Fees keep rising rapidly, soaring 8.3 
percent last year at public universities and 4.5 percent at private 
institutions. In 2009, more than half of all public college graduates 
were in debt, with an average loan burden of nearly $20,000. For 
private college graduates, the percentage and amount of debt is even 
greater. The loan burden itself is substantial, and the last thing 
graduates need to worry about is high interest rates on these loans.
  I was proud to vote for the initial efforts to keep student loan 
interest rates low back when I was serving in the House in 2007. Now I 
am a proud cosponsor of the Interest Rate Reduction Act which has been 
offered by my friend, the Senator from Tennessee, Mr. Alexander. This 
legislation prevents student loans from doubling from 3.4 percent to 
6.8 percent, and I truly hope Congress will be able to come together 
with a bipartisan agreement soon to prevent this increase from going 
into effect on July 1.
  While student loan rates should be addressed, I am even more worried 
about the overall economic climate facing college grads. Recent reports 
found that more than half the bachelor degree holders under the age of 
25 last year, which was 1.5 million young Americans, were jobless or 
underemployed. Of the 1.5 million languishing in the job market, half 
were underemployed. These young would-be professionals are either 
unemployed and unable to start paying their loans or have a job that 
may only provide enough for them to barely scrape by paycheck to 
paycheck. Instead of becoming the workforce of the next generation, the 
majority of recent graduates are finding their personal lives and 
finances mired in this ailing economy. Parents who have been laid off 
or who have seen their savings diminish have not been able to help 
their children through their education as they may have planned or 
wanted to. Our children and grandchildren are paying the price for 
Washington's failure to lead our Nation out of this economic crisis.
  Addressing student loan rates is important and we need to accomplish 
that work promptly, but our work for America's colleges students and 
recent graduates is far from over. Congress should be doing something 
every day to provide more stability and certainty for businesses so 
they will create jobs and hire these graduates. We need to pass a 
budget and review expiring tax provisions. We need to get bureaucratic 
redtape out of the way and let American job creators do what they do 
best. Let's not put off until tomorrow what we can do today to make 
sure good-paying jobs will be available for graduates who have worked 
so hard to provide for a better future and let's pass a bipartisan 
measure that keeps student interest rates low.
  Thank you. I yield the floor and suggest the absence of a quorum.
  The ACTING PRESIDENT pro tempore. Will the Senator suspend his 
request?
  Mr. HELLER. I will.
  The ACTING PRESIDENT pro tempore. The Senator from Nebraska.
  Mr. JOHANNS. Mr. President, I rise to speak about the issue that is 
currently under debate; that is, student loan interest rates.
  For many students across this great country, the month of May marks 
the end of the school year and, for some, it means graduating after 
years of hard

[[Page 6095]]

work and moving on to another chapter in their life. Americans have 
always been people who celebrate hard work and the doors that hard work 
open for all of us.
  Our country was founded on the promise that people could come here to 
find the opportunity to realize their dreams. So one of the most 
devastating consequences of the recent economy is that college students 
are beginning this new chapter in their lives when opportunities are 
harder and harder to come by. Sadly, today's college graduates are more 
likely to end up unemployed or underemployed and struggling with 
student loan debt at the same time. They are more likely to end up with 
those circumstances than they are to land their dream job.
  Unfortunately, college costs have been increasing faster than the 
cost of living. Sixty-five percent of graduates who got a bachelor's 
degree in 2010 graduated with debt. So as our economy continues to lag, 
stopping interest rates on subsidized Stafford student loans from 
doubling could provide much needed relief. That is why I am a cosponsor 
of legislation introduced by my colleague Lamar Alexander which extends 
the current 3.4-percent interest rate for an additional year. It needs 
to be done.
  It cannot be denied that access to education is imperative to 
ensuring a prosperous future for Nebraska's young people and for all 
Americans. It should be our goal to foster an economic atmosphere where 
jobs will flourish, our economy thrives, and opportunities abound for 
young people and, for that matter, for all Americans. That is why I am 
so disappointed that today we will vote on a bill that takes such a 
different approach to paying for the student loan interest rate 
extension.
  The bill we will vote on taxes small businesses and raids funds that 
would otherwise go to shore up the Social Security and Medicare trust 
funds. Providing relief for students, protecting seniors' benefits, and 
fueling our Nation's job engine should not be mutually exclusive goals. 
We should not be pitting one sector of our population against another. 
Yet that is what we will do later on today.
  This bill sacrifices one of those goals I just mentioned and puts 
another in jeopardy to achieve a third. I believe that is 
counterproductive. Why? In part because the future of our young people 
is so dependent on the availability of jobs in America.
  This bill would raise taxes on job creators at a terrible time. The 
U.S. economy only grew by 1.7 percent in the last year, and our 
unemployment rate has been over 8 percent now for 39 consecutive 
months. Taxing job creators has a chilling effect on hiring. It isn't 
straightforward to promise students the American dream while making it 
harder for them to get a job--often the first step toward realizing 
their dreams.
  The bill is also enormously unfair to seniors. By diverting tax 
revenues that would otherwise go to Social Security and Medicare, it 
ignores the warning flags we just received yet again about these 
programs. A recent trustees' report verifies that both these programs 
are on unsustainable paths. Medicare is projected to be insolvent by 
2024 and Social Security by 2033--two dates that are well within sight. 
But instead of helping to strengthen these programs for the future, 
this bill spends the money elsewhere. The legislation ignores reality 
and, sadly, that has been all too familiar.
  The health care law also siphoned funding from Medicare to the tune 
of $\1/2\ trillion. This money was used to pay for new entitlements in 
the law, not to extend the life of Medicare. The law's supporters have 
sometimes claimed it somehow did both--that magically we could count 
the same dollar twice--but anyone who looked at that disagreed with it, 
and basic math tells us we can't save and spend the same dollar two 
times. That was just one of many budget gimmicks used to mask the true 
cost of the health care bill.
  Student loans help shoulder the massive cost of the health care law 
as well. That law, interestingly enough, nationalized the student loan 
industry, generating $60 billion over the decade, according to the 
Congressional Budget Office. But instead of using that money to address 
the doubling of student loan interest rates that was on the horizon, 
Congress and the President spent a portion of that money to help pay 
for the health care law--simply amazing. It is just one more example of 
a government that claims to know best when their only remedy is to rob 
from Peter to pay Paul. Sadly, the misguided government solution we 
will vote on today will be counterproductive for our job creators, for 
our economy, and for our Nation's job seekers, our soon-to-be 
graduates.
  But don't take my word for it. There is a long list of organizations 
representing millions of employers and hard-working employees sounding 
an alarm over the tax increase being proposed in the bill we will vote 
on today. They are the people who build our homes, fix our air-
conditioners, run the corner convenience store, own restaurants, print 
the flyers we distribute and the church bulletins we receive on Sunday. 
They all say the pay-for in this bill is bad policy. They don't buy the 
notion that it is a simple tax clarification. They identify it in plain 
English as a permanent payroll tax increase.
  They go on to say in a letter to Senate leaders that a payroll tax 
increase should not be diverted from Medicare and Social Security to a 
temporary program. That letter, dated May 3, 2012, to Senators Reid and 
McConnell and signed by dozens of organizations is in my hand and was 
printed in yesterday's Record.
  Senator Alexander has proposed a good option that doesn't slap the 
job creators with a tax increase and doesn't divert funds that would 
otherwise go to Medicare and Social Security, and I support his 
proposal. I would also be open to supporting other pay-fors other than 
the irresponsible one we will face today. It is time to look for 
practical solutions that can actually pass the Senate and help the 
American people. Americans are getting sick and tired of election-year 
voting where we face legislation that we all know is designed to fail 
with this singular focus of generating good campaign talking points. 
While extending the student loan interest rate is important, a 
prosperous future depends on more than just that low interest rate. 
Young Americans would have greater prospects for the future in an 
economy that generated jobs and its growing income. The budgets would 
be less drained if the price of gas and health insurance didn't 
continue to escalate, and they would have more stability down the road 
if their future wasn't threatened by strained entitlement programs and 
a Federal debt that is now larger than the entire Nation's economy.
  Lately, instead of solving these problems, legislation simply looks 
for yet another scapegoat, another political gotcha, a bill that is 
designed to fail to get a 30-second spot. Here in the Senate we should 
not be in the scapegoat- or gotcha-finding business. We should be in 
the solution-finding business. That is why I am proud to cosponsor 
Senator Alexander's legislation that does the right thing for our 
country's students. This bill provides relief for students during a 
difficult economic time, and it uses money from a fund created from the 
health care law to pay for the extension. Identical language has 
already passed in the House, and it is here for the Senate to consider.
  The President has already signed legislation into law using this very 
health care fund as an offset. The President even included cuts to this 
fund in his own deficit-reduction proposal. But now, when it is 
politically expedient to oppose those cuts, he has conveniently changed 
his mind. Well, these flip-flops don't go unnoticed by the American 
people.
  I hope we can consider Senator Alexander's legislation soon and the 
President will reconsider his threat to veto it. There has been a lot 
of finger pointing on this issue, but in reality everybody agrees 
interest rates on the Stafford loan should not double when the economy 
is struggling. The only disagreement is over how to pay for the relief. 
It is unfortunate that an area

[[Page 6096]]

with so little disagreement has yet again morphed into a political 
football.
  Sadly, with this being a Presidential election year, I fear there 
will be more of this political gamesmanship. But I stand ready to work 
with anyone interested in solving the problem.
  I yield the floor, and I suggest the absence of a quorum.
  The PRESIDING OFFICER (Mr. Manchin). The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mr. CORKER. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. CORKER. Mr. President, I rise today to talk about the student 
lending program that I understand we may be voting on a little bit 
later today. I want to first say, like my colleague, I have talked with 
a number of students in Tennessee and people who used to be students in 
college who have a tremendous amount of loan obligation they have to 
deal with. Our hearts go out to folks whose careers start with a large 
amount of debt, and we hear lots of stories about the size of this 
debt.
  So I want to start by saying that I certainly empathize with much of 
what is happening in the student lending program as it relates to the 
recipients on the one hand. On the other hand, as it relates to how we 
deal with this issue, which also relates to these young people--I mean, 
at the end of the day, these massive deficits we are piling up are also 
going to be an obligation to them in one form or another. I want to 
speak to that for one moment.
  First of all, I want to say that my friend from Tennessee, the senior 
Senator, has done as good a job as any of laying out what is driving 
tuition costs in the first place. The reason students are having to 
borrow so much money to go to college these days is due to what we have 
done in Washington. What I mean by that is if we look at the Medicaid 
Programs in West Virginia or Tennessee, what we have seen over the 
course of the last couple of decades is that Medicaid costs have been 
rising dramatically in our own States. Because State governments are 
forced to fund these huge Medicaid costs, they don't have the same 
resources available to fund public higher education.
  So what is happening is these State governments, which are compelled 
by us, by the way, to fund these Medicaid Programs--let me make a 
point. Most people realize that with the passage of the health care 
bill a couple of years ago, we are going to have upwards of 25 million 
more Americans across this country on Medicaid. That was the largest 
part of the health care expansion that took place.
  In my own State of Tennessee they have already projected over a 5-
year period that it is going to cost them over $1 billion to fund what 
this Congress mandated as it relates to health care just a few years 
ago. That is $1 billion that is not going to be available for higher 
education. So when we campaign around the country and talk about 
wanting to deal with student lending, I think we ought to be looking at 
Congress because Congress is actually the one driving the exorbitant 
tuition rates in the first place by these mandates that we are placing 
on State governments. It is kind of appalling.
  As a matter of fact, in our own State, at a time when Medicaid costs 
rose 15 percent, in order to make our State's budget balance the State 
legislature invested 15 percent less in higher education. Again, what 
is happening is young people--such as the ones who are sitting in front 
of me--are having to pay exorbitant tuition costs because the States 
around our country are not able to invest in higher education. 
Therefore, it is being sloughed off on the backs of students as they 
enter college.
  Let's talk about the loan program itself. First of all, a loan 
program that charges 6.8 percent, which is what the program is getting 
ready to do, loans money to all comers--in other words, everybody who 
comes to get a loan--and there is no collateral in place. It is not 
like a home mortgage where there is collateral. There is no 
downpayment. As we know, these loans don't begin to be repaid until 
years down the road. The U.S. Government is not even breaking even at 
6.8 percent. So this whole notion that this student lending program--
again, as part of the health care bill--was going to create $50 billion 
or $60 billion to fund a new health care entitlement was wrong in the 
first place. With the interest rate at 6.8 percent there is no way 
taxpayers are coming out even. It is not possible.
  As a matter of fact, CBO issued a report in March that said if they 
used fair accounting standards at the 6.8 percent level, the Federal 
Government was actually subsidizing student loans by 12 percent. So 
this whole notion of saying, well, the U.S. Government's borrowing 
costs is low, and therefore we ought to be making loans at 3.4 
percent--by the way, I would love for us to be able to offer rates as 
low as we can to students. But the fact is we are already losing money 
at the 6.8-percent level. There is no way, with no money down, no 
collateral, payments being made down the road, taking all comers, and 
default rates that will exist that we could possibly be coming out at 
6.8 percent. I think CBO has clearly stated that by virtue of the 
report that came out in March.
  Let me come up with a third point. What we are getting ready to do is 
to discuss a bill that spends $6 billion of our taxpayer money, and 
Congress is considering spending the $6 billion in this 1 year to give 
students who apply--futuristically, by the way. This has nothing to do 
with students who are already in college today and have student 
lending. But for this 1 year, for loan originations to student lending, 
we are going to keep the rate at 3.4 percent, which is going to cost an 
additional $6 billion this year.
  So what is Congress considering? Congress is considering paying for 
that $6 billion over the next 10 years. So instead of saying we are 
going to spend $6 billion and do what most Americans have to do on a 
daily basis--if we are going to spend a dollar this year, we have to 
save a dollar someplace else--what is Congress considering? Spreading 
the cost over the next 10 years. What is that going to do? Accumulate 
additional tremendous debt. What is that going to do for the students 
who are now seeking these loans? Candidly, it piles up additional money 
they are going to have to pay back.
  Let me close by saying this: I know this is campaign season. I know 
candidates on both sides of the aisle are around college campuses in 
this country talking to students about their future. What I find 
unbelievable--and I think these students, by the way, are a lot 
brighter than people give them credit for as they are campaigning 
around on college campuses. But, basically, I think these students 
understand that as politicians are going around trying to offer them 
deals, they understand that at the same time Washington is piling up 
tremendous amounts of debt on these students, and not only are they 
going to have their student loans to repay, but they are going to have 
all of the trillions and trillions of dollars of debt that Congress is 
adding on in order to curry favor with citizens of all walks of life in 
our Nation. That is what happened in Western democracies. We are seeing 
it play out right now in Europe.
  But what I think these students are quickly figuring out is that we 
are really not giving them anything. Basically, we are taking with the 
other hand. I think the numbers will carry this out. If, in fact, we do 
deal with this pending student lending program over the course of the 
next 6 weeks--and my guess is we may well do that--I hope we will be 
honest with these college students and at least pay for this 
expenditure by not spending money on something else so we are not, in 
essence, giving them something today but taking away something much 
bigger from them over the long haul.
  I yield the floor. I note the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mr. REED. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.

[[Page 6097]]

  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. REED. Mr. President, the vote we will take today will affect 
millions of Americans. If we do not enact legislation before July 1 of 
this year, approximately 7.4 million students will see the interest 
rate on their student loans double.
  Nearly 200 student government leaders, representing more than 2.5 
million college students across the Nation, have asked us to come up 
with a bipartisan solution to keep the interest rate from doubling this 
July.
  Hundreds of thousands of students, parents, educators, and concerned 
citizens have called and written to their Senators and Representatives 
with a simple message: Don't double the rate.
  For them, student loan debt is not a trivial matter. It is a matter 
of going to school, and it is a matter, ultimately, of the jobs they 
take and their ability to pay off those loans during their working 
life.
  Without action, students will pay, on average, an additional $1,000 
for every year they have to take student loans, if we let this rate 
double.
  Two-thirds of the class of 2010 graduated owing student loans, with 
an average debt of over $25,000. They are walking out of school with a 
degree and a huge debt. If we do not fix this problem, beginning today, 
that debt will be larger for their successes in the years ahead.
  Student loan debt collectively has passed the $1 trillion mark--
exceeding credit card debt. In fact, there are some who speculate this 
is the new bubble that is coming upon our economy. This is a serious 
issue.
  The good news is that there seems to be for at least the principle of 
preventing this increase--an emerging bipartisan consensus that we 
should not allow the rate to double. The bad news is that my colleagues 
on the other side have chosen to use the student loan interest rate as 
another opportunity to attack health care. They have proposed to pay 
for the extension by cutting funds to the Prevention and Public Health 
Fund, reducing access to immunizations and services that seek to 
prevent cancer, diabetes, heart disease, to name a few.
  The President has already said he would veto this attempt to pit 
health care against education--health care, which benefits all, but 
particularly benefits those low-income and middle-income American 
families and, of course, these education programs that are a lifeline 
and a mainstay for middle-income Americans.
  The other aspect of attacking this prevention fund is, in the long 
term, if we are ever going to get our hands around the cost of health 
care in this country--and both sides recognize this is one of the 
critical obstacles we face in the future--we have to have better 
prevention. It is difficult to understand how people can say: Let's not 
do prevention, but we have to cut health care costs. If we could have 
an effective prevention program, we could, indeed, over years, and with 
increasing success, reduce or at least begin to flatten that proverbial 
health care cost curve.
  It is interesting to note, the other side is proposing to use health 
care to pay for this proposal to help middle-income families, but they 
do not always insist on paying for everything they want to do. They 
will, frankly--and, I think, eagerly--extend the Bush tax cuts without 
any pay-for. The House recently passed the so-called Small Business Tax 
Cut Act with no offsets. And that costs $46 billion--nearly enough to 
pay for the student loan interest rate at 3.4 percent permanently.
  Following this logic, students and their families across the country 
are probably wondering: Well, why isn't the risk of doubling their 
interest rate treated the same way as benefiting the wealthiest 
Americans through tax cuts and businesses through tax cuts? Don't they 
count as much? Shouldn't they count as much?
  We propose to pay for this 1-year extension by closing an egregious 
loophole in the Tax Code that has enabled certain high-wage earners to 
avoid paying their fair share into Social Security and Medicare by 
misclassifying their wages as profits through subchapter S 
corporations. It is a very small subset of corporations that are doing 
this, and our proposal is targeted.
  This is not the small manufacturing plant that is organized as a 
subchapter S corporation or the pharmacy or the lumber dealer. These 
are consultants, these are high-paid attorneys, these are professionals 
who have chosen to put between themselves and their company or their 
partnership in another entity purely for the purpose of minimizing 
their payroll tax exposure. That is a loophole that should be cut 
regardless of other measures we are considering.
  Essentially, this is a very small group of people, as I said. In 
order to be subject to this proposal, you would have to have 75 percent 
or more of your gross revenues from professional services. This does 
not apply to the manufacturer or the merchant. It is lawyers, 
accountants, lobbyists, and similarly positioned individuals. And it is 
further restricted to only those who earn more than $250,000 filing 
jointly. So this is not the struggling underpaid professional. These 
are people who are doing reasonably well in this very complicated and 
competitive society.
  According to the Joint Committee on Taxation, in 2009 about 15 
percent of all S corporations were service businesses as defined in 
this bill. Yet this small subset is responsible for billions of dollars 
in lost revenue to Medicare and Social Security.
  In a 2009 report, the Government Accountability Office found that in 
the 2003 and 2004 tax years, individuals used this loophole to 
underreport over $23 billion in wage income.
  This is a loophole that should be closed. I hope my colleagues on the 
other side of the aisle will take a serious look at it and join us in 
supporting this bill.
  We have 54 days to prevent the interest rate from doubling on 
subsidized student loans. We have no time to waste.
  Mr. President, with that, I yield the floor.
  The PRESIDING OFFICER. The Senator from Iowa.
  Mr. HARKIN. Mr. President, in a little over a half an hour we will 
have a vote on whether we are even going to proceed to the bill that 
will keep interest rates on our subsidized Stafford loans at 3.4 
percent for the next year or whether they will go up double on July 1.
  This is just a vote on going to the bill. For the life of me, I 
cannot understand why the Republicans do not even want to go to the 
bill. Well, perhaps they are afraid if the vote really comes down to 
the bill itself and the, quote, offset, that maybe some of my friends 
on the other side of the aisle will think that students may be a little 
bit more important than a few wealthy people in this country who are 
not paying their fair share of taxes. But they are going to hide behind 
this motion to proceed. So that is what the vote is at noon. Are we 
going to even go to the bill so we can debate it, offer amendments, 
vote it up or down? Republicans do not even want to go there. They do 
not even want to proceed to the bill.
  They have clouded it up in a lot of rhetoric about offsets and how we 
are going to pay for this. It comes down to a choice. We have a serious 
offer, a serious offer, a serious offset, one which is widely 
recognized as a terrible loophole. By closing that loophole--which 
affects a microcosm of individuals in this country--we are able to pay 
for keeping the interest rate at 3.4 percent for another year.
  My friends on the other side of the aisle say, well, they want to 
keep the 3.4-percent interest rate, but they want to pay for it by 
eliminating--eliminating--killing the Prevention and Public Health Fund 
that goes to help make sure our kids do not get diabetes, to make sure 
we fight obesity, that we cut down on smoking in this country, that we 
make sure kids get their vaccinations--all the things that go to save 
us money in health care. That is the prevention fund. They want to take 
that money away from there. They want to end that program. That is 
their offset.
  Well, if that is what they want, fine. But let's get to the bill. If 
they want to offer that as an offset, fine, we will

[[Page 6098]]

vote on it. But they do not even want to go to the bill. Their 
priorities are not the students. Their priorities are protecting a 
small class of individuals in this country who use the Tax Code to 
avoid paying their fair share of Social Security and Medicare taxes.
  We have heard all about: job creators, job creators; oh, we Democrats 
are going after these job creators. Well, the offset we have only 
affects subchapter S corporations, and only subchapter S corporations 
that have three or less stockholders--three or less. These are usually 
family members. They do not create any jobs--three or less. If you have 
five or ten or more, you are not covered by this; only if you have 
three or less, and only--only--if you have more than $250,000 a year in 
income. It is very narrowly drawn, very narrowly drawn. But the Joint 
Tax Committee scores this saying that over 10 years, by closing this 
loophole, we put $6 billion into the Medicare trust fund and $3 billion 
into the Social Security trust fund. So there is $9 billion there of 
money where people using this loophole--a few people using this 
loophole--are able to escape paying their share of Medicare and Social 
Security taxes.
  We are saying, let's close that loophole. Let's use those savings, 
put them into the Medicare and Social Security trust funds. Under the 
scoring system here, any revenue that is raised or mandatory cuts go to 
offset any increases in mandatory spending. Well, that is kind of 
budget jargon around this place. All it means is, by closing this 
loophole, we are able to do two important things: one, put more money 
into the Social Security and Medicare trust funds, and keep the 
interest rate for students at 3.4 percent for another year. Not a bad 
deal. I think a very good deal. But my friends on the other side are 
not going to go there. They want to kill the Prevention and Public 
Health Fund.
  Mr. President, how much time remains on our side?
  The PRESIDING OFFICER. The majority has 8 minutes remaining.
  Mr. HARKIN. Mr. President, I yield the floor at this time and reserve 
the remainder of our time.
  The PRESIDING OFFICER. The Senator from Tennessee is recognized.
  Mr. ALEXANDER. Mr. President, I can understand the Senator from 
Iowa's concern about the reduction of the prevention and public health 
fund, which he put in the health care bill. I know he has a 
longstanding interest in that subject.
  But let's be clear about this. It is not just Republicans who think 
that fund isn't the best use of taxpayer money; it is almost all the 
Democrats on that side of the aisle. In February, the Middle Class Tax 
Relief and Job Creation Act was passed. It was voted on in the Senate, 
and every Democrat except six voted to take $5 billion out of the 
prevention and public health fund we are talking about to pay for it. 
It is not only the Democrats on that side who have supported taking 
from the fund, it is the President of the United States.
  President Obama, in his Fiscal Year 2013 budget proposal, proposed 
taking $4 billion away from the fund, and then in his 2011 deficit 
reduction package, he proposed taking $3.5 billion from the fund. So it 
is a bipartisan proposal. We are a government that is borrowing 40 
cents of every $1 we spend. If we are going to spend some money, we 
have to save some money, at the very least.
  What we are proposing on the Republican side is the same goal the 
Democrats have, the same goal that both President Obama and Governor 
Romney have, which is to take this 3.4-percent interest rate for new 
subsidized loans, for 40 percent of students who take out loans, and 
extend it at that rate for another year, while we also take a look at 
what the long-term prospects could be. We agree on that. We agree that 
3.4 percent ought to continue to be the rate on new loans for another 
year. The President agrees. Governor Romney agrees.
  We don't agree with Senator Reid's proposal on how to pay for it. We 
have suggested paying for it by reducing spending in the health care 
law and reducing it in a way that all but six Democratic Senators have 
supported or at least from the fund they have supported reducing before 
and from the fund the President has supported reducing before.
  Why are we suggesting saving from the health care law? There is a 
reason for that. It is because those who passed the health care law are 
overcharging students on student loans in order to help pay for it. 
Here is why I say that. The government is borrowing money, according to 
the CBO and the way it scores student loan spending today, at 2.8 
percent and loaning it to students at 6.8 percent. The truth is, that 
6.8 percent is a pretty good interest rate for a student who is maybe 
unemployed today. My colleague from Tennessee, Senator Corker, was here 
talking about that earlier. There might be other ways of looking at 
this spending differently. But the way the Congressional Budget Office 
scores this spending today, it says the government is borrowing money 
at 2.8 percent and loaning it at 6.8 percent and that the government is 
making, in effect, a profit--that is my word--because the CBO says that 
based on the amount of money the government is receiving from the 
student loans, it makes a profit or a savings of $61 billion over 10 
years.
  What did our friends on the other side do with that $61 billion? The 
Senator from Iowa very carefully explained that yesterday. They spent 
it--all except $10 billion, which they used for deficit reduction. They 
could not keep their hands off it. They spent $8.7 billion of that 
excess money from student loans to help pay for the health care law.
  We are saying that if we are looking for money to keep the interest 
rate at 3.4 percent, if we are trying to help students, why don't we 
give back to the students the money we are taking from them to pay for 
the health care law. We are overcharging students, according to the way 
the CBO looks at the loans, by $8.7 billion to help pay for the health 
care law. We propose in our bill to freeze the rate at 3.4 percent, 
give the students back the money we are overcharging them, and use the 
excess money--over $6 billion--to reduce the deficit, which we need to 
do at a time when we are borrowing 40 cents of every $1 we spend.
  That is what the Interest Rate Reduction Act I have proposed does. It 
freezes it at 3.4 percent and gives back to students the money the 
government is overcharging them on student loans to pay for it. That is 
the same bill the House of Representatives passed. If we can get a vote 
on that here and pass it in the Senate, we can send it to the 
President, and he could go around the country saying he has worked with 
the Congress and has produced a way to help students save money.
  The President needs to also say a couple more things. It is not much 
money--$7 a month on average student loans. But this is the political 
season, and students need to be aware of that. I have talked about 
tuition going up and student loans going up. But if we do what we have 
agreed we should do, what the House has already voted to do, and freeze 
this interest rate on 40 percent of new student loans at 3.4 percent 
for 1 year, it saves the average student on the average loan $7 a 
month. That is for 10 years. It adds up eventually to $830, but it is 
$7 a month. We should talk about the rest of the story too.
  Mr. President, how much time do I have remaining?
  The PRESIDING OFFICER. The Senator has 14 minutes.
  Mr. ALEXANDER. I thank the Chair. The rest of the story is about why 
tuition is going up. As a result, why are loans going up? There are 
several reasons. The main reason, which every college president and 
every Governor knows--and the Presiding Officer who was the Governor of 
West Virginia--college tuition is rising at public universities and 
community colleges across the country, where three out of four of our 
students go, is because of Federal Medicaid mandates on States that are 
soaking up dollars that would otherwise go to the University of West 
Virginia, the University of Tennessee, the University of Iowa, and 
other public institutions. Every college President knows that and every 
Governor

[[Page 6099]]

knows that. That didn't just start 3 years ago. That was going on when 
I was Governor 25 or 30 years ago. I even came to Washington and said 
to President Reagan: You take all of Medicaid and we will take all of 
kindergarten through the 12th grade education. We want out of this 
situation every year of having to use State dollars to fund one-third 
or whatever you think we ought to be paying for Medicaid.
  If we had made that swap 30 years ago, if the Federal Government had 
taken over all of Medicaid and the States had taken over all of 
kindergarten through the 12th grade education, the States would have 
come out about $4.5 billion ahead. If we made it today, if the Federal 
Government took all of Medicaid and the States took all of elementary 
and secondary education, the States would have $92 billion extra to 
spend. Where would it go?
  I know that a lot of it would go to education--maybe most of it--
especially to higher education and to public universities. The reason 
students are fasting and striking in California, when tuition is going 
up, is because California has reduced spending to its public 
universities by $1 billion since 2008. What the students don't seem to 
know is that the reason California has had to reduce spending to its 
public universities is because Washington has insisted that California, 
Tennessee, West Virginia, Iowa, and every other State increase their 
share of spending on Medicaid, and that soaks up the money that would 
otherwise go to public universities and community colleges.
  In my own State, last year, Medicaid spending was up 16 percent and 
higher education spending was down 15 percent. What was the result? Up 
went tuition 8 percent and up went student loans. So it is a good 
thing, I suppose, that Democrats and Republicans and Governor Romney 
and President Obama have all agreed that for 1 year we want to freeze 
the rate on new subsidized Stafford student loans at 3.4 percent and 
save the average students who get those new loans $7 a month.
  What students and families who are struggling to pay for college need 
to know is that until we repeal this health care law or until we repeal 
these Medicaid mandates on States, those college tuition rates will be 
going through the roof. The Kaiser Family Foundation says States, which 
now spend about 1 out of every 4 State tax dollars on Medicaid, will 
see a 29-percent increase on average in the next year as the health 
care law goes into effect. Where do you suppose that 29 percent 
increase will come from? It will come from the State budgets. The 
Governor will sit there and choose primarily between spending for 
community colleges and universities. More of it will go to Medicaid and 
less to community colleges and universities. So their quality will go 
down and their tuition will go up. The students will be fasting in 
California and they will be thinking it is their legislators in 
California who are the problem, while it is really the legislators in 
Washington, DC who are the problem because they are the ones imposing 
the Medicaid mandates on states.
  I have tried to be fair in saying this problem is not an invention of 
President Obama's and of the new health care law; this has been a trend 
for 25 or 30 years. But President Obama and the new health care law 
have made this problem worse. This debate, while it may save students 
$7 a month in interest payments and while we think the fairest way to 
do it is to take the money we are overcharging them and give it back to 
them, this debate at least highlights the issue I hope I hear the 
President and Governor Romney talk about this fall, which is about who 
is responsible for rising college tuition and student loan debt.
  I believe the main person and main group responsible are those who 
insist on continuing Medicaid mandates on States that soak up the 
dollars that should be going to public colleges and universities.
  I yield the floor and reserve the rest of my time.
  The PRESIDING OFFICER. The Senator from Iowa.
  Mr. HARKIN. Mr. President, how much time do we have?
  The PRESIDING OFFICER. Eight minutes. The other side has 9 minutes.
  Mr. HARKIN. Mr. President, I always enjoy engaging in good debate 
with my friend from Tennessee. He is a very thoughtful Senator, a very 
thoughtful member of our Committee too, and a good friend. Having been 
a former Secretary of Education, he has a depth and wellspring of 
knowledge about education, and I respect that greatly.
  We obviously see things a little bit differently, but that is the 
nature of the animal here. I say to my friend that without getting into 
a point-by-point rebuttal, I wish to make it clear the President did 
put in his budget taking some money out of the prevention fund. I 
assume my friend knows I was not much in favor of that proposal. Then 
it was used later on to extend the unemployment insurance and also the 
payroll tax cut until the end of this year. That money was used for 
that. I was not very supportive of that. I thought we should have taken 
the money from elsewhere. At least the President has said that is it, 
no more. We will take a nick out of that prevention fund but no more. 
That is why he issued a statement of administration policy saying he 
would veto this bill if it had any cuts to the Prevention and Public 
Health Fund.
  I used the analogy a while ago that the cut the President proposed, 
which was supported on our side, to extend the payroll tax cuts to the 
end of the year, I likened that to taking a couple pints of blood--we 
can take a couple pints of blood and still get our health back and go 
on. The proposal of my friend from Tennessee takes all our blood or all 
the prevention fund money. When we do that, we are dead. That is the 
analogy I have used. They took a couple pints of blood, which I was 
opposed to, but the prevention fund is still alive and healthy and is 
doing its job. It is going to do even more of its job in the future, as 
long as we don't take any more money out of it, and the President has 
said he will not do that.
  I wanted to make that clear. That happened one time; no more. Even 
though Senators supported it on our side--and there were people who 
supported that on our side--they have said no more; we are not taking 
more out of that fund.
  Lastly, I cannot help but also talk about this $61 billion the 
Senator from Tennessee keeps talking about. As I said yesterday, he is 
right in one way; that we did spend it. The question is, What did we 
spend it on? Well, as I said, $36 billion went to increased Pell 
grants. I don't think my friend from Tennessee would want to cut Pell 
grants. I think he is a pretty good supporter of Pell grants. That is 
where $36 billion of that went. And $750 million went to the College 
Access Challenge Grant Program, $2.55 billion went to historically 
Black colleges and universities, and $2 billion went for community 
colleges. So my friend may be right. Maybe we could reduce those 
interest rates a little bit. But what that money is being used for is 
basically students.
  Now, I will be honest about this. Ten billion dollars went for 
decreasing the deficit. I don't think my friend from Tennessee would be 
opposed to that. And $9.2 billion went to other health care programs, 
including requiring dependent coverage in the health care bill. In 
other words, how many students now are covered under their parents' 
policies until they are age 26? They didn't have that before. Now they 
have it. So some of this money was used to invest in that or community 
health care centers. Yes, we did do that by providing some of the money 
from that--$9.2 billion of that--for some specific types of items in 
that health care bill.
  Lastly, Mr. President, I just have to ask a question. Are we having a 
health care debate here or an education debate? I thought we were 
talking about education. We are talking about whether student loan 
interest rates on subsidized Stafford loans are going to double on July 
1. Now it has morphed into some kind of big health care debate.
  I have heard it said that the other side wants to keep the interest 
rates at 3.4-percent for a year. OK, fine. The question is, How do we 
pay for it? That is really the question. We have offered

[[Page 6100]]

in good faith, I believe, a serious proposal: closing the loophole that 
affects a very small sliver of people in this country who are using 
this sort of a fog surrounding Subchapter S corporations to escape 
paying their fair share of Medicare and Social Security taxes.
  Yesterday, someone on the other side said: Well, we can audit them. 
We can do IRS audits.
  The IRS only audits one-half of 1 percent of subchapter S corporation 
filings. So if there is kind of a fog out there and I get to decide as 
a taxpayer, as a subchapter S corporation, whether I get paid or 
whether it is dividends, what am I going to say? Dividends. Because my 
odds are 95.5 percent that they are never going to audit me--95.5 
percent. Those are pretty good odds.
  That is why the Joint Tax Committee said that by closing this 
loophole--by closing this loophole--we save over $9 billion, put into 
the Social Security fund and Medicare fund, and at the same time be 
able to keep the interest rate for students at 3.4 percent. That is a 
serious offer. The offer from the other side is not serious. They want 
to kill the prevention fund. That is not serious at all, but that is 
where they are coming from.
  Well, I say let's have a vote. Let's at least move the bill. That is 
what the vote is at noon, is moving the bill, getting it out there so 
we can have a debate on the bill and how we pay for it. Obviously, my 
friends on the other side of the aisle don't even want to bring up the 
bill. They do not want to bring it up. They are going to vote against 
cloture, against bringing up the bill to even discuss it and vote on 
it.
  Mr. President, I will close by urging all Senators to support the 
cloture motion so that we can get to the bill and students and their 
families will know that we are serious about this and that on July 1 
their interest rates are not going to double on our middle-class 
families.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Tennessee.
  Mr. ALEXANDER. Mr. President, I appreciate the comments and the 
courtesies of the chairman of the Committee on Health, Education, Labor 
and Pensions, and I recognize his leadership and his interest in these 
subjects.
  The Senator asked the question: who connected health care to student 
loans? It was the Democrats who connected health care to student loans. 
Think about this. Here we were debating a new health care law a few 
years ago, and what happened? The Democrats--the majority--said: While 
we are at it, while we are supposedly fixing health care, we are going 
to take over the entire student loan program. We are going to take 
Arnie Duncan, who is a terrific Secretary of Education, and we are 
going to make him banker of the year, banker of the century, and we 
will put him in charge of making more than $100 billion in new loans 
every year to students all over America.
  So as a part of the health care law, they got rid of the student loan 
program, most of which was handled by people you would expect to be 
making loans--that is, banks--and put it all in the government. They 
did that on the theory that the banks were making too much money.
  It reminds me of people who think that if it can be found in the 
Yellow Pages, the government ought to be doing it. Autos, student 
loans--just put it all in the government.
  So if we are going to do that, if we are going to connect the two, 
student loans and banks--and then the Congressional Budget Office comes 
along and says: Well, OK, if the government takes over the student loan 
program, it will save $61 billion, that $61 billion ought to go to the 
students who are getting the loans. That is my view. That is our view. 
And the Congressional Budget Office estimates that if we applied that 
$61 billion savings to student loans, we could have reduced the 
interest rates to about 5.3 percent and save the average student $2,200 
over 10 years.
  So it wasn't anybody on this side of the aisle who suggested during 
the health care debate that we ought to suddenly say: While we are at 
it, let's take over the student loan program.
  All we are saying today is this: We agree with President Obama, we 
agree with Governor Romney, and we agree with the House of 
Representatives that the interest rate for new subsidized Stafford 
student loans should stay at 3.4 percent for the next 12 months. That 
will save the average student about $7 a month in interest payments. 
The only difference we have is how we propose to pay for it. The 
Democrats want to raise taxes on people and small businesses who are 
creating jobs while we are still in the midst of the greatest recession 
since the Great Depression. We say that since the government is 
borrowing money at 2.8 percent and loaning it to students at 6.8 
percent and since the Congressional Budget Office said there was a 
savings of $61 billion when the Federal Government took over the 
student loan program and that $8.7 billion of the savings went to pay 
for the health care law, we ought to take the money the government is 
overcharging students and use it to pay for keeping this rate lower for 
another year. That is what we Republicans are saying and is where we 
have a difference in opinion with the other side.
  So I hope my colleagues will vote no on the motion to proceed. We 
have a different proposal that we believe is superior and is the same 
as the one that passed the House. We would like a chance to offer the 
Interest Rate Reduction Act and give the students the benefit of our 
proposal, which will give the overcharged money back to them. We would 
like to have a vote on that.
  Therefore, I recommend that we keep the rate at 3.4 percent; that we 
use the money we recognize as the savings we are taking from students, 
by overcharging them for student loans, as the best way to pay for it. 
Hopefully, the majority leader will allow us to consider the Interest 
Rate Reduction Act that we have proposed.
  I thank the Chair, and I yield the floor.


                             Cloture Motion

  The PRESIDING OFFICER. Under the previous order and pursuant to rule 
XXII, the Chair lays before the Senate the following cloture motion, 
which the clerk will report.
  The bill clerk read as follows:

                             Cloture Motion

       We, the undersigned Senators, in accordance with the 
     provisions of rule XXII of the Standing Rules of the Senate, 
     hereby move to bring to a close debate on the motion to 
     proceed to Calendar No. 365, S. 2343, the Stop the Student 
     Loan Interest Rate Hike Act of 2012.
         Harry Reid, Jack Reed, Sheldon Whitehouse, Jeff Merkley, 
           Charles E. Schumer, Kay R. Hagan, Jeanne Shaheen, 
           Robert P. Casey, Jr., Kent Conrad, Sherrod Brown, John 
           F. Kerry, Dianne Feinstein, Mary L. Landrieu, Barbara 
           Boxer, Patty Murray, Bernard Sanders, Barbara A. 
           Mikulski, Richard J. Durbin.

  The PRESIDING OFFICER. By unanimous consent, the mandatory quorum 
call has been waived.
  The question is, Is it the sense of the Senate that debate on the 
motion to proceed to S. 2343, a bill to amend the Higher Education Act 
of 1965 to extend the reduced interest rate for Federal Direct Stafford 
Loans, and for other purposes, shall be brought to a close?
  The yeas and nays are mandatory under the rule.
  The clerk will call the roll.
  The bill clerk called the roll.
  Ms. SNOWE (when her name was called). Present.
  Mr. KYL. The following Senators are necessarily absent: the Senator 
from Illinois (Mr. Kirk) and the Senator from Indiana (Mr. Lugar).
  The PRESIDING OFFICER (Mr. Tester). Are there any other Senators in 
the Chamber desiring to vote?
  The yeas and nays resulted--yeas 52, nays 45, as follows:

                      [Rollcall Vote No. 89 Leg.]

                                YEAS--52

     Akaka
     Baucus
     Begich
     Bennet
     Bingaman
     Blumenthal
     Boxer
     Brown (OH)
     Cantwell
     Cardin
     Carper
     Casey
     Conrad
     Coons
     Durbin
     Feinstein
     Franken
     Gillibrand
     Hagan
     Harkin
     Inouye
     Johnson (SD)
     Kerry
     Klobuchar
     Kohl
     Landrieu
     Lautenberg
     Leahy
     Levin
     Lieberman
     Manchin
     McCaskill
     Menendez

[[Page 6101]]


     Merkley
     Mikulski
     Murray
     Nelson (NE)
     Nelson (FL)
     Pryor
     Reed
     Rockefeller
     Sanders
     Schumer
     Shaheen
     Stabenow
     Tester
     Udall (CO)
     Udall (NM)
     Warner
     Webb
     Whitehouse
     Wyden

                                NAYS--45

     Alexander
     Ayotte
     Barrasso
     Blunt
     Boozman
     Brown (MA)
     Burr
     Chambliss
     Coats
     Coburn
     Cochran
     Collins
     Corker
     Cornyn
     Crapo
     DeMint
     Enzi
     Graham
     Grassley
     Hatch
     Heller
     Hoeven
     Hutchison
     Inhofe
     Isakson
     Johanns
     Johnson (WI)
     Kyl
     Lee
     McCain
     McConnell
     Moran
     Murkowski
     Paul
     Portman
     Reid
     Risch
     Roberts
     Rubio
     Sessions
     Shelby
     Thune
     Toomey
     Vitter
     Wicker

                        ANSWERED ``PRESENT''--1

       
     Snowe
       

                             NOT VOTING--2

     Kirk
     Lugar
       

  The PRESIDING OFFICER. On this vote, the yeas are 52, the nays are 
45. One Senator announcing present. Three-fifths of the Senators duly 
chosen and sworn not having voted in the affirmative, the motion is 
rejected.
  The majority leader.
  Mr. REID. Mr. President, I enter a motion to reconsider the vote by 
which cloture was not invoked.
  The PRESIDING OFFICER. The motion is entered.

                          ____________________