[Congressional Record (Bound Edition), Volume 159 (2013), Part 8]
[Senate]
[Pages 12033-12036]
[From the U.S. Government Publishing Office, www.gpo.gov]




                             STUDENT LOANS

  Mr. MANCHIN. Madam President, we are talking about student loans. The 
thing I have found out working this in the amount of time we have been 
working it is we are all in the same position. We all want to help our 
students attain higher education, to be productive citizens, to live a 
better quality of life. We all know that is the most important thing we 
can do, and we are trying the best we possibly can to come up with a 
solution.
  We have what we call a bipartisan bill that we have all worked on. We 
have everyone's input. I respect everyone's position, and we are going 
to come to a comprehensive bill. I think under Senator Harkin from Iowa 
we will have a comprehensive bill that

[[Page 12034]]

looks at why the costs are so high and why college is so unattainable 
for so many families today. We have to tackle that problem.
  The problem before us now is this problem: How do we help the most? 
What we have before us is 6.8 percent if we do nothing, 6.8 percent 
across. I know some people have said it is better if the 6.8 stays as 
it is. I disagree.
  We have been working on this. Here is the difference. The 6.8 percent 
that is basically the cap right now--the old cap we had was 3.4 percent 
just for the subsidized. If we look at the portion of people who are 
subsidized, it is less than 1 million. If we look at the unsubsidized, 
it is less than 1 million. If we look at basically the subsidized and 
unsubsidized, that is more than 6.5 million. Our bill basically reduces 
that 6.8 rate down to 3.86 for this coming year. Rather than leaving it 
at 6.85, we have helped this many people who are basically needing this 
money in order to go to school. If we left it as it is, they would be 
paying the 6.8. If we only kept the 3.4, the subsidized loan, this is 
the amount of people we would be helping.
  So we come as a bipartisan group saying: How can we help the most? I 
think most of us agree with that. As we look further down these charts, 
we have also asked: Under current law, how much would the average 
dependent undergraduate repay? Under the bipartisan bill, we can see 
2013, 2014, 2015, 2016, which we have scored out, it would be about at 
3.86, 4.62, 5.4, and 6.2. At 6.8 across the board, if it would stay, 
there is a difference of savings of over $2,000. That we know.
  The other argument that has been used and the point that has been 
made is rates might go up. Yes, rates might go up. If they do go up, 
how much would you pay? This is worst case scenario. The bipartisan 
bill, over the 10-year period, and current law if it stayed fixed over 
10 years, it is a very small possibility it would go up, and that would 
be a $505 difference. The bottom line is we know this is a fact. This 
has been scored and that is where these rates are going to stay. They 
think that might be the worst-case scenario.
  Let me show the difference of what has happened. CBO has not had the 
greatest track record with scoring. In 2003, we were a little over 4 
percent. They projected interest rates for 10 years out. If we look at 
what they are projecting out for 10 years, it has about the same path 
as far as what actually happened under the rates. There is a big spread 
of money that would have been spent based on fixing the rate, let's say 
back in 2003, versus what was actually occurring. We are hoping we are 
able to continue that savings.
  We understand that what we are dealing with is an awful lot of help 
and safeguards that are built in for young students. The best safeguard 
we have built in is the IBR, income-based repayment. The IBR Program 
allows the student who has graduated with an exorbitant amount of 
debt--and finds a job that basically doesn't give them the type of 
money they would like--a cap on how much of their disposable income can 
be paid toward the loan. The cap is at 15 percent now, I believe, and 
is going to go to 10 percent. It is also based on the amount of years. 
After 20 years, they are done paying. If their income did not increase 
appreciably, they are only going to pay the loan back based on their 
income of 10 percent--10 percent of their disposable income. We think 
that is a tremendous savings.
  Most students who qualify for the subsidized loan get the Pell grant. 
They don't have to pay that back. As far as the subsidized loans, 
basically the taxpayers have invested in the students who qualify for 
those for the first 4 years of college, and that interest is not 
accrued. The interest does not accrue until they leave. Those are the 
things that have been built in that we think give the protections we 
want.
  If we do nothing, we save the students about $8 billion over 2013 
compared to $31 billion if we do something. If we are able to help this 
many students, that is equivalent to a $23 billion difference in 
savings, and that has been scored.
  I know we have talked about the accounting procedure. I know the 
Presiding Officer has worked very hard on this and understands it very 
well. I agree with you--if we could take every penny of profit out and 
make sure the students were getting the absolute lowest rate. I also 
know that basically market-driven rates--if we are going to go to 
market, which we are in this piece of legislation--and we look at the 
risk factors, defaults, and all that goes into that and score that 
normally under a market-risk value or market value, it would be 
different. They have shown that market value would be $95 billion we 
will be losing and that the taxpayers would be subsidizing. The way we 
are doing it now shows a profit of $184 billion.
  I am willing to work with the Presiding Officer to clear this up and 
get something more accurate of how we score and how we charge students. 
That is not what we have in front of us, and I think that is the 
difference. We are trying to move forward to get some certainty.
  We have a lot of students in West Virginia who are deciding whether 
they can go to college and, if they can, where do they go and what can 
they afford. This gives them the certainty I think they have been 
looking for and hopefully the certainty they definitely need. There are 
more than 8\1/2\ million undergraduate students who take advantage of 
the Stafford Loan Program every year and over 6.5 million of these 
students take both the subsidized and unsubsidized loans and that is a 
big change.
  Our colleagues on the other side, as we have been negotiating this, 
we talked to them about how we didn't want any profits whatsoever, and 
they agreed. The first bill that came from the House had $16 billion on 
top of what the base was at $184 billion. That has been taken out the 
best we possibly could to $700 million.
  When you think about how we are going to run a deficit this year of 
$740 billion just in our annual budgeting here in Washington--and we 
are talking about $714 billion over a 10-year period with over $1 
trillion. They said that is as close as they were able to come. Even if 
there is any of that, we are looking at--with this amendment Senator 
Harkin was able to put in--how we are able to see if that can be 
funneled back in and reduce the loans even further.
  I think we are doing everything we possibly can. There is going to be 
about $1.4 trillion in loans offered over the next decade. We pretty 
much know that. There is $140 billion of loans every year. As a matter 
of fact, student loans are now the second largest indebtedness we are 
carrying. It is the largest burden we are carrying next to a mortgage. 
It just surpassed credit cards. It is unbelievable. We have to get a 
handle on the cost of college.
  Current students and graduates are holding at $1.1 trillion in loans. 
The loans represent investments and will pay dividends in the form of 
higher earnings. The best investment a youth is going to make is an 
education, but if it becomes unobtainable, inaccessible, and 
unaffordable, it does them no good. We know that, and that is the 
balance we are trying to find.
  The average student loan debt--every one of these young students, 
when they get done with college--for those who graduated in 2011 is 
about $26,000 that everyone is leaving college with, on average, for a 
debt. There is only a small percentage of borrowers who have small loan 
balances, but 11 percent, or roughly 4 million people, owe $50,000 or 
more. It is truly unbelievable.
  I have heard everyone here give their reasoning for this, such as not 
having had good consultation, good advice or good fiscal planning, and 
that may be true. We can do much better to make sure the students are 
not taking loans that they can do without or maybe not take too much 
out.
  I appreciate the hard work and good faith that all of our colleagues 
on both sides of the aisle have been showing to reach this compromise. 
I know it is not easy for many, and I know everybody is going to have, 
hopefully, their say and their vote on an amendment or two if they wish 
to.
  At the end of the day, I believe we can walk away knowing we did 
better

[[Page 12035]]

today than doing nothing at all. I believe that. I believe I, the 
Presiding Officer, and all of our other colleagues are going to come 
back and work hard whether it is the remainder of this year or next 
year. Basically, we are going to get a program so that these young 
people can find college attainable again and affordable. That is what 
we have all been working on.
  The plan helps everyone and not just some. It lowers rates 100 
percent for all students. So everything we have in our compromised bill 
brings down those rates. It provides a long-term fix. We don't have to 
kick the can down the road. We know it is there. If we can find 
something better between now and 4 years, 3 years, 2 years or even 
before this year is up, then we are willing to go back and entertain 
that. We don't want to see loans that were supposed to help students 
move forward end up moving them back.
  I know what debt does; it will smother. My grandfather used to say: 
Indebtedness will make a coward out of you in the decisions you make 
when you are carrying so much debt. You will be robbing Peter to pay 
Paul just to survive.
  We have found ourselves with the sequester, and with everything else 
going on, we ask how we are going to make it. When you find yourself 
against a proverbial rock, if you will, you will do things you would 
never do normally.
  We are trying to find a way to move forward. It shows our students 
that the country believes in them and that we support their efforts to 
advance their education and reach for the American dream.
  When we, as Democrats, Republicans, and Independents, work together 
and have a real debate on a real problem--and this has been debated--we 
can come up with commonsense solutions that truly benefit all 
Americans. I believe we have done that. It is refreshing for such an 
important issue we have. We have put politics aside in the first and 
foremost thing we want to do--help the students. It doesn't matter 
whether we are talking about a Republican, Democrat or Independent, 
everybody had the same purpose. I thought it was refreshing to see 
that. We want to lower the rates for everybody. We want to help 
everybody, give them some certainty and make it affordable. I look 
forward to working in this more bipartisan atmosphere we have right now 
on many more subjects. I know we can when we put our country first. The 
right thing to do is to put our country first.
  We might be a ``D'' as a Democrat or we might be an ``R'' as a 
Republican, but we are always an ``A'' first, which is an American.
  With that, I think the students have been served. I think we will be 
able to give them consistency. This piece of legislation has been 
worked on hard. There has been a lot of input, and Senator Harkin did a 
yeoman's job on bringing some of the most important factors we had to 
the forefront and into the bill.
  With that, I yield the floor.
  The PRESIDING OFFICER. The Senator from Connecticut.
  Mr. BLUMENTHAL. Madam President, while my colleague from West 
Virginia is here, I wish to thank him for his leadership on this issue 
and for the very hard work he and other colleagues have devoted to this 
profoundly difficult, challenging but important issue.
  I rise with regret to oppose the compromise agreement that has been 
reached with the help of our colleagues from Illinois and Maine and 
across the aisle. It is a compromise, and compromises are to be sought 
in this day and it is bipartisan and that, too, is an objective. It is 
a bipartisan compromise, but the fact is, it is a bad deal.
  We can do better. We must do better. This Nation can do better. We 
have a moral and historic obligation to do better for the students of 
today and their brothers and sisters who will be following them over 
the next 10 years.
  This deal offers the illusion of lower rates in the short term while 
delivering higher rates, in some cases, in as little as 2 years from 
now. It forces students back into a system of market-based loans that 
have failed in the past and will fail in the future. It subjects 
students to economic uncertainties which are wholly unrelated to the 
actual cost of higher education.
  We know we need to reduce the cost of tuition and higher education. 
We know we need to address the overhanging $1 trillion-plus of debt 
that exists from past loans. This deal exacerbates the problem instead 
of easing the problem.
  Yes, it has caps on the interest rates students may pay, but they 
creep to more than double where student loan rates were at the 
beginning of this month. It has a low rate, but it is, in effect, a 
teaser rate. As the Presiding Officer said so well, it is a teaser rate 
that has nowhere to go but up. It lowers the deficit, yes, but it does 
so by having the Federal Government reach into the pockets of students 
and take billions more on top of the $51 billion already extracted in 
this fiscal year from them and from their hard-working parents.
  At the heart of this bill is a mistaken premise. It is the premise 
that it is OK to profit off the backs of students and that it is all 
right to regard students as a revenue source or a profit center. That 
premise reverses a historic promise, which is: We will invest in 
students, not profit from them. We will support their efforts to gain 
higher education so they can better themselves and better the country 
with the skills and education they acquired. We are not supposed to 
hamper or handicap them and exact from them a crushing burden of debt 
in the future. That premise reverses a historic promise, and we cannot 
allow it to go forward without a fight.
  Every dollar we extract from those students is a dollar they can't 
spend on a down payment for a house, a car, a business or an 
investment. These young people are the economic drivers of our future. 
Let's be purely selfish about it. How can they build a family, buy a 
home, start a business if they are hit with an 8-percent interest rate 
or higher at a time when we can make it more affordable? It makes no 
sense.
  I have spoken to students across the State of Connecticut over these 
past weeks, and they have done the math. They know the results. As many 
as 86,000 students who attend our colleges and universities--and I have 
spoken to many of them, their families, the staff and teachers who are 
also doing this math--and they know the best way to reduce our deficit 
is not to profit from students but to make possible their higher 
education so they can bring their innovation and experience and 
expertise to the marketplace, and not make the marketplace dictate the 
variable rates they are charged, but enable them to contribute to the 
marketplace and the American dream by going to college.
  I understand the temptation of this deal, but we must reject a 
compromise that saves the American dream for one sibling in a family by 
taking away from another. My colleague from Rhode Island made this 
point very eloquently earlier today. If a person is a student in high 
school right now, they will do pretty well under this bill when they 
begin college next year, but not their younger brother and sister. The 
sister will be paying for the current student. The brother will be 
paying more and, in fact, may be denied the opportunity the present 
student has next year because the parents cannot afford to send him to 
college.
  The issue of loan rates is complicated, but the math is pretty 
simple. There is already more than $1 trillion of crushing loan debt 
that this bill is not refinancing. The bill provides no debt 
forgiveness, just market rates that will lead to higher payments and 
more student debt as we zoom past that $1 trillion mark and raise it 
even further. The irony here is that the majority of this body has 
already voted to return to 3.4 percent. This compromise betrays the 
majority will of the Senate. Instead, it allows rates to rise as high 
as 8.25 percent, graduate Stafford rates as high as 9.5 percent, and 
PLUS rates as high as 10.5 percent. So we are saying to parents of two 
children: You can send one to college now with a loan that you take out 
at current rates, but to pay for that second child, you are

[[Page 12036]]

going to be seeing rates more than twice as high.
  Do my colleagues think the income of the average middle-class 
American family is going up 10.5 percent? Ask the American people. Do 
as I have done. Go around to the States and ask the students and the 
parents.
  Let's not kid ourselves. The fact is they are not going to be able to 
pay. This compromise relies on a presumption that somehow, over the 
next 2 years, we are going to come back and revisit, revise, reshape, 
and avert disaster. I have only been here 2\1/2\ years, but what I have 
seen is it is better to know what the result is going to be than engage 
in potential false hope and raise the potential false expectation that 
somehow everything will be solved next year or the year after, before 
disaster strikes. We should learn something from our experience with 
sequestration.
  This bill is not based on analysis of what the rate needs to be to 
cover the program's cost. In fact, it requests the GAO to examine and 
report on what that should be. So I implore my colleagues, instead of 
voting first and getting the facts later, that we reserve such a life-
changing decision until the GAO has advised us on the cost of student 
loans and we use that necessary information to set the rates going 
forward.
  There are amendments that I believe will improve this bill, and I 
have cosponsored them, including an amendment Senator Reed and the 
Presiding Officer, Senator Warren, have offered that would lower the 
interest rate caps in this bill to the current statutory rate. If this 
amendment is adopted, we can go back to the people of our States and 
say: At worst, you will be no worse off than under current law. We 
cannot say as much under this compromise bill.
  I have also cosponsored the Sanders amendment which would sunset this 
legislation after 2 years. If interest rates rise the way they are 
projected to do, we could be looking at dramatically higher rates 
within 3 years. So this sunset clause will force us to come back and 
revisit them.
  I have also filed my own amendment that would expand and make more 
generous loan repayment assistance programs for borrowers who are 
struggling right now to make payments under existing law. At a time 
when outstanding student debt is $1.2 trillion, we need to make sure we 
help and support distressed borrowers at every stage of repayment, and 
that is the unaddressed need this body needs to confront.
  I am hopeful these amendments will be adopted. In the meantime, I 
must respectfully and regretfully oppose this compromise. We are the 
greatest Nation in the history of the world, as we are fond of saying 
repeatedly on the floor of this body. But only one thing is certain 
about the Bipartisan Student Loan Certainty Act, and that is rates will 
inexorably, inevitably, inexcusably go up. They will exceed current 
rates. We must stand and fight to prevent that kind of betrayal of the 
fundamental American promise of higher education and the American 
dream.
  Thank you, Madam President. I yield the floor.
  The PRESIDING OFFICER. The Senator from Ohio.

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