[Congressional Record (Bound Edition), Volume 159 (2013), Part 9]
[Senate]
[Pages 12274-12275]
[From the U.S. Government Publishing Office, www.gpo.gov]




                           STUDENT LOAN DEBT

  Mr. DURBIN. Mr. President, later today we will consider a student 
loan bill that will affect 11 million students across America.
  On July 1 the interest rate paid by students for their student loans 
doubled; it went from 3.4 percent to 6.8 percent. We know students are 
graduating with more and more debt. We also know the cost of that 
debt--the interest rate--makes a big difference in their lives. 
Sometimes they postpone important life decisions because of student 
loan debt.
  My daughter has a business in New York with two employees who are 
paying off student loans. She said the biggest worry they have from 
month to month is making that payment. I understand that too. After 
taking a look at the increase in debt, we find that student loan debt 
has now surpassed credit card debt in America. It is more than $1 
trillion, and it is growing faster than any other form of debt. It is 
an indication of an indebtedness we need to take seriously. We will 
have a chance to do that this afternoon.
  There are many different points of view on what to do with student 
loans. Some people say that the government should be involved but it 
really should be a market-based system. Others say, no, the government 
should be involved and it should be a subsidy. We should help students 
go to school. We should find ways to keep the cost of education 
affordable, and lowering interest rates is one way to do it.
  We will have two amendments this afternoon. Senator Jack Reed and 
Senator Elizabeth Warren are offering an amendment that will cap the 
interest rate on student loan debts at 6.8 percent for most debts 
affecting undergraduate students and 7.9 percent for other loans. To 
put a cap on that interest rate means we have to subsidize. In other 
words, as we project out what the cost of student loans will be based 
on market interest rates, a subsidy is necessary to honor that cap.
  The second proposal will be from Senator Sanders of Vermont, and his 
approach is a little different. He basically says we ought to sunset 
any changes we make to student interest rates today after 2 years and 
then revert back to the current 6.8 percent rate. That ends up costing 
about $20 billion. Senator Sanders may or may not offer a means to pay 
for that. I believe, from some statements he has made publicly, he 
believes that should be a debt of the government, but I will leave it 
to him to make his explanation.
  At the end of the day, after those two amendments are considered, we 
will come down to one basic decision we have to make as a body, 
Democrats and Republicans. It can be simply stated, and here is what it 
is: Should the student loan interest rate--currently at 6.8 percent for 
most students--stay at 6.8 percent or be reduced to 3.8 percent? That 
is the question.
  If we pass the Bipartisan Student Loan Certainty Act, which I have 
worked with Republicans and Democrats to craft, the interest rate for 
undergraduate students--that is almost two-thirds of all students--goes 
down 3 percent, from 6.8 percent to 3.8 percent. I won't mislead my 
colleagues. It is based on a 10-year Treasury rate and will be 
projected over a period of time. As general interest rates go up, so 
will the student loan interest rate from 3.8 percent, but we put a cap 
on it and say that rate can go no higher than 8.25 percent in a 10-year 
period of time, protecting students even if interest rates go up 
dramatically. So there it is.
  The final vote will be whether to reduce the student loan interest 
rate from 6.8 to 3.8 and to cap it for two-thirds of the students at 
8.25 percent--no higher than that--for the next 10 years. Students who 
are receiving subsidized loans won't have to pay the interest while 
they are in school, and they will have some other benefits at the end 
of the day. What we are setting out to do is to make student loans 
affordable for students and to make sure families are not burdened with 
loans they can't pay back.
  I hope my colleagues, no matter what their philosophy on student 
loans--whether they believe they should be market-based or government-
subsidized--realize that at the end of the day we have a very clear 
choice to make: Stick with the 6.8 percent interest rate or lower it to 
3.8 percent.
  What does that mean for students, the 3-percent difference? We 
calculated it. We looked at the average undergraduate student in 
America, and here is what it means: If we don't lower it to 3.8 
percent, if we keep it at 6.8 percent, it means that student, over the 
course of 4 years of undergraduate education, will pay an additional 
$2,000 in interest. Why would we want to do that? Why at the end of the 
day would we want to keep interest rates at 6.8 percent and penalize 
students with $2,000 in interest over the next 4 years? That is the 
wrong thing to do.
  I urge my colleagues, when the bipartisan alternative comes up, to 
vote for it. Even if my colleagues believe it should be a government 
subsidy, which we have not been able to enact, or if they believe it 
should be market-based--either way, this is a better outcome.
  Personally, I hope this isn't the end of the story. Senator Tom 
Harkin of Iowa chairs the HELP Committee--the education committee--and 
he is going to come to the floor soon to start working on the 
reauthorization of higher education. We understand it is more than the 
interest rate that is causing a problem for students; it is the cost--
the cost--of higher education.

[[Page 12275]]

  I went to Georgetown Law School. I couldn't get in there today with 
the standards they have. Currently, I am told it costs over $50,000 a 
year to go to this law school--$50,000 a year for 3 years, in addition 
to undergraduate debt. Well, a person better get a darn good job at a 
Wall Street firm afterward because they will face a mountain of debt. 
They are not alone. All across the United States we are seeing tuition 
rates go up--even at public universities--to record levels.
  We have to find a better way to prepare the next generation of 
leaders in America. The old model of 4 years of undergraduate and then 
graduate school and professional school has gone beyond the reach of 
most students and families.
  Keep in mind, too, that student loans are different from most other 
debt. Student loans are not dischargeable in bankruptcy. The debt a 19-
year-old student and his family sign up for is a debt that can trail 
them to the grave. We have cases where people are signing up to 
basically guarantee the loans of granddaughters to make sure their 
granddaughter can go to college, and then the granddaughter either 
drops out or can't find a job and defaults on the student loan, and 
they proceed to collect it from grandma. I am not making this up. They 
are garnishing the grandmother's Social Security benefits to pay for 
student loans she guaranteed for her granddaughter. That is how 
ruthless this industry is and how tough this debt is.
  We have a chance today to make this debt more affordable for students 
now, to reduce the interest rate from 6.8 percent to 3.8 percent and 
cap it over the next 10 years at 8.25 percent. I won't mislead my 
colleagues. In some debt categories of borrowing--graduate students and 
parent PLUS loans--in the second 4 years the interest rates go up more, 
and many of those who borrow in those categories are going to find 5 
years from now that they are facing a much tougher debt situation. I 
won't mislead my colleagues on that at all.
  I think we can't leave the conversation today and say we are finished 
and we don't need to talk about it anymore. Let's give the students and 
families the help they need today, but let's not stop on this issue. On 
the higher education reauthorization bill, we will have a chance to 
address overall student indebtedness and affordability for families.
  Let me close by saying that the worst offenders--the worst 
offenders--when it comes to college loans are the for-profit schools. 
People may not know much about them unless a person is 18 or 19 years 
old and they can't escape them when they go on the Internet. They are 
trying to sign up students to for-profit schools, many of which are 
worthless--worthless.
  The numbers to remember are three, and they are going to be on the 
final, so listen carefully. Twelve percent of all students coming out 
of high school go to for-profit schools. Twenty-five percent of all 
Federal aid to education goes to for-profit schools. Forty-seven 
percent of all student loan defaults are students at for-profit 
schools. So what is the message there? They are raking in Federal 
dollars at twice the rate they should, and their students are failing 
at a rate greater than any other category of schools. Their students 
are failing to get a job, failing to graduate, failing to pay back 
their loans.
  For-profit schools are a national scandal. We need to deal with them 
in the higher education reauthorization. I know Senator Harkin has held 
hearings on these schools, and he understands this. We need to take an 
honest look at the schools that are misleading our students and their 
families. These schools aren't worth the accreditation, they certainly 
aren't worth the time, and they aren't worth the debt they are pushing 
on students.
  Let me make a marketing pitch, if I may. I say it in Illinois, and I 
will say it anywhere. If you are graduating from high school and not 
sure where to go, what you want to do, what you want to major in, your 
safest bet is your community college. It is nearby. It is affordable. 
It offers many options. In most States the hours are transferable to 
other colleges. It is a good way to start your college education. Also, 
for vocational training, community college is a smart investment. When 
it comes to these for-profit schools, exactly the opposite is true.
  So when we reauthorize higher education, let's come up with a good 
student loan approach that builds on what we can vote for today, but 
let's also start looking at the overall cost of higher education, 
sensitive to the needs of families today to make sure their kids have a 
fighting chance for the best jobs in America.
  I travel all around my State, and I go to businesses. I asked my 
staff: Find me businesses that have done well in the recession and are 
hiring today. I find a lot of good businesses, including Kraft Foods in 
Champaign, IL. Each year they need over 100 industrial maintenance 
engineers--people to keep the assembly lines running--who understand 
how to repair things, understand computers, and are good employees. The 
starting wage for those employees, by and large, is $50,000 a year. 
That is the average wage in my State. Think about it--a starting wage.
  Well, what is holding them back? Why didn't they fill the jobs? The 
students coming out of high school are not ready. They do not have the 
math skills or the computer skills. But if they go to Parkland 
Community College in Champaign, they can acquire it affordably.
  That makes sense. That is a way to bring a student out of high school 
with a year or two of good training at a community college and have a 
good job and opportunity for a lifetime. It is a great place to start. 
Those jobs are all over my State and all over America.
  So let's focus on affordability in higher education, on training for 
vocational skills that give people a chance to become skilled 
apprentices and beyond, and let's make sure today that we do not miss 
this opportunity to reduce interest rates.
  A ``no'' vote on the bipartisan plan will keep interest rates for 
students at 6.8 percent. A ``yes'' vote will lower the interest rates 
for two-thirds of students to 3.8 percent and save those students 
$2,000 over the next 4 years. It caps that interest rate at 8.25 
percent. That is a guarantee that no matter what happens to interest 
rates, these students will be protected.
  This is a pretty basic choice. We need a strong bipartisan vote. 
Regardless of your philosophy on what student loans should look like, 
keep these families and students in mind. If you are frustrated with 
the legislative process, frustrated that Congress is not doing it 
exactly the way you want to have it done, do not take it out on the 
students and their families. Give them a break today with a ``yes'' 
vote for the bipartisan bill.
  I yield the floor.
  The PRESIDING OFFICER (Ms. Heitkamp). The Senator from Washington.
  Mrs. MURRAY. Madam President, what is the pending business?
  The PRESIDING OFFICER. The Senate is currently in morning business.
  Mrs. MURRAY. Madam President, I yield back the remaining time in 
morning business.
  The PRESIDING OFFICER. Without objection, it is so ordered.

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