    [Public Papers of the Presidents of the United States: William J. Clinton (1994, Book II)]
    [November 1, 1994]
    [Pages 1919-1922]
    [From the U.S. Government Publishing Office www.gpo.gov]

    Remarks in a Roundtable Discussion on the Direct Student Loan Program at
    the University of Michigan in Dearborn, Michigan
    November 1, 1994

        The President. Thank you very much, President Duderstadt. Ladies and
    gentlemen, first let me say how delighted I am to be back at this campus
    again. I visited here in 1992, and I'm glad to be here again.
        One of the most important commitments I made to the voters in 1992,
    at least from my point of view, was that if I were to become President I
    would try to do something about the student loan program to make it
    easier for more people to access and for more people to go to college
    and stay in college. I'd been very concerned, based on my experience as
    a Governor, with the number of our young people who either didn't go to
    school or who started and then dropped out because of the high cost of
    the college education, because they either couldn't get the loans or
    they thought if they did get the loans they would never be able to pay
    them back. I was also, frankly, outraged by the high default rate among
    people who had loans and didn't pay them back. So it seemed

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    to me that there ought to be an easier way to get the loans, to pay them
    back, and a better way to actually see that they were paid back.
        What this program is designed to do is to lower the cost of the
    college loans to the students, give the students more flexible repayment
    terms, guarantee that if you choose to go into some line of work which
    doesn't have a high salary when you get out of college, that there is a
    limit to how much you can be required to repay as a percentage of your
    income but that if something happens and your circumstances improve and
    you want to pay the loan off quicker with lower interest rates,
    obviously you have that option as well. So I came here today just to
    learn how this program is working.
        I want to say a special word of thanks to Congressman Ford who, as
    the chairman of the House Education Committee, spearheaded this, as well
    as to Congressman Dingell and Congressman Carr. We passed this program
    by the narrowest of margins in the Congress. There were a lot of people
    who didn't want us to pass it because there were a lot of people who
    were sort of middlemen in this operation who were making a good deal of
    money off the program. But this is amazing. We saved over $4 billion
    over a 5-year period in the cost to the taxpayers. We already know we're
    going to cut $2 billion in the cost to the borrowers. And we're going to
    be able to help more people in a better way, if it is properly
    implemented.
        So we're here today, in large measure, to thank the University of
    Michigan and to thank Wayne State for joining the program next year.
    Michigan has probably had the strongest participation in the program of
    any State in the country so far. It's a real tribute to the leaders of
    your institutions of higher education that you're out ahead of this
    curve. But I think the students of America will demand to be included in
    this program, the more they hear about it, if it's properly implemented.
    So I came here today to listen and see how it's going and hear from all
    of you.

    [At this point, two students explained that the new William D. Ford
    Federal Direct Loan Program was beneficial to students planning to enter
    lower salary professions due to its flexible repayment terms. Another
    student then expressed appreciation for the AmeriCorps program.]

        The President. Let me interject here. For those of you who don't
    know, what Alex was talking about is AmeriCorps, the national service
    program, allows young people to earn credit against a college education
    at the same annual rate as the GI bill, for service to the United States
    here at home in community service work. So the two of these things
    together, he said, can have an even bigger impact in making it easier to
    complete your college education.

    [Another student expressed support for the AmeriCorps program. A
    participant then stated that he came from a low income family and could
    not attend college without student loans. He also commented on the
    minimal paperwork required by the new program. James Duderstadt,
    president of the University of Michigan, then introduced David Adamany,
    president of Wayne State University, who praised the new program's
    outreach to communities with high numbers of poor and minority students
    in need of financial support to attend college and expressed
    appreciation for the Department of Education's work on the program.]

        The President. Thank you very much. I think we should give a little
    credit here, as you did, to Secretary Riley and Deputy Secretary Kunin
    and Assistant Secretary Longanecker and all the others. They have worked
    very hard to get the mechanics right, the details right on this and to
    keep it going.
        The other thing that I'd like to emphasize on the points you just
    made is that I have been very concerned about the number of our young
    students, and not-so-young students, who are having to really string out
    their college education because they want to do it all on a pay-as-you-
    go basis for this reason. It actually is not good economics for our
    country.
        The average college graduate in the first year of work makes, as you
    all know, I'm sure, much more than the average high school graduate in
    the first year of work. What you may not know is that the gap between
    what they make now in 1994 is twice as great as it was in 1984. So these
    trends are rather dramatic, and they are not going to be reversed in the
    foreseeable future, which means that especially in areas which have
    traditionally had either high unemployment or low income, if you want to
    change the income mix of the people and change the nature of the
    economy, one of the things you simply have to do is to dramatically
    increase

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    the percentage of people who have a college education. It's one of the
    few things you can do in a short period of time, meaning over a 5, 6
    year period, to change the income distribution in a community.
        And so this is a very important thing not just for individual
    Americans and their opportunities, this is a big deal for our country
    and for whether we can continue to promote equality of opportunity and a
    better living standard and a rising living standard among people who
    have absolutely no way other than an education to achieve it.

    [President Duderstadt introduced Representative William Ford, who
    discussed consolidation and refinancing of preexisting loans under the
    new program and the tremendous decrease in paperwork due to its expanded
    use of computers. James Renick, chancellor of the University of Michigan
    at Dearborn, noted that the program served more students without an
    increase in administrative staff. After President Duderstadt invited
    students to comment, a participant stated that the direct loan program
    should be expanded. Another participant then explained that according to
    the legislation, only 5 percent of all student loans could be made
    through this program during its first year, but that in approximately 5
    years most institutions should be offering it.]

        The President. This law passed the Congress last summer--I mean,
    summer before last, summer of '93. And then we had to do the rules, the
    regulations, set the system up. So no one could have been involved in it
    before then. And this is the first year, and then next year we'll have
    up to 40 percent of the institutions in the country involved. And then,
    eventually, we'll be offering it to everybody within a couple of years.
    And if we can get this message out across the country that it's working
    very well, then I think some of the reluctant student loan offices and
    institutions around the country will be changing their position rather
    rapidly.

    [President Adamany explained that the Federal Government's involvement
    in the direct loan program would help colleges and universities collect
    loan repayments and improve the image of institutions that accept high
    numbers of students who depend on loans. A participant then explained
    that while many students currently make several different payments to
    more than one financial institution, under the new program they will
    only be required to send one check per month to the Internal Revenue
    Service. Another participant thanked the President for making affordable
    student loans available and for giving students from all backgrounds a
    chance to attend institutions like Michigan State, scheduled to
    participate in the second year of the program.]

        The President. They're coming the next time.

    [A participant discussed how the direct loan program was helping people
    see higher education as an investment in the future of individuals and
    of the Nation. Another participant added that the variety of loan
    repayment options would give more incentive and opportunity to people
    from low income families to get a college education. A participant then
    suggested that the benefits of the program should be better advertised
    to students.]

        The President. I think that's a very good suggestion. Let me say, we
    do have some money set aside for an advertising outreach program. And we
    wanted to wait to start to run the advertising until this first year--
    which is 5 percent of the institutions, as you've heard--until we had
    these programs up and going so we knew what would work, we had some of
    the kinks ironed out. And yet, we wanted to get people's attention up
    because, as you heard Bill Ford say, we're going to 40 percent next
    year, then 50 percent the year after, then anybody who wants to get in.
    So I think you will see some--if our program works the way it's supposed
    to, you should see some advertising about this program through the media
    within a matter of a couple of months.

    [Representative Ford noted that the Department of Education would have a
    toll-free telephone number to provide information about the program. A
    participant said that implementing the program gradually would help
    ensure its quality and disagreed with the criticism that offering more
    than one method of repayment could be confusing to students.]

        The President. Thank you.
        Q. We should also note that you don't have to make a decision about
    anything until you reach repayment.
        Q. That's right.
        Q. And then if you make one decision, you can change it. You're not
    stuck for the rest

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    of your life with what you decide the day you graduate from college. You
    can adjust what's happening in your life.
        Q. Which is key, because I may plan to get out and do more service.
    But I guess I don't plan to be a poor starving graduate student forever,
    and I'd like the ability to adjust my finances accordingly.

    [President Duderstadt reviewed the benefits of the program and invited
    the President to make final comments.]

        The President. Well, I think, first of all, the students have said
    it all, from my point of view. I do want to thank the Members of
    Congress who are here, Chairman Dingell, who's been characteristically
    reticent but has been so important to all of us. And Chairman Ford,
    thank you, and I'm very glad this program is named for you; it ought to
    be. And Bob Carr, I thank you for your help on this education
    initiative. But mostly I thank the students for what they've said
    because they have pointed out why this program will work and why it's
    important.
        Again I will say, I just got interested in this because I got tired
    of hearing young people in my own State tell me they were going to drop
    out of college because they couldn't afford to take out another loan or
    tell me that they wouldn't go until they had some money because they
    knew they'd never be able to repay the loan. And I think we have changed
    all that now.
        We've also been able to change it with good management and actually
    lower the cost to the Government, not increase the cost to the
    Government. It's unheard of that we can make better loans available at
    lower cost to the borrowers and still lower the costs to the taxpayers
    and drastically simplify it.
        I will say this is a part of a series of things we are doing. We
    have done the same thing with the Small Business Administration loans,
    where a small business person can now fill out an SBA application that's
    one page long and get an answer within 3 days, something which was
    unheard of before. So we're trying to do this piece by piece by piece
    throughout the Government.
        I also appreciated what Kelly said about the fact that we were
    willing, and wanted, in fact, to have one year where we started out on a
    very modest way, because there's always the possibility there could have
    been some difficulty here we had to deal with. But in the end, the
    important thing is the students of this country--increasingly
    nontraditional students, increasingly not students that are just between
    the ages of 18 and 21--understand that this program is out there for
    them. Now they have to use it.
        We--I will say again--this country is dealing with about 20 years in
    which the average earnings of hourly wage earners has been virtually
    stagnant when you adjust for inflation. If we want to get earnings up in
    America and we want to make a big dent particularly in population groups
    like Native Americans that have traditionally been lower income, there
    is no other way to do it in the near term, apart from dramatically
    increasing the number of young people who--and perhaps not-so-young
    people--who go to and finish college. There is no other near-term way
    for us to turn our society around on this economically.
        So what I'm really hoping will happen as a result of this direct
    loan program is that enrollments will continue to rise dramatically and
    people who do not drop out will continue to drop dramatically, so that
    our country becomes a more educated place and our economy will become
    more powerful and our society will become more equal because people will
    be able to compete and win in a global economy. That is the ultimate
    goal of this entire enterprise. And from what I've heard today, I think
    it's been an effort worth making.
        I thank you all for being here.
        Q. Mr. President, on behalf of the University of Michigan and our
    sister institutions, we want to express our gratitude for your meeting
    with us today and sharing in this discussion.
        I should point out that the President and I had a brief discussion
    before we came in, and we've agreed that we are going to arrange a
    little basketball match-up the first week in April between Arkansas and
    Michigan out in Seattle. [Laughter] Of course, we've got to do a little
    bit to get there first.
        The President. That's right.
        Q. The rematch.
        Q. Thank you very much for returning to Michigan.
        The President. Thank you.

    Note: The President spoke at approximately 10:40 a.m. in the student
    union at the University of Michigan at Dearborn.