[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 
    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 
    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 

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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 

[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 
    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.