    [Public Papers of the Presidents of the United States: William J. Clinton (1995, Book II)]
    [September 11, 1995]
    [Pages 1335-1341]
    [From the U.S. Government Publishing Office www.gpo.gov]

    Roundtable Discussion With Students on Student Loans at Southern
    Illinois University in Carbondale, Illinois
    September 11, 1995

        The President. Is everybody in? For the members of the press corps
    that came in with me, as you know, I have been doing these roundtable
    discussions with students and faculty members and others in colleges
    around the country. And this is the kickoff of a back-to-school week
    we're doing this year to emphasize the choices that have to be made in
    Washington in the next 60 days that will affect education. And so I came
    here to Southern Illinois University.
        One of the big issues is what's going to happen to the student loan
    program and, particularly, the direct loan program which our
    administration started. So I thought that we should start by having Pam
    Britton, who is in charge of financial aid here at SIU, talk a little
    bit about how it works--the direct loan program--and what you're doing
    here.
        So, Pam, why don't you lead it off.

    [At this point, Ms. Britton welcomed the President and asked the
    participating students to introduce themselves. Following the
    introductions, Ms. Britton explained the importance of the student loan
    program at Southern Illinois University.]

        The President. Thank you. Let me explain--how many of you come from
    schools that have the direct loan program? You know the old guaranteed
    student loan program basically gave banks a 90 percent guarantee if they
    made a student loan to a student and the student didn't

    [[Page 1336]]

    repay. And they got a handsome commission and fee on it. Under the
    direct loan program, the Government makes the loan directly through a
    Government institution like a lot of the other Government mortgage
    institutions. And what we found is that, number one, as Pam said, the
    loans are going out much faster, much, much faster. There is less
    paperwork for the college administrators, less paperwork for the
    students. If the students get the loans on time, then they don't have to
    go borrow money, what you talked about, short-term loans.
        In addition to that, believe it or not, they are less expensive
    because the fee doesn't get paid. So the Government actually spends less
    money on them. And best of all, for students that have to borrow a lot
    of money, unlike the old guaranteed student loan program, there are four
    different repayment options, including an option to pay the money back
    as a percentage of your income, so that, for example, if you decide to
    take a job that you find very rewarding but doesn't pay very much money
    and you have a big loan, you still can't ever go broke doing it. There's
    no incentive ever to drop out of school because you can pay the money
    back as a percentage of your income.
        This was a major part of my administration's economic proposal in
    1993, and we got it through. And ever since then it's been under assault
    by the bankers who made the money under the old loan program. It is true
    that they're worse off. I mean, they lost a lot of business. But the
    students are better off, the administrators are better off, the Federal
    Treasury's better off, and the country's better off because now we're
    going to have more people borrowing money and going to school. But the
    bankers aren't better off, and they've persuaded the House of
    Representatives to get rid of the program, go back to the old system.
    And now it's under assault in the Senate; they'll be voting this week.
        So one of the reasons I wanted to come here is to try to galvanize
    people like you all across the country to ask our Congress to stand up
    to the special interests that, you know, want their money back and to
    keep this program, which is working better for you.
        I mean, ultimately, the purpose of the loan program is to educate
    more young people, to make loans--and not-so-young people going back to
    college, because a lot of people my age are now going back, and they
    can't do it without student aid.
        So I want to hear all of your stories, but Pam told me she had sort
    of a testimonial--the experience that SIU has had with the direct loan
    program, and I must say, I hear that everywhere.
        I met a young couple in Florida the other day who were both
    graduated from medical school with $140,000 in student loans between
    them, and they told us that if it weren't for the direct loan program,
    which permits them to repay as a percentage of their income--because,
    see, they're all going to become interns; they won't make a lot of money
    when they get right out of medical school. They said they would be
    spending over half of their monthly income repaying their loans. They
    wouldn't have enough money, literally, to pay for food and rent but for
    the direct loan program.
        So, Pam, why don't you take over now. Let's go around and listen to
    the other students.
        Ms. Britton. Okay. One of our student participants would like to
    begin by speaking to direct loan issues at her institution. Noemi?
        Noemi Rivera-Morales. Mr. President, Ms. Britton, fellow students,
    good morning. Buenos dias.
        The President. Buenos dias.

    [Ms. Rivera-Morales recounted her past difficulties in receiving her
    loan disbursement under the Pell grant program, but stated that this
    year she had received her loan within a week of applying to the direct
    loan program.]

        The President. So it was one week?
        Ms. Rivera-Morales. One week. With a holiday in between.
        The President. With a holiday in between. So much for Government
    inefficiency.

    [Ms. Rivera-Morales explained that the efficiency of the direct loan
    program had increased the amount of money given yearly to students at
    the university from $16 million to $28 million.]

        The President. From 16 to 28?

    [Ms. Rivera-Morales stated that she was fearful that future cuts in
    spending would prevent some people from attending college.]

        The President. So am I. That's why I'm here.
        Ms. Britton. We are concerned about direct loans, but we're also
    concerned about the Pell grant program here at SIU as well as other

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    undergraduate grants. And Duane would like to speak to that.

    [Duane Sherman explained that without the help of Federal grant programs
    he and many other students would not be able to attend college. He also
    stated that the education students receive enables them to become
    productive, tax-paying citizens who are able to compete in a global
    society].

        The President. I agree with that. You know, I think most taxpayers
    resent it if they think their money is going to people who don't need
    it, people who get tax breaks who are very well off or people who won't
    work, who won't try to help themselves. The student loan and the student
    scholarship program, by definition, go only to people who are trying to
    help themselves.
        We have increased the maximum amount of the Pell grant and propose
    to do it some more and to have some smaller Pell grants, between $400 to
    $600 a year, to help people who maybe have a little money but don't have
    enough.
        One of the big arguments that I'm in now with the Republican
    Congress is that both of us agree we should balance the budget, but I
    think it better to take a little longer, have a smaller tax cut, and
    increase our investment in education. So the difference between our two
    proposals is there would be 360,000 fewer people getting Pell grants
    under their proposal than mine, and the maximum grant would be
    considerably smaller, and the smaller grants would be cut out under
    their proposal.
        Again, I would say that it seems to me that the main thing we ought
    to be doing today is try to help people who are willing to help
    themselves, trying to empower people to make the most of their own
    lives. And they say that's what they believe in, but it's just
    inconsistent. You do not have to cut education to balance the budget;
    you don't have to do it. And it's sort of cutting off our nose to spite
    our face. I mean, the whole argument for balancing the budget is that
    it's going to strengthen the economy. And you know, I mean, that's the
    argument for doing it, right? And if we do it right, it will. Obviously,
    if we don't keep borrowing money every year just to pay the same bills,
    it will lower interest rates and free up money for people to borrow
    money and start businesses or expand businesses and create jobs. But if
    the way to balance the budget is to make the American people less well-
    educated, all it will do is to continue to drive wages down in this
    global economy where most people are working harder for less money
    anyway.
        I consider this decision on education basically one of the three
    most important decisions that will be made in the Congress in the next
    60 to 90 days over this budget. Is it worth it to balance the budget in
    the way they want to do it if to do it you have to cut education, if
    there is a better way to balance the budget? I think the answer is, no,
    take the better way. But that is the big--I mean, Duane just sort of
    laid it out, what the choices are for you, and you can multiply that by
    millions and you can see the future of America.
        Who's going next?
        Ms. Britton. We have some concern related to graduate students, and
    Mary wanted to speak to especially----
        The President. Mary, I read about you. [Laughter]

    [Mary Armstrong explained how important subsidized loans were to her
    education. She said that if they were reduced due to budget cuts, she
    would have a difficult time paying for her education because the
    profession she has chosen will not pay a very high salary. She then
    added that the student loan program was an investment in the future.]

        The President. Good for you.
        Ms. Britton. We have one last student that is prepared to give just
    an indication of their personal experience, Rick Collie.

    [Mr. Collie explained how the Federal loan program had helped him to go
    to college and become a successful and productive citizen.]

        The President. A great story. You know, Mary, one of the proposals
    on the student loan program has been to start charging students interest
    on the loan while they're in school and then to maybe--and also start
    charging them the so-called grace period, you know, the 6 months after
    school you can go look for a job and finally try to find placements.
        If that happened and the direct loan program were abolished or made
    unavailable to huge numbers of students, the combined impact of that, on
    the average for graduate students, would be an increase in the debt of
    about $9,300 without the option to pay it back as a percent of your
    income, which for graduate

    [[Page 1338]]

    students--which for graduate students in the nonprofessional areas would
    be a disaster--I mean, like the lawyers and the doctors and the
    accountants, you know, you might argue--well, even the accountants, a
    lot of them are not going to make much money in the beginning. But I
    mean, the----
        Q. I couldn't do it.
        The President. It's a serious problem. I really do believe if enough
    of your voices are heard between now and whenever we finally adopt this
    budget, which will probably be sometime in October or November, in that
    range--they're not going to do it by September 30th, which is the
    deadline and they won't make it this year--but I just think it's very
    important to get this story out there.
        And Rick, I'll just use you as an example. When I ran for President,
    I was in my fifth term as Governor of my State; I was having a good
    time. A lot of my State looks like southern Illinois, which is probably
    why I did so well here when I ran. But I just realized that unless
    somebody did something to change the direction of the country, we were
    going to face--we had already faced by 1992 almost 20 years of stagnant
    wages for hourly wage earners. Now we have--since '73, the average male
    worker in America today, once you adjust for inflation, is making about
    10 percent less than he did in 1973 working a slightly longer workweek.
        Almost all of the economic gains have gone to those people like me
    in the upper 20 percent of the society. So my goal has been as President
    not only to create more jobs but to raise the incomes again, to give
    working families some sense of stability. It's the biggest economic
    problem in the country.
        Most people who do what they do, like Mary said, most people do what
    they do knowing they're never going to be rich. That's not the point.
    The point is that people ought to know that if they work hard and are
    diligent that at least they'll do a little better year-in and year-out--
    not that you're going to get rich but that you'll be able to have a
    family and raise children and have a stable life. And so that's a very
    serious concern.
        And if you look at the last 2 years of our administration--now, this
    wage thing has been going on for 20 years. So you just can't turn it
    around like that. So in the last 2\1/2\ years, we have--to show you how
    pervasive it is--since the day I became President, we've got 7 million
    more jobs, 2\1/2\ million more homeowners, 1\1/2\ million more--
    actually, probably like 2 million more small businesses now--the most
    rapid growth of small business in American history. The stock market is
    at a record high. Corporate profits are high. Inflation is low. The
    combined rate of employment and inflation is at a 25-year low. But the
    median income, the person in the middle--not the average because the
    average gets jerked up by the people at the top--the median, the person
    in the middle has dropped one percent.
        And why is that? There are only--there are two or three things we
    can do about it. The first thing we have to do is to try to change the
    mix of jobs in America, to try to get more higher wage jobs with a
    longer term future. But you can't do that overnight. The second thing we
    have to do is to raise the educational level of the American people
    because the people who are being just hammered out there in this country
    today are people who don't have at least 2 years of community college
    education. Basically people that have 2 years or more tend to do pretty
    well in this economy, tend to be able to hold their own and then sort of
    move forward. And it strengthens the American economy. That's what this
    issue is about.
        So if we balance the budget--and I'm all for that. We've cut the
    deficit from $290 billion a year to $160 billion a year since I've been
    President. I think it's nuts just to run a permanent debt. But if we cut
    it by cutting education, then we will compound the most important
    economic problem we have which is that people are working harder for
    less. So what we need is more people like you, not fewer.
        Mr. Collie. The student loan program allowed me to free up my
    distress and bills that were due and things I had to pay, and I could
    focus on my education. And I graduated with honors.
        The President. Don't you believe, though, if we dramatically raised
    the cost of higher education that fewer people would go and more would
    drop out?
        Students. Absolutely. Most definitely.
        The President. We have evidence of that, by the way. I just was in
    California over Labor Day where--California had the worst recession of
    all the States in the last few years because they had the huge impact of
    the defense cuts because they had most of the defense industry

    [[Page 1339]]

    when we built it up. And there were other reasons as well.
        And one of the decisions they made in California was when times got
    tough, they would cut education and raise the cost. And the California
    system of public education was generally believed to be the finest ever
    created by any society anywhere. They have 21 colleges in the State
    university system. And then I think they have another 9 or 10 in the
    University of California system.
        And it used to be free, and--they had to put some fees on it. But
    they raised the cost so much in the last few years that enrollment is
    down 19 percent. Well, if you've got a high unemployment rate and
    stagnant incomes, the last thing you want to do is drive down college
    enrollment, right? You want to drive up college enrollment. So, I don't
    want our country to do that.
        So, it's not just all of you, there are millions of people out there
    like you, millions. And the whole future of the country depends in part
    on--in other words, it doesn't matter what I do in terms of economic
    policy or how much I try to change the job mix in America unless the
    people in America have the education to do the jobs of the 21st century.
        To me, this is self-evident. You cannot imagine how important this
    event is today. I'm telling you, this is one of the two or three most
    important decisions we're going to make in the next 60 to 90 days, and
    it will color the whole future that you will have.
        Q. Mr. President, I was lucky enough to get in under this program. I
    have a son who is a junior in college who was lucky enough to get in. I
    have a son in Maine who has a five-year-old child who had a liver
    transplant at the age of 6 months. Rex wants desperately to go to
    school, but he doesn't fit into this program.
        Ms. Britton. You talked about the higher cost of education. We might
    want to hear from our Knox College private----
        The President. I'll look into that. Go ahead.

    [A student explained that he was able to attend Knox College due to
    Federal money and a work-study program at the Knox College youth
    center.]

        The President. That's good.
        Q. And while I was working there, I learned the skills that enabled
    me to acquire a job with the National Football League this summer in
    terms of enterprise computing.
        The President. Really?

    [The student said that he now had a full-time position with the NFL
    because of the experience he received through the work-study program. He
    also emphasized the importance of a graduate degree in the job market.
    Another student then explained the importance of loan programs to
    students from low-income families.]

        Ms. Britton. And at the graduate level, Vanika is on the special
    fellowship----

    [Vanika Mock spoke about the importance of a grace period for students
    who must repay a large amount in student loans after graduating from
    college.]

        The President. You've got to have a job first.

    [Ms. Mock explained that in order for her to pursue a career as a
    teacher, her loan would have to continue.]

        The President. So you could pay it back as a percentage of your
    income?

    [Ms. Mock said that was the only solution for people who wanted to work
    in a profession that they enjoy but which would not pay a lot of money.]

        The President. And, of course, most of the jobs will be in service
    job growth, too.
        Brian, were you going to say something?

    [Brian Szuda commented on the importance of the grace period in loan
    repayment for people who were unable to find jobs immediately after
    graduation.]

        Ms. Britton. I know Michelle's been trying to say something here.
        The President. I'm sorry, Michelle.

    [Michelle Birch explained how difficult it would be for her to attend
    college without help from Federal loans and subsidized day care for her
    son. She stated that in order to stay off of welfare she would need to
    continue receiving this assistance.]

        The President. That's the argument we're having in Washington now
    over welfare reform.
        Ms. Birch. I know.
        The President. I told them that I would gladly support programs that
    would save money on spending and welfare reform and put limits on how
    long people could stay, if you would give

    [[Page 1340]]

    more for child care and if we keep the student aid programs. Because
    basically, welfare reform is about education and work and child care;
    it's not very complicated.
        You know, I have spent since 1980, when most of you were real
    children, I have spent a lot of time with people on welfare. And I found
    that people with the deepest desire to change the system are people who
    have been on it.
        I've almost never met anybody that didn't want to get off, and also
    who all have the best ideas. I'm glad to hear you say that. Good for
    you. I'm proud of you.

    [Ms. Birch stated that she had a strong desire to succeed in life
    because she was raised by a family who instilled those values in her.]

        Ms. Britton. We're running short of time, and I want to give Ramon
    and Allison an opportunity to say at least one thing.
        The President. You guys are great.

    [Ramon Blakley explained how Federal loans help students from low-income
    families.]

        The President. That's why I'm with you.
        Allison Crabtree. I guess I have a question more than anything. I
    was talking with one of your aides beforehand about the proposals by the
    new Congress to limit the growth of the direct lending program, and
    that's been so beneficial, I know, on my campus. It's so much more of an
    efficient program. And as I was talking to my Congressman this last
    weekend, he was informing me that what it does bottom-line is it takes
    more of the money that you put into the student loan programs at the
    Federal level into the hands of students as opposed to administrators,
    such as banks and private lending institutions.
        The President. You got it.
        Ms. Crabtree. So I was wondering how you felt about the possibility
    it will be capped off?
        The President. I think it's a terrible idea. But capping is not as
    terrible as getting rid of it altogether, though. The House of
    Representatives wants to get rid of it altogether. I mean, not the
    Congressmen that are here, they all fought it, but the majority. This is
    not complicated. Banks used to make a lot of money doing this, and they
    want their money back. This is not a complicated thing.
        They want--and, interestingly enough, they pulled an incredible
    gimmick. They basically got--the new majority in the Congress got the
    people who run their budget office to pull an incredible gimmick. They
    said that in calculating the cost of the direct loan program, as
    compared with the cost of the old student loan program, the guaranteed
    loan program, we had to calculate the administrative costs of the direct
    loan program and put it in, but we couldn't count anything of the
    administrative costs that we paid for the guaranteed loan program to try
    to make the direct loan program look more expensive than the guaranteed
    program when everybody knows it's cheaper. It is bizarre. I mean, that's
    the kind of stuff that's going on up there.
        And it's just classic--it's a special interest grab that overlooks
    the fact that the stories that all of you have told are good stories for
    America's future.
        Let me just say one other thing. I will say this: A lot of these
    guaranteed loan providers have gotten quicker and cheaper and more
    responsive because of the competition. So what we wanted to do--I've
    never wanted to deprive a student or an institution of the right to use
    a guaranteed student loan provider. Because if we did that, the
    Government might get sort of fat and sassy, too, and unresponsive, if
    you see what I mean.
        In other words, my goal always was to set up a competition where
    people could choose a direct loan program because of its obvious
    strengths, where the others would have to do more to try to compete, and
    where, if the direct loan program started to fail people down the road
    because they thought they had a monopoly, there were other options
    available as well.
        That's what my goal is. My goal is to have 100 percent open option
    for the colleges and universities of the country. But the worst thing to
    do would really be terrible if it were abolished, and I think it would
    be a mistake to cap it.
        Ms. Britton. That's probably a good note for us to end on. We'd like
    to have you for the rest of the afternoon; but there's a few thousand
    people out there who would also like to hear you.
        The President. You know, I'll give a better speech because I was in
    here with you. I mean, really, you know. One of the problems we have in
    Washington is that people like you, the people who basically are out
    here making this country go are--normally tend to be so busy keeping
    body and soul together and doing what you want

    [[Page 1341]]

    that you're not organized. The people that are organized and can hire
    lobbyists and have influence up there, you're not them.
        So that's one of the biggest problems in decisionmaking. And that's
    why I try to do everything I can to get out in the country and give
    people like you, by my presence here, a chance to have your voice heard
    up there because there's more of you than them. You're just not there.
    You're here. And I hope we can save this program.
        Yes, Brian, what were you going to say?

    [Mr. Szuda stated that many students were able to relax and concentrate
    on their classes because of the efficiency of the direct loan program.]

        The President. Didn't you say you had a national defense loan?
        Q. Yes.
        The President. I did, too. And you're the first person in your
    family to go to college?
        Q. No.
        Q. I am. I'm the first in my family.

    [A student showed the President an example of the application form for
    the direct loan program.]

        The President. A one-pager.
        Q. One page, that's it. That's it. The margin of error is extremely
    small.
        Q. I've got that myself.

    [Several students explained the less efficient application process for a
    Pell grant.]

        The President. Let me just point out one other thing----
        Q. It's just a long--a long period of time. You need a crystal ball
    just to find out where the problem is--[laughter]
        The President. I'll tell you something else----
        Q. It's just----
        Q. Let the President talk. [Laughter]
        The President. No, no. The loan default--another thing, because of
    this you need to know the loan default rate. If you look at it from the
    point of view of the taxpayers who want their money back--I mean, I paid
    my college loan back. I felt morally obligated to. And I think I feel
    like you, that one of the reasons I never resented the taxes I pay is
    that my country helped me get an education; I figured I ought to give it
    back so other people could get one.
        But what I was going to say is, one thing the taxpayers need to know
    is that we have cut the loan default rate in half since I've been
    President--the loss to the taxpayer. And part of it is because the
    system is different. If you're running a bank, right, and you loan me 10
    grand and you've got a 90 percent guarantee from the Government, and I
    don't pay you back, if you don't lift your finger to get $9,000. If you
    hire a lawyer you've already spent more than $1,000, right? So the whole
    thing--that's another thing--the whole system is organized to maximize
    default.
        Our system is organized to make it easy for everybody and to be
    tough on getting the money back. I mean, it's very different.
        Q. Here is another point. [Laughter]
        The President. I'd better take her back to Washington with me.
    [Laughter]

    [Several students described past problems with receiving loans.]

        The President. This has been unbelievable. I don't want to leave you
    guys. You're great. Thank you.
        Ms. Britton. We thank you very much for all you do for us.
        The President. Thank you.

    Note. The President spoke at 10:51 a.m. in Pulliam Hall.