[Public Papers of the Presidents of the United States: WILLIAM J. CLINTON (2000, Book II)]
[October 2, 2000]
[Pages 1995-1998]
[From the U.S. Government Publishing Office www.gpo.gov]



Remarks on College Financial Assistance
October 2, 2000

    Give her another hand. Wasn't she great? 
[Applause] Good job. Thank you. You know, I thought I'd be having 
withdrawal today, after the Olympics--[laughter]--and I was wondering 
what I would do for an encore, and the answer was, meet Raquel. 
[Laughter] Thank you very much for being here and for your example.
    And Secretary Riley, to you and to all 
these wonderful people at the Department of Education, I thank you for 
the astonishing work you've done on the student loan program and on 
student assistance, generally.
    When I ran for President in 1991, late 1991 and 1992, I talked a lot 
about redoing the student loan program and increasing access to 
financial assistance through grants, work study, tax credits, and an 
improved student loan program. I'll never forget one night; it was about 
1990, I think. I was then serving as Governor of my home State, and I 
was up in Fayetteville, Arkansas, which is the home of the University of 
Arkansas, and a friend of mine and I went out to a coffee shop to have a 
cup of coffee. And I did what I always do; I went around and shook hands 
with everybody at all the tables in there. [Laughter] And there were 
three young students there having coffee, so I sat down and started 
talking to them. Two of them were planning to drop out of school. They 
were already in college--I'll never forget this. And I asked them why in 
the world they would do that, given the fact that the economy that they 
would live in for their adult lives put a higher premium on education 
than ever before. And both of them said they had to go ahead and get out 
and work for a couple of years because they knew they could not meet 
their student loan repayment schedule. And they didn't want to take the 
money and not be able to pay it back. And it had a searing impact on me. 
So I said, ``Surely, these people are the exception to the rule,'' so I 
started nosing around and come to find out there were a lot of people 
like this. And that's basically how we got into the idea of the direct 
student loan with the option to repay as a percentage of your income.
    I also found a lot of young people who wanted to be teachers, like 
Raquel, or police officers or nurses, who 
instead were taking jobs that they found less rewarding but paid more 
money so they could meet their loan repayment schedule.

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    The background to all these things that we're going to talk about 
here in a minute, for me at least, came alive through the stories of 
young people I met. And then when I went around the country in 1992, I 
met more and more and more of them. So, Raquel, I'm grateful to you, but I'm also grateful to all 
those young people, many whose names I don't even know, who took the 
time to share their stories and tell me about the personal challenges 
they faced. And it was very important to me because I never could have 
gotten through college and law school without loans and grants and jobs. 
And I wanted everybody else to have those opportunities, as well.
    Now, one of the big problems we faced in 1993, when I took office, 
is that the student loan program itself was in danger because its 
credibility, its very financial underpinnings were threatened by a very 
high default rate. Nearly one in four students was failing, for a 
variety of reasons, to repay their student loans. And yet, again I say, 
we all knew that we needed more people going on to college, not fewer 
people. So the trick was how to figure out how to get more people to go 
to college and do a better job of collecting on the student loans and 
get people to be more responsible in discharging their student loans.
    Since 1993, as Secretary Riley said, we have more than doubled our 
investment in student aid. We've increased Pell grants; expanded work-
study slots from 700,000 to a million; created AmeriCorps, which has now 
given more than 150,000 young people a chance to earn money for college 
while serving in our communities; created education IRA's, the $1,500 
HOPE scholarship tax credit for the first 2 years of college, and then a 
lifelong learning credit for the junior and senior years and for 
graduate school. More than 5 million families already have taken 
advantage of the HOPE scholarship tax credit in '98 and '99. We made it 
easier and cheaper to get loans and for students now to pay them back as 
a percentage of their future income, and you heard Raquel talking about that.
    The Direct Student Loan Program we started, also by fostering 
competition, have saved students more than $9 billion in loan repayment 
costs, just from lower interest rates alone. Taken together, these 
actions amount to the largest increases in college access and 
opportunity since the passage of the GI bill after World War II. And we 
can now say to every student in America, ``The money is there. You can 
actually go on to college.'' This is profoundly important.
    Students are getting the message; two-thirds of them are now going 
to college. That's up more than 10 percent over the last few years. We 
have also tried, as I said, to increase responsibility for repaying 
these loans. Otherwise, the whole thing would be undermined over the 
long run. And here's what the Department of Education did, and again, 
it's just another example of Secretary Riley's sterling leadership and the great qualities of the people 
there. But here's what they essentially did to reduce the student loan 
default rate.
    First, identified more than 800 schools with consistently high 
default rates that were obviously not serving their students, and they 
were eliminated from the program.
    Second, more flexible repayment schedules were offered. Students no 
longer have to default on their loans simply because they're going 
through a period in their lives where they don't have all the resources 
they need to make full repayments.
    Third, we slashed the cost of the loans, themselves, so it's more 
affordable to pay them back. A typical $10,000 student loan today costs 
$1,300 less in fees and interest costs than it did 8 years ago. That's 
astonishing--$1,300 less on a $10,000 loan. I guess that sort of 
explains why some people thought our attempts to establish this program 
so--[laughter]--that $1,300 was going somewhere. [Laughter]
    Fourth, students are borrowing less than they otherwise would have 
because of the increases in Pell grants, HOPE scholarships, and other 
tax credits, and the work-study aid and other student aid. And finally, 
of course, a stronger economy has made it easier for students to repay 
their loans.
    But listen to this. Thanks to all these factors, today, the student 
loan default rate has been cut by two-thirds--actually, more than two-
thirds. When I took office, the default rate was 22.4 percent; today, it 
is 6.9 percent. Here's a really impressive thing: This is the lowest 
default rate in the history of the student loan program, and it has been 
achieved while tripling the number of loans given every year. Normally, 
you think if you give more loans, you'll be loaning more at the margin 
of risk. This is an astonishing achievement. And Secretary Riley, you

[[Page 1997]]

should be very proud. I thank your whole team. This is an amazing, 
amazing thing.
    By cutting defaults, increasing collections, and making the system 
more competitive, we have saved taxpayers and students--the students 
have saved $9 billion, and the taxpayers have saved twice that much, $18 
billion, because of the reduction in student loan defaults since 1993. 
That is very good news for the American people, a total of $27 billion 
in savings.
    Let me say that this lesson--invest more and have more 
accountability and have the programs work based on how the real world, 
the real lives of these students is unfolding--that's the kind of thing 
I think we ought to do in education generally. And I'd like to say just 
a few words about the education budget and priorities now pending before 
the Congress.
    For more than 7 years, we've tried to invest more in our schools, in 
more teachers, smaller classes, more Head Start, more after-school and 
summer school programs, hooking up 95 percent of the schools to the 
Internet. We've also demanded more from our schools: higher standards, 
more accountability for results, more responsibility for turning around 
failing schools. Secretary Riley points out 
when we took office, there were only about 14 States with real standards 
and a core curriculum. Today, there are 49 States. And we got a change 
in the Federal law to require the States to identify their failing 
schools and have strategies to turn them around.
    We wanted to go further, in terms of the standards for the tests 
that the students take, through the nonpartisan national association for 
student testing, called NAGB. And we also would like to pass legislation 
that requires States to turn around the failing schools in a fixed 
amount of time or shut them down or put them under new management.
    But we have made a lot of progress. Math and reading scores are 
rising across America--some of the greatest gains in some of the most 
disadvantaged schools. The number of students taking advanced placement 
courses has risen by two-thirds in 8 years: among Hispanic students, by 
about 300 percent; among African-American students, by about 500 
percent--taking advance placement courses. College entrance exam scores 
are rising, even as more students from more disadvantaged backgrounds 
take the test. That is not an education recession; that is an education 
revival.
    But on the other hand, no serious person believes that American 
education is where it ought to be. We have the largest and most diverse 
student body in the history of our country. We have what is immensely 
frustrating to me, which is evidence that every problem in American 
education has been solved by somebody, somewhere, but we have still, 
after almost 20 years of serious effort in education reform, not 
succeeded in institutionalizing what works in one or two schools right 
across a school district or right across a State.
    So there are lots and lots of challenges still out there. And what I 
believe we should be doing is to emphasize further changes in the 
direction we have been moving. We need more investment, and we need more 
accountability. And we need to understand the central importance of 
teachers, of principals, of modern facilities, and of genuine, effective 
accountability systems.
    Now, that's my problem with the present congressional budget. The 
majority in Congress is pushing a budget that would neither increase 
investment or accountability. It abandons the bipartisan commitment we 
made just last year to hire 100,000 new highly qualified teachers to 
reduce class size in the early grades. It fails to guarantee investments 
in building or modernizing classrooms, when we know that the 
construction and repair deficit in America's classrooms is over $120 
billion today. It shortchanges investment in after-school programs, in 
improving teacher quality, in our efforts to turn around schools or shut 
them down or reopen them under new management.
    Even though they claim to be for accountability, the one proven 
strategy we've gotten that I've seen over and over and over work--from 
small rural schools in Kentucky to urban schools in California and New 
York and Ohio--a strategy to identify the schools, turn them around, 
shut them down, or put them under new management, they failed to support 
this strategy.
    It underfunds our GEAR UP program to get disadvantaged students 
focused on and prepared for college. It fails to give hard-pressed 
middle class families a $10,000 tax deduction for college tuition, which 
they desperately need.
    Now, we've got a $230 billion surplus, folks. This Congress voted to 
get rid of the estate tax, to give a $6.5 million tax break to some 
Americans. They voted for a marriage penalty

[[Page 1998]]

relief that didn't just relieve the marriage penalty but gave other 
upper income Americans huge tax breaks. The least we can do is 
adequately invest in education. More Americans will make more money, 
including already wealthy Americans, by having an educated work force in 
this country, than by anything we can do in giving specialized tax cuts. 
And we ought to do it and do it now.
    We have evidence that, if you invest more and demand more, you can 
turn the schools around, improve student achievement, get more of our 
young people going to college, and, as we've seen today in stunning 
fashion, make the student loan program work better for more students and 
for the American taxpayers, as well.
    This is worth fighting for. We now have lots and lots of evidence 
that if we invest more, and do it in an intelligent way, we can produce 
real results for the American people. There is no more powerful example 
than what Secretary Riley and the 
Department of Education, along with people that have worked with them 
throughout the country, in college and university after college and 
university, and more responsible, active students, have done to turn 
this student loan program around.
    Now, it will be available for more and more and more students, and 
it will do more good for more and more and more students. We need more 
stories like Raquel Talley's. We need more 
young people like her, who want to give their lives to the education of 
our children. And we ought to do whatever is necessary to make sure, 
number one, they can go to college, get out, and succeed, and number 
two, when someone like her goes in the classroom, the rest of us do 
whatever we can to make sure she succeeds in the classroom, as well.
    Thank you very much.

Note: The President spoke at 11:05 a.m. in Presidential Hall in the 
Dwight D. Eisenhower Executive Office Building. In his remarks, he 
referred to Raquel Talley, student loan recipient who introduced the 
President; and NAGB, the National Assessment Governing Board.