[Weekly Compilation of Presidential Documents Volume 33, Number 2 (Monday, January 13, 1997)]
[Pages 19-22]
[Online from the Government Publishing Office, www.gpo.gov]

<R04>
Remarks on Receiving a Report on Student Loan Default Rates and an 
Exchange With Reporters

January 9, 1997

    The President. Thank you very much, Fiona. And I want to thank all 
the young people for coming here and for representing the best in our 
country and the best of our future. I also want to thank Secretary Riley 
for this report and for the work that he and the good people at the 
Department of Education have done every day for the last 4 years.
    When I ran for this office in 1992, at every stop along the way, I 
always said one of the most important things for me to do in the next 4 
years was to open the doors of college education wider by passing a loan 
program that would allow people to pay their college loans back as a 
percentage of their income, to have more options to pay their college 
loans back so no young person need ever fear going to college because of 
the crushing burden of debt on them in the early years after they got 
out, but that at the same time, we had to have more responsibility by 
dramatically lowering the student default rate.

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    I went to law school and college on scholarships and loans and jobs, 
and I felt very strongly that it ought to be easier for people to go but 
that it ought to be harder to evade your obligation to repay the debt. 
And we have worked very, very hard to achieve those objectives. And 
that's why we've worked hard to expand college loans and lower their 
costs through the direct loan program. I'm glad that Fiona is a direct-
loan student. We've seen the results of that throughout the country, and 
we believe that when those loans start to be repaid, they will lower the 
default rate even more.
    We expanded Pell grants and work-study programs in the last session 
of Congress to their highest level in history. We had the biggest 
increase in Pell grants in 20 years, and we added 200,000 more work-
study slots. AmeriCorps was created, and it lets young people, 
obviously, earn money for a college education by serving in their 
communities.
    And in addition to that, as this report points out, we have 
strengthened the basic bargain. There has been more opportunity, but 
there is more responsibility. The default rate on student loans that is 
being announced today is the lowest in the history of America. It has 
dropped 40 percent since I took office. It is now below 11 percent.
    We want it to go lower still, but we can be proud of the fact that 
more young people who go to college are showing that, along with 
everything else, they have learned the important lesson of their 
responsibility to pay the loan back. And that means savings of hundreds 
of millions of dollars to our taxpayers, savings which will make it 
easier for us to balance the budget and easier for us to invest more in 
education.
    We have done our part by placing tough sanctions on schools that 
didn't do their part to prevent defaults, and in some cases, we actually 
took away eligibility for Federal loan programs. When necessary, we have 
tracked down defaulters and made them pay. Frankly, a stronger economy 
has also helped to produce today's good news. More young people who get 
out of college can get good jobs and repay their loans more easily, and 
that's very, very important.
    But the bottomline is that this report shows that our strategy of 
opportunity and responsibility is working. It's working because of the 
steps that have been taken to improve student loans and strengthen the 
economy. It's working because of the changes that were made in the loan 
program by Congress a few years ago. And it's working because more and 
more young people are taking advantage of a college education and then 
taking the opportunity to be responsible in paying their loans back.
    Now, as we begin this second term, I just want to reiterate my 
commitment to ensuring that every person in this country has the tools 
that he or she needs to make the most of their own lives, that we open 
the doors of college education to everyone. The core of my second term 
efforts to build a bridge to the 21st century will be dramatic 
advancements in education. The fact is that some people who want to go 
to college still can't get there, so our first step should be to provide 
more opportunity. We can do that through the HOPE scholarships tax cuts 
that I have proposed. They would allow Americans to deduct from their 
tax bill, dollar for dollar, the cost of the typical community college 
tuition for up to 2 years; to make the first 2 years of college as 
universal as a high school diploma is today. They would allow the 
typical family to deduct up to $10,000 a year from their taxes for the 
cost of any college tuition. They would allow a family--I mean, more 
families, many more families to save through IRA's and then to withdraw 
from those IRA's penalty-free if the money is being used to finance a 
college education.
    Especially now that more and more students are taking responsibility 
for their own education, we simply have to do more to open the doors 
wider. The HOPE scholarship tax cuts would make college affordable for 
every person in this country willing to work for it, especially when you 
couple that with the availability of the loans and the work-studies. 
America needs these tax cuts to help America pay for college, and I hope 
Congress will help us to pass them into law.
    Let me also point out one of our other proposals that I've had on 
the table in Congress for 4 years now, which I am determined to get 
passed in this next Congress, is the ``GI bill'' for America's workers. 
A lot of people in the work force need to go back to

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school. There are now scores of different training programs that we 
propose to consolidate and send a skills grant to people who lose their 
jobs or people who are dramatically unemployed and let them make the 
decision to use this skills grant in the same way, to finance a college 
education.
    And let me finally say that while we can make sure that everyone can 
go to college, it's also important that everyone be prepared to go. We 
have to set the highest standards for public education in this country 
so that highly trained teachers demand peak performance from students. 
We should require that students pass tests that actually test whether 
they learn what the standards say they're supposed to know before they 
go on from grade to grade. We should reward teachers who do well and 
make it possible for local schools to remove those who do not.
    We should expand public school choice and improve and expand on 
charter schools run by teachers and parents that survive only if they 
produce results. We should make sure every child can read independently 
by the third grade, and I hope that we'll have another 100,000 young 
people helping in that million-person brigade of volunteers we're going 
to need to teach our young people to read. And we should finish the job 
of connecting every classroom to the Internet by the year 2000.
    If every 8-year-old can read, every 12-year-old can log on to the 
Internet and every 18-year-old can go to college, America will enter the 
21st century with every person able to have the skills that he or she 
needs to succeed in building a good life.
    So let me say that these young people here--they're a shining 
example of opportunity and responsibility--give me the hope that we will 
succeed. And I thank you, Fiona, and I thank all the others and all of 
them like you all across America today who will be watching this and who 
will be building our future.
    Thank you, and thank you, Mr. Secretary.

Legislative Agenda

    Q. What do you think is his chance of getting these through 
Congress?
    The President. Well, I think they'll be very good. You know, we've 
worked very hard on our budget, and our OMB Director, Frank Raines, has 
begun conversations with Members of Congress already. I have spoken, 
obviously, on many occasions with Senator Lott and Senator Daschle, 
Speaker Gingrich and Leader Gephardt. And if the atmosphere--I can now 
only add to what I've already said--if the atmosphere of this Congress 
reflects what happened in the last 2 months of the last Congress, I 
think the American people will get their balanced budget; they will get 
these education tax cuts; they will get the next step of welfare reform 
to create jobs for people who are going to be moving from welfare to 
work; and it will be a very, very good time.
    The atmosphere so far feels good to me, and if we just keep working 
on it, I think we can get there.
    Q. Mr. President, have you made all of your final budget decisions? 
And is there any possibility of your reopening any of those decisions, 
specifically on Medicare?
    The President. Well, let me answer you this way. I have completed 
sometime ago the work on the budget. We still have to work around the 
edges from time to time. It is a good budget; it is a credible budget. I 
also am pleased that the OMB and the Congressional Budget Office have 
been working together to try to narrow the gaps between them in all 
these assumptions they have for the budget. And I'm confident that we 
can produce one that will bring balance under either set of assumptions, 
and I intend to do that. And the budget will reflect the priorities I 
laid before the American people in the campaign and will be consistent 
with what I have said over the last 4 or 5 years about this.
    Now, I also expect there to be a negotiating process with the 
Congress, and I will work with them in good faith, as I have said all 
along. But I think this budget will show that I am making a clear effort 
to reach out to them, to meet them halfway, and to get this job done.
    Q. In what year will the budget you present in February actually 
reach a balanced budget?
    The President. In 2002, the same year we----
    Q. The same year.

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    The President. ----all along.
    Q. Does that mean that on Medicare you are going to go for raising 
the premiums and so forth? And you spoke in generalities, but is there 
anything you can----
    The President. Well, it means I don't want to remove all the 
suspense from my budget presentation. [Laughter]
    Thank you very much.

Note: The President spoke at 10:31 a.m. in the Oval Office at the White 
House. In his remarks, he referred to Fiona Rose, University of Michigan 
student who introduced the President.