Energy and Water Development and Related Agencies Appropriations Act, 2016

Floor Speech

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Mr. KING. Mr. President, when Senators rise on this floor, typically we are identifying problems, we are talking about how to solve them, and we are talking about how prior actions haven't quite worked. Today I have the pleasure of rising for the opposite reason. I am here to talk about something that has worked, something that we did, something that we worked on together on a bipartisan basis that has made an enormous difference for the students of our country.

In the spring of 2013, there was an impending deadline. The interest rate on student loans, which in the past had been set by statute by Congress without regard to what the underlying economics were at the time or what the borrowing rate of the Federal Government was--it was an arbitrary number set by Congress, and it was due to double. In July of 2013, it was due to double to 6.8 percent.

There was a proposal put forward by the leadership and by the Members on this side of the aisle which did not get sufficient votes. There was another proposal put forth by the Senators on the other side of the aisle which also didn't get enough votes. We were left with a situation with no proposal on the floor and an impending deadline that would have doubled rates for student loans for millions of students across the country. At that point, a small, bipartisan group of us got together and said: There has to be a better way to find a solution. We can't let this happen to our students.

This is a particularly important time of the year to talk about this because this is when students are finding out where they are going to college next year, they are making their arrangements for financial aid, and they are thinking about what their commitment will be. Well, as of this afternoon, those students are going to be able to breathe a bit of a sigh of relief because we just learned that the interest rate on student loans taken out for next year based upon the cost of borrowing for the U.S. Government will be 3.76 percent. That is the lowest it has been in a decade, and it is considerably below--by almost half--what it would have been had we not come to that solution on that hot summer day in the middle of the summer of 2013.

The group of people who worked on this and put it together were, as I said, a bipartisan group. The group consisted of Senator Richard Burr of North Carolina; Senator Manchin; Senator Tom Coburn, my friend from Oklahoma; Senator Alexander; Senator Tom Carper; Senator Dick Durbin; and Senator Tom Harkin. We had a lot of meetings, discussions, negotiations, and ultimately worked together to determine a fair and equitable way to set the rate for student loans from the Federal Government based upon the Federal Government's own cost of borrowing money and combined the best ideas from both plans. We got the strong support of the President, who encouraged the Democratic Members of our group to join in these negotiations, and we reached a consensus. The Bipartisan Student Loan Certainty Act passed this body with something like 80 votes, and that has made a real difference for our students.

Here are some numbers: $50 billion, $5 billion, $275 million. Those are the answers. What are the questions?

The first is, $50 billion is the amount of money students will save over the next 10 years based upon the difference of what the interest rate would have been and what it is going to be. This says 3.8 percent. We made this yesterday. It is actually lower; it is 3.76 percent. But this differential over 10 years equals $50 billion in the pockets of students across this country. That is a $5 billion-a-year difference in what they will have to pay in interest and what they would have paid had the law not been changed. That is an enormous amount of money for our students. In the State of Maine, the New America Foundation has estimated that this translates into over $275 million in interest savings to students just in the State of Maine.

Well, those are big numbers: $275 million, $50 billion, $5 billion. So what does it mean in reality to an individual student? Here is what we are talking about. Under the old law, an individual typical undergraduate would have paid $17,000 in interest as opposed to $10,000. That is at least $6,000 that goes into the pockets of our students. That is going to make a real difference.

I am delighted that we have had this success and that we have been able to report something that has actually been done right around here and then has truly benefited millions of students across this country, but we have plenty of work still to do. College is still too expensive. The burden of student debt generally is very heavy and weighs on not only the students but our economy. We need to reauthorize the Higher Education Act. We need to enact meaningful changes in the whole structure of how colleges can keep their prices affordable. We need to give students the tools they need to succeed. We also need to look at the structure of student loan programs to simplify, A, how you apply, and B, how you pay them back, how the structure is, and have simple, easily understood techniques to pay back according to your means, according to what you are earning at the time, an earnings-based repayment schedule so that students don't exit college with this enormous burden. One student told me: Senator, I feel like I have a mortgage but no house. That is essentially what is happening.

So what I am talking about today is truly good news, but it is not the end of the story and we should not say: Well, we have taken care of that issue. Let's move forward.

I do think every now and then it is important to acknowledge that occasionally the policies work out, and this is one that has worked out spectacularly for the students of America. Fifty billion dollars over the next 10 years will be saved by students who would otherwise be paying that money in interest, and that is money they can invest in their own futures and so can make a better life for themselves, their families, and our country.

I appreciate the opportunity to acknowledge the work that was done by this entire body and by the House and by the President to resolve what would have been a true crisis for our students and to move it toward a much more manageable solution. I look forward to continuing to work on this issue and to keeping in touch with Chairman Alexander and Members of this body who are interested in continuing to work on this issue of the cost of college and how student loans are structured in order to make them work most effectively and fairly for the young people of this country.

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