College Cost Reduction Act Of 2007

Floor Speech

COLLEGE COST REDUCTION ACT OF 2007 -- (Senate - July 17, 2007)

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Mr. REED. Mr. President, I rise today in strong support of the Higher Education Access Act of 2007, and I want to commend Senator Kennedy and Senator Enzi for their great leadership on this measure.

This very important legislation, which I helped craft as a member of the Senate Education Committee, makes a substantial Federal investment in need-based grant aid for low-income students and helps middle-class students and families pay down and manage their loan debt. It will be a significant contribution to the overall welfare of American families, and it will be the critical key, I believe, to opportunity in America.

Opportunity in America is a strong and direct function of education. Indeed, education is the engine that moves people forward. This legislation renews our commitment to ensuring that all Americans with the drive and talent to go to college are provided the financial means to do so. We understand how critical that is. A college education has now become increasingly necessary. In the generation of my parents, very few people went to college. It was seen as a special distinction, something that was, in some cases, unique. There was a society and an economy then that could accommodate people who graduated from high school who could then go on, with great dedication, diligence, and the skills they learned, to provide for their families and provide for their retirement.

Today, that has all changed. College is a necessity not only for the Nation in terms of expanding our intellectual capital but for families in order to make their way, in order to provide for a decent living, in order to provide for their children and to provide for their retirement.

College graduates, on average, earn 62 percent more than high school graduates. So college education pays off in the bottom line of American families. And, indeed, over a lifetime, the difference in wages between those with a high school diploma versus those with a bachelor's or higher degree exceeds one million dollars.

What we are seeing now in this society is troubling to me because we all understand the importance of an education. One of the key hallmarks in America is opportunity. We pride ourselves, going all the way back to Horatio Alger, as being a place where anyone with a little pluck and a little education can go a long way.

It turns out that recent research is showing that this opportunity is decreasing. Prior to the 1990s, the correlation between a parents' income and their children's income was approximately 20 percent, which is good because it means if you come from modest circumstances you have an 80-percent chance you will rise above your parents' income to the next level of economic well-being in this country. Now that was before the 1990s. In the 1990s, the number rose to 40 percent. So the difference between your parents' income and your income was getting closer and closer. You weren't rising as far above your parents. Today, economists estimate that 60 percent of a son's income is determined by the level of the income of his father.

So we are no longer a place in which you can far exceed your parents' income with a little pluck and a little education. The way we rectify that is to give more people the chance to obtain a higher education. As I have demonstrated with these statistics, that is the key to economic progress in this country. But it is also the key to social progress and maintaining the fabric of America.

As an individual moves through school, we hope they are not just learning about technical skills and applying that to the economy, but that they are also learning to be a good citizen and learning the values of America, values we hope will one day inspire the whole world in a very positive way.

To reverse this troubling trend, a trend in which opportunity is not as readily available in our society, we have to invest in education. I have the particular privilege of being the successor to Senator Claiborne Pell. He recognized in the 1960s that education was the key. We have named, and rightfully so, the Pell grant after Claiborne Pell. He understood profoundly that if you let Americans with drive and talent go on to college, and provide them with the financial resources to do so, they will do great things, and they will compel this country to do great things.

I would say that a lot of the great breakthroughs which have been translated into today's robust economy stem from the fact that 30 years ago, beginning with my generation, young men and women with drive and talent had a chance to go on to college. There are so many people today who are captains of industry, there are so many people today who have invented new products, who have deployed these products into the commercial realm, and they have done so because they went to college and beyond. In another generation they might have had the talent but would have ended up doing something much less educationally advanced because they didn't have a college education. That is a huge insight and a huge contribution to this country.

This legislation builds on Senator Pell's legacy and takes significant steps toward making college more affordable and ensuring that students with talent go forth and get a college degree. I am particularly pleased that under this legislation Rhode Island students will be eligible for an additional $10 million in need-based grant aid next year, and over $86 million in the next 5 years. That is a tremendous input of additional federal financial resources.

The effect of this bill's investment in need-based grant aid is to increase the maximum grant for Pell-eligible students from $4,310 to $5,100 next year and to $5,400 by the year 2011.

That increases the average grant in Rhode Island from $430 in 2008 to $2,870.

I am also pleased, as has been discussed by my colleagues, that this legislation includes provisions from my Financial Aid Form Simplification and Access Act, or FAFSA Act, to significantly increase the number of students automatically eligible for the maximum Pell grant and to reduce the penalty faced by students when they work in order to pay for college.

Specifically, the increase in the Auto-Zero Expected Family Contribution ensures that all students from families with incomes of $30,000 or less will receive a maximum Pell grant. Currently, only families making $20,000 or less automatically qualify for such grants. This provision not only increases the number of low-income students eligible for need-based aid, but also simplifies the financial aid process by providing such students with early information and assurances of financial aid for college.

Additionally, the income protection allowance protects students who have to work during college so they can earn more without having it count against their financial aid. This legislation doubles the income protection allowance for dependent students from $3,000 to $6,000 over 4 years, and increases the income protection allowance for independent students, including adult learners, veterans, and those students in foster care, by 50 percent over 4 years.

We should reward work, not penalize it. We should recognize that, in today's economy, the price of going to school and of getting to school is going up and up. Many students have to work. As such, these increases will help students and families better afford a college education by stemming the perverse income protection limits that punish students and parents who must work one, two, or more jobs to pay for college.

I am also pleased that the legislation includes provisions to stem the increasing numbers of middle-class families falling further and further into debt to finance a college education. In Rhode Island, 61 percent of students graduating from 4-year institutions in the 2004-2005 school year graduated with debt at an average of over $20,000 per student. The Higher Education Access Act will help students manage their debt by capping student loan payments at 15 percent of a borrower's discretionary income and forgiving all debt on such loans after 25 years.

So as young people emerge from college with this debt, their payments will be capped, and at some point their loans will be discharged. I think that gives real incentives and real help to people coming out of school, middle-class students who had to borrow money to go to school, and now they can go ahead and discharge those payments over many years at a rate they can afford.

It will also provide loan forgiveness for borrowers who continue in public service careers for 10 years. This is an important aspect. There are so many talented people who want to go into teaching or health care professions, but with all this debt they literally cannot afford to. This legislation gives them an opportunity not only to do what they want to do but to serve their community without being penalized because they have to borrow to get through their college education.

It also helps our military members and families by expanding loan deferments for Active-Duty military service. Certainly there is no group of persons today who deserve that kind of consideration more than our military members and their families.

I hope we build on this legislation by promptly taking up the long overdue reauthorization of the Higher Education Act, which passed the Education Committee unanimously last month and includes provisions I authored to simplify the financial aid process and forms; improve the Leveraging Education Assistance Partnership--or LEAP--Program and forge greater state investments in need based grant aid; strengthen college teacher preparation programs; and provide loan forgiveness for librarians.

This is significant legislation. It is important for families in Rhode Island and across the Nation. Let me again commend Senator Kennedy and Senator Enzi for their excellent work on this bill. I look forward to working with my colleagues to ensure that this legislation becomes law.

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