College Cost Reduction Act of 2007

Floor Speech

COLLEGE COST REDUCTION ACT OF 2007 -- (Senate - July 19, 2007)

BREAK IN TRANSCRIPT

Mr. DURBIN. I ask my friend from Rhode Island to take note of the fact that we are conscious of Senator Pell's great contributions to America. The Pell grants have helped a lot of young people in unfortunate circumstances have a chance to succeed in life. It is a wonderful legacy. I know you see him from time to time, and I hope you will tell him we haven't forgotten the great contribution he made to this Nation.

Mr. WHITEHOUSE. I will be sure to do that.

Mr. DURBIN. I stand here today because of a number of things. I am fortunate to have a good family, friends, and role models, fortunate to have good luck in politics, and fortunate that in 1957, the Soviets launched a satellite. It is one of the reasons I am standing here. The satellite was known as Sputnik. Sputnik was the first satellite launched into outer space, and the United States, which thought it was the most powerful Nation in the world, stepped back on its heels, couldn't believe it: the Soviets had launched a satellite, and we knew they had nuclear weapons. A panic spread across Washington, DC, and the Nation: The Soviets are winning the space race; they could conquer the United States; if they can find a way to put that nuclear weapon into a satellite, we could never knock it down.

What did Congress do? It did something that was breathtaking and unprecedented. It decided the best way to fight the Soviets was to make sure we had a force that could equal the Soviets, not just a military force--we always had a great military--but a force of private citizens with the training and knowledge to compete with the Soviet Union and every other country that might be our enemy in the future.

There was an obscure Congressman who came up with an idea: Why doesn't the Federal Government loan money to college students?

Nobody thought of that before. It was radical. Some said it was too big, the Government was getting too involved. But he prevailed in the fear and the climate in the post-Sputnik era.

So they created something called the National Defense Education Act. It was in place in the early 1960s. The National Defense Education Act said to America's high school graduates: Go to college. Get educated. We need you in America for our future, for our defense.

Well, there were a number of young people who heard that message, and I was one of them. So I borrowed money through the National Defense Education Act to go to college and law school, at a time when I could never have afforded to do it otherwise. The terms were very reasonable. Under the terms of the National Defense Education Act, you borrowed money throughout your academic career, and then, 1 year after graduation, you had to start paying it back. So they gave you a year to get back on your feet. The interest rate was capped at 3 percent. Think about that. So I paid it back over 10 years, even though when I graduated I did not think it was possible. It turned out to be fairly simple because with my law degree and college education, I made a little bit more money, so I could pay back my student loan.

Now, repeat that story millions of times over, and you have an explanation as to why America is where it is today. We decided to invest as a nation in making certain we had a new generation of college graduates. We took higher education, which had been fairly elite to that point in our history, and democratized it. It was no longer just the smartest kids and the richest kids and the sons and daughters of alumni who were admitted to colleges and universities. Now, this kid from East Saint Louis, IL, whose mother and father went as far as the eighth grade, had his chance, and many more like me. Well, I would like to think, as I stand here today, that Government program paid off not only for me but for this Nation, and that story is repeated over and over again.

But now what has happened? What has happened is that the cost of education has gone up dramatically. I took a look at what I paid at Georgetown University in the early 1960s, and I would be embarrassed to tell you the numbers. It did not take much to get through a university in those days. You could borrow $1,000 a year and make it through if you worked during the school year and worked during the summer and were careful with your expenses.

That is, of course, not even close to the reality of today. Whether it is a public university or private university, the cost has gone up substantially. Students, as good as they are, when admitted to those schools understand that if they do not receive a lot of financial assistance, they will have to borrow some money. Borrowing that money, heaping up that debt, means as they graduate they have a burden they never anticipated--not the burden I faced back in 1969 but a much greater burden today for the cost of higher education.

Then the scene changed. We went from the National Defense Education Act--a Government program with a fixed rate of interest--and decided: Well, let's let the private sector get into this. And they did. First, we had an organization called Sally Mae, which was created as kind of a quasi-Government operation, which was going to be a transition between the private sector and public sector. Well, over the years, Sally Mae evolved into a completely private corporation. It is now one of if not the largest student loan lender in America. It is also one of the most profitable businesses on the New York Stock Exchange. Think of it. This lender, loaning money to our children and the next generation of Americans, is flush with cash. They are making a lot of money. They are doing it, quite honestly, at the expense of these kids. A lot of these young people sign up for loans, and they have no idea what they are signing up for.

If you think I am being critical of them, I will also quickly add that very few of us flip over the monthly credit card statement to read the fine print about what we are getting into. We just trust everything is going to work out.

Well, for a lot of young students, they sign up for loans which dramatically increase in cost. For example, it is not unusual for a student to borrow money in his freshman year and then be told: Don't worry, you don't have to pay anything back while you are still in school. The student breathes a sigh of relief and continues on and borrows some money the next year. But many times, the loans they are borrowing are increasing in cost each year while they are not making a payment. The $5,000 you borrow in your freshman year that you do not pay back for 3 or 4 years turns out to be $10,000 at graduation. Now, multiply that times four, and you get an idea what students are into. So the debt students carry out of colleges and universities is much higher today. Companies such as Sally Mae are very profitable, at the expense of these students.

Now, the companies--like Sally Mae--argue: Could you think of a worse risk than a recent graduate from high school? We are willing to run that risk of loaning money to that high school graduate, uncertain as to whether they will graduate or ever find a job. So you have to give us a break.

I will concede that point. But when you take a look at the actual cost of the loan, it is pretty clear this industry is doing more than covering its risk; it is making an awful lot of money.

Senator Kennedy has been our leader on this issue. This bill we have before us today is a bill which will dramatically change the kinds of student loans which will be available and student assistance available to students across America. I think it is long overdue. We need to make certain we have money available for young people to go to school, under terms where they can afford to repay. That is part of this bill--a big part of this bill.

The average student in America today is graduating with nearly $20,000 in debt. In many places, that is more than a downpayment on a home. So how do we expect our kids to prosper if they spend the next 10 to 20 years digging out of a financial hole?

The Pell grants, which Senator Whitehouse just referred to, are basically scholarships given to the lowest income students. It is the right thing to do to give these kids a fighting chance. Until the changes offered in this bill we are considering today, the maximum Pell grant did not change for 5 years. What happened to the cost of college education in 5 years? It went up. So students trying to make up the difference had to borrow more money.

Interest rates on a program called the Stafford loans went up last year. In fact, last year President Bush signed a bill passed in the Republican Congress which increased the interest rates on student loans. Think about that. Congratulations, recent graduate, your Government has just given you a bigger mortgage to pay in terms of your student loan. That is what we did.

We also limited the opportunity of students to consolidate their loans and bargain them into lower interest rates. My wife and I own a home in Springfield, IL. When a good mortgage rate comes along, we talk about refinancing our home. Most people do. Students, under the bill signed by President Bush, unfortunately, were limited as to how and when they could consolidate their loans and look for lower interest rates.

Even with these Pell grants, Stafford loans, work income, and, if a student is lucky enough, scholarships, many young people are forced to turn to private student loans to pay for college.

What about private student loans? I had a couple come into my office a few weeks ago. They are in the private student loan business. They said they were just trying to fill in the gaps that the Pell grants and the Government loans did not take care of.

So I asked them: ``What is the interest rate you charge on these student loans?''

She said: ``oh, it's about 8 percent.''

I said: ``Now, is that the highest rate?''

``No. The highest rate is 19 percent.''

Quite a difference. Think about your home mortgage at 8 percent as opposed to 19 percent. Think about the possibility you will ever pay that loan off.

Oh, incidentally, something happened on the floor of the Senate that people did not notice. Senator Kennedy did. Remember when we had the bankruptcy bill up. Do you recall what we did in the bankruptcy bill? Let's go back in history for a minute.

There was a time when some students who had borrowed money from the Government to go to school waited until they graduated and filed bankruptcy, discharging their student loans in bankruptcy, never paying them back. We said: Wait a minute, if the Government is going to pay for your education, then you have an obligation to pay it back because that money goes to another student. It gives another student an opportunity. So we said under the bankruptcy law that you cannot discharge a Government student loan in bankruptcy.

Well, in the last bankruptcy bill, the people who are in the companies with private student loans put themselves in the same category. So if a student, unknowingly, signs up for a 19-percent college loan and then gets out of school and has an illness, ends up they cannot find a job, and files for bankruptcy, they are stuck with not only a Government loan but these private companies and their loans. They will haunt that student to the grave. That person cannot discharge that loan in bankruptcy under any conditions except the most extreme financial circumstances.

This bill is long overdue. According to the College Board, tuition, fees, and room and board at public 4-year schools have risen by 42 percent over the past 5 years--from $9,000 to almost $13,000.

I wish to make that point. I have fought, as Senator Kennedy has, for better terms in student loans, larger Pell grants, more direct loans from colleges to students to take the lending institution and the middle man out of the operation, and I will continue to do it. But make no mistake, we are shoveling against the tide with this legislation. If colleges and universities decide: Well, if they are going to loan them more money at lower interest rates, we will just raise our cost--they have been doing that year after year after year. So my message, in voting for this bill, to colleges and universities is that we certainly expect them to use restraint and good judgment in terms of what they are charging students today.

Let me give you one footnote to that. Twenty-five percent of the debt college students take out of college is because of expenses at the bookstore. If you as a student sign up for a course, and you are about to take the course, you notice there are a handful of textbooks you have to buy. You go down to your bookstore to buy the textbooks and find out that textbook, which is only for sale at this bookstore, costs $100. Not unusual. Well, it turns out in any given semester a student could end up with hundreds of dollars of debts just for textbooks.

I made a proposal, introduced a bill, which we will bring up at a later time when the Higher Education Act comes before us, that basically requires colleges and universities to disclose to students the textbooks and the costs as part of their course offerings. Oh, textbook publishers scream bloody murder: How could you do that? How could you require us to disclose the costs of our textbooks before the students sign up for the course? And the professors say that inhibits academic freedom. No, it does not. They can pick any textbook they want.

We do something else: We also require them to put in what is known as the ISBN code. This is a universal code for a book. Why? So the students can go shopping on the Internet. Maybe they can find that textbook a lot cheaper. I do not think that is a bad idea in this day of Internet sales. Well, we do not have it as part of this bill, but we will offer it as part of the next bill. But colleges and universities which are dedicated to bringing down costs for students ought to take a look at not only tuition and room and board but the cost in the school bookstores as well.

I am pleased that the Senate is considering this Higher Education Access Act today. It is going to help a lot of students.

Many of us have been calling for an increase in the Pell grant for years, none more vocally than the Senator from Massachusetts.

Twenty years ago, the maximum Pell grant for low-income and working-class kids covered about 55 percent of the cost of a 4-year public education. Today, the maximum of $4,050 covers 30 percent--almost half of what it covered a few years ago. The bill on the floor today will raise the maximum Pell grant to $5,100 next year and $5,400 by the year 2011. I am glad the Senate defeated an earlier amendment which would have reduced that amount. I think the Senate showed good judgment, understanding the Pell grant is really absolutely essential for a lot of kids from low-income families.

Over the next 6 years, this bill will provide over $850 million in new grant aid to students in my State of Illinois. This will do a great deal to help the neediest students get a college education. This bill will cap monthly student loan payments at 15 percent of a student's discretionary income. I talked to Senator Kennedy about this earlier, and I believe he is moving in the right direction, so that students will realize that when they graduate they will not have to pay any more, each year, than 15 percent of their discretionary income.

That is going to give them some relief in terms of their repayments and give them some opportunities to choose jobs they really want.

I have run into students--and I bet the Presiding Officer has too--who really want to be teachers, and we need them as teachers. But when they end up with $20,000 to $30,000 in student loan debts, they take a job which pays a little bit more so they can have a basic life and still pay off their student loans. This bill is going to help students understand they won't have to repay more than 15 percent of their discretionary income if they work in certain professions that have public importance to us.

I can't tell you the number of college graduates who have come to me asking for relief from these high monthly student loan repayments. Many of them are just starting careers and barely scraping through. So I think this is a positive aspect of the bill. It will cover teachers. It will cover those who go into public defense, prosecutors, legal aid attorneys, and many others. It will accomplish all of this, not only to the benefit of these students but to the benefit of America.

We are actually reducing the deficit with this bill, I might add, through cuts to the already substantial Federal subsidies to the lenders. The lenders are going to claim we have gone too far. A recent study shows that lenders spent less than one-tenth of 1 percent of their subsidy on benefits for borrowers. That means the average borrower saves only $118 through lender benefits. Let's not forget that these are the same lenders who many times have been involved in the scandals we have been reading about in the newspapers; lenders like Sallie Mae, whose former CEO Albert Lord used his generous compensation package to build a private, personal, 18-hole golf course in suburban Maryland. Well, it is time for Mr. Lord and his ilk to step aside. It is time for Congress to take control of the situation again. It is time to be more sensitive to the students and their families than to the wealthy owners of these limited corporations.

An investment in education is an investment in our Nation. The cost of education is a hurdle for many students, and we can help them clear that hurdle with this bill. If America is going to succeed in the 21st century, if our college graduates are going to be ready for that challenge, we need to make certain they have the best education. Bright, hard-working students deserve the best opportunity to receive an education, and we can't afford not to invest in them. I encourage my colleagues to vote for the Higher Education Access Act.

DREAM ACT

I would like to say one final word, and I know the Presiding Officer is very sensitive to this issue as well. I don't think it will be possible on this bill, but I will look for every bill I can to introduce legislation known as the DREAM Act.

Today in America, we have tens of thousands of high school graduates in undocumented status. These are people, young people, who came to America as children, brought here by their parents; many of them have never known another country. They have grown up here. They have graduated high school, and they want to be part of America's future. But because they don't have a legal status in this country, they are uncertain as to whether they can go to college and if they graduate, whether they can even work here. At a time when we are importing tens of thousands of workers into America legally, with visas, to supplement our workforce, why would we turn these young people away?

So for the past 5 years, I have been fighting for this DREAM Act. I have had the strong bipartisan support of many of my colleagues, and I thank them for it. It is basic. If you came to America before the age of 16, if you have been here at least 5 years, if you graduated high school, and if you are able to complete 2 years of college or enlist in our military, you will have a path to legalization. That is what it boils down to.

I have met a lot of these young people. I know the Presiding Officer has too. These are some of the best and brightest, the most idealistic and energetic people you are ever going to meet. They are young people who want to be part of America's future.

I have talked to the sponsor of this legislation. I am not sure we can put this as an amendment on this bill, but I wish to remind my colleagues that as we speak about college education and the future of America, we should understand there is a group out there yearning for an opportunity to make this a better Nation through the DREAM Act.

Mr. KENNEDY. Mr. President, would the Senator be good enough to yield for a question?

Mr. DURBIN. I am happy to do that.

Mr. KENNEDY. Mr. President, I have heard the Senator speak very eloquently today about the elements of the legislation and his outline of his strong, continuing, ongoing support for the DREAM Act which I welcome the opportunity to support and will work very closely with him to try to achieve this very important legislation.

I have listened to him also talk about the division that is in America--whether we are growing as one country or whether we are finding out that we are really growing as different nations.

The Senator remembers very well, in the postwar period, if you look back at the economics, the lowest income, the medium income, the highest income families--all of them moved along together. They all improved together. We had the GI Bill which, over a 6-year period, invested the equivalent of a third of the total Federal budget for the year 1951. That is the kind of priority we had as a nation in terms of education, and many believe it is the principal cause of the creation of the great middle class in our country, the backbone and the strength of our democracy, our economy, and our national security.

I listened to the Senator talk about the DREAM Act, but I have also listened to him talk about the divisions that exist in our country. This is a chart here, which is really self-explanatory, which shows that low-income students are far less likely to graduate from college. This is what is happening today. As one who is committed to seeing that we are going to be one country with one history and one destiny, does it not underline the point that we have important responsibilities to try to ensure that all students, regardless of family income, can earn a college degree?

I am interested in, if we are really talking about the divisions that exist in our country--we see them so dramatically in the area of education--whether we have some real responsibility to try to equalize those disparities, and would he not agree with me that if we don't do that, we are going to be a nation that is going to continue to be a divided country with all of the implications that it has in terms of fairness and equality and opportunity for the future?

Mr. DURBIN. I would agree with the Senator from Massachusetts. When you consider the fact that low-income students in America today and minority students are about 50 percent likely to graduate from high school--many of them drop out--they are out there. They are somewhere in America. They haven't reached their full potential and may never.

What the Senator shows us with this chart is that those who are lucky enough to get started toward earning a college degree--and the lower income categories have the toughest time--you have to believe, as I do, that many of those students who don't finish is because of financial reasons. These are students who are struggling and doing their best. I have seen them.

I can recall a young student in Springfield attending Lincoln Land Community College. She was a young woman who had a child while she was in high school, but she was determined that she was going to make it through college. She used to take her baby with her on a bus out to our community college, which is not in town but in the outskirts, and she had to get the last bus back into town every night. When I think about the sacrifice she was making to take that baby and catch that bus and make it out there, you knew how much she wanted it, but you also knew that she was right on the edge financially at any given moment, whether she could complete her education.

So what you are doing in this bill in giving these students a helping hand is not only going to mean more college graduates but, to the point the Senator raised, it is going to result in a fairer society in America, more opportunity, so that the disparity between incomes, the highest and lowest levels in America, is reduced. I thank the Senator for his leadership.

Mr. KENNEDY. Mr. President, the Senator may remember the extraordinary work that was done in this area of education by a former mentor of his and a very close personal friend of ours, Senator Simon of Illinois. Whenever we had the debate on higher education, he always reminded me of the great debate we had in this country in 1960.

One of the principal issues that divided the two political parties at that time was the issue of education. At that time, Senator Kennedy believed that what we ought to have in higher education is a program that is going to give assurance to every young person in this country that if they have the ability to gain entrance into any college, that regardless of their resources, they were going to be able to put together a student aid package that would permit them to go where their talent leads them. He believed the country was a lesser country unless we were going to have that opportunity. Talent was going to be lost in terms of our Nation and our people. That was basically the philosophy behind the Higher Education Act.

As my colleague knows, two years ago the maximum Pell grant covered 55 percent of the costs at a public four-year college. Of course, that has completely been reversed in recent years, with the resulting disparity we see here. The maximum Pell grant covers just one third of the costs today.

Does the Senator not agree with me that we ought to at least set the goal that ideal we had at the time of the passage of the act; that is, any young person who has the ability and wants to work, can put together whatever their family can contribute and receive the aid they need to attend college. But we ought to, as an ideal and as a nation, move toward that particular goal where we are going to give assurance to every young person that if they work hard, they can afford a higher education. This is a matter of national priority; our belief in young people, our belief in their families, and our belief in the future of this country demands it.

I was always impressed by Congressman Silvio Conte, who is a Republican, and like so many people in this body--we heard from Senator Murray who talked about members of her family who are all professionals now who got the Pell grants, and Senator Cantwell, a very successful entrepreneur before she entered the Senate.

Does the Senator agree with me that this is an investment we should be involved in as a matter of national priorities, and that we ought to be, as a country and as a people, really leading the way toward having a goal of providing that kind of help and assistance to our country as well as to the individuals?

Mr. DURBIN. I certainly agree. When someone like Bill Gates of Microsoft comes and says: You have to give me visas so I can bring in foreign-trained engineers for my expanding information technology company, it really is a challenge to us. Why aren't we producing engineers here at home?

It comes to this point: Will there be the kind of support, financial support for those promising students to get into math and science and engineering
or will they be discouraged at an early age and give up on it?

The same thing is true--and I know the Senator from Massachusetts is well aware of it--when it comes to the field of nursing. We are just a few years away from being 1 million nurses short of what we need in America. As the baby boomer generation reaches a point where it needs more medical help, there will be fewer medical professionals available. We don't want to see that happen. It compromises the quality of care and also puts pressure on the United States to poach--to go after medical professionals in developing countries to attract them to the United States.

So when we talk about this investment in education, it means a lot to the high-tech industry. It means a lot to every American in terms of basic health care. It means a great deal when it comes to the teachers we need.

I had the university presidents, several of them from Illinois, in my office just a few weeks ago, and they talked about math and science skills, how that is the one thing that troubles them as they look ahead, that our students aren't keeping up in the world in terms of developing their math and science skills. How do they reach that point? Better classroom teachers, which means more young people graduating college, going into the teaching profession, who can make that call because they are not worried about paying back their debt.

It all works together. If we start cutting back in terms of higher education, arguing we can't afford it, we will pay for it for decades to come.

Mr. KENNEDY. Mr. President, finally, the Senator remembers that this body passed the COMPETE Act, which was legislation that came out of our committee--Senator Bingaman from New Mexico, Senator Alexander from Tennessee were leaders on that bill--which had very strong, virtually universal support here, which gave focus in terms of encouragement in the areas of math and science and engineering. This is something, I know the Senator agrees, we ought to make sure we are going to invest in.

When we passed the GI bill, over those 6 years, we produced 450,000 engineers--450,000. We had three Presidents of the United States who used the GI bill, three Justices who served on the Supreme Court of the United States, and several Senators who were educated under the GI bill. This is investing in education.

We know what to do. The question is whether we have the will and whether the American people are going to be responding to this challenge.

I thank the Senator. I think we have work to do in this area. We have been able to find additional resources for the downpayment toward closing these gaps, and I give the assurance to the Senator that we will work closely with him to make sure we get the DREAM Act achieved and passed and we will also continue to eliminate the disparities in these charts.

Mr. DURBIN. I thank the Senator. I encourage my colleagues to support passage of the bill.

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