Statements on Introduced Bills and Joint Resolutions

Floor Speech

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Mr. REED. Mr. President, today I introduce with my colleagues Senators WHITEHOUSE, SANDERS, STABENOW, and FRANKEN legislation to stop the student loan interest rate from doubling on July 1 of this year.

This is an issue that weighs heavily on many of Rhode Island's students and families who rely on student loans to finance college. Rhode Island's college graduates have the ninth highest student debt total in the Nation, according to a recent study by the Project on Student Debt. In Rhode Island, 67 percent of students graduating from four-year colleges and universities in the 2010 school year had debt averaging over $26,300.

Nationwide, the Department of Education estimates that more than 10 million students will borrow subsidized Stafford Loans in fiscal year 2012. Unless we act soon, they will see their interest rates double for the upcoming academic year.

In 2007, Congress made a historic investment in higher education by passing the College Cost Reduction and Access Act. Included in this law was a provision that reduced the fixed interest rate on Stafford Loans for undergraduate students from 6.8 percent to 3.4 percent over a 4 year period, easing the financial burden on millions of students and their families.

This was the right investment to make for our future. Today, education, particularly higher education, is even more essential than ever. In 1980, the gap between the lifetime earnings of a college graduate and a high school graduate was 40 percent. In 2010, it was 74 percent. By 2025, it is projected to be 96 percent. Since at least the 1980s, we have not been producing a sufficient number of college-educated workers to meet the demand of a more sophisticated and challenging economy driven by global competition. Indeed, our country lags behind in college education, ranking 14 in international comparisons of college graduates. For young adults, ages 25 to 34, we rank 16.

This is no time to make financing a college education more expensive for middle class families. Yet, absent enacting this legislation, that is what will happen. According to an analysis by U.S. PIRG, allowing the interest rate to double could cost borrowers who take out the maximum $23,000 in subsidized student loans approximately $5,000 more over a 10-year repayment period.

The subsidized student loan program for undergraduates is highly targeted to low- and middle-income families. Approximately 37 percent of the dependent borrowers in this program come from families with annual incomes of less than $40,000. An additional 21.6 percent of students receiving subsidized students loans come from families with incomes between $40,000 and 60,000 per year. These students receive very little, if any, benefit from the Pell grant program but still have significant financial need. The subsidized student loan program is our main vehicle for addressing that need.

Tax loopholes and giveaways that let the biggest companies ship jobs overseas cost roughly $37 billion over ten years. Loopholes like this one should be ended, with those savings used to prevent an increase in college costs, which are already a crushing burden on families. Indeed, those savings are more than enough to extend the student loan interest rate at least through the next reauthorization of the Higher Education Act, expected in 2014. I would that my colleagues on both sides of the aisle will support helping millions of middle class families finance a college education over continuing to provide incentives for companies to take jobs and their investments overseas. In his State of the Union Address, President Obama called on Congress to prevent this doubling of student loan rates. As families continue to struggle with the rising cost of college and newly minted graduates face the toughest job market since the Great Depression, it is vital that we protect middle class families and their children from higher student loan rates.

I urge my colleagues to join me in cosponsoring and pressing for passage of this legislation.

Mr. President, I ask unanimous consent that the text of the bill be printed in the RECORD.

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