Agriculture Reform, Food, and Jobs Act--Motion to Proceed--Resumed

Floor Speech

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Mr. DURBIN. I just left a meeting a few feet away from here with the leaders of some of the American colleges and universities. They came to brief us on a challenge we face across America that we had better be aware of. It is the growing student loan debt.

Just in October 1 year ago, student loan debt in America surpassed credit card debt. It is now $1 trillion. More and more students are going more deeply into debt, which many of them can never repay. Student loan debt is different than other debt. It is different because one cannot discharge it in bankruptcy, which means it is a debt they will carry for a lifetime.

Imagine someone who is 19, 20 years old, that they have been told as long as they have been on this Earth education is the key to the future, and they are sitting across the table from a financial counselor who says they have been accepted at this college. All they need to do is sign up right here for a loan.

What is the natural instinct? Of course, it is to sign on the dotted line: I am doing what I was told to do; I am going to the best school I can get into; I am going to borrow the money and make it happen and my life will be successful and I will pay the money back.

The formula is right, but there are problems. If they drop out of school,
they end up with no diploma, just debt. If they go to a bad school, they end up with a worthless diploma and debt. If they end up, unfortunately, in some aspects of life, occupations and professions, it may take decades to pay off a debt. The average student loan debt is about $25,000 once someone has completed 4 years of education.

We have asked students across Illinois and across the Nation to tell us their stories and the student loan debts go as high as $100,000 and more for 4 years of education. Many of these students are finding themselves in an impossible predicament, where they literally cannot get on with their lives, cannot find a job and, unfortunately, are still stuck with the debt.

They are lucky, incidentally, if they are dealing with a Federal student loan guaranteed debt, so-called Stafford loans, because that is 3.4 percent interest. There are ways they can have that debt forgiven and consolidated. It is a flexible type of debt guaranteed by the Federal Government.

But if they step over that line of Federal Government debt and get into a private student loan, hang on tight. The interest rates go from 3.4 percent to the heavens, 18-percent credit card rate debts. Interest rates are not uncommon when it comes to these private loans. Students find themselves being swallowed by debt they cannot repay that is unfortunately compounded and just goes from bad to worse, to even worse.

Students I have run into thought they were doing the right thing. They went to some of these worthless for-profit schools. They can hardly avoid them. If one gets on the Internet and punches in the search engine for ``college'' or ``universities,'' hang on tight. They are about to be inundated with ads from for-profit schools that tell just how easy it is to get a college diploma.

All you have to do is sign up. They used to run an ad here on one of the television stations in Washington. It showed a pretty young girl and she was lounging on her bed with her laptop computer and she said: I am going to college in my pajamas. That kind of come-on--to suggest you can get a worthy college diploma through a for-profit school--unfortunately lures many of these kids into a mountain of debt and worthless diplomas from this for-profit industry--the most heavily subsidized private business in America.

Ninety percent of the money that for-profit schools have in revenue comes right from the Federal Government. Heck, they ought to have their employees join a Federal employees union for that matter because 90 percent of their revenue comes right out of the Federal Treasury. Students end up with the debt and a worthless diploma.

Last week, the quarterly report on household debt of the Federal Reserve Bank of New York found that student loan debt hit $904 billion in the first quarter of 2012, up from $241 billion just 10 years ago. That is a 275-percent increase since the same period in 2003. The Consumer Financial Protection Bureau--which many people on the other side of the aisle would like to put out of business--the only leading consumer protection bureau in the Federal Government, estimates that outstanding student loan debt may be even higher, up to $1 trillion.

Students continue to pile on the debt, even as America--most Americans--cut back on other forms of credit, such as mortgage and credit cards. According to a senior economist at the New York Federal Reserve Bank:

It remains the only form of consumer debt to substantially increase since the peak of household debt in 2008.

The hole just gets deeper for students and the families borrowing money for higher education. Students are graduating with massive amounts of debt and having a very difficult time paying it back. Delinquency rates for student loans are higher than rates for mortgages or automobile loans.

Every week, I hear from students drowning in debt, and I don't mean just recent graduates. Some of the borrowers are in their thirties and forties, even older, and still paying off student loans or paying off private student loans they cosigned for their children or grandchildren. Student loan debt has serious consequences for families and for our economy. In a recent survey of college graduates by Rutgers University, 40 percent of the participants said they delayed making a major purchase, such as a home or car, because of student debt. More than one-quarter of those surveyed put off continuing their education or had moved in with relatives to save money to pay their student loans.

Private student loans don't come with the same consumer protections and payment plans Federal loans offer. Senator Tom Harkin of Iowa, chairman of our Senate education committee, introduced a bill with me to help families understand the difference between the Federal student loan and private student loans. We call it the Know Before You Owe Private Student Loan Act. It would require private student loan lenders to confirm the potential borrower's enrollment status and cost of attendance. The bill would also require institutions to counsel students about the difference between Federal and private student loans. Many students just don't know the difference.

The come-on is, listen, we have only one sheet of paper you have to fill out and you will get a private loan or do you want to go through five sheets of paper over here for the Federal Government? This is easier. Easier, yes, but a debt that is going to be much more serious for you in years to come.

Last week, the attorneys general from 22 States wrote to Members of the House and Senate asking that Congress fix the so-called 90 10 loophole. The 90 10 rule, as it is currently written, requires for-profit colleges to receive at least 10 percent of their revenue from something other than the Federal Government--10 percent. But current law considers Federal sources only those funds from the Department of Education's title IV Federal financial aid programs, which includes Pell grants and federally guaranteed student loans. Other Federal subsidies for students, such as GI bill funds and the Department of Defense tuition assistance, aren't counted.

The attorneys general across America once again are ahead of Congress. They recognize that including GI bill and DOD funds will eliminate the powerful incentive the for-profit colleges have to recruit veterans and Active military in order to comply with the 90 10 rule.

Holly Petraeus is the wife of General Petraeus. Her husband is a true American hero. She has stood by his side through all his military assignments, dearly loves the military and their families. She works for the Consumer Financial Protection Bureau. Her specialty is to find those rip-off institutions that are going after veterans to try to soak up their GI bill benefits for a worthless education.

How did we reach this point? Why are we, at this moment in time, where we are--facing this student loan debt bomb. Years ago, with widespread reports of waste, fraud, and abuse in the for-profit college sector, Congress created the 85 15 rule to weed out fraudulent fly-by-night schools that relied almost entirely on taxpayer dollars. The 85 15 rule said a school could take in no more than 85 percent of its revenue from the Federal Government. The other 15 had to come from other sources. It worked, and many of the worst schools, fortunately, closed.

In 1998, the rule was loosened to 90 10--90 percent Federal subsidy. Now we see we need to return to the original intent of the law and crack down on these for-profit schools that are taking advantage of veterans, servicemembers, and students across the board.

In January, Senator Harkin and I introduced the Protect Our Students and Taxpayers Act--the POST Act--that will make several changes to the 90 10 rule. To better protect the students and our taxpayer dollars, the POST Act would reinstate the original 85 15 ratio, and the bill would change the definition of what is considered Federal revenue.

This may sound like bureaucratic gobbledygook, but let's get to the bottom line. If an institution needs to rely on the Federal Treasury for 90 percent of their revenue to exist as a school, there is a serious question about whether they are a real school. If the students make no contribution--or only 10 percent toward their education--then, frankly, what they are doing is just milking the

Federal Treasury to keep the lights on at their school. I might add, these for-profit schools are highly profitable. Some of the biggest investment counselors and managers in America invest in these schools because they are money machines. They bring their money directly from the Federal Government, with no guarantee that students will end up with an education.

The numbers I return to time and again tell the story. Ten percent of students finishing high school--10 percent--end up in for-profit schools--10 percent. Yet these for-profit schools eat up to 25 percent of all Federal aid to education. They are sucking in the Pell grants and the Stafford loans and then--hang on--they have a student loan default rate almost twice the level of other colleges and universities. What does that tell us? They have come up with an economic model which reaches deep in the Treasury to bring in money to keep the lights on and to pay their CEOs very generous salaries. They are also, of course, loaning money to students, and those students are defaulting, unable to repay their student loans at twice the rate of other colleges and universities.

You might say to yourself: Well, Senator, if that is the case, why don't you do something about it? The problem is the for-profit school industry in America is one of the most politically wired industries in this country. They have friends in high places, and it is very difficult to get reform legislation through the House or the Senate when they are so politically connected. Yet Senator Harkin and I believe it is worth the effort, and we are going to ask our colleagues to join us in that effort.

What is worse is that students are aggressively recruited to attend these colleges, lured into taking out massive amounts of debt and may not even graduate. Think about that. A study published earlier this year by the Education Sector shows that the borrowers who drop out are more than four times more likely than those who graduate to default on their college loans because they are more likely to be unemployed and earn less when they do get a job. The dropout rates rose across all kinds of colleges, but the biggest increases were found in the for-profit 4-year institutions, where a staggering 54 percent of those who had borrowed to pursue a bachelor's degree dropped out of school--more than half. The study showed 16.8 percent of dropouts defaulted on their loans compared with 3.7 percent of those who graduated.

What difference does it make to these for-profit universities? They got their money.

Alexander Brooks recently contacted my office about his student debt. Alexander is from Normal, IL, and graduated in 2006 with a degree in computer networking from ITT, a for-profit institution. Alex never got a job in his field. He drives a schoolbus to pay his rent, even though he has this so-called degree in computer networking. He said he would like to get married to his long-time girlfriend, but he doesn't want to have her share in the burden of his student loan debt.

When asked about the quality of education he received from ITT--what we will hear being advertised on the television every time we turn it on--here is what he said:

ITT fell short of preparing me for what happens after graduation. Although the school provided me with a degree, the program did not provide any of the necessary certifications needed to get a job in the computer field.

Alex would like to go back to school, but he can't borrow any more money. When he graduated 6 years ago from ITT, a for-profit school, his total loan balance was $40,000. That was when he graduated. Six years later, his balance is $50,000. Six years of payments, falling further and further behind. His private student loans have interest rates up to 9.25 percent, almost double the Federal student loan rate.

Alex isn't alone. Many of his fellow students from ITT have the same trouble repaying their loan. ITT's 3-year cohort default rate is over 29 percent. That means that within 3 years of entering repayment status, almost one-third of students have already defaulted. In 2009, ITT received 85.8 percent of all its revenue--this for-profit school--from the Federal student aid programs. It was the third largest recipient of GI bill funds, receiving $99 million in the school year 2010 2011. If GI bill funds and other Federal aid were counted, ITT would likely be at or close to receiving 100 percent of its revenue from the Federal Government--totally federally subsidized.

Federal student aid money is just about all that keeps this institution alive, running, generating profits, and paying handsome salaries to those who own it. What do the taxpayers get in return for this investment? More Americans with student loan debt they will never be able to pay off. That is not a good deal for taxpayers or students.

High student loan debt is not limited to for-profit college students. Students at private nonprofit institutions graduate with an average of about $26,000 in debt. Students who graduate from public institutions graduated with an average debt of $15,600.

What I say back home in Illinois I hope some will listen to carefully. Education is critical for a student or person to succeed. I encourage people to pursue it but go to the low-cost alternative if they haven't made up their mind or don't have a clear goal in front of them that is reasonable. Go to their community college. Start there. Learn to what it means to go to college. They can do it at an affordable cost in their neighborhood, in their town, and then progress from the community college level to the right place for them. The students who sign up for these worthless for-profit schools or sign up for a heavy load of debt may find themselves in a terrible situation, and it is impossible for them to pursue a higher education.

We have to do something to control the cost of postsecondary education, ease the burden of student debt, and crack down on the aggressive recruiting practices used by these for-profit colleges by closing the 90 10 loophole. Congress should start by coming to an agreement on the student loan interest rate hike that will prevent the interest rates on subsidized Federal student loans from doubling.

Let me close with this because I see my colleague from Rhode Island is here. On July 1, the interest rate on Federal loans--Stafford loans--will double from 3.4 percent to 6.8 percent. For a student borrowing $20,000 over the course of a 4-year education, it means at 6.8 percent as opposed to 3.4 they will be paying back $24,000 instead of $20,000. Why do we want to dig this hole any deeper for students across America?

We have put together an alternative on the floor to keep the interest rate low. Unfortunately, the other side has objected. I hope we can work out a reasonable bipartisan way to keep interest rates on student loans at a lower level. We owe it to these families and to these students.

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Mr. DURBIN. I was advised of that, and I wanted to double-check.

Three weeks ago we passed a milestone in U.S. agriculture. The U.S. Department of Agriculture celebrated its 150th birthday. I take some pride in that coming from Illinois because it was President Abraham Lincoln who created the U.S. Department of Agriculture. He called it the people's department. Among other things, it became a launch pad for the development of the United States. It was during that same period of the Lincoln Presidency that they started the land-grant college system as well as the Transcontinental Railroad. These things literally settled and united our great Nation.

Since its inception, the U.S. Department of Agriculture has played an important role supporting farmers, investing in rural communities, researching crops, diseases, production practices, increasing energy production, and helping to fight poverty.

Now the Senate is turning to the debate on the 2012 farm bill that will carry forward the vision of our government's role in agriculture for the next 5 years.

While much of the rest of the country has been struggling through a recession, agriculture in America has really remained a bright spot. We have seen record prices and record income in the farm sector.

Last year farm revenues reached $98.1 billion. Times are good, but we cannot afford to forget for a moment that there is inherent risk in farming--risks that many other business do not face. Droughts, floods, wind damage, rain, and pests are just a few of the risks farmers must cope with on a year-to-year basis. Because of the nature of these risks associated with farming and the important role farmers play in food production, the Federal Government, since the days of President Franklin Roosevelt, has long provided a safety net to help farmers in the worst of times. But the need for a safety net must be balanced every time we have a farm bill with the realistic appraisal of the risk facing farmers and acknowledging the resources available from the Federal Government.

The Agriculture Committee, under the leadership of Chairwoman Debbie Stabenow of Michigan, who has done an extraordinary job with Senator Roberts, the ranking Republican, in bringing this bill to the floor, and the broader agriculture community deserve credit for stepping up to find savings in this farm bill, to cut subsidies, and to make sure those savings are dedicated toward good programs and deficit reduction. They make real reforms in agricultural programs. The bill on the floor is a huge step forward in putting our agriculture policy on the right track in light of the fiscal challenges we face. It reforms several titles to help producers better manage their risk, makes key investments in energy and research, ensures programs are in place to help our rural communities grow, and assists those who need to put food on the table. It does all this, and, to the credit of the Agriculture Committee, it still manages to save $23 billion over the next 10 years against what we had projected spending before this bill was introduced.

Gone are the outdated direct payments that went to farmers even when they were having record positive income years. To replace direct payments, the Agriculture Committee has proposed the new Agriculture Risk Coverage Program, known as ARC. ARC is a market-oriented program to build on the principles of the ACRE Program that I authored in the last farm bill and was expanded on in the Aggregate Risk and Revenue Management Act I joined along in with Senator Sherrod Brown, Senator Thune, and Senator Lugar last year.

The biggest change introduced by the ARC Program is that to get a payment, you have to have an actual loss. That may sound odd to people who are observing this from the outside, but this is a fundamental shift in agricultural policy and I think a very wise one. ARC does not guarantee a profit, and it does not make the farmer completely whole, but it smoothes out the downturns and provides the producer time to shift to a new market condition.

Crop insurance protects farmers within any given year. The ARC Program is designed to help manage risk when there are repeated years of low prices or low yields. In other words, it makes the payments when they are needed. And even better, the shift to ARC saves the Federal Government about $15 billion. I congratulate Senator Stabenow for this extraordinary savings as well as many other changes within the bill.

Other portions of the bill make long-term investments that will help strengthen agriculture. The bill increases mandatory spending and reauthorizes and expands several programs in agricultural research. It is a small part of the Agriculture bill but a critically important part of expanding agriculture in America.

This bill creates the new Foundation for Food and Agriculture Research, which leverages public dollars to generate private investment. These investments are going to be important to Illinois producers and major research institutions such as the University of Illinois, Southern Illinois University, and the Peoria Agriculture Lab, as well as several other universities across our State.

The energy title includes mandatory funding for programs to expand bio-based manufacturing, advanced biofuels, and renewable energy. These programs are going to help companies in my State, such as Archer Daniels Midland and Patriot Renewable Fuels. They are going to be able to process and manufacture products in rural America. There are many examples in Illinois of new markets being developed and new jobs being created in rural areas because of the growth of the bio-based industry.

The bill reforms the conservation title to streamline programs and finds additional savings by limiting the number of acres that can participate in the CRP or Conservation Reserve Program.

I have some concerns with these cuts and believe our most environmentally sensitive lands need to stay out of production, but I understand that the committee had a tough assignment to balance our policies with the need to reduce the deficit. This also holds true when it comes to nutrition, and I would like to say a word about the nutrition programs in this bill.

You can almost argue that this is a nutrition and agriculture bill. But it is the farm bill, and it includes many critical nutrition programs.

SNAP is the old Food Stamp Program. It helps those most impacted by the current recession continue to feed their families. You cannot really improve your situation in life if you are hungry. The committee bill takes some steps to reduce fraud in SNAP, and I heartily endorse that. We cannot really argue against those. But I am concerned about rumblings from other Members considering amendments to cut the program more fundamentally and alter the way SNAP works.

Let's be clear. We should not be cutting food assistance at a time when we are setting record poverty levels. In 2010 the United States set a new record with 15.1 percent of the population living in poverty. That is over 46 million people in our country. For them, SNAP, or the Food Stamp Program, is a lifeline.

I invite my colleagues who are anxious to cut these programs to go visit the local pantry, whether it is run by the church or whether it is a food bank in your area, and watch the people coming through the door. Some of them are very poor. Some of them are very elderly. Some of them are coming from work or going to work; they just do not make enough money to feed their families. Now is not the time to

cut food assistance for American families. If you need more savings, I encourage my colleagues to look somewhere else in this bill.

While the Agriculture Committee bill makes major reforms, there is still more that can be done. The bill makes no changes to the Sugar Program that forces consumers in America to pay higher prices at the store and costs us jobs in America. I plan to support an effort from several of my colleagues to make some relatively minor changes that will benefit both consumers and businesses.

There is another area that needs further reform. It is the area of crop insurance. Crop Insurance Program costs have risen dramatically over the last several years, even when farm income was rising dramatically. Just last year the Federal Government spent more than $7.4 billion in crop insurance premium support. This does not even account for the amount sent to crop insurance companies--the companies that actually sell the crop insurance--to simply sell the policies. Incidentally, by selling those policies, they get a 14-percent return--not a bad deal.

However, the crop insurance title sees the largest single expansion of any title in the farm bill, without making major efforts to rein in the costs. We can do better. I have joined with my Republican colleague, Senator Tom Coburn, to find additional savings in this title. In our opinion, it is not unreasonable to ask the wealthiest and most prosperous farmers in America to pay a little more for their crop insurance. Right now the Federal Government is subsidizing 62 percent of premium costs for crop insurance. For those who are making over $750,000 a year, a slight reduction in that Federal subsidy is not hard to explain, at least from where I am standing.

I commend my colleagues on the Agriculture Committee for sending us this bipartisan bill. It is a safety net for producers, makes investments in rural America, research, and energy development, protects nutrition programs, and actually cuts spending.

I look forward to working with my colleagues in a bipartisan fashion to debate and pass the 2012 farm bill. I hope they will all join us in voting for the motion to proceed.

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