The Role of Education in Rebuilding the American Economy
Floor Speech
Mr. GARAMENDI. Mr. Speaker, thank you for the opportunity for this hour. Joining me tonight will be Mark Takano from the State of California.
We just heard 4 or 5, maybe 10 minutes of talk about the energy issue. I would like to put a slightly different face on it. It's not the main subject matter of this hour, which is really about jobs and how education fits into that, but this is sort of along the line, and it follows directly on what my Republican colleagues are talking about: denying that there is real climate change going on.
We can no longer deny the fact that we as human beings have, over this last century, been putting into the atmosphere a vast amount of carbon dioxide that is changing our environment. But what I want to spend just a moment on here is to discuss how education fits into this issue of climate change. It's an area in which the institutions of higher learning and students play an enormously important role combating climate change and developing a clean energy economy.
Today, as we just heard from our Republican colleagues, President Obama outlined a plan to address the threat of climate change. He recognized what the scientists have said, which is during 2013--this year--we'll have another record year for climate problems. Deadly flooding, superstorms, droughts, and impacts on sensitive species are just a sampling of the dire consequences that climate change is already bringing to America and the rest of the world.
In my district, home to the University of California, Davis, vitally important research is already being carried out to rise to the challenge of climate change. This research ranges from how changes in our climate are going to negatively impact agriculture and native California fish, flora, and fauna, and what we can do about it.
Just this month, Dr. Daniel Sperling of the University of California, Davis Institute of Transportation Studies was one of two recipients of the 2013 Blue Planet Prize for his monumental work in clean transportation, hydrogen fuel infrastructure, and research into how we can achieve a 100 percent renewable energy economy for the globe and for America. The expansion of the clean energy section would also play a very, very important role in what we will fundamentally discuss here today, which is creating jobs and spurring economic growth.
Recent research indicates that the revenue generated from clean energy globally within the next 5 years will create $1.9 trillion of revenue. Studies also show that States with larger green energy sectors are much more economically sound postrecession. We're on the right track. Last year, California led the national record for the most jobs created in the green energy sector, with over 26,000 new jobs being created. It's evident that we have the building blocks in place to make the changes that are needed for our future, especially in my home State of California. As Dr. Sperling said, solutions are all around us, and indeed, they are.
Let me just go into how that fits into our common agenda here, an agenda that we speak about nearly every week. We're talking about Make It in America. There are these seven things that are involved in the Make It in America agenda.
Trade policy is critically important. It's not the subject for tonight, but it's the trade policy of the United States as it affects jobs and bringing jobs back to America.
Taxes. Tax policy is exceedingly important. I don't think the American public knew that prior to 2 years ago, American corporations were rewarded for offshoring jobs. When the Democrats controlled the House of Representatives, we eliminated some $16 billion annual tax deductions that American corporations had to offshore jobs.
Energy issues. That's not the subject for tonight, but given what our Republican colleagues were talking about and my little 1-minute here, that is a major issue. And we know that the green energy economy creates jobs. The old coal economy doesn't.
Labor issues. The value of labor, rebuilding the middle class. Research is critically important, but not the subject for tonight. And infrastructure, which is often our subject, we'll put off until next week.
What we want to talk about tonight is education. We want to talk about the role of education in rebuilding the American economy. A critical, critical part of the education issue is something that's going to happen in 5 days.
At the end of this month, on July 1, 2013, thousands upon thousands, indeed, millions of students across the United States that have received Stafford loans are going to see a doubling of their interest rate, an interest rate that will go from 3.4 to 6.8. It's an incredible burden on the students across the Nation. Some who have finished school, others who are about to finish school or maybe just finished their graduation ceremonies are going to be greeted with a doubling of their interest rates.
On the Democratic side of the aisle, more than 200 of us have put forth and already signed up for an effort to bring to the floor a solution to this problem. So we want to talk about that tonight. We want to talk about the Democratic solution to avoid this extraordinary problem that will be faced by millions of students who have graduated and have just picked up their degree this month.
Joining me tonight for this discussion is Mark Takano, a newly elected Representative from the State of California, who represents the University of California, Riverside campus.
MARK, please join us. Take up that microphone in front of you and tell us how this affects your district and the students in your district.
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Mr. GARAMENDI. We can just take a very quick look at the math. If it's a $100,000 debt and it's 3.4 percent--and you're paying just the interest rate, not the principal of the loan--you're talking about $3,400 a year that you would be paying at the current rate. Double it, you're talking $6,800 a year. So just that alone, without paying down the principal, you're looking at a very significant burden on a person that's leaving school, graduating just this year. We need to deal with that. And the effort that's under way here by the Democrats in Congress--and also by President Obama, who's put forth, I think, a very solid program--gives the students an opportunity.
This is a very interesting chart here, MARK. And I think it's one that you're aware of. I know you've paid off your loan now, but that group hasn't.
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Mr. GARAMENDI. Well, then you're one of these students--ex-students. $1 trillion, this number, the total student loan, is well over $1 trillion today. This is greater than the total credit card debt of every American. So we're looking at a situation where student debt is now larger than the credit card debts of all Americans. This is an enormous burden.
But what this also does--and perhaps you have not only personal experience, but other--is that when a student graduates, their first obligation is to pay off this debt. You can't go into bankruptcy. This debt is going to follow you. With or without bankruptcy, you've got to make these payments.
Now, last year we passed a bill that tends to modify how much you can pay. I think it's no more than 10 percent. The President's proposal takes that further and applies the 10 percent not just to the new loans that are taken out, but to all existing loans. So as your income from a teacher, you would be required to pay no more than 10 percent of your income to pay down this debt. But if this debt has an interest rate of 3.4 percent, well, you can get it paid off more quickly. But if it's 6.8 percent, it's going to take longer and be more difficult.
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Mr. GARAMENDI. Well, certainly that. And then a young person graduating from college, sometimes they want to get married. They may have to delay that. They want to form a household, buy a house, rent a house, buy the furniture. They can't because they've got to pay this off first.
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Mr. GARAMENDI. I'm going to put up another chart here that speaks to what you just said. This chart talks about our colleagues' proposal. That was one that we passed here. We like to say that this is really about making education more expensive. Here's how it works.
Our proposal is to keep the interest rate--and this is a person that's maxed out. They've borrowed the maximum amount from the Stafford loan; this is the subsidized portion of it. This is the total interest that they pay over 5 years of a subsidized loan. The proposal that we put forward would be $4,174 of interest. What's going to happen, unless we pass a law, is that that number will go to $8,808. That's the doubling of the interest rate from 3.4 to 6.8 percent.
Now, the thing that I'll never understand--and this bill passed the House of Representatives a couple of months ago--was the proposal by our Republican colleagues that would actually force the students to pay more than just the doubling. You go, What's that all about? Why would they do that?
So under the proposal that we say actually makes education more expensive, the Republican proposal would go to $10,109, as opposed to our proposal, which would keep it at $4,174. Or even allowing the rate to double, the Republican proposal is actually more expensive. It doesn't make sense. I would say nonsense is probably a better way of describing it--no sense. But it just creates a serious problem.
Now, the proposal that the President has made is somewhere between these two numbers--actually, just a little over $4,000. That proposal is based on a 10-year note, the 10-year Treasury bond that would then set the floor.
This one is also based on a Treasury bond--that's the GOP proposal--but it is like an adjustable-rate mortgage on your home. So every year, as the interest changes, you're going to pay more and more. And we know that right now interest rates were, just 3 weeks ago, at an all-time low. But now you're looking at a situation where we're looking at those interest rates going up, and the Republican proposal would automatically adjust upward. It's one of the adjustable-rate mortgages that got this country into such great trouble.
I notice that Rush Holt is here from New Jersey. Rush Holt, please join us. I know that this is an issue that is very important to you.
If I recall correctly, you represent a university. What is that university?
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Mr. GARAMENDI. Let me see if I understand what you were saying.
The Republican proposal--which has passed the House of Representatives, is over in the Senate, and hopefully will die there--by their proposal of allowing an adjustable rate on the student loans, they will actually bring money into the United States Treasury to reduce the deficit, or are they going to use that money for education?
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Mr. GARAMENDI. That's very interesting.
Mr. Takano, you're absolutely correct about the role of immigration and the comprehensive reform. There are some pieces that we often talk about: the DREAMers, the young men and women that came here as children, brought here. They don't have their papers, but they also do not have the opportunity to really get the kind of education. So we have the DREAMers.
But here's what I think Mr. Holt was talking about that's really important, and this is part of what you were saying, Mr. Takano, about immigration reform--access to all the benefits of the economy and what it means.
If you happen to be a person that has less than a high school education, which is where you started your discussion on the immigration act, you're taking a look at perhaps as high as 14 percent unemployment and the average median--or excuse me, not average, but the median weekly earnings, less than $500 a week, $451 a week. If you get a high school degree, you may get $638, the median weekly income, but you're still looking at 9.4 percent unemployment.
Here's where the issue of education comes in at the post-high school education and here's where the Stafford loan issue comes in. If you're able to go to college and get that bachelor's degree, your income is going to be more than double if you don't finish high school and nearly double what you would have if you were able to finish high school.
So getting that education--and this is part of the immigration issue, and it's the facts that you were laying out so very well, Mr. Takano. If you're able to get that education with borrowing money, a Stafford loan, subsidized or unsubsidized, with a low interest rate, you're going to be looking at a median weekly earnings of well over $1,000 and your unemployment rate will be less than 5 percent.
If you go on to get that professional degree--and here's where you and your own history have been able to get that professional degree, that master's degree---you're looking at $1,600 median weekly income and the unemployment rate is down.
So here you begin to see not only how immigration fits into education, but how an individual, an immigrant or not, will be able to improve their life. And as they improve their personal life, they are improving the economy; they're bringing greater wealth to the economy, greater productivity, effectiveness, and efficiency to the economy.
All of this is dependent upon immigration reform, as you pointed out so very well, as well as how we finance education.
Now, if we allow this situation that's going to occur in just 5 days--we're coming up against a crisis for the education for those men and women, immigrants or not, for those who want to get an education, who want to move beyond high school--they're looking at a doubling--at least 6.8 percent--of the interest rates on their Stafford loans. So they're going, Well, maybe I can't finish college; maybe I can't even start; and maybe I'm not going to be able to get that master's degree or that doctorate when I know that I will be able to be more productive to the economy and earn a higher living.
So these things fit together, and I thank you so very much for pointing out the way in which the immigration issue fits into this. We really must have comprehensive immigration reform.
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Mr. GARAMENDI. This is the Make It in America agenda. As you say, you could easily add to this immigration reform as one of the things we need to do. These men and women--some 12 million who are here without documents--are unable to really rise up into these more highly skilled jobs. In many ways, their educational opportunities and their children's educational opportunities may be limited. This is the fundamental investment in any society; and giving access to people with that education, immigrant or not, allows us to build the American economy.
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Mr. GARAMENDI. It's really true. The comprehensive immigration reform bill that's being discussed does bring into our economy those people who have the high skills, many of whom came here and got an education but who under the current law have to leave and go start their businesses in China, India or somewhere else around the world. Part of that comprehensive immigration reform would allow those men and women who have taken their education in the United States--gotten their degrees, their doctorates in engineering or electrical engineering or whatever--to stay in the United States.
It turns out that our State, California, is the great engine of economic growth. Some of it is in southern California with the entertainment industry and the way in which it is now merging into the electronic industry and all of the things that are going on with Google and the use of the smartphones for disseminating content--movies and the like. In the Silicon Valley, many of those start-up companies are immigrants. In fact, the majority of start-ups in the Silicon Valley are immigrants--a very interesting fact that goes back to the issue of immigration reform.
We want to bring to America the talent. We want to bring--we want to be able to use--in America these extraordinary workers and make sure that they have access to the education system that then is the fundamental investment and make sure that they are able to participate and move our economy forward.
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Mr. GARAMENDI. All of that is true, and we've got 5 days. The Congress of the United States has 5 days in which to make a fundamental decision about how we treat those who are participating in the most important investment that any society makes, which is the investment in education.
Right now, we are asking most students to pay for their own education through loans and through some grants that are given through Pell Grants, but they've taken on enormous amounts of debt. Students in the United States have taken on $1 trillion of debt. A large portion of that debt is the Stafford loans, subsidized and unsubsidized. The loan rate on those programs is going to double from 3.4 percent to 6.8 percent in just 5 days, creating an enormous burden on the students on whom we rely to grow our economy.
They've made the investment, and this society has made the investment in them. We need to free them so that they can participate more fully in our society--so that they can participate as consumers and so that they can participate as small businesses men and women, the entrepreneurs. All of this is possible if we take action, and we must. We owe it to those students. We owe it to the economy. We owe it to our ability to make it once again in America. All of these things come together with immigration reform, as you've pointed out, Mr. Takano. I really appreciate you being with us tonight.
I think we've pretty much closed off this subject. We'll be back next week to talk about Making It in America--about jobs. Today, we've talked about how education fits into the jobs agenda. We've got 5 days to solve a very, very serious problem for millions of Americans who have gotten their educations or who have just graduated who are now going to be faced with a doubling of their interest rates. We can do this. We have the power, we have the ability, and we have the proposals--the President's proposal and the proposal here from the Democrats--and we ask that those proposals be acted upon.
Mr. Speaker, with that, I yield back the balance of my time.
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