Keep Student Loans Affordable Act of 2013 - Motion to Proceed

Floor Speech

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Mr. SCHUMER. Madam President, I am going to be brief, because things went a little longer. First, I have a great deal of respect for my good friend, and he truly is my good friend, the Senator from Tennessee. I understand what he is getting at. I certainly agree with one part of his comments that the unsubsidized and subsidized students should be given good treatment. We should not just aim at 2 million when there are 7 million more. I am on board with that.

I would make three points in reference to my colleague's comments and in reference to the bill, and why I am a sponsor of the Jack Reed bill. First, the bottom line is, we here are in this mystical world of baselines. Under present law, the government actually will make about $180 billion from students over the next 10 years. It is revenue neutral in the budgetary sense, but not in the family sense, in the sense that families are actually going to end up paying more.

My good friend from Tennessee and many on his side--and they are budget hawks--say they do not want to see that baseline changed. So they have come up with a fine proposal if you believe that you should not change that baseline. But if you believe, as I do, that actually the government should not be making extra money from the students as they pay, even if it means dipping into our Federal accounts to make that happen, then it is not such a fine proposal. But let's not confuse budget neutrality with neutrality between what the government does and what students get.

The proposal is indeed budget neutral, as would be letting things expire. The proposal is not family neutral. Students end up paying more, more than the government's cost. That is point No. 1. I know my colleague understands, and that is the dilemma we are in because there are different values here. To me, if I had to do one thing, one of my highest priorities and where the Federal Government ought to help out families, middle-class families, is helping pay for the cost of college.

Revenue neutrality, particularly at an artificially high baseline, 6.8 percent, does not help out families, does not make it worse than the present baseline, does not make it better. I would like to make it better.

Second point. I have spent much of my time in the Senate helping middle-class families pay for college. I am the author of the American Opportunity Tax Credit which gives every middle-class family up to $180,000. So I agree with my colleague's point about the middle class, gives them--I know he is going to want to ask me a question, but I cannot. I will come back. I have a meeting on this issue with some of the people from the White House right now, so I am not going to be able to answer a question. I do not want my colleague to stay.

I believe in this strongly. The tax credit is something I am proud of. That is on the books for 5 years, $2,500 in the pockets of middle-class families to help pay for college. But one of the problems we face is, every time we give the students a break, the colleges raise tuition. So the family is not any easier off paying for college. We need something to deal with that issue. I do not know what it is, but it will not be in any plan we are going to pass in the next week or two. So my view, to extend the present 3.4-percent rate for 1 year, to keep the situation the way it was before July 1 for a year while we come up with that type of solution, makes sense, makes a good deal of sense.

Third. We have another problem. A lot of these for-profit colleges have a high default rate. They raise the rates for everyone else. What are we going to do about those? Some of those are not for-profit. But any college that helps students get a lot of loans, and then has a huge default rate, low graduation rate, makes all the rest of us pay. It is a little like health care, where a few people are making the rest of us pay quite a bit. That was through no fault of their own. Who knows what this is. What do we do about them?

I agree with my good friend from Tennessee, we do not want to keep doing this year to year, like the doc fix. It would be a lot better, just like the doc fix, if we had a permanent solution that deals with these two issues instead of brushes over them. A 1-year extension keeping the present situation, not raising anybody's rates at all, makes sense, because while students will gain some, not probably as much as under present law, under the Reed law, now they may lose a lot later, because there are no caps except for the 8.25 percent when you refinance. But otherwise, the caps are each year. You can be 3.4 this year, and if interest rates go up 3 percent, you will be at 6.4 next year. If they go up 2 percent after that, you will be at 8.4. If they go up 2 percent after that, you will be at 10.4 for your 4 years in college.

We do not know what interest rates will be. It is anybody's guess. But that is why caps are a good thing, so when it gets too high, we have some limit. I am not sure a cap simply on consolidation is a good enough cap.

I respect my friend from Tennessee, but I would argue there are two reasons that the proposal Senator Stabenow talked about is better: One, it does not make money from students to pay the government, which using the present baseline and being budget neutral we would have to continue to do.

No. 2, it doesn't allow us to get to a long-term solution, which we must do and should do, and maybe now that we are in this dilemma we are importuned for doing.

I wish to have a colloquy with my colleague from Tennessee. I will be back after this meeting if he is still around. I respect him, and I know he is trying to come up with a fair and good solution--one that ideologically or substantively I might disagree with, but I hope we keep moving toward one another so we can gain a good solution.

With that, I yield the floor.

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