Keep Student Loans Affordable Act of 2013--Motion to Proceed--Continued
Floor Speech
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Mr. HOEVEN. Madam President, I wish to clarify for the esteemed Senator from Iowa that I intend to speak in support of the student loan certainty act which he may not be in favor of, so I wish to be clear.
I ask unanimous consent to speak for up to 5 minutes, while preserving the 2 minutes remaining for the distinguished Senator from North Carolina prior to the vote at noon. I wish to be clear so the good Senator from Iowa understands as far as whether he wishes to object.
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Mr. HOEVEN. My understanding is to preserve the 2 minutes for the Senator from North Carolina.
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Mr. HOEVEN. Madam President, I rise to speak to the permanent solution that is being put forward on a bipartisan basis today, which is the Student Loan Certainty Act. Again, I wish to emphasize that this is a bipartisan solution. Senator Joe Manchin, a Democrat from West Virginia; Senator Lamar Alexander, a Republican from Tennessee; Senator Richard Burr, a Republican from North Carolina; and Senator Angus King, an Independent from Maine--I guess tripartisan, right? This is truly a bipartisan effort, including the support of Senator Tom Carper, a Democrat from Delaware, myself, and others. This is a bipartisan effort to come up with a permanent solution.
I have been listening to the floor debate and what everybody says over and over is we need a permanent solution, and that is exactly right.
A year ago I served on the conference committee for MAP 21 which is the authorization for the highway program.
We included in that conference report an extension, a 1-year reauthorization, of the Federal student loan program. So we could do what? Put a permanent solution in place--not come here a year later and extend it again for a year.
So that is what the vote at noon is all about. It is yet another 1-year extension. We need to put a permanent solution in place. Our bipartisan plan is simple and straightforward. It provides students with dependable low-cost financing on a long-term basis. We call it the Student Loan Certainty Act because it provides just that: certainty for our students and for our families, not another 1-year extension.
There has been a lot of discussion here, and it is easy to get confused. But let's go through it for a minute. How does it work? This is a simple straightforward plan. The plan would tie all student loan rates to the 10-year Treasury note to reflect current market and employment conditions.
Right now, that index rate--the 10-year Treasury note rate--is 1.8 percent. Then both subsidized and unsubsidized Stafford loans would be 1.85 percent over that rate. Graduate Stafford loans: 3.4 percent over that rate. PLUS loans--loans parents take out--4.4 percent over the 10-year Treasury note rate. Those rates are then fixed, locked for the life of the loan. The student knows that is a fixed rate then for the life of the loan, until it is paid off.
So let's compare the programs, compare the existing student loan program to what we are proposing. That is easy enough to do.
Subsidized Stafford loans. Right now they are actually at 6.8 percent because the existing program expired, didn't it. But under the old program they were at 3.4 percent for the subsidized Stafford loans. Under our proposal: 3.66 percent--3.4 percent; 3.66 percent--so it is about the same, isn't it.
Actually, those rates have gone to 6.8 percent because, again, we go year to year. This program expires so we are really bringing them down. But even if you assume it has not expired, it is about the same rate--3.66 percent versus 3.4 percent.
For unsubsidized Stafford rates, again, under our proposal, you get the same rate as for the subsidized student loan program--3.66 percent. That compares to 6.8 percent under the existing program. That is a big-time savings for 60 percent of college borrowers, big-time savings: 3.66 percent versus 6.8 percent. Which would you rather have? Big-time savings for 60 percent of the undergraduate borrowers.
Graduate student loan rates under our proposal: 5.21 percent versus 7.9 percent under the existing program; parent PLUS loans: 6.21 percent versus 7.9 percent under the existing program--in both cases, again, lower rates.
The consolidated loan rate remains at 8.25 percent. That is a cap. We keep that in place--8.25 percent--in essence, providing students and families with a cap, another safety feature.
There is also another protection measure in the bill. The good Senator from North Carolina just referred to it a minute ago. Under the income-based repayment level provision, student loan payments are limited to 15 percent of income. So your repayment, your payment amount is limited to 15 percent of your income, and after 25 years, if the loan is not paid off, the balance is forgiven. So you have both a cap and a repayment limit provision to protect borrowers.
Furthermore, this program is designed solely for students and their families. What do I mean by that? This program is solely for students and their families. Unlike the existing student loan program, it does not subsidize health care. The current program, in essence, provides a subsidy for Federal health care--the Affordable Care Act, ObamaCare. It provides a subsidy, and the students pay for it. Why would we do that? Why would we continue that?
What we are talking about is a vote at noon to extend the current plan. It is a 1-year extension, meaning we are going to be right back here 1 year from now doing the same thing. Furthermore, it is paid for with a tax increase on withdrawals from retirement accounts--a permanent tax increase to pay for a 1-year extension. That does not make any sense. What are we going to do a year from now to come up with the revenue to once again extend it? A permanent tax increase for a 1-year extension.
The third point is, why in the world are we using a student loan program to subsidize the Affordable Care Act, ObamaCare? That does not make any sense. Why would we do that?
Again, I come back to the point I started with, the point I made earlier that I think reflects on the debate and the discussion we have all had here: There is a desire to come together. I do not think we are very far away. I think this bipartisan measure is very close to something we can agree on. The good Senator from Iowa said himself he wants a permanent plan in place that takes care of students. I think we are close to doing that. I think the Student Loan Certainty Act provides that bipartisan framework we can now gather around. It may need some modification, but we can gather around it and get a permanent solution in place. I know that is what all of the Members of this body want. I ask my colleagues to join with us so we can get that done, and we can get it now--not extend it for a year and hope to get it done. Let's get it done for the benefit of our students across this great country and their families.
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