Transportation, Housing and Urban Development, and Related Agencies Appropriations Act, 2014 - Motion to Proceed

Floor Speech

BREAK IN TRANSCRIPT

Mr. DURBIN. Madam President, I wanted to come to the floor while the Senator from Massachusetts was giving her remarks and was still here to say a few things about the bipartisan student loan proposal.

There are a couple of things I want to point out for the Record. She has made a point about our student loan programs and how much they cost students, and she is right about the basic $184 billion the government is going to generate over 10 years in this program. I would support a proposal to change that, but the fact is it doesn't have the votes to pass.

Here is the reality. We are talking about this issue with a divided Congress. We are talking about this issue where the House of Representatives is controlled by the other party and doesn't see this issue at all the same way the Senator from Massachusetts and I do. Secondly, we are up against the filibuster rule in the Senate requiring 60 votes. We have 54 Democrats. So this global change she has spoken of and referred to is one she and I could probably agree on in a hurry but it is not going to happen. The question is: What can we do now to help students?

On July 1, because we did nothing, the student loan interest rate on subsidized loans went from 3.4 percent to 6.8 percent. Students are now facing 6.8-percent interest rates on subsidized loans. I think that is just plain wrong. What can we do about it? One version says nothing, do nothing. Don't change anything. Let the students right now continue to pay 6.8 percent. What is wrong with that?

It is obvious. Basic interest rates in this country are dramatically lower than that. You can get mortgage interest on a home for 3 or 4 percent, maybe even lower in some places. In addition to that, we have students who have to make some life decisions pretty quickly. They need some certainty about what is going to happen here. So I have set out to bring that interest rate down as quickly as possible, as low as possible. That is the bipartisan proposal before us. Those who vote against the bipartisan proposal are voting to keep interest rates now at 6.8 percent--the interest rates that have doubled from 3.4 percent to 6.8 percent. And the Senator from Massachusetts can tell you that will generate many billions of dollars to the Treasury at the expense of these students. So a vote against any change, a vote for the status quo, is a vote to charge students $37 billion in interest over the next 5 years.

I don't think that is right. I think it is far better for us to bring these student interest rates down as quickly as we can and hold out the possibility we will revisit this again and bring them down even further in the future. Maybe things will change politically. But to step away from this whole conversation and say that because we can't change the global problem of student loans, because we can't bring them down to the level we want, we will leave them at 6.8 percent, I don't think is a good outcome. I don't think that is in the best interests of the students and their families. They are going to be facing more debt for the next 5 years with that approach than they would under the bipartisan bill. And that is the one thing I would like to correct for the Record. I believe the Senator mentioned that students would be paying more than 6.8 percent in 2 or 3 years. Under the proposal before us, based on projections on interest rates, the same projections everyone is using here, it isn't until after the fifth year that students would pay anything near 6.8 percent. It would be 6.29, 6.3 percent that fourth year, and then 7.0 percent the fifth year.

So doing nothing means students who would be protected with lower interest rates, for 4 out of the next 5 years by this projection, are going to pay more. How is that a victory for students? How do they come out ahead in that deal? They didn't. They are paying higher interest rates.

There are some who want to hold out for something different. I would like to join them, but I have watched the votes. The Senator from Massachusetts and I have both voted the same way. We voted with Senator Jack Reed: Let's keep that rate at 3.4 percent--and we lost. Then he came back and said: Let's try it again--and we lost. Now he is going to propose a 6.8-percent cap--which I can vote for--and we will lose again.

Then you face the reality, are you going to say at that point: I don't want to talk about this anymore. I just want to go home. That is the end of the story. Students pay 6.8 percent. Sorry, we couldn't solve it--or do you accept this bipartisan compromise, which brings the interest rates down for the next 4 years below 6.8 percent? I think that is a pretty easy choice. I think it is one that may not be what I want to see, but I am dealing with the reality of Congress as it currently exists and what we are currently faced with.

In terms of the cost of education, though, the Senator from Massachusetts and I do agree on this part of it: Kids pay too much for college today virtually every place they go, and the interest rates are too high. But it is a dual problem. Simply addressing student loan interest rates, even for 4 years, still leaves the overall arching issue of the cost of higher education.

I have had several conversations with the President over the last several days. I know he is going to come back quickly with a proposal from this administration to deal with the cost of higher education. I am going to support him too. I don't know the particulars. Maybe I will disagree with one thing or another, but I will sure support his effort to bring down the overall cost of higher education. That is an important part of this conversation.

I just was on the phone with him a few minutes ago talking about the student loan program and what we are faced with. He doesn't like the choices we are faced with, but he wants to keep interest rates below 6.8 percent, if we can. The bipartisan approach keeps them below 6.8 percent. Voting against it means that students for the next 4 years will pay higher interest rates on their student loans than they have to.

So I would encourage my colleagues, don't dismiss the bipartisan plan. Vote for the alternatives. Jack Reed may offer one, Bernie Sanders of Vermont may offer one. Vote for those. We know what will happen. We will not get enough votes. But then make the hard choice: Do you want students to face 6.8 percent this year, next year, and the 2 following years or a lower interest rate, which is what this bipartisan plan will produce.

We went through a lot of negotiations on this. Many Republicans have a much different view than we do on this whole subject. I was lucky. I am old enough to have benefited from the first student loan program. It was a student loan program that came about because the Soviets launched a Sputnik satellite that scared the world out of the United States. We didn't have one. They sent a rocket to space and launched a Sputnik satellite and we thought: Oh, my goodness. They have the bomb and now a satellite and we are doomed. Congress, in a bit of a panic, created the National Defense Education Act. The Presiding Officer remembers that and maybe she benefited from it. I did and so did the Senator from Massachusetts.

I borrowed money to go to college and law school and 3 percent was the interest rate. I think it was a fixed interest rate, if I am not mistaken. One year after I finally graduated from school, I started paying it back in 10 installments, paying 3 percent--a pretty good deal. I paid my money back, thinking now the next generation can benefit from it.

My personal point of view is that education is worth a subsidy. So when Jack Reed comes to the floor and says a 6.8-percent cap and will pay for it by closing a tax loophole, he has my vote. But he will not have 60 votes on the floor.

So if that fails, what do we do next? Nothing? If we do nothing, the 6.8-percent interest rate stays in place, and students pay it, even though under the alternative they wouldn't have to face it for the next 4 years. I think in 4 years we can do better. I think, within that 4-year period, protecting them from 6.8 percent, we have a chance to do even better, and I would like to work to achieve that goal.

Congress may change. Maybe it will change with a more positive viewpoint toward student loans. But at the moment, we have to make a choice, and the choice involves buy-in on the Republican side.

What they are looking for--not unreasonable but different--is to have a long-term approach rather than a short-term approach. I would rather have a short-term approach. They prefer a long-term approach. They want it based on some basic interest rate we can calculate, a 10-year Treasury rate, as applied to virtually every option we have considered, save one. All the others have had a 10-year Treasury rate as a basis. They say you can add to that 10-year Treasury rate what it costs for defaults on loans and administration of loans, and we have tried to do that. We have said to them, at the end of the day, we don't want to add more money from the students and their families to pay off the deficit. It shouldn't be viewed as a tax on students.

Here is where I would disagree with the Senator from Massachusetts: $715 million over 10 years is a lot of money. It is a huge amount of money. Let's put it in context, and here is the context: Each year, student loans amount to about $140 billion; over 10 years, $1.4 trillion. What percentage of $140 billion is $71 million? That is 715 divided by 10. I did the calculation, and it is something like .0005 percent. It is decimal dust: $71 million a year out of $140 billion in loans. I would like to get it down to nothing.

But here is the bottom line. This tiny fraction of decimal dust, $71 million a year, is no reason not to protect these students from 6.8 percent interest.

By my calculation, if you accept the notion we are going to go to 6.8 percent interest and stay there as our solution, for the time being, students are going to pay about $100 more a month, as I understand it, on the basic loans they are faced with. That, to me, is an unacceptable alternative.

For $71 million a year, for $140 billion in loans, this tiny fraction of a percentage is no reason to walk away from a loan package that is much more generous to students and their families. If we can get it down to zero, let's get it down to zero. But please, walking away from that just doesn't make sense.

Here is what students will face. If this bipartisan proposal goes through, the interest rates students pay now on their student loans, subsidized and unsubsidized, will go down from 6.8 percent to 3.8 percent. That is the immediate savings this year for students who are enrolling in college, 6.8 to 3.8. For students who are borrowing money, it is a lot. To walk away from that and say: I am sorry. If I can't get a better deal, then students are just going to have to pay that extra 3 percent interest, I don't think that is a good outcome.

It is better for us to give this relief to the

students and their families and work to improve it. I will work with the Senators from Massachusetts and Hawaii to do that. But simply saying 6.8 percent forever is a victory is not. It is a penalty. It is a penalty on a lot of hard-working families and the students who come from those families. Let's avoid that if we can.

Let me add one particular footnote and chapter to this. The worst offenders when it comes to student loans and student loan defaults are the for-profit colleges.

I always ask people to remember three basic numbers about the for-profit students: What are the for-profit schools? Let me give you the big names. The University of Phoenix is the biggest one, with more than the combined enrollment of all the big 10 schools. The University of Phoenix, Kaplan University, which is owned by the Washington Post Company, DeVry University out of Chicago, those are the three big ones.

As a category, for-profit colleges educate 12 to 13 percent of all the high school graduates in this country. So stick with the number, 12 percent of high school grads go to for-profit schools. For-profit schools receive 25 percent of all the Federal aid to education. They are soaking up the dollars for students by a margin of 2 to 1 over the students they are taking. Here is the kicker: 47 percent of all student loan defaults come from students in for-profit schools.

What does that tell you? They are being charged too much for their education, they can't get a job to pay it back, and they default on the loan. The bottom line on student loans is they are not dischargeable in bankruptcy. A student who can't pay that loan still has that debt and burden for a lifetime. The parent who cosigned? They are on the hook as well--not dischargeable in bankruptcy. It is a lifetime debt.

So we have a lot to do to clean up higher education, and I hope we go after for-profit schools as part of it. They need to be held accountable.

I will close by saying this. I accept the premise of the statement made earlier by the Senator from Massachusetts: We can do better on student loans. I am for it.

We don't have the votes to achieve it. We don't have them in the Senate. We don't have them in the House. So the question is, will we do nothing? Doing nothing means that students and their families will pay 6.8 percent interest on their loans for the foreseeable future, 1 year, 2, 3 or 4 years. Taking the bipartisan compromise reduces the interest rate on student loans for both subsidized and unsubsidized loans from 6.8 percent to 3.8 percent immediately--a 3-percent savings right now for students and families--and it doesn't reach 6.8 percent until the fifth year from now. Between now and then we can do better.

Walking away from this bipartisan approach is going to mean more debt for today's students and higher interest payments, and I don't think that is fair.

So let's do the best we can to change the system, accept the political reality, and come out with the best outcome for students and families.

I hope that at the end of the day we can see some change in the composition of Congress and move closer to a model we all accept.

I yield the floor.

BREAK IN TRANSCRIPT

Source