Student Loans

Floor Speech

BREAK IN TRANSCRIPT

Mr. BLUMENTHAL. Madam President, while my colleague from West Virginia is here, I wish to thank him for his leadership on this issue and for the very hard work he and other colleagues have devoted to this profoundly difficult, challenging but important issue.

I rise with regret to oppose the compromise agreement that has been reached with the help of our colleagues from Illinois and Maine and across the aisle. It is a compromise, and compromises are to be sought in this day and it is bipartisan and that, too, is an objective. It is a bipartisan compromise, but the fact is, it is a bad deal.

We can do better. We must do better. This Nation can do better. We have a moral and historic obligation to do better for the students of today and their brothers and sisters who will be following them over the next 10 years.

This deal offers the illusion of lower rates in the short term while delivering higher rates, in some cases, in as little as 2 years from now. It forces students back into a system of market-based loans that have failed in the past and will fail in the future. It subjects students to economic uncertainties which are wholly unrelated to the actual cost of higher education.

We know we need to reduce the cost of tuition and higher education. We know we need to address the overhanging $1 trillion-plus of debt that exists from past loans. This deal exacerbates the problem instead of easing the problem.

Yes, it has caps on the interest rates students may pay, but they creep to
more than double where student loan rates were at the beginning of this month. It has a low rate, but it is, in effect, a teaser rate. As the Presiding Officer said so well, it is a teaser rate that has nowhere to go but up. It lowers the deficit, yes, but it does so by having the Federal Government reach into the pockets of students and take billions more on top of the $51 billion already extracted in this fiscal year from them and from their hard-working parents.

At the heart of this bill is a mistaken premise. It is the premise that it is OK to profit off the backs of students and that it is all right to regard students as a revenue source or a profit center. That premise reverses a historic promise, which is: We will invest in students, not profit from them. We will support their efforts to gain higher education so they can better themselves and better the country with the skills and education they acquired. We are not supposed to hamper or handicap them and exact from them a crushing burden of debt in the future. That premise reverses a historic promise, and we cannot allow it to go forward without a fight.

Every dollar we extract from those students is a dollar they can't spend on a down payment for a house, a car, a business or an investment. These young people are the economic drivers of our future. Let's be purely selfish about it. How can they build a family, buy a home, start a business if they are hit with an 8-percent interest rate or higher at a time when we can make it more affordable?

It makes no sense.

I have spoken to students across the State of Connecticut over these past weeks, and they have done the math. They know the results. As many as 86,000 students who attend our colleges and universities--and I have spoken to many of them, their families, the staff and teachers who are also doing this math--and they know the best way to reduce our deficit is not to profit from students but to make possible their higher education so they can bring their innovation and experience and expertise to the marketplace, and not make the marketplace dictate the variable rates they are charged, but enable them to contribute to the marketplace and the American dream by going to college.

IS understand the temptation of this deal, but we must reject a compromise that saves the American dream for one sibling in a family by taking away from another. My colleague from Rhode Island made this point very eloquently earlier today. If a person is a student in high school right now, they will do pretty well under this bill when they begin college next year, but not their younger brother and sister. The sister will be paying for the current student. The brother will be paying more and, in fact, may be denied the opportunity the present student has next year because the parents cannot afford to send him to college.

The issue of loan rates is complicated, but the math is pretty simple. There is already more than $1 trillion of crushing loan debt that this bill is not refinancing. The bill provides no debt forgiveness, just market rates that will lead to higher payments and more student debt as we zoom past that $1 trillion mark and raise it even further. The irony here is that the majority of this body has already voted to return to 3.4 percent. This compromise betrays the majority will of the Senate. Instead, it allows rates to rise as high as 8.25 percent, graduate Stafford rates as high as 9.5 percent, and PLUS rates as high as 10.5 percent. So we are saying to parents of two children: You can send one to college now with a loan that you take out at current rates, but to pay for that second child, you are going to be seeing rates more than twice as high.

Do my colleagues think the income of the average middle-class American family is going up 10.5 percent? Ask the American people. Do as I have done. Go around to the States and ask the students and the parents.

Let's not kid ourselves. The fact is they are not going to be able to pay. This compromise relies on a presumption that somehow, over the next 2 years, we are going to come back and revisit, revise, reshape, and avert disaster. I have only been here 2 1/2 years, but what I have seen is it is better to know what the result is going to be than engage in potential false hope and raise the potential false expectation that somehow everything will be solved next year or the year after, before disaster strikes. We should learn something from our experience with sequestration.

This bill is not based on analysis of what the rate needs to be to cover the program's cost. In fact, it requests the GAO to examine and report on what that should be. So I implore my colleagues, instead of voting first and getting the facts later, that we reserve such a life-changing decision until the GAO has advised us on the cost of student loans and we use that necessary information to set the rates going forward.

There are amendments that I believe will improve this bill, and I have cosponsored them, including an amendment Senator Reed and the Presiding Officer, Senator Warren, have offered that would lower the interest rate caps in this bill to the current statutory rate. If this amendment is adopted, we can go back to the people of our States and say: At worst, you will be no worse off than under current law. We cannot say as much under this compromise bill.

I have also cosponsored the Sanders amendment which would sunset this legislation after 2 years. If interest rates rise the way they are projected to do, we could be looking at dramatically higher rates within 3 years. So this sunset clause will force us to come back and revisit them.

I have also filed my own amendment that would expand and make more generous loan repayment assistance programs for borrowers who are struggling right now to make payments under existing law. At a time when outstanding student debt is $1.2 trillion, we need to make sure we help and support distressed borrowers at every stage of repayment, and that is the unaddressed need this body needs to confront.

I am hopeful these amendments will be adopted. In the meantime, I must respectfully and regretfully oppose this compromise. We are the greatest Nation in the history of the world, as we are fond of saying repeatedly on the floor of this body. But only one thing is certain about the Bipartisan Student Loan Certainty Act, and that is rates will inexorably, inevitably, inexcusably go up. They will exceed current rates. We must stand and fight to prevent that kind of betrayal of the fundamental American promise of higher education and the American dream.

Thank you, Madam President. I yield the floor.

The PRESIDING OFFICER. The Senator from Ohio.

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