Smarter Solutions for Students Act

Floor Speech

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Ms. WARREN. Madam President, I want to start by saying to Senator Reed how much I appreciate his leadership in putting forth this amendment
that takes a bad bill and turns it into something that will be helpful for our students and for our families struggling with student loan debt.

I also want to say how much I appreciate the leadership of Senator Harkin, Senator Durbin, Senator Manchin, Senator King, Leader Reid, all of whom have worked very hard and made best efforts under very difficult circumstances. We had a better bill that passed the Senate, but it was filibustered by Republicans and, as a result, we are where we are now.

Today the Senate will vote on a plan that would fundamentally change the way government sets interest rates on student loans. My colleagues who support this proposal say it will lower interest rates on loans for this year, and that is all that matters. That is the same thing credit card companies said when they sold zero-interest credit cards, and it is the same thing subprime mortgage lenders said when they sold teaser-rate mortgages. In all these cases, the bill comes due. Nobody disputes the fact that within a few years, according to our best estimates, all students will end up paying far higher interest rates on their loans than they do right now.

I want lower interest rates for students. With more than $1 trillion in existing student loans, our students are drowning in debt. We must find a way to address this crisis by lowering the interest rates, refinancing existing student loan debt, and bringing down the cost of college. But I cannot support a plan that asks tomorrow's students to pay more in order to finance lower rates today. And I cannot support a plan that raises interest rates on students in the long term while the government continues to make a profit off of them.

According to official government estimates, the Federal Government will make $184 billion in profits off student loans over the next 10 years under current law. This is obscene. Students should not be used to generate profits for the government. We should be doing everything we can to invest in students and to offer them the best deal we can on student loans, not find more ways to make money off them.

I am a realist about this. I know that eliminating those $184 billion in profits is going to be hard. The government and our Republican friends liked having that money to spend. I know that it will take time to wring the profits out of the system, and I know it will take compromise. But the plan before the Senate today is not a compromise, and it doesn't remove a single dime of profits from the student loan program. That is not an accident. It was designed that way, on purpose, with the high interest rates in the future, to preserve every penny of that $184 billion in profits. I want a compromise that actually saves some money for our students.

In fact, the plan we will vote on makes even more money off the backs of our students--an additional $715 million over the next 10 years. That is right; the total profits of the plan we will vote on are nearly $185 billion.

Some have sought to minimize these profits. They say this money is only a fraction of what students will borrow in the next decade. But I have spent months talking to families in Massachusetts, and it doesn't look small to them--families who are already squeezed by the economy and who are fighting to put kids through college, young graduates who are struggling to buy a home, buy a car, or to put away a little bit of savings in the future. That money should stay in their pockets, not go to the government. These students don't think that $184 billion in profits is small change. These students don't think adding another $715 million on top of these already huge profits can be ignored as rounding errors. These numbers are not abstractions, they are real dollars coming out of the pockets of hard-working Americans. Middle-class families work hard and pay their taxes, and now they have to pay an extra tax--an extra $184 billion tax to put their kids through college.

Meanwhile, this plan asks for nothing from our biggest corporations which take advantage of loopholes in the Tax Code to avoid paying their fair share. It asks for nothing from millionaires and billionaires who get away with paying less taxes than their secretaries. It asks for nothing from the enormously profitable companies that get billions of dollars in subsidies from the government every year. It is our kids--our kids who are trying to get an education--who will pay more.

Senator Jack Reed has introduced an amendment that would change this. His amendment would substantially improve the plan before us today. His idea is a simple one: It would cap interest rates on all Federal loans at their current levels. These caps would allow students to get a good deal right now while the interest rates are low. But the caps would also ensure that when interest rates go up in a few years, as we all expect them to, our students will still be protected.

The Reed amendment is the only way to ensure that no students will be worse off under the new plan than if Congress did nothing at all. It makes sure we don't pit our students against each other, making tomorrow's students pay more so today's students can get a break.

Senator Reed's amendment creates these protections for students by taking a chunk of profit out of the student loan system and replacing it with 55/100th of 1 percent--about one-half of 1 percent--surtax on people whose annual income is more than $1 million.

This amendment would turn this bill into a true compromise. It does not come close to taking all the profits out of the student loan system, as I would like to see, but it is a very good first step in that direction.

Like most of the things we do around here, this is a choice. Anyone who says we can't afford this amendment is in effect saying it is more important to keep making profits off the backs of our kids than to ask millionaires to pay a tiny bit more. These dollars have to come from somewhere--college kids or millionaires.

A vote against this amendment is a vote in favor of higher interest rates for our students. A vote against this amendment is a vote in favor of making profits off the backs of our students. I don't believe that is how we build a future. I believe we build it together.

I support Senator Reed's amendment, and I urge my colleagues to do the same.

I suggest the absence of a quorum.

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