Student Loan Debt

Floor Speech

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Ms. WARREN. Madam President, I thank Senators Durbin and Reed for their extraordinary leadership on this important issue. I also rise today to talk about the crushing burden which student debt places on our college students and on our economy, and I call on Congress to address it.

The core facts are well known to every family in America. In recent decades, college costs have skyrocketed. Adjusted for inflation, a young person today pays 300 percent of what their parents paid just 30 years ago. For millions of young people, the only way to cover this tuition cost is to take on huge debt. The average student loan balance among 25-year-olds who borrow has grown by 91 percent in just 10 years. Total outstanding student loan debt stands at a staggering $1.2 trillion, and it is getting bigger every single day.

The problem is made worse by the Federal student loan program, with high interest rates which will produce obscene profits for the government. The GAO recently projected the government will bring in $66 billion in profits on its Federal student loans made between 2007 and 2012--profits which would make a Fortune 500 CEO proud.

This exploding debt is crushing our young people. More than one third of borrowers under the age of 30 have been delinquent for more than 90 days.

This exploding debt is also dragging down our economy. With monthly loan bills which can easily exceed a mortgage payment, it is no surprise that home ownership among 30-year-olds has declined steeply. Last spring the Federal Reserve raised concerns that rising student debt could threaten our overall economic growth.

Tying students to a lifetime of financial servitude as a condition of getting an education does not reflect our values. These students didn't go to the mall and run up charges on a credit card. They worked hard, and they learned new skills which will benefit this country, help us build a stronger middle class, and help us build a stronger America. They deserve our support. They don't deserve to be buried in debt.

To reverse this trend of student borrowing, we need to bring down the cost of college. That will not be easy, and it will require everyone--the government, higher education institutions, and the students themselves--to do far more than they do now.

I am committed to working with Chairman Harkin and my colleagues on the Senate HELP Committee to find ways to meaningfully reduce college tuition, and I am working closely with many of my colleagues, including Senators Durbin, Reed, Schumer, Gillibrand, Murphy, and Brown, who are all intensely focused on this issue.

But our need to reduce the cost of college must not blind us to the urgency of addressing the massive debt already crushing our young people. The pressure is building, and we must act to provide real relief to our students and young graduates now.

In the coming weeks I will join with my colleagues to introduce legislation to do just that--legislation which will allow eligible borrowers with high-interest loans to refinance at interest rates which are at least as low as those currently being offered to new borrowers in the Federal student loan program.

The idea is pretty simple. When interest rates are low, homeowners can refinance their mortgages and big corporations can swap more expensive debt for cheaper debt. Even State and local governments have refinanced their debts. But a graduate who took out an unsubsidized loan before July 1 of this year is locked into an interest rate of nearly 7 percent. Older loans run 8 percent, 9 percent, and even more.

Last year Congress agreed those interest rates were much too high, so they lowered them significantly for this year's borrowers. But that change does nothing for the millions who are trapped under the old high-interest-rate loans. Refinancing those old loans would lower interest rates to 3.8 percent for undergraduate loans. The savings would vary, of course. For a recent graduate who borrowed the maximum, payments would drop by as much as $1,000 a year, and total interest could be cut nearly in half. For those who have even older loans, those with graduate school loans, and those with loans from private lenders, the savings would be even higher.

The PRESIDING OFFICER. The Senator's time has expired.

Ms. WARREN. Madam President, I yield back.

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