Speeches & Floor Statements
Posted on May 9, 2012
Madam President, I enjoyed listening to the Senator from Rhode Island, as I always do. His passion for education is always on his sleeve and always front and center and I admire him for that.
There are a couple of things I wish to make clear. If you are a student and you already have a student loan, what we are talking about has nothing to do with your loan. In other words, your rate on that loan is not going up. What we are talking about only affects new loans. So before you think about not going to college next year because of all this talk about student loan rates going up, that is not a problem. We are only talking about new loans.
Second, for 60 percent of the students who get new loans, we are not talking about you either. So you don't have to worry about student loan rates going up.
Third, for those of you about whom we are talking, the 40 percent who have these subsidized undergraduate student loans, what we are talking about saving you is $7 a month in interest payments over the next 10 years. Now $7 a month can add up, which is why Governor Romney as well as President Obama, Republicans as well as Democrats, wants to keep the interest rate at the rate it is now for new loans, 3.4 percent, for another year. But it is $7 a month in savings. It is important to know that.
It is also important to know that there is an easy way to get this done. The House of Representatives has already passed a bill that would keep the interest rate at 3.4 percent for these 40 percent of new loans for one more year. All the majority leader has to do is bring up the House-passed bill and enact it here in the Senate. In other words, we agree on extending the interest rate. We only have a difference of opinion about how to pay for it.
I have offered an alternative supported by many Republicans, which is the same as the House bill, which simply says we want to keep the interest rate where it is for another year, 3.4 percent, and we want to do the logical thing to pay for it. We want to give back to students the money that the government is taking from them to help pay for the new health care law.
You may think: what in the world does the health care bill have to do with student loans? That is what many of us thought when the health care law was being debated. Because, what our friends on the other side of the aisle did during the health care law debate was take over the whole student loan program and almost turn the U.S. Secretary of Education into the U.S. banking commissioner. He has the job of making more than $100 billion in new student loans every year. Their idea was the government can make these loans better than the banks. Our friends on the other side of the aisle said to the students: The banks are overcharging you. We are going to take it over and we will be doing you a favor.
What did the Democrats do? They took it over, but they didn't do the students a favor. According to the Congressional Budget Office, there was $61 billion of savings from taking over the loan program, much of which was money that the students should not have been paying. When the federal government took it over, what did the Democrats do? They spent it on other programs, all except for $10 billion, including $8.7 billion helping to pay for the new health care law.
The way the Congressional Budget Office looks at it, $61 billion in savings resulted from -- and these are my words -- the government borrowing money at 2.8 percent interest and loaning it to students at 6.8 percent interest. We now want to take that profit from overcharging students and give it back to students. That is the way to pay for extending the 3.4 percent interest rate that we are talking about for another year.
We are in agreement on this. Republicans as well as Democrats, Governor Romney as well as President Obama, say keep the 3.4 percent rate at 3.4 percent for another year. Students should know that it does not affect anybody who has a loan today and that it will save you $7 a month for a new subsidized loan. We want to do that. But the way we want to pay for it is by giving back the money that the other side of the aisle took from you to help pay for the health care bill. That is the right way to do it, instead of the typical reaction we often hear from the other side, which is we have something we want to do so we will simply raise taxes on people and businesses creating jobs in the middle of a recession.