Speeches & Floor Statements

Floor Speech on Student Loans

Posted on June 6, 2013

I would like to congratulate the senator from North Carolina for his proposal.  The two votes we are having today are like the opening act at the circus, and hopefully the main event will attract some senators who are willing to conduct this in a grownup way.            

We do not really have a disagreement here; we have a serious issue.  We have students graduating all over the country from high school at about this time, and about 70 percent of them will go to college next year.  The taxpayers want to encourage that.  We spend about $35 billion in Pell grants to help pay for that.  Then three out of four of those students who go to college will go to public colleges and universities -- like the Universities of Michigan or Mississippi or North Carolina or Tennessee -- the taxpayer helps foot the bill for that.  Then the taxpayer is going to loan $133 billion this year in student loans to students of all kinds.

What the senator from North Carolina and the Senator from Oklahoma have suggested -- and I have joined them -- is that we take advantage of today's low rates and that we lower rates on all the new loans to something below 5 percent, fix that rate for those students who get their loans this year, and allow them to participate in the income repayment program so when they take a job they will not have to spend too much of their money repaying back the loan.  In some cases, it can ultimately be forgiven.  There is also a cap on a consolidated loan, if they choose to do that, which many do.

If we had a real disagreement about that, it would be one thing, but we do not have a real disagreement.  The House of Representatives, which is Republican, has passed a bill based on the same idea.  The President of the United States, President Obama, presented a budget to the Senate two months ago based on the same idea.  The idea is very simple.  If we are going to loan $133 billion this year, let's loan the money to students at exactly what it costs the government, which today is at about 1.75 percent, and let's add 3 percent to that -- all of which goes back to the Department of Education for the cost of collections, defaults, administration, so there is no profit on the students.

Then, let's fix that loan rate.  We say that if it is 4.75 today, it is 4.75 next year and 4.75 the next year for that loan.  If the rates go up, the rates on new loans next year will reflect that increase.  So it is fair to the students, and it is fair to the taxpayers.  It is a permanent solution.  It is the same idea the House has already passed.  It is the same idea the president has recommended.  Yet our friends on the other side are so intent on playing political games that they want to have two votes today.  If I may say so, they should hire somebody to come up with a better idea than they came up with.  This is one of their weakest attempts at a political game I have seen in 10 years.

We have a permanent solution supported by the president, supported by the House Republicans -- all the same idea.  Senate Democrats have come up with a short-term fix for 40 percent of the loans.  They leave 60 percent hanging high and dry.  They raise taxes to do it.  It is unconstitutional for them to do it because it originates a revenue bill in the Senate instead of the House.  That is their weak idea.

Why are they not following the example of the senator from Michigan and the senator from Mississippi and working in a bipartisan way to get a result?  Why are they not following the same idea of the Senator from California and the Senator from Louisiana on the water resources bill and working in a bipartisan way to get a result?  Why are they not following the same idea the four Republicans and four Democrats did on the immigration bill and working to get a result?  Instead, they hold a political stunt at the White House.  They now hold another political stunt on the Senate floor at a time when students are graduating from high school, looking forward to college, and would like to have a permanent solution on interest rates by July 1, which we can easily do.

I guess it is inevitable that the opening acts of the circus are sometimes going to be like this, but I regret it.  I really did not come to the Senate to engage in this kind of thing.  I would much rather sit down with my Democratic colleagues, which I believe we can do, and I would much rather sit down with the White House officials, which I believe we can do, and with the House of Representatives and spend the next 3 weeks saying:  Look, we all have the same idea.  We have a serious issue.  It affects millions of students.

So let's work together and show the country we can do this.  It would be a nice prelude to the immigration debate to show that we can not only pass a water resources development bill and a farm bill but that we can also solve the student loan problem on a bipartisan basis. Then, we can take up this more difficult immigration question where we have some real differences of opinion and really need to have a debate. 

I am here to congratulate the senator from North Carolina and the senator from Oklahoma for their suggestion and to fully support it.  I will conclude by saying that there are two aspects to their bill that I believe are preferable to the version of this idea that passed the House and the version of this idea that was proposed by the President.  Remember, it is the same idea in all three places -- the President's budget, the House of Representatives bill, and the Burr and Coburn proposal.

The first thing that Burr and Coburn propose is to have a single interest rate for all student loans.

There are three types of student loans.  It is very confusing even for those of us who have been around this issue for a long time.  Let's assume there is a single student rate and you are graduating from Maryville High School.  What is the cost of money?  Right now, if you get a loan of any kind, it is going to be 4.75 percent.  It is whatever it costs the government to borrow the money plus 3 percent to cover the Department of Education’s costs.  I like that proposal.

Then the second thing they propose that I would suggest is preferable to the House of Representatives bill is that if you get a loan at 4.75 percent in 2013, it is still set at 4.75 percent in 2014, 2015, 2016, and 2017.  It does not change over the life of the loan.  The House bill would have the interest rate on a loan going up each year.  I do not like that idea.  I do not think many students would.

But I wish all of our serious issues opened with proposals from the president and the House of Representatives and Senate Republicans that were as close together as we are on this issue.  If we cannot come to an agreement on this issue before July 1, based on these three major centers of influence all making the same proposals, then we ought to go back to seventh grade civics class.  I do not think we all need to do that.  I think we know how to do our jobs.

This is the opening act of the circus.  It will not take too long.  It will be a little embarrassing that we have to go through it, but after we go through it, maybe we can sit down and a Senate full of grownups will say:  Let's take the President's idea and the House idea and the idea suggested by Senators Burr and Coburn, let's put it together, let's congratulate all of those students who are going to colleges, and let's encourage them and hope it is a ticket to the middle class. Let’s show that our country supports those students as they seek to advance their higher education.