Speeches & Floor Statements

Floor Remarks of U.S. Senator Lamar Alexander (R-Tenn.) -- Motion to Commit and Student Loan Reform

Posted on March 24, 2010

Mr. ALEXANDER.  Mr. President, I ask unanimous consent to temporarily set aside the pending motion so that I may offer a motion to commit, which is at the desk.  

The ACTING PRESIDENT pro tempore.  Without objection, it is so ordered.  The clerk will report the motion. 

The assistant legislative clerk read as follows: 

The Senator from Tennessee [Mr. ALEXANDER] moves to commit the bill H.R. 4872 to the Committee on Health, Education, Labor, and Pensions of the Senate with instructions to report the same back to the Senate within 1 day with changes to reduce the interest paid by student borrowers by 1.5 percentage points and to add an offset.           

The ACTING PRESIDENT pro tempore.  The Senator from Montana.

Mr. BAUCUS.  Mr. President, I wonder if the Senator from Tennessee would agree to modify his request so that the earlier amendments be set aside until a time designated by the leaders and this motion then be taken up at a time to be decided by the leaders, which is the customary practice we have been utilizing with previous amendments.   

Mr. ALEXANDER.  Mr. President, I wonder if the Senator from Montana would permit me to consider that request and then respond to him within a few minutes.   

Mr. BAUCUS.  The Senator would withdraw the request and make the request later? 

Mr. ALEXANDER.  If I may consult with Senator Gregg, then respond.  If you will make the request later, I would be grateful. 


Mr. ALEXANDER.  Thank you very much.   

The ACTING PRESIDENT pro tempore.  The Senator from Tennessee is recognized. 

Mr. ALEXANDER.  Mr. President, 19 million American families will be interested in this motion because it will reduce the cost of student loans which 19 million Americans have.  This is the season of the year when a great many students have been admitted to a college or a community college and are making plans and looking for where they are going to get their money.  This motion is aimed at reducing the interest rate on 19 million student loans from 6.8 percent to 5.3 percent.  For the average student loan debt of about $25,000, it would save that student $1,700 or $1,800 over their ten-year loan.  More specifically, it would not only help the student, but it would prevent the Federal Government from overcharging 19 million American college students on their student loans to help pay for the health care bill and other government programs.   

One may say:  Wait a minute, I thought we were debating the health care bill.  How did we get to student loans?  That is a very good question because it just came up over the weekend.  Of course, we have talked about student loans.  There have been proposals, but there have been no hearings in the Senate, no consideration in the Senate committee of which I am a member.  Yet over the weekend, the Democratic majority said:  Well, look, while we are at it, let's have another Washington takeover.  Let's take over the Federal student loan program.  Let's take a program which is working very well, in which 15 million American students have voted with their feet to say they would prefer to get a regular student loan backed by the government, which they get at their college campuses, through their community bank, through a nonprofit institution.  Even though they do have an option for a government loan, three out of four students have said they prefer the student loan through the private lender.  Yet over the weekend, the Democratic majority has said:  While we are at it, let's take over the Federal student loan program. 

That means that starting July 1, students have no choice.  They go to the Federal Government to get their student loan, all 19 million of them, which is a new experience for 15 of the 19 million.  The way they are going to do it -- and this is all going to be set up in a very short period of time -- is they are now going to have to go to four Federal call centers.  So instead of going to their local lender or to their nonprofit institution, that can help them with their application form and see what their options are and encourage them as they make their plans for college, welcome to the new government loan program.  They have no choice.  That is what they are going to do. 

What are the other aspects of this?  Well, other than denying choice to 19 million students on more than 2,000 campuses who prefer the Federal loan program, the Federal Government is going to have to borrow another $1/2 trillion in order to make these loans.  Let's think about this for a moment.  What is the No. 1 issue that most Americans worry about today?  It is that we have too much debt.  So what did this weekend takeover do?  It adds about $1/2 trillion to the Federal debt in order to make student loans, at the rate of about $90 billion or $100 billion a year for 4 or 5 years. 

So we take away choice, we add to the debt, and we also put 31,000 people out of their jobs.  These are a lot of loans, and so we have a lot of people in these organizations, such as Edsouth in my State, a nonprofit organization that helps students get their loans.  So all  these lenders are out of business and we have one big bank -- the Federal Government. 

The Education Secretary is the new banker of the year.  He is a very good Education Secretary, but I don't know how good a banker he is going to be. 

But here is the rub, and this is what my motion is about.  The Federal Government is going to be borrowing money at 2.8 percent and loaning it to students at 6.8 percent and taking the difference and spending it on new government programs, including the health care bill.  So we are going to be overcharging 19 million students to help pay for the health care bill.  And, according to the most recent Congressional Budget Office estimates, about $8.7 billion of the overcharged money is going to go to pay for the health care bill. 

My friends on the other side have already spent the money, of course.  They have announced to everybody that we are going to spend it on this and on that and on this, but what they do not tell you is, where they get the money.  Where they get the money is overcharging students -- overcharging students. 

These aren't Wall Street financiers we are overcharging.  This might be a single mom going to a community college in Tennessee who has a job but who wants a better job and so she borrows some money to go to the community college and the Federal Government is going to overcharge her to pay for some government program.  She might not like that. 

In fact, I think there will be about 19 million student loan holders across the country who will go to school next year and say:  Wait a minute here.  You mean you are overcharging me on my student loan to pay for this health care bill and to pay for other government programs?
The answer will be:  Yes, that is what we are doing, unless my colleagues support this motion. 

The estimate by our friends on the other side is that their Federal takeover of the Federal student loan enterprise will save $61 billion.  If they are correct, let's give it to the students.  Let's reduce their interest rate.  I mean, $1,700 or $1,800 per student in interest over 10 years is the average amount of savings, and that is a lot of money.  It may not seem like a lot of money to Congressmen and Senators in Washington, but to the single mom going to the community college who is borrowing the money to go to school in order to get a better job, $1,700 or $1,800 is a lot of money. 

So in addition to the higher premium numbers, the higher taxes, the Medicare cuts, and the new cost to States, we are going to be overcharging on student loans.  Let me use a specific example from Tennessee, if I may.  I was at the University of Tennessee earlier this week.  This is the University of which I used to be president.  The University of Tennessee has 30,000 students, and 37 percent of them -- or 11,251 -- have Federal private loans today.  The average student debt is about $20,000.  After July 1, all 11,000 students at the University of Tennessee, with these Federal loans from private lenders, are going to have to switch to the government loans, and the government is going to overcharge 11,000 students who go to the University of Tennessee at Knoxville and use that overcharged money to pay for new government programs, including the health care bill. 

They are going to do the same thing to the University of Tennessee at Martin.  There they choose to use the private loan program.  They like it better than the government loan program.  They think it is more convenient for the students.  They have chosen -- 3,600 students at UT Martin -- have chosen Federal private loans.  They are going to be out of those loans by July 1.  They are going to have government loans, and the government is going to overcharge them to help pay for the health care program. 

Maryville College -- I will be there Saturday night to help dedicate their arts center.  There, 824 students have Federal loans today.  They are going to have government loans.  They are going to switch from private to government loans.  They will have no choice after July 1.  I know a lot of these students.  They come from modest families, in most cases.  They are not going to be very happy to learn that when they switch to a government loan after July 1, and if they have an average-size loan, which is about $25,000, that over 10 years they are going to pay $1,700 or $1,800 to help pay for the health care program or other new government programs.   

In Carson-Newman College, it is 1,259 students.  In East Tennessee State University, it is 8,187 students.  In all of Tennessee, it is 200,000 students who have student loans who are going to be overcharged an average of $1,700 or $1,800 a year to help pay for the health care program or some other government program, and this amendment would say:  No, we are not.  If we are going to take over the student loan program, at least we are not going to overcharge the students and use it for the health care program.  We are going to give the money back to the students. 

The point of my amendment is very simple.  We are going to reduce the interest rate we charge on 19 million student loans from 6.8 percent to 5.3 percent and let the students have the savings instead of letting the government have the savings.  That is what the other side has not told people about the student loans. 

If we had an ample opportunity to debate this in the Senate, if we had a committee hearing on it, if we had taken it through the regular process, maybe we could have pointed this out, but no, we do it over the weekend, put it in the House bill, send it over here, jam it through with great breast beating and protestations:  Look what we have done for the country.  I am accustomed to that.  I used to be a Governor.  I remember lots of Members of Congress who would say I did a great thing in Washington and then send the bill to me to pay.  And then, as Governor -- in this case the health care bill will do the same thing.  It will send to the Governors and to the States new costs.  Our Governor estimates it is $1.1 billion over 5 years, to $1.5 billion.  That is about $300 million a year new costs that State taxpayers will have to pay.

As the Medicaid cost goes up, we will get the second blow to the students of Tennessee because either the State is going to have to reduce funding for public higher education -- which I believe this health care bill will help permanently damage -- or they are going to have to raise taxes, or they are going to have to raise tuition, or they are going to have to do all three.  If I am a student at Maryville College, Carson-Newman, or the University of Tennessee, first this health care bill is going to overcharge me on my student loan to help pay for it; second, it is going to send such big new costs to the government that the Governor is going to have reduce funding to my college.

All those students in California who are protesting a 34-percent increase in tuition probably do not realize the reason for that happening.  The main reason is that over the years the Federal Government has so regulated the Medicaid program that the States pay about a third of, that the State budgets have grown and grown and the Governors, such as Governor Schwarzenegger in California, have had no choice except to cut, knowing that when you get down through the budget process you have had no choice except to cut other programs.  Governors know when you get down through the budget process in the State, it usually comes down to Medicaid or higher education.  So a great university such as the University of California is on its knees, and if it even hoped to keep its quality, it raises tuition 34 percent.

My amendment will not help that problem.  The law the President signed yesterday already will transfer to States these huge new costs that are going to permanently damage higher education and raise tuition.  But what my amendment will do is say we are not going to overcharge 200,000 students in Tennessee for their student loans and use $8.7 billion to help pay for health care.

Sometimes I think the motto of the Obama administration is:  If you can find it in the Yellow Pages, the government ought to be doing it.  This is breathtaking.  While we are taking over cars, banks, insurance companies, while we are taking over more of health care, we will also take over the student loan program, add $1/2 trillion to the Federal debt, overcharge 19 million students, cause 31,000 people to lose their jobs and say "all in a day's work."  That is what happened last weekend.  Over the weekend that is the decision they made.  Then over here bragging about how much we are going to do for everybody.  We are going to do a little more for everybody if we have a chance to vote on this amendment because when we go home we will have a chance to say either I cut the interest rate on your student loan from 6.8 to 5.3 percent and give you the savings, or I voted to overcharge you $1,700 or $1,800 a year and give the money to the government to help pay for the health care bill.

Mr. President, I ask unanimous consent to have printed in the Record following my remarks a few communications I received from Tennessee.   

The ACTING PRESIDENT pro tempore.  Without objection, it is ordered.    

Mr. ALEXANDER.  Here is a letter from Vanderbilt University to Congressman Cooper from the Chancellor which says:

Our overarching concern with [this proposal] is that the legislation forces institutions, including Vanderbilt, to switch to direct lending. 

Here is a distinguished university, one of the top research universities in the world.  They have chosen -- they believe it is best for their students and for their campus to use the private banks and non-profits.  We know better, of course, than Vanderbilt University, what is best for the campus and best for the students.  We say no, July 1, only the government.   

In their letter they continue:

Vanderbilt opposes the elimination of the FFEL program.  We encourage Congress to carefully study the many alternate proposals.... In addition to our concerns about the elimination of choice, competition, and the high level of services, products and debt management we believe would come with this switch, we are very concerned that the proposed timeframe for this mandated conversion is unreasonable. 

So Vanderbilt opposes that.  So does the Baptist College of Health Sciences, so does Maryville College, so does the Middle Tennessee School of Anesthesia, so does Dyersburg State Community College. 

I ask to have these remarks printed in the Record and an article I wrote in the Washington Post that was published on Sunday, March 7, about the student loan takeover.   

I have a little history with the student loan program.  I see the distinguished Senator from Utah (Mr. Hatch) is here.  When he was the ranking Republican on the Senate Health and Education Committee 20 years ago, I was the U.S. Education Secretary.  He even helped me in my confirmation process, for which I have always been deeply grateful.  But he and I worked together during that time when the question of having a government loan program or a direct loan program came up.  It was widely discussed.  We had a Republican President then and a Democratic Congress.  We came to a compromise.  The compromise was to say let's have both.  We will give students the option and help them stay on and keep the organizations on their toes.  So if you are a student at the University of Tennessee, University of Utah, you have a choice.  You can either say I don't want to fool with all these private lenders or the local bank or the nonprofit organizations in my State or Edsouth or others or the State organization, I want to go straight to the government.  All institutions have that choice.  That is 6,000 colleges and universities and 19 million students.  Only one-fourth of them choose the government direct lending program. 

In the United States of America where choice and competition is an important part of our culture, that usually teaches us a lesson.  That would suggest to us that most campuses, most students, by overwhelming majorities prefer being in the private market to lining up to go to the government.  Otherwise we would have the government grocery store, we would have the government car company.  Actually we are beginning to sound like that in this country.  We would have the government insurance company and all banks would be government banks.  Everything would be in the government. 

They used to have a system like that in the Soviet Union.  Ours did a little better over time.  Generally, our motto has been if you can find it in the Yellow Pages the government should not be doing it.  What is happening with this administration and this Congress is the reverse.  If you can find it in the Yellow Pages, the government should be doing it. 

Here is the situation that developed over the last 20 years.  There are roughly 6,000 institutions of higher education in this country.  Many people say all higher education is like the University of Tennessee or Harvard or University of California, but there are many kinds of colleges and universities -- for-profit, nonprofit, private, public, historically Black colleges, many different kinds of institutions.  The genius of our system is that we let Federal dollars, either through Pell grants or through loans, follow the student to the institution of their choice.  Choice and competition in our system of higher education has given us by far the best system of higher education in the world. 

Of those 6,000 institutions, last year, 2008, 4,421 schools chose to use the regular student loan program.  That is three out of four.  About one out of four used the government loan, the direct loan program, the one that everybody is going to be made to use now.  Currently there are just under 2,000 lenders who participate in the student loan program.  They are banks and they are nonprofit institutions such as Edsouth in Tennessee. 

Last year nearly $100 billion in student loans was made.  Let's keep in mind as the government takes this over we go from a system where we have government-backed loans, which cost the taxpayers very little, to government loans at the rate of $100 billion a year which means we are going to have to run up a half trillion more in debt at a time when our debt is ridiculously out of control.  That is this weekend’s newest Washington takeover that just occurred. 

There is not definitive evidence to suggest that the Federal Government can make these loans better than lenders can make these loans.  I don't think the Department of Education has the manpower to do it.  I think that by July 1 there is going to be consternation all over the country from families who have applied for student loans and are applying through their Federal call center or through the Internet. 

Edsouth, a nonprofit provider in Tennessee, for example, has five regional outreach counselors who canvas Tennessee and provide career training.  They made 443 presentations to Tennessee schools to help students understand -- remember, we have 200,000 of these students in Tennessee -- to help them understand their options.  They worked with 12,000 students to help them understand what they could do.  They worked with 1,000 school counselors. The U.S. Department of Education will soon be providing all of these services.   

Senator Gregg earlier had written the Congressional Budget Office asking how much money this Federal takeover would save.  They came back with an explanation that it is not $67 billion or $61 billion, which is the current number being used today, but more like $47 billion.  My own suspicion, and I cannot prove it, but my own suspicion, having been a university president, having been Secretary of Education and having watched this program for 20 years, is that in the real world the Federal Government is not going to make these 19 million loans more convenient for students.  It is not going to be able to do it any cheaper.  It is just going to deny people choice, run up the debt, throw 31,000 people out of jobs, and the icing on the cake, and it is a sour-tasting icing, is that the 19 million students who have student loans after July 1 are going to be overcharged by the Federal Government, which will be borrowing money at 2.8

percent, loaning it at 6.8 percent, and using the money to help pay for the health care bill and other programs.   

Our friends on the other side, they will be saying -- they like to blame everything on the bankers or the lenders -- well, the lenders are charging too much money.  Well, if they are charging too much money, reduce what they get.  You are saying there are $61 billion in savings, much of which comes from the fact that the Federal Government can borrow money more cheaply than private lenders can.   

But then you are saying, we are going to take the savings and we are going to spend it.  We are going to overcharge these students.  I can't believe the brazenness of this, and I believe neither will 19 million students understand it. 

So I am glad to come to the floor today and talk about my motion, which I will be glad to introduce at the appropriate time.  No Senate bill has been introduced.  Our committee has held no hearings.  We have not had a markup of this bill.  This is a wondrous Washington takeover over the weekend.  

We stick into the health care bill another Washington takeover, this time of 19 million student loans.  On top of it:  Congratulations, Mr. and Mrs. Working Student, you are going to get to be overcharged on your loan to help pay for the health care bill and other government programs.   

I hope my friends in the Senate, on both sides of the aisle, will see the injustice of this and say:  OK, you are right, Senator Alexander.  If we are going to take it over, and if we are going to create $61 billion in savings, at least let's give the students the savings.  Let's not give it to the government.  Let's not overcharge the students, on an average $25,000 student debt, $1,700 or $1,800 over 10 years.   

I think we need to have a truth-and-lending stamp that goes on every single student loan starting July 1 that says:  Warning.  Your government is overcharging you in order to help pay for other government programs. 

We will let the single mom who has a job, who is going to school to help improve her circumstances, see what she thinks about the idea of her being overcharged to help pay for other government programs.   

So my motion, when it is voted on, will do a very simple thing.  It will say to the 19 million students in the country:  We are going to reduce your interest rate on your student loan from a typical 6.8 percent to 5.3 percent.  That is going to save you $1,700 or $1,800 on an average loan over ten years.  It says:  We are not going to overcharge 19 million students to help pay for the health care bill. 

Before I yield the floor, I see my friend from New Hampshire is engaged in conversation.  I wonder if I could address the Senator from New Hampshire through the Chair.  Before I yield the floor, I wished to ask, through the Chair, whether that is what I should do.     

Mr. GREGG.  Well, I would like to ask the Senator from Tennessee a question on the substance of his proposal.           

Mr. ALEXANDER.  I will be glad to take your question.       

Mr. GREGG.  Because I do think it is an important proposal.  As I understand it, what the Senator is saying is that they put this baggage on the train, which is the nationalization of all student loans in this country, the government is going to take them all over, which will be the fourth major nationalization event this administration has undertaken.  

First, they nationalized the auto industry.  Now, they are in the process of quasi-nationalizing the health care industry.  Now they are going to nationalize the educational industry.  If the House final reform bill passes, they will essentially be nationalizing the financial industry -- or having the capacity to -- because they can break up any company, whether they are healthy or not, under the Kanjorski amendment.   

So my question to you is:  They threw this proposal on the train, nationalizing the student loan industry, in order to use student loan money to finance the health care bill because this bill would have violated the budget rules if it did not have the student loan money basically paying for it?   

Mr. ALEXANDER.  Mr. President, I am afraid the Senator from New Hampshire is exactly right.  According to the Congressional Budget Office's updated estimate, $8.7 billion of this money that is being overcharged to students will be used to help pay for the health care bill.   

The other money, except for a small part, will be used for other government programs.  So you are right on both counts -- one Washington takeover after another.  That is why I am saying, I think we ought to hide the Yellow Pages from these fellows because if they find something in there that is being done in the private sector, they are going to say:  Oh, we can cut out the profit, we can cut out the business; why does not the government do it?   

Then, second, I mean this is astonishing to me.  These are not Wall Street financiers going to community colleges in New Hampshire and Tennessee, these are people with jobs who are trying to improve their lot.  Their student loan levels are already too high.  We are worried about that.  So we are going to take another $1,700 or $1,800 on a $25,000 average loan over 10 years.  We are just going to say:  Well, we will overcharge you.  We are going to use that in government.  The answer is, yes, to your question, Senator; $8.7 billion of the money taken from students by overcharging them on their student loans will go to help pay for the health care bill.  

Mr. GREGG.  If I can ask a further question of the Senator.  If they did not have that $8.7 billion of student loan money being used to finance the health care bill, this reconciliation bill would fall; would it not?  Because it would not meet the budget instructions of having $1 billion of savings.   

Mr. ALEXANDER.  The Senator is correct.   

Mr. GREGG.  The Senator had a further question about whether the floor could be yielded.  We are in the process of seeking a unanimous consent agreement.  

Mr. BAUCUS.  I was going to ask the Senator from Tennessee a question.   

Mr. ALEXANDER.  I will be glad to have a question.   

Mr. BAUCUS.  Is it not true that the Congressional Budget Office stated in a letter, dated March 20, commented on the bill in a letter to the Speaker on page 13, where it states:  The title as a whole, that is referring to the education title, states that the title as a whole would reduce budget deficits in both the 10-year projection period and in subsequent years.  

Is it not true that the Congressional Budget Office reached that conclusion and so states in their letter of March 20?   

Mr. ALEXANDER.  Mr. President, I do not have that letter in front of me, and I do not know what that has to do with my amendment.  What I am saying is, the Democratic majority is deliberately overcharging 19 million students to help pay for the health care bill.  Those are the Congressional Budget Office's figures, not mine.   

I would ask, through the Chair, to the Senator from New Hampshire, whether I should at this point yield the floor.  

Mr. GREGG.  I appreciate the Senator from Tennessee's courtesy.  At this time, we are ready to go forward with a unanimous consent request.   

Mr. ALEXANDER.  I yield the floor.