Speeches & Floor Statements

Floor Remarks of U.S. Senator Lamar Alexander (R-Tenn.) - The President's Community College Initiative

Posted on July 14, 2009

Mr. President, President Obama was in Warren, MI, today, and a little while ago he made an announcement. He announced a new $12 billion national community college initiative. That sounds very good at first. As a former Governor and Secretary of Education for the United States, I am a big fan of community colleges. I think they are our secret weapon for helping men and women in this country go from one job to the next and to improve our workforce. But I respectfully suggest that what the President, his Education Secretary and his economic advisers -- and I think his Education Secretary may be his very best appointee of all -- I say this with respect, I think they ought to be asked to stay after school at the community college and write on the blackboard 100 times that in a year in which we have run the Federal deficit up by another $1.8 trillion, I will never again add another penny to entitlement mandatory spending. Then I think we in the Congress, as we legislate this year, ought to do some truth in lending. To do that, we would have to put a little card with every 1 of the 15 million student loans, if the President's proposal goes through, and say: The interest you are paying on the money you are borrowing is almost all being used to pay for somebody else's scholarship in the President's community college initiative. I think it is important to say that because, as good as it sounds to say: Let's help the community colleges, I am afraid this is a familiar refrain we have been hearing from the White House for the last 6 months. Instead of reducing entitlement spending the President is again adding to mandatory spending. Entitlement spending, which is driving up our debt to unbelievable numbers, a situation where the President's proposal for the next 10 years is more new debt than we spent, three times as much money as we spent in World War II. This is one more Washington takeover, in addition to banks and insurance companies and car companies and maybe health care. It is now the student loans of the country. It also changes the way we fund higher education, which is usually to take almost all our money and give it to students in Pell grants and student loans and let them choose the college, rather than to give grants the way we do with K-12. Let me take a few minutes to explain why I am saying this. The idea the President has is to spend $2.5 billion for community college facilities, buildings. Every State has community colleges. One of our major jobs as governors and state legislators is to fund those community colleges. Traditionally, the Federal Government gives scholarships, and the Pell grants often pay for almost the entire tuition at a community college, making them very important to American students. But this moves the Federal Government into construction and renovation of community colleges, as well as $9 billion for competitive challenge college grants to increase graduation rates and $500 million for online curriculum. So the choice is, instead of more money for Pell grants and administration of student loans, we are going to spend it on direct grants to some community colleges. In other words, we are going to start funding higher education, community colleges, in the way we fund kindergarten through the 12th grade. Despite the fact that higher education is by far the best in the world, the most admired system -- and one reason is because we don't have a lot of Federal direct programs for it; we give the money to students, they choose the school -- we are going to start doing it more like K-12, which is not the most admired system in the world. The $12 billion would be paid for out of savings from the regular student loan program we have now because under the President's plan all new student loans would go through the U.S. Department of Education. So let's take that idea first. We have about $75 billion in student loans every year. That is a huge bank. Fifteen million students borrow money for student loans. Twelve million of them borrow through 2,000 different institutions -- banks -- and spend the money at 4,000 institutions of higher education. Three million choose to go through the government, where they get a direct loan directly from the government. I was the Secretary of Education when this program was created. I didn't see any reason for the Direct Loan Program because I didn't think the U.S. Department of Education ought to be a bank. I thought the Secretary of Education ought to be trying to be the educator of the year, not the banker of the year. But the argument is, well, we can borrow money more cheaply in the government. We can borrow it for a quarter of 1 percent and then we can loan it out at 6.8 percent to students. Banks can't do that. So we will do it, and we will take it over and do it all here. We will do all 15 million loans from the U.S. Department of Education. We will be the banker of the year. Mr. President, the Federal Government is getting real busy. This is becoming the national headquarters for automobiles, where we own 60 percent of General Motors; we are running a bunch of banks; we run some insurance companies; we are talking about a government-run health care program; and now we are going to take over and make a huge national bank out of the U.S. Department of Education. The reason is because we can borrow money more cheaply here. Well, why don't we just abolish all the financial institutions in America and say: We can borrow money more cheaply than you can, so you go away and we will do it all. That is not the American way. In fact, most Americans would like to get the government out of the car business, out of the banking business, and out of the insurance business. I can guarantee you that as soon as 15 million students start lining up outside the U.S. Department of Education to get their student loans, instead of going through their local banks and dealing with their local universities, they are not going to be very happy about this either because they have had a choice for nearly 20 years, and they have chosen to go to their private lenders. So that is the first problem. We are canceling the choice that 12 million students are exercising this year to get a federally backed student loan from a bank even though they could have gotten a student loan directly from the government. Then we are saying: All right, because we are canceling that, we are saving $94 billion and we have money to spend. Well, in the first place, that is not right, Mr. President. By my calculation, according to the Congressional Budget Office estimate of what it costs to operate the current Direct Loan Program, it will cost about $32 billion over the next 10 years, at least, to operate the entire student loan program out of the U.S. Department of Education. My common sense tells me -- and I have thought this for years -- that there is not any way a group of educators in the Department of Education -- a relatively small department -- are going to operate more efficiently than banking institutions across America in making loans. That is not their business. They know about scholarships and graduation rates, not about being bankers. My common sense tells me that, and I think it does most Americans. Plus, we have a free market system, or at least we did, where we try to get things out of government, not into government. So that is the proposal. Yet 32 billion of the dollars over the next 10 years are illusory savings, so we are really adding to the debt. Then the President is saying, well, let's take some of that $90 billion as mandatory spending. I know this gets a little complicated, but it is really not that complicated. He is saying the money we now spend to pay the costs to the government of loaning out this $75 billion every year is automatic mandatory spending, so let's take it away from how we now spend it on the administration with banks, and let's spend it instead on mandatory spending for community colleges. In other words, he has an opportunity to say let's take away some money that is being automatically spent every year and save it. Let's save it. Or he could say, let's put it for students. But I think most of us would say -- and he has said in his summit on entitlement spending -- that we need to stop adding entitlement spending. But that is not what he is doing. Indeed, his other proposal -- which is not announced today but is the rest of his proposal -- is to say we have this $94 billion -- which I think is closer to $60 billion or $50 billion -- that we could save, and he is going to say we will make Pell grants entitlement spending. Well, Pell grants are terrific grants. There are 5 million of them. We appropriate them every year for low-income students. There was $19 billion appropriated for that purpose last year. The Congress has always been enormously generous with that. We appropriate a certain amount. It is almost automatic, but it is not automatic. In other words, we appropriate what we think we can afford, and then we spend it on the students who need it. This proposal to shift Pell grants to mandatory says it doesn't matter what we can afford, we are just going to do it. Again, it is exactly the kind of thing that most economists, most Americans, and the President himself has said we need to stop doing. Yet in the full light of day, we are saying and announcing that we are going to create a community college program, and later a Pell grant program, and we are going to pay for it with mandatory automatic entitlement spending. While the President says it is $94 billion that could be saved over 10 years, the Congressional Budget Office said it is $293 billion -- nearly $300 billion -- in automatic spending over 10 years that we could avoid. Yet the President is saying we should spend it. I am very disappointed with that. Then here is the last point I would like to emphasize -- well, there are two points really. The President is saying: I am here today to do a favor for you. I am going to spend $12 billion on community colleges. But what he doesn't tell you is the people paying for that are the people borrowing money to go to college. So if you are getting an extra job at night so you can go to college, and you are taking out a student loan, the government is going to borrow money at a quarter of 1 percent and loan it to you at 6.8 percent and use the difference for its own purposes. We are making money on the backs of students who are borrowing money to go to college and then taking credit for spending it for somebody else's scholarship or some community college program and we are not telling anyone that. So we need a little truth in lending. Finally, I am concerned about the changes in direction from the way we support higher education. We are very fortunate in America to have this terrific higher education system, including our community colleges. In a way, we got it by accident because with the GI bill, when the veterans came home from World War II, we just gave the money to them and they went anywhere they wanted to. That is not the way we do with kindergarten through 12. We have all these programs. It is command and control, and we support the institution instead of the student. We call the argument about that "vouchers." When we have arguments like that, we get all excited. We did in the Appropriations Committee the other day, and the Senator from Illinois and I argued -- we each got 15 votes -- about the DC voucher program: Shall we give our money to students and let them choose a school or shall we support the school? Well, in higher education, 85 percent of the dollars we spend, or some figure about like that, goes to the student, who then chooses the school. It may be a community college or a Jewish school or an African American school or a Catholic school or a public school or a private school or a for-profit school. We don't care, as long as it is accredited. As a result, we have a higher education system that attracts the best foreign students anywhere in the world and gives Americans choices. As a result we have almost all the best colleges and universities in the world. So this proposal is a little shift from that to say the Federal Government would take all the money -- which I would argue we don't have -- but this $12 billion we are going to give to grants in higher education instead of to students. I would rather give it to students. So I applaud the President for his interest in higher education and community colleges, but I would suggest to him that we have too much debt and too many Washington takeovers, and we shouldn't be funding this program on the backs of the students who are borrowing money and working an extra job to go to college. I don't think they would appreciate knowing that the interest they are paying is mostly going to pay for someone else's scholarship. They might ask: Why do I have to do that? Why isn't that person in the same shape I am? The President was in Warren, MI, in the middle of the auto business, and we have some suggestions -- or I would have -- for other ways to deal with the problems we have with the economy today. One would be that since we are near the General Motors headquarters, to celebrate their emergence from bankruptcy by giving the 60 percent of the stock the government owns in General Motors back to the taxpayers who paid taxes on April 15; that we should focus on cheap energy so we can reindustrialize America, including our automobile industry, by 100 nuclear powerplants; that we could take the mandatory spending and instead of spending it, save it and have less debt. That would be a real favor to the students. To revitalize housing, we could have Senator Isakson's $15,000 tax credit to help get the housing market going again. Then in our health care debate we could stop talking about more government takeovers and, instead, take the available dollars and give the money to low-income Americans and let them buy their own insurance, like most of the rest of us have. So this is a big difference of opinion we have. As noble as the idea of supporting community colleges is, this is not the way to do it. Another Washington takeover and too much debt. There is a better way.