Mr. COURTNEY. Mr. Speaker, we are here today, Tuesday, April 24, to talk about an issue which, again, middle class families all across America are watching very closely. As the chart next to me indicates, in 67 days, the interest rates on the Stafford student loan program, a loan program which serves over 7 million college students all across America, is slated to increase its interest rate from 3.4 percent to 6.8 percent.
This program, which over time today has served roughly about 35 to 40 million Americans, is a critical component for middle class families to provide affordable higher education, which today, in the 21st century, is almost as important as having a high school education.
The Stafford student loan program's interest rate was cut in 2007 as a result of the passage of the College Cost Reduction Act, a measure which cut the rate from 6.8 percent down to 3.4 percent. Unlike this Congress, it was a bipartisan effort--77 House Republicans voted for that measure; 35 Republican Senators voted for that measure. George W. Bush signed it into law, President Bush, to his credit, and it provided, again, great relief for students all across America for an issue which we now know from the Federal Reserve Bank threatens, really, the financial solvency of America's middle class.
College student loan debt today now exceeds credit card debt. It exceeds car loan debt. One of the few safe harbors that exists in the system for students is, in fact, the Stafford student loan program. It has great bipartisan genealogy and sources.
Stafford was actually a Senator, Robert Stafford, from Vermont, a Republican, who, again, believed in education and was somebody who understood that the cost of college and university education is not what it used to be and that we had to give, again, middle class families better tools to pay for it.
Anyone who has dealt with the private student loan market knows that the rates today are roughly about 9 to 10 percent. Interest accumulates from the day the loan is taken out. If you're a freshman at a 4-year university, you accumulate interest for the entire time that you are in college using those loans. There is no forbearance. There is no timeframe in terms of repayment. Again, it is nondischargeable in bankruptcy if a person gets into great financial difficulty.
The Stafford student loan program, in contrast, has affordable rates--3.4 percent. There is a forbearance period, after a student graduates, of 6 months before payments commence, and no interest accumulates during the time that the student is actually in college. If there are financial problems that occur, again, there are systems for deferring payments. In fact, there is an income-based repayment formula so that no more than 10 percent of your income can be devoted to the repayment of Stafford student loans.
So this is really, again, a measure which affects a broad swath of America in terms of millions of students, millions of families. It is really about the only avenue that young people facing the formidable challenge--almost like buying a house when you go to college. Yet we stand here today, 67 days away from having these rates increase.
Now, for those who have been watching this issue, President Obama, right from that podium at the State of the Union address, challenged this Congress back in January to address this issue to avoid a doubling of interest rates. To date, the majority party in this
House, the Republican majority, has not taken up a single bill. Even though we hear some nice words on the other side, there is no measure with which they have come forward.
The chairman of the Education Committee last week was quoted in The New York Times as saying that protecting this rate at 3.4 percent was bad policy. We have the words of the chairwoman of the House Education Subcommittee, from North Carolina, who stated on a radio program a couple of weeks ago:
I have very little tolerance for people who tell me that they graduate with $200,000 of debt or even $80,000 of debt, because there's no reason for that.
I would challenge that Member to talk to a new dentist or a new dental student graduating, or a nurse anesthetist who was in my office the other day who was carrying over $80,000 in debt. The fact of the matter is, in terms of trying to get, again, skills for this, the modern American workforce, that is a reality that students and families confront day in and day out.
Yet the leadership of the majority of this Congress is basically turning its back on the bipartisan tradition of the Stafford student loan program with its really pioneering Member of the Senate, Robert Stafford, with the bipartisan support for the College Cost Reduction Act passed with strong bipartisan votes and signed into law by a Republican President, George Bush, and basically saying it's bad policy and we're not going to do it.
Since last week--and again we did one of these Special Order 1-hour sessions with a countdown clock--some things are starting to change.
Yesterday, the Republican frontrunner, effective nominee for President, Mitt Romney, during the middle of a press conference, finished up, turned around, was walking away and turned on his heel and said, Oh, by the way, I want to say that I support President Obama's proposal to block the increase in interest rates of 3.4 percent. This is the leader of the Republican Party, nationally.
There does seem to be some hope. Now, it may be connected to the fact that the President, yesterday, was at the University of North Carolina, talking to young people in this country who know exactly what he is talking about in terms of higher education costs and the need to protect affordable loan programs to pay for college. Later tonight, he is going to be at the University of Colorado, talking to students at Colorado about exactly the same issue. Tomorrow, he is going to be at Iowa State University.
There is clearly a bit of politics swirling around here, because if you look at Mr. Romney's comments on this issue over the last few months or so, he has, in fact, said exactly the opposite. Indeed, he has come out in support of the Ryan budget, the Republican budget resolution, which was passed in this Chamber a few weeks ago. In that budget resolution, that 6.8 rate increase is locked in under the Ryan budget plan. Not only does it lock in the higher cost of the Stafford student loan program, it cuts the Pell Grant program.
That's the other workhorse of economic affordability in this country, named after Senator Claiborne Pell of Rhode Island. Again, it is a grant program that helps the most needy students pay for college. It's up to $6,000--hardly enough to fully pay for most colleges in the country, but nonetheless is essential for college students across this country.
The Ryan budget cuts the grant level for the Pell program down to $5,000--unbelievable--at a time when we're seeing college student loan debt skyrocket in this country and, sadly, at a time when America's graduation rate, which was number one in the 1980s, has now fallen to number 12. For the folks who are listening here today, that is a trend of mediocrity for this country. That is not a trend of growth. That is not a trend of innovation for the future. That is a trend which basically says we are basically going to surrender to the forces of mediocrity in this country. And that is not acceptable to this country, and it's certainly not acceptable to all of us as Americans, and it resonates all across America. Again, I come from the Northeast, up in Connecticut.
We're joined here today by a great Congresswoman from the State of Texas, Sheila Jackson Lee, and I'd like to yield to Congresswoman Lee to talk about her perspective from the great State of Texas.
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Mr. COURTNEY. Thank you, Congresswoman Jackson Lee.
Again, just to follow up on one quick point, which is that there is legislation that is now pending in the House, H.R. 3826. A few minutes ago, we got our 146th cosponsor. To this date, though, we are still waiting for any Members on the majority side to join us in this effort. Again, 77 of them voted in 2007 to support this measure to cut the interest rates. It's time. It's time for them to listen to what their presumptive nominee is saying. It's time to join the Members on this side of the aisle and prevent the damage that this would do to middle class families.
And no one knows that issue better than a member of the Education and Workforce Committee, who has, again, done great work in terms of education issues and higher education affordability. Congressman Davis, thank you for joining us here this evening.
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Mr. COURTNEY. That is high praise from you, Congressman Davis. When I was a freshman, brand new to the Capitol, the Education and Labor Committee, which you've been serving on for a number of years, it was a great honor to really observe you and to see that the College Cost Reduction Act was one of the first things that came out of the chute in January of 2007. And, again, your words tonight show that this has been a lifelong priority and mission for you to make sure that that happens.
You mentioned Abraham Lincoln from your great State of Illinois. It is interesting to note that the College Land Grant system, the Morrill Act, was actually passed in 1862 in the middle of the Civil War, the most catastrophic threat to our country's existence ever. And yet we had a President from your great State who had the vision to understand that every State should have a land grant college, which is what that bill did, and created a national commitment to higher education. Again, it was committed to agricultural sciences and mechanical engineering.
What an amazing story about somebody who, gosh knows, could have been distracted with whatever was happening in that terrible conflict, and yet he still understood that we can never, ever, ever lose sight of the importance of investing in our people. That's what has made our country great, and you know that better than anyone.
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Mr. COURTNEY. Thank you, Congressman Clarke, and thank you for sharing your personal story.
What has been sort of extraordinary to me is that over the last few months, as we've been working on H.R. 3826, our office has received communications from all over the country from folks talking about the importance of the Stafford program in terms of really transforming their lives. I'll be at Chamber of Commerce meetings; I'll be at Rotary Club meetings; I will have people who are not on my side of the aisle politically but coming up to me afterwards and saying this is something that the Congress absolutely has to pay attention to, that it has to protect that lower rate, and thank God this person had the Stafford loan program available to him just like you did.
To see that rate go up to 6.8 percent at a time when our economy--Treasury bonds are being sold at a 2 percent yield. You can get a 30-year fixed mortgage for, really, under 4 percent right now, variabilities at much lower. When you tell people that this rate is going to double to 6.8 percent for this one segment of the population, young Americans who really are doing it for the purpose of improving their own situations, it's greeted by just absolute utter disbelief.
At a time when, as you point out, debt levels--and I've got a little chart here from the Federal Reserve which shows where we're headed right now in this country. We have got to, number one, not make the condition worse by increasing the interest rate--and again, we've run the numbers.
Over a 5-year period of time, somebody who has got a Stafford loan portfolio is looking at an additional $5,000 in interest payments. It's $11,000 for over a 10-year period, which is quite normal, as you said, for people paying back their student loans. We are compounding the trend lines for which the Federal Reserve Bank has, again, put up the warning flags to tell us that we're just creating crushing debt.
The Wall Street Journal had a story, which I was thinking of it as you were speaking earlier, about a young couple with student loan debts who basically were putting off starting a family and buying a house because of the debt levels, that they were basically just working to pay for every month in terms of their burdens there.
We need to be, frankly, A, dealing with the issue of the rate increase obviously in the next 67 days; but, secondly, we need to have a much bigger national conversation to talk about measures like your bill to create, again, a system that rewards people who are current with their payments, who are making progress in their lives but that are not going to have a ball and chain around their necks in terms of debt levels that, again, as you point out, at the end of the day really inhibit creativity and investment and innovation for people at a time in life when they really should be just spreading their wings, not dragging these huge burdens of debt that really hold them back and hold our country back.
So, again, I really appreciate your contributions here this evening. The clock is ticking, 67 days and counting.
Mr. Romney yesterday basically put up a strong signal to the congressional majority in the House here, the Republican congressional majority, that this is something that we must do. And we're still waiting. 146 cosponsors on H.R. 3826.
I'm not somebody who has a big ego. If somebody has a counterproposal to come up with a different way to do this, we're all ears. But what we don't need are the comments of the chairwoman of the Higher Education Subcommittee basically saying she has no tolerance for students with $80,000 in student loan debt. That is a Congress which is out of touch with the reality that young people are confronting these days, who are really trying to improve themselves and fill the workforce needs of this country.
We cannot afford that type of leadership here in this Congress. We need to have people who are focused on the real condition of the middle class in this country, but also really focused, like Abraham Lincoln was back in 1862, about what's important in terms of the future of this country.
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Mr. COURTNEY. Thank you, Mr. Clarke.
In closing, I just want to end where we began, which is that it's 67 days and counting.
Today, all across America, there are high school seniors who are experiencing probably one of the most exciting moments in their lives, which is that they're going to the mailbox to find out whether or not they've been accepted to a 2-year school or a 4-year school. I remember those days. I have a son who just finished up college--and remember how exciting that was--and a daughter who's in high school and who's hopefully going to hear soon when her turn comes. But the fact of the matter is they need to have some horizon, some predictability at this critical moment to make sure that they can plan and budget to pay for college.
Financial Aid offices all across the country are putting up warning flags for students and their families that interest rates are going to double unless Congress acts. And the fact of the matter is that creates an instability about planning for what college to go to, what kind of budget a family can really accommodate in terms of paying for student loan debt. And that's wrong.
I mean, we can do better than that as a Congress. We can do better than that as a Nation.
Again, we're glad to see that Mr. Romney finally came around, even though he had sent out signals in opposition to this type of approach by supporting the Ryan budget which locks in the 6.8 percent interest rate.
But you know what, this issue is too important to get sucked into sort of partisanship here. It is time to move forward, just like we did in 2007, when 77 Republicans voted in favor of the College Cost Reduction Act; 35 Republican Senators supported it. President George Bush signed it into law, a program named after Republican Senator Robert Stafford from Vermont.
I mean, come on. You know, people are sick and tired of the fact that every single issue, whether it's a highway bill, a payroll tax cut extension, or education assistance for middle class families gets sucked into this partisan maelstrom in Washington, DC.
And the fact of the matter is there's 146 Members on our side that have cosponsored H.R. 3826 that are looking for a signal from the Republican majority to say, you know what, it's time to look at our history. It's time to look at the genealogy of the Stafford student loan program and the great bipartisan support to cut those rates 5 years ago.
Let's come up with a solution. Let's move. Let's help those families whose students are being accepted into college and those financial aid offices that are trying to help families budget and plan for the next academic school year.
Sixty-seven days is really not enough time, even today, but we should at least not compound it by delay and, hopefully, not compound it by letting just a totally unacceptable increase in interest rates for Stafford student loans to go into effect.
And I look forward to working with you, again, in the next hours and minutes and days to make sure that that doesn't happen. Thank you for joining me here, Congressman Clarke.
I yield back the balance of my time.