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Mr. CLARKE of Michigan. You're very welcome, Representative Courtney. I thank the gentleman from Connecticut for raising this important issue and for introducing this important bill, which I'm very honored to support.
We've got to keep interest rates low on student loans. 3.4 percent is reasonable. The Federal Government shouldn't be in the business of trying to make money or extract more money from student loan borrowers. The real problem with these interest rates, if we allow them to go up, is that if a borrower, for some reason, can't make a payment because they're sick, because they get laid off, maybe they get a divorce, that the interest rate would then compound. The interest would apply on top of interest, and the loan principal will actually start growing as the student loan borrower's income drops. So it puts student loan borrowers in a position where it could take them decades, if ever, to pay off their loans if they're in financial hardship. And that's not right.
As the gentleman from Illinois said, these loans are to provide people with educational opportunities, to give them a chance to get a degree where otherwise they wouldn't have the money to be able to do so. But instead, Representative Courtney, of these loans providing borrowers with a chance of experiencing the American Dream, the debt burden is so high on many of our graduates right now that the student loan debt has actually turned into a national nightmare. As you mentioned, over $1 trillion of debt is owed by student loan borrowers. These aren't just the graduates. There are parents that also borrow money and take out student loans that help fund the education of their kids so their kids can have a better life.
I've introduced a bill, H.R. 4170, to complement your efforts. It's the Student Loan Forgiveness Act of 2012. In that bill, I adopt your position on keeping the interest rates on student loans, Federal student loans, at 3.4 percent. Then I also want to make student loan repayment fairer and simpler by allowing every student loan borrower to get a second chance. Yes, you may have fallen behind on your payments--you may even be in default--but I want you to have a second chance to pay off your loans and to continue your education.
So, under my bill, every student loan borrower who is currently in repayment right now or has already taken out a loan will be able to repay that loan based on their income, 10 percent of their discretionary income. They make those payments for 10 years, and they'll be eligible to have the balance of their student loans, if there is anything outstanding, to be forgiven. But if you pay 10 percent of your discretionary income for 10 years, more than likely, you'll pay off a substantial amount of your loans if not the entire loan balance.
But for those who have had to borrow a lot of money because you decided to get a graduate education or maybe you came from a family that didn't have much money so that your only chance to get an education was to borrow student loans, you won't be saddled with those loans for decades. You'll be able to pay them off over 10 years, which is the standard term for student loan repayment.
One thing I'd like to add, though, about the bill is this: that forgiving the balance of these student loans is not just to help the borrower. It's also to help our country. Cutting student loan debt, keeping the interest rates down, and forgiving student loans that pose an excessive burden on Americans, that's the most effective, one of the most effective, ways to stimulate our economy to create jobs.
Think about it. A student loan borrower, instead of having to pay hundreds of dollars a month, maybe even $1,000 a month, that after they've paid it according to their income, according to their means, for 10 years, to have the balance of that forgiven so now they have this money available to use as they choose it, to invest, to start their own business. And think about it: our graduates, those are the ones that were disciplined enough to go to school. They were ambitious enough to set their sights on a goal and achieve it. Those are precisely the folks that we want to encourage to go into business because it's through private business, free enterprise, that we really create jobs in a sustainable way in this country. Let's free up people's money so they can start their own businesses and realize the American Dream, not just for themselves, but for everyone else.
I'm from the city of Detroit. We've always been a tough place, but we've had great entrepreneurs who risked everything, like Henry Ford, to create and expand the automobile industry in this country, which created jobs for millions of Americans for generations. We have so many young people right now who are ready to work and ready to start their own businesses, but they're not going to take any risk like that because they're too much in debt. They won't even buy a house because they can't afford it. Many student loan borrowers even postpone probably the most precious thing that anyone could get involved in--our great institution of marriage--and they put that off.
So, the student loan debt, it's not only a burden on the borrowers, on the parents, it's costing our society jobs and economic growth; and we're costing the global market the opportunity to be benefited by the great products that our country could produce, the great services that we could provide, the great technology that we could develop and create and sell globally. We are depriving the world of that because many of our budding entrepreneurs can't take the risk of starting their own businesses because they're in the hock of student loan debt, which is outrageous.
So, I want to thank you again for your leadership, for your persistent leadership on keeping student loan interest rates down at a reasonable level. As you can see, everyone around the country, including Members of the other party, they understand the commonsense notion of that.
See, these loans, again--essentially I'm talking to the American people because they understand this. These loans that the government provides you, it's not just for your benefit, it's to make our country stronger. There's a reason why we had the GI Bill after World War II. The more educated, the more trained, the more that we're able to develop our skills to our fullest potential, we're able to do more for ourselves and our community and for our country. See, that's what America is all about.
The reason this is such a big deal for me is that my dad immigrated to this country during the midst of the Great Depression, the midst of the Great Depression, the roughest time economically for this country, because he saw America as a land of opportunity. My mother, who was African American, had to struggle for years under discrimination and segregation in Detroit in the thirties and the forties and fifties. She was a school crossing guard and a cleaning lady who saved up all of her money so I could get a chance to get an education. But after I dropped out of school and after my parents died, the only way I could return to college is I had to borrow student loans. I thank this country for having those loans available as an opportunity for me to get an education, to come here and to be able to effectively represent the people of this country.
But you know what the problem is now, Representative, is that students who want to get the same education that I did decades ago, they may not be able to afford to do it. Even if they could borrow the money, they can't afford the costs that they'll have to endure in trying to pay off that debt year after year, decade after decade. That's not right. The Federal Government shouldn't have that kind of power to press people, robbing them of their money--because it's our money that we're using to pay off these loans--and robbing us of our job and economic potential.
So thank you again for your leadership. I'm very honored to join you in your endeavor to make student loan financing fairer for our country, but also, too, to let you know my bill, H.R. 4170, the Student Loan Forgiveness Act, I offer to complement your efforts to provide equal opportunity for education for all of us here in this country.
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Mr. CLARKE of Michigan. Your request for us to keep interest rates at 3.4 percent is so reasonable that we need to act on that right now. The point that you mention, that we need to have these loans available for our students so they can get the training that they need to be hired into jobs that are going unfilled right now, in metropolitan Detroit, which is known for having a high unemployment rate, where people really want to go to work, there are thousands of jobs that are available in metro Detroit that are not being filled because employers can't find the folks that have the training in the information technology area for software engineering.
So, we want to encourage people to go to school even if they don't have the money. We want them to be able to borrow loans without having to go into this type of debt.
My final point is this, too: that if we allow borrowers to be burdened by student loan debt to such a degree that they can't pay off their debt, we, as taxpayers, are on the hook for this debt. Probably one-half trillion of it is taxpayer backed. So we're on the hook for this one way or the other. We should give our borrowers a helping hand so they can manage their student loan repayments, pay this debt down, and then get on with their lives and help us create jobs throughout this country and throughout this world by selling the best products that metro Detroit knows how to do.
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