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Stop the Student Loan Interest Rate Hike Act of 2012--Motion to Proceed

Floor Speech

By:
Date:
Location: Washington, DC

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Mr. CORKER. Mr. President, I rise today to talk about the student lending program that I understand we may be voting on a little bit later today. I want to first say, like my colleague, I have talked with a number of students in Tennessee and people who used to be students in college who have a tremendous amount of loan obligation they have to deal with. Our hearts go out to folks whose careers start with a large amount of debt, and we hear lots of stories about the size of this debt.

So I want to start by saying that I certainly empathize with much of what is happening in the student lending program as it relates to the recipients on the one hand. On the other hand, as it relates to how we deal with this issue, which also relates to these young people--I mean, at the end of the day, these massive deficits we are piling up are also going to be an obligation to them in one form or another. I want to speak to that for one moment.

First of all, I want to say that my friend from Tennessee, the senior Senator, has done as good a job as any of laying out what is driving tuition costs in the first place. The reason students are having to borrow so much money to go to college these days is due to what we have done in Washington. What I mean by that is if we look at the Medicaid Programs in West Virginia or Tennessee, what we have seen over the course of the last couple of decades is that Medicaid costs have been rising dramatically in our own States. Because State governments are forced to fund these huge Medicaid costs, they don't have the same resources available to fund public higher education.

So what is happening is these State governments, which are compelled by us, by the way, to fund these Medicaid Programs--let me make a point. Most people realize that with the passage of the health care bill a couple of years ago, we are going to have upwards of 25 million more Americans across this country on Medicaid. That was the largest part of the health care expansion that took place.

In my own State of Tennessee they have already projected over a 5-year period that it is going to cost them over $1 billion to fund what this Congress mandated as it relates to health care just a few years ago. That is $1 billion that is not going to be available for higher education. So when we campaign around the country and talk about wanting to deal with student lending, I think we ought to be looking at Congress because Congress is actually the one driving the exorbitant tuition rates in the first place by these mandates that we are placing on State governments. It is kind of appalling.

As a matter of fact, in our own State, at a time when Medicaid costs rose 15 percent, in order to make our State's budget balance the State legislature invested 15 percent less in higher education. Again, what is happening is young people--such as the ones who are sitting in front of me--are having to pay exorbitant tuition costs because the States around our country are not able to invest in higher education. Therefore, it is being sloughed off on the backs of students as they enter college.

Let's talk about the loan program itself. First of all, a loan program that charges 6.8 percent, which is what the program is getting ready to do, loans money to all comers--in other words, everybody who comes to get a loan--and there is no collateral in place. It is not like a home mortgage where there is collateral. There is no downpayment. As we know, these loans don't begin to be repaid until years down the road. The U.S. Government is not even breaking even at 6.8 percent. So this whole notion that this student lending program--again, as part of the health care bill--was going to create $50 billion or $60 billion to fund a new health care entitlement was wrong in the first place. With the interest rate at 6.8 percent there is no way taxpayers are coming out even. It is not possible.

As a matter of fact, CBO issued a report in March that said if they used fair accounting standards at the 6.8 percent level, the Federal Government was actually subsidizing student loans by 12 percent. So this whole notion of saying, well, the U.S. Government's borrowing costs is low, and therefore we ought to be making loans at 3.4 percent--by the way, I would love for us to be able to offer rates as low as we can to students. But the fact is we are already losing money at the 6.8-percent level. There is no way, with no money down, no collateral, payments being made down the road, taking all comers, and default rates that will exist that we could possibly be coming out at 6.8 percent. I think CBO has clearly stated that by virtue of the report that came out in March.

Let me come up with a third point. What we are getting ready to do is to discuss a bill that spends $6 billion of our taxpayer money, and Congress is considering spending the $6 billion in this 1 year to give students who apply--futuristically, by the way. This has nothing to do with students who are already in college today and have student lending. But for this 1 year, for loan originations to student lending, we are going to keep the rate at 3.4 percent, which is going to cost an additional $6 billion this year.

So what is Congress considering? Congress is considering paying for that $6 billion over the next 10 years. So instead of saying we are going to spend $6 billion and do what most Americans have to do on a daily basis--if we are going to spend a dollar this year, we have to save a dollar someplace else--what is Congress considering? Spreading the cost over the next 10 years. What is that going to do? Accumulate additional tremendous debt. What is that going to do for the students who are now seeking these loans? Candidly, it piles up additional money they are going to have to pay back.

Let me close by saying this: I know this is campaign season. I know candidates on both sides of the aisle are around college campuses in this country talking to students about their future. What I find unbelievable--and I think these students, by the way, are a lot brighter than people give them credit for as they are campaigning around on college campuses. But, basically, I think these students understand that as politicians are going around trying to offer them deals, they understand that at the same time Washington is piling up tremendous amounts of debt on these students, and not only are they going to have their student loans to repay, but they are going to have all of the trillions and trillions of dollars of debt that Congress is adding on in order to curry favor with citizens of all walks of life in our Nation. That is what happened in Western democracies. We are seeing it play out right now in Europe.

But what I think these students are quickly figuring out is that we are really not giving them anything. Basically, we are taking with the other hand. I think the numbers will carry this out. If, in fact, we do deal with this pending student lending program over the course of the next 6 weeks--and my guess is we may well do that--I hope we will be honest with these college students and at least pay for this expenditure by not spending money on something else so we are not, in essence, giving them something today but taking away something much bigger from them over the long haul.

I yield the floor. I note the absence of a quorum.

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