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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. BINGAMAN. Mr. President, I come to the floor to urge my colleagues to vote to proceed to this important legislation. I was disappointed to see many of my Republican colleagues voted against allowing debate and amendment on this legislation. I have heard Senators from both sides of the aisle acknowledge the need to prevent the July 1 rate increase on the Stafford loans, the subsidized loans. So it is difficult to understand their unwillingness to even consider the bill and have a thoughtful debate and an opportunity for amendment which will allow us to keep these interest rates low for college students in all of our States.

Members may disagree about the best way to pay for keeping the rates at 3.4 percent, but we need to go ahead and proceed to the legislation and pass legislation to accomplish this. If Senators have different proposals, they can offer them. But by blocking debate, we, obviously, cannot get to a solution of this problem.

The Democrats have proposed to pay for the legislation by closing a tax loophole that people use to avoid paying Social Security and Medicare taxes. That is the so-called S corporation payroll tax loophole. This proposal would close the loophole for S corporations for which 75 percent of the corporation's income is attributable to the services of three or fewer shareholders.

This loophole allows, for example, an individual lawyer or a lobbyist to set up an S corporation to make millions of dollars in fees and to not pay payroll taxes on nearly all that income. All he has to do is give himself a cash dividend from the corporation instead of paying himself wages. This is not a fair arrangement.

To be clear, not all small businesses are gaming the system in this way and are not permitted to game the system in this way. This loophole is not available to businesses that are organized as sole proprietorships or as partnerships. Those small businesses are paying their fair share of taxes.

By contrast to this way of paying for the continuation of the low interest on student loans, my Republican colleagues have opted for a very different approach. They offset the cost by using the Prevention and Public Health Fund. In my view, this is a misguided approach. The prevention fund is not a slush fund, as it has been called by many. Instead, it is a fund used to help reduce chronic disease such as diabetes and heart disease and to fund immunization programs for children. This is a critical fund that is used to lower long-term health costs and improve health outcomes. In my view, eliminating this fund would simply increase health risks and, ultimately, increase health care costs in this country.

It is very clear Democrats and Republicans have a fundamental difference in our approach to how we should maintain student loan interest rates. However, as I said before, it is important we get to the bill, we proceed to vote for cloture on this bill, so we can discuss a path forward and consider amendments, if individual Senators wish to propose amendments.

Preparing students for an education is essential for this country's global competitiveness. It is imperative we provide students the tools they need to succeed in this very fast changing economy. This includes access to a high-quality education, which will enable us to train the next generation of Americans for jobs in high-technology fields.

This past Tuesday I spoke at a luncheon that was put on by a foundation that supports one of our community colleges in New Mexico. It is clear we have many students who are working very hard to make ends meet and to stay in school so they can obtain the skills they need to earn a good wage, to pursue a constructive career. There are many areas of our economy where these types of trained workers are needed.

One area which is obvious in my State and nationwide is in health care. We need to train more nurses. One statistic used in this talk last Tuesday was that over the next 8 years, between now and 2020, we are going to have to add 700,000 more nurses to the health care field to meet the needs of the baby boom generation. In addition to those 700,000, we are going to have to hire an additional 500,000 just to replace those who retire from the nursing profession. So we have 1.2 million nurses who are going to have to be hired in this country over the next 8 years. We need to train those people.

There are many young people in this country who would like to have that training. They need student loans in order to be able to cover the costs of that training. That is why this is such an important debate.

Student loan debt has, for the first time in our history, surpassed credit card debt. Today this debt exceeds $1 trillion. The average college graduate leaves school with more than $25,000 in loans.

According to the Bureau of Labor Statistics, college costs at State schools are rising and have been rising at an alarming rate. These increased costs far outpace the increased costs of medical care. We are often giving speeches on this Senate floor about the high increase, the excessive increase in medical care costs. In fact, the cost of college for many students is rising even faster. The same thing can be said about gasoline. I see my colleagues rush to the floor whenever the price of gasoline begins moving up--and with good reason. It is a major burden on U.S. families and Americans everywhere. But the growth in these costs pale in comparison to the growth we are seeing in the cost of education.

The cost of tuition and fees has nearly sextupled since 1985. This is particularly troublesome for students from low-income families.

If we allow interest rates to double, there are 7.4 million students nationwide who will see an increase in the cost of their student loans beginning on the 1st of July. This has a direct impact on students and on families because subsidized Stafford loans are need based, and they are typically designed and focused on helping low- and moderate-income students.

In my State of New Mexico, about 40,000--the specific number I have been given is 39,875 but about 40,000 students will see an increase in interest rates if we do not take action before the 1st of July.

There are nearly 10,000 undergraduates at New Mexico State University who will feel the effects of doubling rates and there are thousands of students at the University of New Mexico who will also see these increases.

This is true of our smaller schools in New Mexico as well. The school I was speaking at last week was Eastern New Mexico University in Roswell. There are 222 students there who took out Stafford student loans during this current academic year.

The Department of Education estimates that the average student would pay as much as an additional $1,000 per year for their student loans unless we can keep this interest rate where it is. Not only would incoming students be affected, current students would also feel the increase as they originate a new loan for the new academic year. The additional burden on our students would be substantial.

Students and families understand the additional increase in costs. In the last few weeks, I have been hearing from constituents all over my State asking us to prevent this rate increase.

One student from Gallup, NM, wrote to me saying:

Give a break to the future of this country and to the millions of students and families who need the relief from the debt of college.

Another family from Albuquerque wrote to me saying:

I write to urge you to vote so that student loan interest rates DO NOT go up. In this recession, more than ever, people of all ages are depending on education as a means of gaining employment, and depending at least in part on student loans.

So our constituents are asking us to take action. By doing so we can continue to provide students with stability as they enter and complete their education.

A high-quality educational system unleashes the potential of our students. We need world-class problem solvers and thinkers if we are going to remain competitive. By investing in American students, we can grow our economy and build the middle class.

Let's move ahead with consideration of this bill. If a majority of Senators wish to change the way the bill is paid for, then we can consider that amendment.

But we should not refuse to allow the bill to come to the Senate floor for debate and amendment.

I yield the floor and suggest the absence of a quorum.

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