Mr. DAVIS of Illinois. Mr. Speaker, President Franklin Delano Roosevelt once said, ``We cannot always build the future for our youth, but we can build our youth for the future.'' College access and success are fundamental stepping stones toward economic security and global competitiveness. As policymakers, it is imperative that we support students in making college affordable so that our citizens and nation can prosper.
I strongly supported the passage by the House of the bipartisan Senate agreement to prevent a doubling of the student loan interest rates. Without this action before July 1, more than seven million students would have seen their interest rates double, resulting in an approximate $1000 additional debt burden per student for this year. Indeed, failure to act would have added $6.3 billion to students' debt burden in 2012, with 1.5 million African-American students and 1 million Latino students experiencing an additional $1.5 billion and $1 billion in loan repayment costs, respectively.
Unfortunately, the agreement prevents the interest rate hike by cutting student financial aid, continuing a disturbing trend in which the Republican Leadership insists that low-income and middle-class students pay for federal student aid programs and deficit reduction. In the last two years, the Republican Leadership has insisted on multiple cuts to student aid, including: elimination of the interest subsidy for graduate student loans; elimination of the interest subsidy for the six-month grace period after finishing school; elimination of summer Pell grants; reduction in the number of semesters a student can receive Pell grants; erection of barriers to qualifying for the maximum Pell grant; and reduced eligibility for the minimum Pell grant award. These cuts require low-income and middle-class students to incur roughly $20 billion in the cost of their federal loans and resulted in 145,000 students losing their Pell grants. Rather than viewing federal support for higher education as an investment in our nation, Republicans in the House prefer to subsidize oil companies that make tens of billions of dollars in profits rather than help low-income and middle-class students afford college. I firmly believe that we must help all citizens access the American dream, not just the most privileged. We must strengthen the system of student aid, not weaken it.
In addition to interest rates, there are multiple other education policies that lawmakers must support in order to prepare our youth for the future. For example, we must increase Pell Grants, which constitute a critical avenue by which low-income students access higher education. If Pell Grants are reduced in any way, attending and completing college will be beyond the financial reach of the vast majority of low-income students. Reductions in Pell also will have a disparate negative impact on racial and ethnic minority groups given that 46% of African Americans, 39% of Hispanics, 36% of American Indians, and 22% of Asian American and Pacific Islander undergraduate students rely on Pell, with African Americans representing about one-quarter and Latino Americans representing approximately one-fifth of Pell recipients. For the 2012-2013 academic year, the maximum Pell Grant will be at a historic low, covering less than one-third of the cost of a four-year degree. This is unacceptable.
Further, policymakers must also maintain consumer protections on student loans, such as income-based repayment as well as re-institute bankruptcy protections for private student loans. Income-based repayment is a critical improvement to financial aid that makes higher education affordable by limiting repayment based on the income and family size of borrowers. For most borrowers, loan payments end up being less than 10 percent of their income--or nothing if the borrower experiences financial difficulty. After 25 years of qualifying payments, the remaining loan amount is eligible for forgiveness. These Democratically-championed policies promise to help borrowers handle their student loan debt in a responsible manner as they enter the workforce, have families, and purchase homes.
Consumer protections related to bankruptcy for private student loan debt are equally important, but will require Congressional action. Unfortunately, without any hearings, in 2005 Congress made private student loans by for-profit lenders extremely difficult to discharge in bankruptcy even after meeting the restrictive criteria for bankruptcy, treating private student debt in the same manner as debts for criminal penalties and back taxes. This 2005 change gave special federal protections to for-profit lenders, penalized borrowers for pursuing higher education, and provided no incentive to private lenders to lend responsibly. Private education debt is no different than other consumer debt; it involves private profit and deserves no privileged treatment. Congress must restore fairness in student lending by treating privately issued student loans in bankruptcy the same as other types of private debt This is why I introduced the Private Student Loan Bankruptcy Act, which I will continue to champion until it is law.
A strong economy requires an educated workforce, and an educated workforce comes from ensuring students and their families have what they need to prepare for, enroll in, and complete college. Given that student debt has surpassed credit card debt for the first time in history, our economy remains fragile, and the labor market demands increased skills, now is not the time to make deep and permanent cuts to critical college programs serving needy students. I urge the Republican Leadership to invest in education and support students. I will steadfastly protect federal financial assistance for higher education so that we can build our youth for the future.