BREAK IN TRANSCRIPT
Mr. BURR. Mr. President, I am here to say to my colleagues that although we are going to go through a very expedited process of voting on two options on student loans, I want to urge my colleagues to take this seriously. This has a huge financial impact on families across this country, and I say ``families'' because we are focused on the students, and in many cases it is the parents taking out loans, and the truth is that under one option today parents are left out.
You see, the debate on this floor today is over two bills--one offered by my friends in the majority, which would extend the 3.4-percent interest rate on subsidized Stafford loans. That is 39 percent of all the student loans taken out. It does not speak to the 61 percent that is still under the 6.8 percent rate. It is parents, it is students who take out unsubsidized Stafford loans. They are still at 6.8 percent.
But more importantly, you need to look at the financial sustainability of the program. When this was originally enacted in 2006, the campaign rhetoric was, we are going to drastically cut student loans for everybody--until they realized how much it was going to cost. Then they limited it to subsidized Stafford loans. When the authorization for that runs out, we have this debate about whether we are going to extend the 3.4-percent student loan rate. We just forget to tell everybody it is for a subsection of everybody who is taking out student loans.
So let me suggest that the other option today will be to put student loans on a financially firm footing, something we can certify for the future is financially sustainable not just for the students and for their parents but for the American taxpayer. They should have a voice in this.
So what Ranking Member Alexander and Senator Coburn and I have introduced is a comprehensive piece of legislation that ties the rate of student loan borrowing to the rate of the 10-year bond in May of that year.
So this past month we would take the rate of the 10-year bond--which was about 1.79 percent--we would add 3 percent to it, and for the next year the rate for everybody taking out student loans would be 4.79 percent. Some Members of the Senate cannot add. And for the next 12 months anybody who took out a student loan would be at 4.79 percent--not some at 3.4 percent, not the rest at 6.8 percent. That 4.79 percent would be a fixed rate for the life of the loan. It would not go away in 12 months and have to be renegotiated based upon what the will of Congress was and the legislative mandate of what the interest rate was going to be. Every year that somebody went--whether it was a parent, whether it was for a nonsubsidized Stafford loan or a subsidized Stafford loan--whatever that May establishment of the 10-year bond rate was, you would add 3 percent to it. It would be very predictable. You would not be at the whim of, is Congress going to extend this?
Let me predict to you. I know what we are going to do. We are going to have two options up today, and neither one of them is going to get 60 votes. That means it is not going to pass. And the day before or 2 days before the expiration of the 3.4-percent rate, people are going to rush to the floor and say: We cannot let this happen.
We have an opportunity to fix it, to fix it on a permanent basis, to say to parents, to say to those with the nonsubsidized Stafford loans and, yes, to those with the subsidized Stafford loans: We are putting this on financially sound ground, and we are going to do it in a transparent way that lets you know every May exactly what you can borrow money for for your college education.
Some might conclude, well, if you borrow every year for 4 years, you are going to have different rates. You are right. The reality is that in this bill you have an option, at any point you choose to do it, to consolidate those loans at a guaranteed 8.5 percent. So if it is more attractive to have four different packages of loans with lower interest rates or the blend of them might be higher, you can consolidate them and take a guaranteed rate.
I heard my good friend quote the Congressional Research Service. They came out with an analysis of the two pieces of legislation last night, and they came to this conclusion: that for the subsidized Stafford loans, the Alexander-Burr-Coburn proposal was not very different from what my friends on the other side presented, but for everybody else--for the 61 percent--it saved them $80 a month.
Let me say that again. For everybody else who is not in the subsidized Stafford loans, the Congressional Research Service said our bill saves parents and students--those who are in the nonsubsidized student loan program--$80 a month. That is almost $1,000 a year. This is real money. This is what Congress should pay attention to.
Let me suggest this. Congress should not be sitting in Washington deciding with a dartboard: Here is what the student loan rate is going to be this year. Should the price of money in the marketplace not have some impact on it? What we are simply saying is, tie it to a very predictable, transparent number--the 10-year cost of borrowing money, plus 3 percent.
You see, unlike throughout the 1990s and half of the
2000s, we do not have private sector competition against the government model. We decided that having financial institutions come in and offer more attractive interest rates or waiving origination fees or the administration fees of a student loan--no, no, no, we did not want that to happen even though in many cases it saved students money. We said we want to centralize this in the Federal Government. We want to take over the whole thing. And then the Congress decided: Do you know what, we want to set the rates.
Let me suggest to my colleagues that this is nothing more than a political tool right now. The last people we are trying to look at are the students or their families who actually need loans to send their kids to college.
Today's vote is a defining moment. If we take advantage of passing one that structures this to where the rates we set are out of congressional control and set by the marketplace in a predictable, transparent way, then this is sustainable. If it is not, this will be the subject of every 2 years and campaign rhetoric, where some win and some lose.
I did not come here to pick winners and losers. I came here to give equal opportunity and unlimited opportunity to the next generation and the generation after that. To suggest that only people who qualify for subsidized Stafford loans are the ones we should give favorable treatment to is ludicrous. What we would like to do is to provide a predictable mechanism to set rates but one that does not pick winners and losers, one that treats everybody who is in the student loan need category the same.
I see the ranking member is here, and I am going to yield to him. But I do want to say to my colleagues that this is not just another 15-minute vote. You should not feel good if you vote for one and vote against another and nothing passes because we are going to be back here before July 1, and the likelihood is that it is going to be presented to us in a way where we are not going to have the option of doing the right thing. They are just going to say: Do you want to suffer the political consequences of letting the rates go from 3.4 percent to 6.8 percent on 39 percent of the American people? I would tell you that a parent borrowing money for their children today is just as vulnerable as a student who is qualified and borrows under a subsidized Stafford loan.
I yield the floor.
BREAK IN TRANSCRIPT