Ms. WARREN. The interest rate on student loans doubled on July 1. Because Congress failed to act, our lowest income students are now paying twice as much on these new loans. While students are paying more, the Federal Government is boosting its own profits--$51 billion in profits from the student loan programs in 2013 alone. This is just plain wrong.
The government is making obscene profits on these loans--profits we can and should cut back on to help our kids who are struggling to pay for college. But Republicans have repeatedly blocked our efforts to pass a short-term fix that would save students from higher interest rates.
This week the Senate will vote to fix this problem. The bill, Keep Student Loans Affordable Act, was introduced by Senators Jack Reed and Kay Hagan. It would drop the rate on direct student loans back down to 3.4 percent for 1 year, retroactively as of July 1, and give Congress time to develop a plan to do the three things we need to do: Reform student loan interest rates on new loans, refinance $1 trillion in existing debt, and lower college costs for all of our kids.
Republicans have a different approach. Despite the obscene profits of the current program, they propose to make even more money from students. Their current proposal would bring in an extra $1 billion in profits off the backs of our students.
Listen to the numbers. New loans will produce $184 billion in profits for the U.S. Government over the next 10 years. That includes the 6.8 percent interest on direct loans, all the borrowing costs, all the administrative costs, and all the bad debt losses for the program.
Let me say that again: The new student loans, including direct loans at 6.8 percent, will make $184 billion in profits for the government over the next 10 years--and the Republican solution is to increase those profits for the U.S. Government. In other words, their solution to the rising interest rate problem is to make students pay even more.
Some of my colleagues are telling students the plan they have is a great deal. But their argument is the same argument that was used by the slick operators who sold teaser rate mortgages and the ones who sold zero interest rate credit cards. Sure, the first couple of years will be cheaper, but they don't want anyone to look at what happens after that.
Fortunately, our students are smarter than that. They read the fine print. They know in the end this debate boils down to simple math--math that our students understand, even if some people in Congress wish they didn't.
Our students sent a letter to Majority Leader Reid and Minority Leader McConnell with a clear message: A bad deal is worse than no deal at all. Our students need a plan that costs them less money, not a plan that costs them more.
I talk a lot about math, but the Senate's decision about student loans is a decision about our values and a decision about how we build a future. Investing in our students will allow them to get good jobs and give them a shot to make it in America, but that same investment will also create new industries and grow the economy for everyone.
We shouldn't treat our students like a profit center. We shouldn't ask them to pay an extra tax to go to school. And we shouldn't try to trick them by shuffling numbers around, hitting them with teaser rates, and declaring a problem is solved while the students just keep paying more and more.
There are real problems in higher education today: Skyrocketing college costs, historic levels of student debt, and high borrowing rates. It is going to take time to develop a solution that works, and there is no magic math that will make student loan profits disappear or make college tuition shrink without some sacrifice. But right now, students are the only ones who are sacrificing. They are giving up the dream of owning a home or being able to retire just so they can keep paying for college.
Congress can ease the burden on our students, and we should be committed to doing just that because this is howwe build a stronger middle class. This is how we build a better future for our entire country. It is a first step, but it is a good one.
Congress can pass the Keep Student Loans Affordable Act. It is a short-term patch to keep interest rates on new loans from doubling for 1 year while Congress develops a plan to reform student loans and to make college more affordable. I support the measure, and I urge my colleagues to do the same.
I suggest the absence of a quorum.