Smarter Solutions for Students Act

Floor Speech

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Mrs. BOXER. Mr. President, I rise in opposition to the so-called bipartisan deal. I have very strong reasons for opposing it and supporting the alternative, which is the Reed-Warren alternative.

The Senator from Tennessee said he likes the sound of bipartisan deals. So do I. It feels good to get things done around here in a bipartisan way. But that doesn't mean, because it is called bipartisan, it is the right thing to do. Sometimes Democrats will have the right idea, sometimes Republicans will have the right idea, and we debate it.

I think it was interesting to hear Senator Alexander's comments. It was a very interesting speech because it was part of--you know, saying that it is wonderful and we are going to help students on the one hand; on the other hand, he talks about changing the way we are doing our accounting to crack down on students; and then he says that in his State a student can get a $5,500 loan even though it only costs $3,000. What about the books they have to buy? What about transportation? What about all the other out-of-pocket expenses?

So I listened to my friend from Tennessee, and I know he is a leader on education, but I think he had kind of a dual message: On the one hand, it is wonderful to help our students. Well, maybe it is just too much of a risk.

I have to say that according to the information I have from my experts, it is pretty tough when you take out a student loan. The Federal Government, if you don't pay it back, can garnish your wages and it can do lots of other things.

I am opposed to this bipartisan deal and strongly support the Reed-Warren measure.

I am pleased that a lot of people are listening to this debate because it is very important. I am going to read some of the criticisms of this bipartisan deal that come from outside groups.

The first is the National Association of Graduate-Professional Students. This is what they said:

This bill falls short in preventing higher student loan interest rates, especially for graduate and professional students. A cap of 9.5 percent for graduate and professional students offers no guarantees that our rates won't significantly increase in the future. We should be encouraging students to enter higher education to help keep our economy growing, not deterring them with higher interest rates.

The Young Invincibles also oppose this bill, writing:

Even as the Federal Government makes $184 billion off the Federal loan program, students and families will be forced to pay more under this bill than current law.

If you let the current law exist, at the end of the day, because of the difference in caps, students will be better off in the outyears and into the future. For anyone who says this is temporary, make no mistake about it--Republicans have said this is permanent. We may revisit other things, and I hope we do because there is a lot we should look at, such as the ability of students to refinance their loans. There are many other things I hope we can work on. But this particular deal, if you look at the Republicans' own words, is a permanent deal.

U.S. Public Interest Group says:

We oppose S. 1334, the Bipartisan Student Loan Certainty Act, because it is worse than current student loan policy. Current law includes an unjustifiable 10-year revenue stream of $184 billion flowing directly from student borrowers to the Federal Government. [This bill] does not address this problem. Instead, it exacerbates it, generating an additional $715 million in new revenue off the backs of student loan borrowers to pay down the deficit.

They close their comments by saying, ``Enough is enough.''

I am sure people listening to this debate could be a bit confused about exactly what we are talking about. I am going to try to go through some of the facts surrounding this debate. I think it is important that we understand what students are feeling out there. I am going to read a few.

In California, Amy and Christian Diede owe over $82,000 in student loans. Amy, who has a master's degree in psychology, and Christian, a cardiovascular nurse, say:

It's like carrying a big backpack filled with bricks all over the place, and I can't ever let it go. It's always there. I may get rid of a few bricks, but there's always going to be more. I don't see the student loans going away.

I have met people who are still paying off their student loans and they are on Social Security.

Last year, Tammy Brown of Redding, CA, said the government has been taking $179 out of her Social Security disability check each month for the past 5 years. Brown, 52, became disabled in 1986 after being involved in a car accident. Unable to work, she fell behind on her student loan payments. She said the Social Security check is too small to cover her food and medical bills, so she quit taking prescription pain pills. She said, ``It's kind of hard to live on this amount of money.'' This is a woman on Social Security disability, and what are we doing in the bipartisan deal? We are laying on top of what we already make from student loans an additional $715 million.

Joseph Luka of Portland, ME, started college as a pre-med student, but he switched to mechanical engineering because the thought of graduating with more than $100,000 in student loans after medical school was too daunting.

I will return to some of the comments at the close of my time.

We have to ask a few questions. Why are we piling another $715 million of debt on the backs of our students--so we could stand here and say we did a bipartisan deal? And I know how hard it was. Yes, there are great improvements from where it started. I appreciate that, but we have a better deal. It is called Reed-Warren. It matches those low rates you see in the bipartisan deal for the first 3 years. It matches them, and then it keeps the rates down. I am going to show just how much money we save students in the Reed-Warren legislation because it keeps the rates down.

Did students put two wars on a credit card? Is that why they have to be punished? Were students running the banks that placed huge bets on Wall Street, leading up to the crash? Did students create a drug benefit in the Medicare Program without paying for it? Did students create and sell toxic mortgages, swaps, and securities? Oh, no, they didn't do any of that, but apparently we are forcing students to pay for that by tacking another $715 million on their backs.

I have to say, when it comes to the banks, oh, hundreds of billions of dollars, no problem; too big to fail. It is very hard to explain to people and to students. We say we love our children and we want them to succeed. And yes, we do, but we don't follow our words with actions because if we followed our words with actions, we would embrace the Reed-Warren solution. But the handwriting is clearly on the wall, and we are not going to have the votes to do that, so we are going to ask our students to continue to pay more and more.

We ought to look at what past Presidents have said about the importance of education.

I feel I must point out that Americans have always said that our values include valuing our students. So let's go back.

George H.W. Bush:

Think about every problem, every challenge, we face. The solution to each starts with education.

How right he was when he said that.

Bill Clinton:

When we make college more affordable, we make the American Dream more achievable.

How right he was to say that.

George W. Bush:

Our country must focus our education system on helping workers learn the new skills of the 21st century so we can increase the job base of this country.

And Barack Obama:

The jobs of the future are increasingly going to be those with more than a high school degree. We all want Americans getting those jobs in the future. So we are going to have to make sure that they're getting the education they need.

OK. So how about charging our students $715 million more?

That really helps us do what these Presidents have called us to do, which is to value our children, to value education. Two Democrats, two Republicans. A clear message. And, believe me, that is hard to find on a lot of issues. Education is key. Our students are important. They need the education to get the jobs.

I am going to show exactly what this bipartisan bill is going to cost. I already said it is $715 million over the course of time to the government. Let's look at how much more each family will have to pay under this so-called ``deal'' compared with the Reed-Warren substitute.

First, let's take a look at the 10-year loan. Now, what we do on all these charts is we go out to the cap because we know the caps will all be reached. All one has to do is look to the experts. They have told us the caps will be reached. Take the 30-year average rate of the 10-year note, add on the surcharge, and, bingo, the caps will be reached in a few years.

Let's look at the Reed amendment versus the deal. If you have a $15,000 loan for 10 years, under the deal you pay $1,363 more than you would under the Reed amendment. If you have a $25,000 loan, over 10 years you pay $2,271 more under the bipartisan deal. If you have a $50,000 loan--and you can get those, by the way--for 10 years, you pay $4,500 more.

So let's say you decided you wanted to take 25 years to pay back that undergraduate loan. Let's say you have decided you want to take 25 years. You will pay, for a $30,000 loan amount, $8,400 more under this so-called bipartisan deal than you would under the Reed-Warren amendment. You will pay $14,000 more over the course of a 25-year loan if you have a $50,000 loan amount.

So I am saying to the American people who might be watching this, the bad deal is the bipartisan deal and the good deal is the Reed deal. Look at how much more money an individual has to pay for a $50,000 loan over 25 years--$14,000 more. Some people don't even make $14,000 in half a year.

Let's look at what happens to graduate students, and this is why the graduate students are speaking out against this. Look at this: If you pay back your graduate loan in 10 years--and we all know the caps are going to be reached--you pay $2,500 more for a $15,000 loan, $4,200 more for a $25,000 loan, $8,500 more with a $50,000 loan, and for a $100,000 loan you pay $17,000 more under the so-called bipartisan deal compared to the Reed amendment.

So what we are seeing now is a breakdown of why we say it is going to mean $715 million more in debt on the backs of our students. I am showing how it breaks down for a family.

This is worth looking at. If you are a graduate student--and I know the Presiding Officer probably has a doctorate--and you had to go borrow money under this bipartisan deal, if your loan amount was $30,000, you would pay $16,000 more than you would under the Reed-Warren amendment. If you had a $50,000 loan, you would pay $26,000.

Look at this: If you have a $100,000 loan, which many people have--you hear about what the cost is, and many people who go to graduate school have this--you will pay $53,000 more under the so-called bipartisan deal.

Let's take a look at the parents--the parents who will have the misfortune of having to live under this. Look at the cap. Under the Reed-Warren cap it is a 7.9-percent cap for the parent loan. Under the so-called bipartisan deal it is a 10.5-percent cap. So what does this mean? The additional money for a 10-year loan would be $2,500 for a $15,000 loan, $4,200 for a $25,000 loan, $8,400 for a $50,000 loan, and $16,000 for a $100,000 loan. That is how much more the parents of the students would pay.

The last chart, to bring it home to everyone, is the parents who are going to live with this bipartisan deal unless we pass Reed-Warren are going to have to pay, over 25 years--because their cap is 10.5 percent under this great bipartisan deal--$16,000 more on a $30,000 loan, $26,000 more on a $50,000 loan, and--hold on to your pocketbook--$53,000 more on a $100,000 loan.

Why would we not support the Reed-Warren bill? Did it cost us a few bucks? Yes. So we paid for the few bucks it cost us by putting in a millionaire's surtax of 1/2 percent. OK? But because the bipartisan deal expects students to pay, and is putting the deficit burden on the students, their cap ranges up to over 10 percent for the parent loans.

So you might hear: Oh, Senator Boxer, it will never reach the cap. We will not get to the cap. Well, I will use a--well, I will not go there. That is simply not true. We will get to the cap. Why? I said before, the average for the 10-year Treasury bond over the past 30 years is 6.22 percent. That is what it is. The bipartisan deal plugs us into the 10-year Treasury bond and adds a few dollars, a few percentage points for handling fees, and we will get all the way up to the cap in every case. It is just going to happen.

If you don't learn from past interest rates, you can't predict the future. CBO predicts the future. They are using the past. We have to use the past. The cap will be hit. The cap will be hit.

So where does this leave us? We have a stark choice to make. We can go with a bipartisan deal that people worked very hard on--and I compliment them for all the work they put into it, believe me. We can go with that deal that puts debt on the backs of our students--an additional $715 million worth of debt--or we can go with the Reed-Warren alternative that says to students: You are already paying enough. We are not going to lay this on you. We figured out a way to do it so that you are capped at a much lower rate.

This is what we are talking about. This is what we are talking about. The deal will take $715 million out of our students' pockets over the next 10 years, and anyone who thinks that is fair should vote for the deal. Anyone who can look into the eyes of a student who is already struggling, who is already working, who is already asking their parents for help and trying to put it all together in a package, anyone who thinks that is fair, then vote for the deal. But don't kid yourself. This $715 million is going right onto the backs of our families. I have shown the charts. This is a permanent deal.

Senator Coburn: I am pleased Senators agreed on a

permanent principled solution. On Friday, the Republican leader called this bill a permanent reform that ties interest rates to market rates. From the Republican HELP Committee, Senator Alexander called this a long-term market-based solution. They are not going to revisit this issue.

I have to compliment Senators REED and WARREN. They deserve praise because they have come up with a plan that works, that is fair, and that will give solace to our students. For the undergraduate and graduate loans, we will see them capped out at 6.8, and for the parent loans the cap is 7.9 compared to over 10 percent in the so-called bipartisan deal.

Now, I promised I was going to revisit some of the stories, and I am going to close with those stories.

Sandy Barnett, 58 years old, of Illinois took out a $21,000 loan to pay for graduate school in the late 1980s. But even after earning her master's degree, Barnett struggled to find a job that paid more than $25,000 a year. She fell behind on her payments. She suffered through a layoff, a stretch of unemployment, and the death of her husband while her student loan ballooned to $54,000.

So what are we saying to Sandy Barnett? Oh, great news, we had a bipartisan breakthrough and now we are going to add $715 million to student debt.

When Michelle Bisutti, a 41-year-old family practitioner in Columbus, OH, finished medical school in 2003, her student loan debt amounted to $250,000. By 2010 it had ballooned to $555,000. The entire balance of her Federal loans--over $200,000--will be paid off over 351 months, when she will be 70 years old.

What are we doing? Who are we fighting for? How can we make one more speech on the floor of the Senate saying our students are our future? We have an immigration bill that is letting in high-tech workers because we don't have enough trained American workers to fill the jobs. Yet we are going to make it easier on students by piling on another $715 million of debt on their backs and on the backs of their families?

Emmanuel Tellez's mother is a laid-off factory worker, and $120 from her $300 unemployment check is garnished to pay the Federal PLUS student loan she took out for her son.

Aren't we proud, Federal Government? This is great. We are garnishing Emanuel Tellez's mother, her unemployment check, because she took out a Federal PLUS student loan for her son. Why don't we talk about refinancing these loans? Why don't we talk about making it easier for people to pay back these loans instead of having a so-called bipartisan deal that adds $715 million to students; that puts it on their backs?

Deanne Loonin, a staff attorney at the National Consumer Law Center in Boston, said she has been working with an 83-year-old veteran--Mr. President, an 83-year-old veteran--whose Social Security benefits have been reduced for the past 5 years.

The client fell behind on a Federal loan that he signed up for in the 1990s to help his son with tuition costs. Loonin said the government's cuts have left the client without enough cash to pay for medicine for his heart problems.

This is a national problem, and part of it is a national disgrace. So what is the solution? A so-called deal that makes it worse.

Last year, the Federal Reserve Bank of New York reported that Americans 60 and older still owe $36 billion in student loans. Social Security checks are being garnished and debt collectors are harassing borrowers in their eighties over decades-old student loans. We can't do this.

There was a recession, the worst one since the Great Depression. Yes, people lost their jobs. Yes, people had problems. So why aren't we dealing with the underlying issues and making it easier for our families, instead of having a deal that is cut--I wasn't part of it, that is for sure--that hurts our students and their families.

Mr. President, I yield the floor.

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