Student Loan Debt

Floor Speech

Mr. REED. Madam President, what has made America strong is we have provided opportunities for individuals to develop their talents. Previous generations of Americans have recognized this, and invested in higher education accordingly.

During President Lincoln's time, the Federal Government invested in establishing a system of public colleges throughout the Nation. After World War II, we opened the doors of postsecondary education to our returning veterans under the GI bill. As part of the War on Poverty, we enacted the Higher Education Act with the idea that no American should be denied the ability to go to college because their family lacked the ability to pay for college.

Senator Pell, my predecessor, with the creation of the Basic Educational Opportunity Grant--later named the Pell grant in his honor--made the promise of a college education real for millions of Americans.

As part of the student aid programs, we invested in offering low-cost loans to create opportunity, spur innovation, and grow our economy. Our student loan programs were originally seen as an investment, not a profit center or even a cost-neutral proposition.

Today, our student aid investment aid has been stood on its head. The Congressional Budget Office estimates we will be generating revenue from student loans through 2024. Student loan debt has become a serious threat to our ladder of opportunity--our pathway to progress for this generation.

That is what brings me and my colleagues to the floor today. We must turn the tide because too many students are drowning in debt, and it has threatened to hold back a new generation of young Americans just when they would be forming a household, buying cars or starting a business.

As student loan repayment plans stretch out over 20 years or more, this generation will still be paying off student loans when it comes time to send their own children to college and perhaps while also taking care of their parents in their senior years.

The bottom line is we know borrowers are struggling. We know the government could play a more constructive role in helping them and enacting reforms to increase fairness and transparency in this process.

The Federal Reserve Bank of New York recently reported that delinquency rates on student loan debt are increasing even as we see decreases in delinquency rates for other types of household debt.

The cohort default rates for student loans have been increasing. For borrowers who entered repayment in 2010, 14.7 percent had defaulted by 2013, up from 13.4 percent for those who began repayments in 2009. It is essential borrowers know about their repayment options. That is why Senator Durbin's Student Loan Borrower Bill of Rights Act is so important and why I am proud to be a cosponsor of his legislation.

But changing the trend of growing debt and rising defaults is more than a student loan servicing issue. We have to provide a real avenue to allow individuals straining under the weight of the estimated $1.2 trillion in student loan debt--many with loans carrying an interest rate of 6.8 percent or higher--an opportunity to refinance those loans at a lower interest rate. The GAO just reported that on loans made between 2007 and 2012, the Federal Government is estimated to make $66 billion. Clearly, borrowers are paying more than they should, and we have to address these college costs.

But we also have to deal with the issue of giving colleges and universities their incentive, their skin in the game, to ensure they carefully review their students' loans; that they direct students to the lowest cost and the lowest possible amount of loans; that they do this in a way which will make them truly responsible and conscious of the debt which is accumulated by students. I have been working on legislation to require that.

So I commend Senators Durbin, Warren, and others for what they are doing to deal with this issue.

Madam President, I yield the floor for my other colleagues.

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