Student Loan Debt

Floor Speech

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Mr. DURBIN. Mr. President, I want to thank my colleague from Rhode Island, Senator Reed. Senator Elizabeth Warren, our new colleague from Massachusetts, and Senator Reed and I have started this effort, but we are welcoming ideas and supporters from both sides of the aisle to join us.

The conversation tonight on the floor of the Senate may be the most important conversation that millions of American families could hear, because we are talking about student debt. Student debt in this country has reached the breaking point. It has reached the point where the cover of Time magazine would have a question mark. It shows a student headed off to college and the comment of the question mark is, Is It Worth It?

It has reached the point where the cost of higher education is so high, the indebtedness associated with it so high, that many are stepping back now to ask that very basic question: Is it worth it, to go this deeply in debt for college courses--an associate's degree, a bachelor's degree, or more? That question would have been unthinkable in my day--unthinkable. If there was one driving idea in my mind from my mother and father, it was stay in school, go to college, do the best you can and don't quit, keep working at it. Thank goodness, for me--thank goodness, for me--the Soviet Union decided to launch Sputnik. That was the biggest break I ever got in my life and I didn't even realize it.

It was October 1957. They launched this basketball-sized satellite that circled the globe. We didn't have any rockets or satellites at the time, and this satellite, as it circled the globe, let off this beep and signaled it was out there. You couldn't hear that beep on Earth with the ordinary powers of individuals--some scientist could pick up that signal--but they heard that beep on the floor of the Senate. What happened is Members of the Senate came in here--Democrats and Republicans--scared to death. We knew Russia had the bomb and now they had satellites.

We did a lot of work. We started preparing our Department of Defense to get ready; something may be coming our way. Then something happened which was nothing short of amazing. Somebody said: If we are going to beat the Russians, if we are going to beat the Soviets, we are going to need an awful lot of educated people, and so they came up with an idea. It was the first time in history the Federal Government had ever conceived of an idea of loaning money to college students to go to school, unless you were a veteran, with the GI bill. You didn't have to be a veteran. They would loan money to students to go to college, and they called it the National Defense Education Act. Sounds right, doesn't it? If we are going to defend America, we need education. So we will loan money to students all across America to go to college.

What that did was to completely destroy the stereotypes of colleges and universities, which used to be for the very brightest and the sons and daughters of graduates. In the 1960s, after the National Defense Education Act, higher education was democratized and a young high school student from East St. Louis, IL, walked into the admissions office at Georgetown University and went to school with a National Defense Education Act loan from my Federal Government.

I didn't borrow much money because it didn't cost much money, though it seemed like a lot at the time. The deal was you borrowed it, and then, in the 10 years after you graduated--you got 1 year grace period--you paid it off in 10 installments with 3 percent interest, which I did. I borrowed money for college and law school. Did I know whether that was a good idea to go in debt for college? I didn't, other than the fact I had been told over and over and over the best thing you can do with your life is to go to college.

Fast forward 50 years. Fast forward from that experience in my youth to today. Imagine a student with the same motivation for college is sitting in an admissions office and, instead of being told they may have to borrow $500 or $1,000, they are told they may have to borrow $20,000 to go to school 1 year. Imagine a 19-year-old student making a decision about being $20,000 in debt. How in the world can they make that decision? They are still motivated, they want that college education, and so they basically say: I will sign up. The admissions officer has said classes start next week. If you sign these papers you will be in there. If you don't sign the papers, you won't be. So students are signing up.

All across America, the indebtedness these students, and many times their parents, are incurring is building up to record levels. There is more student loan debt in America than credit card debt. There are tragic stories emerging from it--stories of students deeply in debt, dropping out of school with no degree; stories of students deeply in debt finishing school unable to find a job; and stories of students deeply in debt going to semiworthless, for-profit schools with diplomas not worth the paper they are written on.

What happens at the end of the day? The debt of these students is not like any other debt. Luckily, we have as a colleague in the Senate Senator Elizabeth Warren, who once taught the bankruptcy course at Harvard Law School, so she can help correct me if I am wrong--at least fill in some blanks for me here. Currently, if someone declares bankruptcy in America today, there are some debts you cannot discharge. I am going to try to remember a few of them; she can help me with the others.

You cannot discharge taxes owed to the government. You still have to pay that. You cannot discharge money you owe for alimony and child support, if I am not mistaken.

I don't know if there is another category, but I am going to add student loans here, and I yield to my colleague, with the permission of the Chair. Did I get an A on that or at least a B?

Ms. WARREN. The Senator got an A.

Mr. DURBIN. All right. So the fourth category is student loans. If you end up in debt with a student loan, it is one of the few loans in your life you can't discharge in bankruptcy. The money you borrowed for your home, yes, that is dischargeable; the money you borrowed for your car, yes, that is dischargeable; the money your borrowed for a boat, yes, that is dischargeable; the credit line you have just for your ordinary expenses, yes, that is dischargeable; but when it comes down to student loans, it is a debt you carry to the grave. You either pay it or they will hound you for as long as you live.

That is why it is different than other debts. That is why we came together and said it is time for us to look at these student loans, the amount of debt which students and families are carrying, and do something about it.

Three bills emerged. The first bill I call the student borrower bill of rights. It says when you sit down at that desk in the admissions office they have to tell you what your rights are. They have to tell you the government loan you could use to pay for your education has a lower interest rate, more reasonable terms, can be consolidated at a later point in your life, a limitation on how much money out-of-pocket you are going to have to pay based on your income, and you might have some forgiveness if you go into some areas such as teaching and nursing. You have to be told this.

Right now, students sitting across from that admissions officer are being steered into the most expensive, worst loans. So the bill I have offered--the student loan borrower bill of rights--says, first, tell them the truth. Tell them the best circumstances for them to borrow money, if they need to borrow it.

Secondly, the bill of Jack Reed of Rhode Island basically says that a university has a vested interest in making sure a student doesn't borrow too darned much money; that a student doesn't get so deeply in debt they can never pay it back. That university, if they do not accept that responsibility, could be on the line themselves for some of that debt.

Think they will take it a little more seriously? You bet they will. That is the Reed bill, which I am cosponsoring.

To discuss the third bill, I wish to defer to the Senator from Massachusetts, with the permission of the Chair. It is the one that is a really critical element in this approach to dealing with student loans and student debt. With the permission of the Chair, I ask to enter into a dialogue with the Senator from Massachusetts.

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Mr. DURBIN. I thank the Senator from Massachusetts, and I see the majority leader is on the floor, so I will close with this:

These three proposals--students being admitted to college should be told the truth about their debt and the best way to minimize their debt; that the colleges will not loan more money than is reasonable or be on the hook themselves, if they do; and that students have an opportunity to refinance their student loans--would have a dynamic impact on student debt in America today and give working families and students a fair shot at a higher education they can afford without a debt that would cripple them for life.

I yield the floor.

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