Student Loan Debt
Floor Speech
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Mr. GARAMENDI. Mr. Speaker, as I was flying to Washington from California today, I recalled conversations I had over the weekend with a group of students who are headed back to school at the universities in California and other parts of the Nation.
To an individual, I asked them: ``How are you financing it? What are you going to do? Are your parents taking care of you; your grandparents?''
In some cases, they said: ``Well, they are helping a little bit, but I am going to do this with a student loan.''
All across this Nation, young men and women and maybe some that are not so young are going back to school to continue their education, to begin it, and, in some cases, learn new skills, and they are taking out student loans. This is an incredible, incredible way in which we have now begun the financing of our higher education system.
What does it amount to?
Well, let me show you what it amounts to. It amounts to a whopping amount of debt. Among Americans, no other loan program exceeds the amount of student debt, except for home mortgages. It is well over a trillion dollars in 2014, and probably approaching a trillion and a quarter dollars.
It is a burden on not just current students, but students from yesterday and from the decades before, still carrying that burden of debt, unable to begin what used to be the normal process of a family, a car, a house, participating in the economic activities of America. But, rather, they are burdened by an extraordinary debt. And here we are in Congress, really not even paying attention to this fundamental American issue. It is an economic issue for the large economy. It is macroeconomic. It is also very, very much a personal issue.
Is there one of you out there in America that doesn't have a son, a daughter, or maybe even yourself that is burdened by this student debt?
You are paying interest rates that are 5, 6, 7, 8 percent and you are wondering why, if you are able to refinance your home, why you are not able to refinance your student debt.
That is a reasonable question and one that I asked my staff and others: Why can't we refinance this student debt? After all, the Federal Government is able to borrow money for 10 years at less than 2 percent. Why don't we refinance those loans--that trillion dollars--and bring it down from 5, 6, 7, 8 percent, down to, let's say, 2 percent, plus 1 percent for the processing costs?
We could do it. It is feasible. It is possible. Oh, but it is going to cost the government. Well, yes. Right now, the government is earning a profit on the backs of those students. Over $200 billion of profit will flow into the Federal Government because we, the American public, through the inaction of Congress, are burdening the students of America today and in the past with this incredible amount of debt. So let's refinance it.
Here are some astonishing facts that you may not know. It is $1.2 trillion--actually, more--second only to the mortgage debt. The number of borrowers on the average balance increased by 70 percent between 2004 and 2012. In other words, mostly every student is taking out loans. The average student loan debt for graduates of 2015 is $35,051, a burden that they will carry for many, many years.
There are solutions, one of which several of us in Congress and the Senate have proposed, somewhat different versions, but they all amount to refinancing your student debt on current students who are borrowing as well as those in the past that have taken out loans. We can refinance it.
Take a look here. My particular legislation would set all student loan interest rates at 3.23 percent. Actually, that was based on the 10-year cost of a Federal bond about a year ago. So it is a little less today. Save low-income borrowers thousands by delaying the interest while they are actually in school. Right now, that interest rate will continue to accrue.
I was talking to a person on the airplane today. They said: ``Well, I am going to go back to school, but I can't continue to pay off my loan just because I get a hiatus.''
I said: ``Whoa, whoa. Yes, while you are in school, you don't have to pay, but that interest clock continues to tick along the way.''
So this legislation would say that if you are continuing your education, the interest clock stops. Also, we want to make sure that the average student can save a lot of money. It amounts to over $2,000 through the life of the loan.
By the way, why does the Federal Government currently cause a cost here called the origination fee? I know if you go borrow money or refinance your mortgage, there is a fee. But why would the Federal Government charge a fee for the origination of a loan?
Students go down to the student loan office at the university and they take out the loan. The cost to the Federal Government is part of that over $200 billion profit that the Federal Government has.
Anyway, we have an opportunity here to address this issue. Now that everybody is focused on this, let's see what we can do.
Changes to the student loan interest rates, we talked about this. If you are a graduate student, it is over 6 percent and so forth. We can bring it down to less than 3 percent based upon today's rates.
There are other people that are involved in this effort to try to deal with the cost of education here in the United States. I want to introduce to you a friend of mine who is often on the floor as we do our East-West show, Paul Tonko from the State of New York. I know that he is faced with this issue in his district, as I am in mine. I represent the University of California, Davis and four different community college campuses, all of which have this problem. If he would share with us his situation in New York and what he faces in his district.
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Mr. GARAMENDI. I thank the gentleman from New York with whom we have often on the floor talked about many, many issues, including making it in America and building a strong economy here. But a strong economy really depends upon the individuals that work in that economy, and if they are saddled with student debt, they are not able to really explore and really carry out all of their potential. So what we want to do is to address this issue.
You mentioned the Presidential campaigns, and Secretary Clinton, she actually has a very strong and robust and fulsome program dealing with the cost of education. She does have an additional item beyond the debt issues, which you very well explained that she wants to pursue. She also has a program in place where all families who earn initially less than $85,000 a year would be able to go to a State university, public university in their State, at no cost, and that would then grow to $125,000 in the next 4 years. That is really extraordinary.
That is pretty much like it was when I went to school a few decades ago and the University of California was literally free. We had a couple of--I don't know--$125 for the Student Union and some athletic programs, but it was tuition-free. Those are bygone days.
But Secretary Clinton believes--and I think she is correct--that it is possible for the Federal Government to institute programs that would make higher education free for those families that earn initially less than $85,000, and then growing to less than $125,000. What an enormous boom that would be to the economy.
So I am excited. I am excited about the potential here in the House of Representatives. Peter Welch, our colleague from Vermont, has introduced a bill that is identical to Senator Warren's over in the Senate, and they have a refinancing bill, similar to my bill. My bill goes a little bit further because we not only lower the cost of current students' loans, but we go to those loans that are on the books. So we can deal with this. We have the ability and the economic strength in this Nation to deal with it.
I know you may have some additional comments on that, but my mind, as we were talking here and I was thinking about this Special Order hour, went to the young and the not-so-young that have student loans, but also to those that are now in their more senior years and the issues that they face in their senior years. So perhaps we can shift to that, unless you have some additional things on student loans.
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Mr. GARAMENDI. Wow. 80 percent of American families would be able to send their kids to school without tuition costs.
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Mr. GARAMENDI. I am so pleased that you brought up this issue of entrepreneurs. I know you often talk about this as something that is very important to you personally and the work that you have done before you came to Congress in New York State with the entrepreneurial activities of that State.
But I also note that Secretary Clinton, who was a Senator from New York, perhaps had listened to you during those years, and is carrying in her proposal a very special program for entrepreneurs.
I am thinking about a group that I met with in Davis, California, this last year, a group that actually nourishes students that are wanting to start a business. And as you said, coming out of the science or out of the technology or other areas, they come upon an idea where they want to grow a business.
Well, Secretary Clinton has loan forgiveness as part of her education package that would forgive $17,500 of their student loans when they begin that business. When they become entrepreneurs and it begins to operate, there is this loan forgiveness. So suddenly they go into a program where they are $17,500 less debt on their balance sheet. An enormous act, an enormous piece of advantage.
I am also thinking about--this is not directly to the entrepreneurs, but to home buyers. That student loan prevents people from buying a home because it shows up on their balance sheet and they are not able to get on with it.
I really like what Secretary Clinton is proposing here because it goes along with what you and I and many of our colleagues see as an impediment to economic growth and individual growth in our Nation.
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Mr. GARAMENDI. Exactly. We have been talking about students, some of whom are young, some not so young, and others who are carrying those student loans. But if you begin to look at the totality of society, and if we care about each other and about what is happening in our communities, we come to the more senior years, and immediately we find that seniors are faced with a host of issues. One of the issues--and I am glad you brought this up--is Alzheimer's and dementia.
Let me show you something that we developed here. This is a graph of the cost of Alzheimer's in our society. It is growing very, very rapidly. You can see right now we are spending somewhere around $236 billion a year on it. And as the population ages, which is part of the baby boom, and the fact that we are all going to get older, we figure by 2050 that we will be spending $1.3 trillion a year to deal with Alzheimer's. It is an extraordinary burden and it is probably one that will bust the bank, the Medicare bank, and the Medicaid bank.
We know that these costs are shared largely by the Federal Government and by individuals and families. In my own family, my mother-in-law was a victim of Alzheimer's, and she spent her last 3 years of her life in our home and we were able to care for her, but that is unusual.
For most families, it is a burden that cannot be afforded, so that cost then comes to the Medicare and the Medicaid program. In fact, the single biggest expense in Medicaid is dementia and Alzheimer's. This is one where we are faced with an enormous challenge, but it is a challenge that actually may have a solution.
Let me put up another chart here before we get to that issue of how to deal with this. This is one that deals with--the cost of caring for seniors with Alzheimer's will increase nearly fivefold by 2050, and here we have broken down the cost, Medicare and Medicaid, $1.1 trillion in 2050 and the extraordinary rise. But the burden for the Federal Government becomes awesome and, frankly, probably unaffordable.
Can we do something about it?
I think so. And this takes us back to what we were talking about earlier, about the universities and about research.
Let me just put this up very quickly.
What happens when we invest in research?
Well, let's take a look at what we do invest in research. We know, for example, that for cancer we are investing about--Federal government dollars now--$5.5 billion a year for cancer research. This is through the National Institute of Health.
For HIV/AIDS, somewhere near almost $3 billion a year. For cardiovascular problems, a little over $2 billion a year.
For Alzheimer's, it is now about $900 million a year. So we were able this last year--in 2015-16 budget year, we were able to increase from $560 million to just under $1 billion. So we have ramped up.
We thank President Obama for putting that in his budget, and for all of our colleagues, Democrat and Republican, for approving that additional funding for research.
But what does research mean? What does it mean when we actually research these illnesses? It is incredible. One very quick chart here will show you what happens when we invest in research.
I know, Mr. Tonko, this is a big issue in your district. It is a big issue--not just the illness, but the research, because New York is one of the great research centers.
Deaths from major diseases, 2000 to 2013. So what has happened with breast cancer? We have seen a small decline in breast cancer deaths. Prostate cancer, we have seen an 11 percent decline in prostate cancer deaths; heart disease, 14 percent decline; for strokes, 23 percent decline; for HIV/AIDS, a 52 percent decline. What is that decline a result of? Obviously, better medical care, but also research.
So what has happened with Alzheimer's? Remember that we were investing basically at one-tenth of what we invest in cancer and one- fourth of what we invest in heart disease. For Alzheimer's disease, we have seen a 71 percent increase--not a decrease in the number of deaths but, rather, an increase in the number of deaths. So as we ramp up the research, will we be able to see this kind of reduction in deaths? Well, we would hope so. But what we do know is that if we are able to delay the onset of this terrible illness, quality of life will be better, and the cost to the public and to families will decline.
I know, Mr. Tonko, that in your area, while your family may not have been directly affected by Alzheimer's, I know that you are seriously interested in it because you see it in your community as I do in mine.
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Mr. GARAMENDI. I thank you so very much for bringing up the Alzheimer's Accountability Act. The new money that goes into it, this additional 300-plus million dollars bringing it up to some $900 million a year is accountable. There are specific plans that are needed; there is a mechanism to prioritize the expenditures--all of those things. So it is not just money that is going to be thrown out there.
I am also reminded that this issue is one that is a brain issue, obviously, but that is an issue that affects our soldiers who have got PTSD, traumatic brain injury, post-traumatic stress syndrome, all of those things for our veterans who have come back, which, again, is an issue of the brain. If we are studying Alzheimer's, we will also be studying those issues.
About 3 years ago now, in the National Defense Authorization Act, we enacted a provision that required the Department of Defense, as it goes about dealing with these terrible problems that the veterans have with post-traumatic stress or the other brain injuries, coordinate their work with other brain researchers. So we really need to understand that we have one mind, one human brain, and the research will go at it from different symptoms and different diseases, but it is still dealing with the brain. So the sharing of knowledge is a part of what this accountability act will bring forward to us.
We have challenges. We have many, many challenges, and this issue of Alzheimer's that was in the omnibus bill last year and our Republican colleagues, our Democratic colleagues, all alike faced with this issue in their families and their communities, voted in support of this legislation. So this is not a partisan issue. This is a human issue and an American issue. It is one that we can deal with, and we really do have the money to do it.
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Mr. GARAMENDI. The early onset.
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Mr. GARAMENDI. As you talk about partnerships, I'm thinking about many of the partnerships that do exist already and those that could exist. This brain research, Alzheimer's, and other brain issues are researched around the world. There is an organization that I am familiar with in California that one of our friends from the Napa Valley started, a program called the One Mind Institute. Our former colleague, Mr. Kennedy, is part of that organization. We have one human brain, and if we could pull together the research from all around the United States and all around the world so that there is a sharing of information, perhaps we will get to some knowledge much, much faster.
So I am really heartened by the effort that the Congress has made thus far to almost double the research for Alzheimer's. I look forward in this month of September as we put together our appropriations, which hopefully we will, or even a continuing resolution, that we would keep in mind that this is an area where money could be well spent.
We make choices here in Congress, and I just want to lay out, as I prepare to close, and then if you would also, Mr. Tonko, among the choices we make is one that I deal with on my committee assignments. I am on the House Armed Services Committee, and I am on the Strategic Forces Subcommittee. Strategic arms mean nuclear weapons. I just am troubled--deeply, deeply troubled--by what we are in the process of doing here in the United States as well as Russia, China, and perhaps other places around the world in rebuilding our entire nuclear arsenal.
If you take all of the various things that are involved in that nuclear arsenal--the rockets, the bombs, the submarines, the airplanes, and all the command and control systems--in the next 20 years, 25 years, we will spend $1 trillion--$1 trillion--on that whole system. I just often think what if we were to spend just a small portion of that, maybe $1 billion a year or $2 billion a year of the $1 trillion on brain research, what would it mean to American families? What would it mean to families around the world? There is not going to be a family in this world that doesn't suffer from this Alzheimer's thing if they live long enough.
So we make choices here, and I wrestle with those choices. But in this particular case, the choice is clear. I prefer to spend some portion of that money on this Alzheimer's issue and on the students and, therefore, on the very important future of this Nation. That would be my choice, and hopefully our colleagues and the American public would see the wisdom of that.
Mr. Tonko, would you like to close?
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Mr. GARAMENDI. Mr. Speaker, I thank the gentleman from New York (Mr. Tonko), my friend and colleague, for the passion and commitment he has to his people and to the American people and beyond.
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