BREAK IN TRANSCRIPT
By Ms. WARREN (for herself, Mr. FRANKEN, Mr. HARKIN, Mr. REED, Mr. DURBIN, Ms. BALDWIN, Mr. ROCKEFELLER, Mr. REID, Mrs. FEINSTEIN, Mrs. BOXER, Mrs. MURRAY, Ms. LANDRIEU, Ms. STABENOW, Mr. CARDIN, Mr. BROWN, Ms. KLOBUCHAR, Mr. WHITEHOUSE, Mr. UDALL of Colorado, Mrs. SHAHEEN, Mrs. HAGAN, Mr. MERKLEY, Mr. BEGICH, Mr. BENNET, Mrs. GILLIBRAND, Mr. BLUMENTHAL, Mr. SCHATZ, Mr. MURPHY, Ms. HIRONO, Ms. HEITKAMP, Mr. MARKEY, Mr. BOOKER, Mr. UDALL of New Mexico, Mr. HEINRICH, Mr. SANDERS, Mr. MENENDEZ, and Mr. SCHUMER):
S. 2432. A bill to amend the Higher Education Act of 1965 to provide for the refinancing of certain Federal student loans, and for other purposes; read the first time.
Ms. WARREN. Mr. President, outstanding student loans now total more than $1.2 trillion and millions of young people are struggling to keep up with their payments. But we have a chance to give those borrowers immediate relief by cutting the interest rates on existing student loans. Make no mistake--this is an emergency. Federal watchdog agencies such as the Federal Reserve, the Consumer Financial Protection Bureau, and the Treasury Department are already sounding the alarm.
Forty million Americans are saddled with student loan debt. It is holding them back, and it is holding our economy back too. Crushing student loan debt is keeping many young people from moving out of their parents' homes, from saving for a downpayment, from buying homes, buying cars, starting small businesses, saving for retirement, or making the purchases that grow our economy.
It doesn't have to be this way. Congress set artificially high interest rates on old student loans that generate extra money for the government. The GAO recently projected that just the slice of Federal student loans issued between 2007 and 2012 will generate $66 billion for the U.S. Government. Those are the kinds of profits that would make a Fortune 500 CEO proud.
These young people didn't go to the mall and run up charges on a credit card. They worked hard and learned new skills that will benefit this country and help us build a stronger America. They deserve a fair shot at an affordable education. We can give them a fair shot by cutting those interest rates and cutting those government profits.
Along with more than 30 of my colleagues, I introduced the Bank on Students Emergency Loan Refinancing Act to do just that. The idea is simple. With interest rates near historic lows, homeowners, businesses, and even local governments have refinanced their debts. But a graduate who took out an unsubsidized loan before July 1 of last year is locked into an interest rate of nearly 7 percent. Older loans run 8 percent, 9 percent, 10 percent, and even higher. We need to bring those rates down, and we need to do it now.
The Bank on Students bill would give student loan borrowers the opportunity to lower their interest rates on old loans to match the rates the government offers to new borrowers today. That is 3.8 percent for undergraduate loans, 5.41 percent for graduate loans, and 6.41 percent for PLUS loans.
I want to be clear. These rates are still higher than what it costs the government to run the student loan program. The government won't be subsidizing student loans. In fact, the government will be making a profit on these loans--just a much smaller profit. And let's also be clear that our work is not done until we eliminate all of the profits from the student loan program.
But this is a step that both Republicans and Democrats can easily support right now. Last year nearly every Republican in Congress in both the House and the Senate voted for the exact same loan rates that are in this legislation. If Republicans believe that 3.86 percent is good enough for new undergraduate borrowers, then it should be good enough for all the existing undergraduate borrowers. There is no reason on Earth to say that some kids could get a better deal than others when they all worked hard to do exactly what we wanted them to do--get an education.
Passing this bill would have a real impact for people who are struggling to make it--college students, young graduates who are only starting to build their lives, parents who are juggling their own student loans and trying to figure out how they are going to pay for their kids' educations, and parents who guaranteed their kids' student loans. Student loan refinancing can save real money for millions of Americans, and they are voicing their support. Letters, emails, and phone calls are already pouring in, and petitions for the bill's passage have already garnered hundreds of thousands of signatures. Think tanks such as Demos and the Center for American Progress, student groups such as Generation Progress and Young Invincibles, and teachers groups such as the AFT and NEA have all come forward and endorsed this proposal.
Today the Congressional Budget Office announced that the bill actually saves billions of dollars and reduces the Federal deficit. That is because the refinancing proposal is fully paid for by implementing the Buffett rule, which limits the ability of millionaires and billionaires to exploit tax loopholes and pay a lower tax rate than middle-class families.
Later today we will introduce an updated version of this legislation in the hopes that we will be able to consider it on the floor of the Senate very soon.
I am encouraged by the fact that some Republicans have also come forward to say they are open to considering a refinancing proposal. I want to be clear. This should not be a partisan issue. I am eager to work with any of my colleagues regardless of party who believe that we need to do something about this growing debt crisis. If they have issues with the proposal, if they want to suggest different offsets or policy changes, they should bring their ideas forward. We are ready to hear them.
What we cannot do is continue to ignore this problem and hope that it will go away on its own. Congress made this mess by setting artificially high interest rates that are crushing our kids. It is Congress's responsibility to clean it up. Refinancing won't fix everything that is broken with our higher education system, but the need for comprehensive reform must not blind us to the urgency of addressing massive debt that is already crushing young people.
This is personal for me. I grew up in an America that made it a priority to invest in young people, and it opened a million doors for me. I will keep fighting to make sure that every kid who works hard and plays by the rules gets a fair shot. I urge my colleagues to join me in supporting this bill. Student loan borrowers don't have armies of lobbyists to fight for them, but they have their voices and they are asking for our support. Let's give it to them.