Student Loan Debt

Floor Speech

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Ms. MURKOWSKI. Madam President, this has been an interesting week here in the Senate.

When we began this week, there was a great deal of attention focused on what was happening overseas with the release of a prisoner of war who had been in captivity for some 4 to 5 years, Sergeant Bergdahl.

Conversation moved to education, with a measure that Senator Warren from Massachusetts had introduced. The thought was we would be discussing education issues--the high cost of college and the burden of college debt on our students.

Then we turned later yesterday to veterans and how we address the real scandal we have seen within the VA in failing to provide that level of care in a timely manner for our veterans who have served us so honorably.

It has been kind of a fast and furious week, and I wish to take a few minutes this afternoon to talk about my perspective on not only the legislation that Senator Warren had put out for discussion, but, really, the concerns so many in this country have when it comes to the issue of student loan debt.

I am the mom of a recent college graduate. Our number two son is going to be entering his senior year of college. So we are fully embroiled as parents in the understanding as to what the current costs of a college education are, what young students go through in order to achieve their dreams of going to college and their struggles as they then face the reality of moving into a working world, but starting off saddled with debt that can be almost breathtaking for them.

In addition to being a mom of kids in this generation, I am also a former commissioner of the Alaska Commission on Postsecondary Education. This is Alaska's State agency lender. So I am coming at the issue wearing a couple of different hats today.

I know full well people are discussing the issue of the high cost of college and student loan debt--and not just here on the floor of the Senate but talking about it around their kitchen tables. They are very concerned about the cost of college and the burden the debt then places on our young Americans.

Young people who are just starting out after college graduation have an average debt of about $27,000. Now, some would say $27,000 is manageable; that is about in the range if you are purchasing a new car. But think about it. For a young person just out of college, starting to make those initial payments, $27,000 can be a staggering amount. Whether we talk to the young people working the phones in either a State office or here, the young interns that I have--who are excited about the prospects of going to college or are in the midst of college or who have just graduated from college--some of that excitement and that enthusiasm dims when they realize what it is they are taking on. So this debt is daunting.

Keep in mind, that debt then assumes the means to pay it back. So many of our young people of course cannot find a job. For the 18- to 24-year-old age bracket, the unemployment rate is twice the national average. For those graduating with a masters or a doctorate, of course, the debt burden is much more.

Then for the parents and those who have taken out loans to help put their kids through college--many families also struggling. So, again, this is something that families are talking about around their dinner table.

And I am hearing about this from parents, from high school and college students in Alaska, and talking with my interns here. They all say the same thing. They are all concerned. They are all concerned about the cost of college and job training and the debt they are going to incur and their ability then to move forward, whether it is to buy that first car, whether it is to purchase a home, the decisions about getting married or starting a family. The debt has an impact, and that is absolutely a given.

I do think it is important to know we in Congress have not turned a blind eye to this and we have been working over the years to help address the cost. The College Cost Reduction and Access Act and the Higher Education Opportunity Act are measures that I worked to craft some years ago, and they address these issues in many ways. We created income-based repayment and public service loan forgiveness. There was Active Military loan deferment, graduate student eligibility for income contingent repayment, interest rate reductions, Pell grant increases, TEACH grants, automatic zero expected family contribution for low-income families and much more.

We improved student support programs like TRIO and helped ensure students and parents have access to the kind of information they need to ensure they really do get top dollar for their education dollars and also to help students then persist in college to complete that process to earn the degree. We required counseling for federal loan borrowers prior to the students' graduation on repayment plans, debt management, loan forgiveness, consequences of default, tax benefits, and more. We also required disclosure about the terms and conditions of the Federal Family Education Loan Program. These are the FFEL loan programs before the loans are disbursed, before repayment, and during repayment.

Recently Congress has supported pay as you earn and other programs and just last year enacted a new interest rate structure to protect both students and taxpayers.

Unfortunately, we haven't seen much out of the administration to make Americans aware that these opportunities actually exist, that they are in law. We heard a nominee for a senior policy position at the U.S. Department of Education who tried to justify this lack of action by saying the provisions were just enacted recently. But 7 years ago is not recent when it comes to helping Americans understand the many loan repayment options. Just this week we heard the President give the Department of Education yet another 6 months to figure out how to tell Americans about their loan repayment options. I think we can do better.

I heard just last week a young teacher who was testifying before a Senate committee. She said she was completely unaware of the income-based repayment program which could have saved her about $4,000. Instead, with her unaffordably high loan payments, she basically defaulted on her loans. So it is important that when we put measures in place, we do make sure that education effort is there on the back end so people understand and can take advantage of some of these initiatives that will help to make a difference.

Obviously we do not have the Warren legislation in front of us for consideration. I am certain that it will be a matter that will be brought back before the Senate. I certainly would hope we would have extended debate about what we as a Senate can be doing to help our young people as they deal with the burden of college debt, of job training debt, and what we can do to ensure they are well on their way to good strong careers. But I want to raise just a couple of issues that presented themselves with the legislation that Senator Warren had put out on the floor, because they speak to a program in my State that has considerable impact.

Madam President, I know that I was scheduled to speak for about 15 minutes this afternoon. I have another colleague that is on the floor. I would ask unanimous consent for about another 5 minutes, if that is acceptable to my colleague and to the Chair.

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Ms. MURKOWSKI. I thank the Presiding Officer, and I thank my friend from Ohio.

First, I would like to bring up the issue of the Alaska State student aid agency. The Alaska Commission on Postsecondary Education--or as we call it ACPE--is funded by the Alaska Student Loan Corporation. It is a public corporation in the State of Alaska and it is an agency that originates Federal loans under the old Federal Family Education Loan Program, FFEL, and for 40 years it has originated State loans. Now, before you dismiss ACPE as just another private lender, let me tell you what this agency does. It is the Alaska agency for authorizing and investigating institutions of higher education. They provide consumer protection for Alaskans. They gather student data to inform policymakers so we know what policies and practices are working and where improvement is necessary. They manage the State's performance scholarships and education grants, which provide both merit and need-based grants to Alaskan students for postsecondary education. They create and manage college readiness and job training programs and help them figure out how to afford it. What ACPE does is promote access to and success in high quality post-secondary education and job training for thousands of Alaskans and non-Alaskans who are attending Alaskan schools. But they also have a special emphasis on outreach to groups that are underrepresented in postsecondary education.

They do such a great job for us in the State that when the late-Senator Ted Kennedy was here, he insisted on creating the College Access Challenge Grant Program to expand what ACPE had been doing for all these years.

But the measure that Senator Warren has, the Bank on Students Emergency Loan Refinancing Act, would potentially put these programs in peril and potentially end them. It would incentivize borrowers who borrowed their FFEL loans and their State loans through ACPE to refinance. But because this opportunity would only be available to borrowers in good standing on their State loans, it would leave ACPE with only the poorest performing and lowest credit quality loans in its portfolio, leaving behind the borrowers who are the ones the sponsors of the bill say we really need to help so much.

The loss of the FFEL loans would be bad enough, but here is another problem. State student financial aid loans were financed by the Alaska Student Loan Corporation through long-term fixed rate revenue bond issues. These have very restrictive terms with respect to paying them off before their scheduled maturity dates. The impact on the State agencies and the Alaskans they serve and to the corporation's bond rating of having a large percentage of student loan volume prepaid through this refinancing bill would be severe. The money the Treasury would pay ACPE for those loans could not be used to pay off the bonds early, nor can it be reinvested at anywhere near the interest rate on the outstanding bonds. The value of the bonds exceeds $65 million. It is not only the cost to the agency and its ability to function. Whether the State corporation were to default or to perhaps go to the legislature for a bailout, the consequences are not good. Either situation would be toxic for the Alaska Student Loan Corporation in terms of subsequently being able to issue bonds that really would be palatable to any investor.

In addition to the risk of default or a hefty bill placed on the State and being labeled a toxic risk to bond issuers, the combined loss of income across both old FFEL loans and State loans could very well leave ACPE unable to continue to perform any of the services that it performs really quite well.

This is not the only issue I have as it relates to what we have before us this week. We don't want our students, our young people to be struggling when it comes to debt. We have to work together to try to find the solutions that truly are helpful across the spectrum. One of the problems that we noted, though, was that the bill would prohibit Americans who have private loans from banks or State agencies, and who are having trouble paying as agreed, to refinance to a lower rate--a prohibition that does not extend to those who are having trouble paying their Direct and FFEL loans. I cannot understand why we would treat Americans differently based on the kind of debt they have. The sponsors of the bill I think genuinely want to help struggling borrowers, but with this provision they leave a lot of folks out in the cold. So that is something that needs to be addressed.

According to the Center on Budget and Policy Priorities, the cost of college is going up, but State funding for higher education, which went down during the recession, is not rebounding. We are seeing exceptions in Alaska and North Dakota. But according to the CBPP, Louisiana is at the top of the list and contributes a little over $5,000 less per student to higher education than they did prior to fiscal year 2008. Hawaii, New Mexico, and Alabama are seeing $4,000 per student less. Idaho, South Carolina, Massachusetts, Nevada, Connecticut, and Arizona are in the $3,000 less per student range. The list goes on.

So when the States are unable to contribute to their public universities and postsecondary education in general, the cost burden then for our students too often goes up. Even when our colleges tighten their belts and cut their internal costs, we see the costs rise.

So obviously there is a great deal to do. I know that so many of my colleagues are committed to working to find that good solution which works not only for students in my State but around the entire country.

We have our work cut out for us. I appreciate the efforts that many have made. I think the discussion will continue, and I look forward to that.

With that I yield to my colleague from Ohio, and I thank the Senator for his indulgence of an additional 5 minutes.

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