Issue Position: College Affordability
Issue Position
Students in Kentucky and across the nation find a college education increasingly unaffordable. At a time when our unemployment rate is higher than the national average, Kentucky students carry loan debt of over $20,000 on average. And in 2012, 71% of Eastern Kentucky University students and 73% of Northern Kentucky University struggled with the burden of student loan debt. Families in the Commonwealth are devoting more of their income to tuition, and ever higher numbers of graduates (and oftentimes their parents) are burdened by unsustainable student debt. The federal government can play a central role in helping students and families pursue educational opportunities, but that will require a senator who puts our future generations before today's partisan politics.
Treat Students As Equal To Wall Street Banks
Give students the same loan rate as Wall Street banks. For far too long, Big Wall Street banks have gotten a great deal from our government, while our Kentucky students drown in debt. We should provide uniform treatment. In the Senate, legislation has been introduced that would for one year allow new student borrowers to be able to obtain a federally subsidized Stafford loan at 0.75 percent, as opposed to the current student loan rate of 3.4 percent. The low rate is the one now used by big banks under the Federal Reserve's "discount window" to borrow money from the government. In the Senate, I will work across party lines to champion similar legislation to fight for Kentucky students and graduates. Mitch McConnell failed to lead on this legislation. He stands with the big banks, but not with Kentucky students and families. [Bank on Students fact sheet; Time, 5/10/2013]
Provide Refinancing Options
Allow students to refinance their loans. Congress has taken some action to attempt to hold down the rates on some federal student loans. However, many existing borrowers have been unable to take advantage of historically low interest rates to refinance their student loans. Mitch McConnell has blocked action on a proposal to allow borrowers with older student loans to refinance at the rates established in 2013 for new, taxpayer-backed student loans, and he previously opposed efforts to cut student loan interest rates in half. I strongly support this student loan refinancing legislation, because it would help nearly 360,000 Kentuckians reduce their student loan burden.
Champion Equal Pay For Equal Work
According to the American Association of University Women, paying back student loans can be a young woman's "first encounter" with the gender pay gap. Their 2012 study found that "women and men pay the same amount for their college degrees, but do not reap the same rewards." In fact, this even proved true for men and women who shared the same college major. A review of full time workers who were one year out of college found that 53% of women v. 39% of men were carrying high student loan debt burden, "defined as the percentage of earnings devoted to student loan payments," and women college graduates were only making 82% as much as men. Due to the pay gap, oftentimes women have less money to pay back the same amount of loan debt.
Not only does McConnell believe students should not be allowed to refinance their loans at lower interest rates, but he's an unabashed opponent of equal pay for equal work. Couple these facts, and it means Kentucky women have a senior senator who believes they should be forced to pay high student loan interest rates, while they continue to make less than their male counterparts in the workplace. And since on average Kentucky women make 76 cents for every dollar men make in the same job, this results in many women having even less income to invest in their future and their families. The federal government derives a large profit from administering the student loan program, and I strongly believe that should be reinvested in lower rates for students. [S. 2432; Senate roll call no. 185, 6/11/2014; Vote 113, 5/24/12; Vote 171, 7/10/13; Boston Globe,4/13/2014; American Association of University Women report; NWLC, 2/2014]
Fully Fund Pell Grants
Maintain full funding for Pell Grants. Pell Grants provide essential support to needy undergraduate students. Mitch McConnell has consistently tried to reduce funding for this vital program. Under a budget he favors, Kentucky students would receive over $48 million less in Pell Grant aid and nearly 10,000 students would be kicked off Pell Grants altogether. A long-term solution to financing the program must be found by 2017 in order to maintain grants at even current levels, which are inadequate. I am a vigorous supporter of protecting and boosting Pell Grants. Fully funding and ideally expanding Pell Grants, and ensuring that working families remain eligible for the grants, are critical to reducing student loan burdens on Kentuckians. [Ryan Budget FY14: Vote 46, 3/21/13; New America Foundation, 4/24/2014]
Support Creative Financing Solutions
Develop more options for college financing. A pilot program in Oregon, "Pay It Forward," presents an innovative solution to the student debt crisis. Students can attend Oregon public colleges and universities for free and, upon graduation, pay a small percentage of future income for a fixed period of years to pay for the program to continue. "Pay It Forward" has been described as an "inverse of Social Security," providing a form of guaranteed assistance for young people. Rep. Tom Petri has proposed a similar program at the federal level, which has attracted bipartisan support in Congress. Unlike Mitch McConnell, in the Senate, I will make exploring innovative options a priority. [Salon, 7/11/2013; H.R. 1716, introduced 4/24/2013]
Strengthen Community Colleges and Vocational Schools
Invest in community colleges and vocational schools, which offer students affordable higher education options. Community colleges work at a local level to develop the skills necessary for students to compete in a global economy. Associate degrees and certification programs offer students more affordable options, and two-year colleges often let students adjust to higher academic standards before moving on to four-year institutions. A fund was proposed to facilitate collaboration between business and community colleges to train workers in fast-growing career fields. Other efforts have focused on addressing high dropout rates at community and technical colleges. Additional federal funding and support will help improve the quality of instruction and completion rates for degrees at community colleges. [Community College to Career Fund Act, S. 1269]
Streamline and Promote Repayment Options
Promote greater awareness of student loan repayment options. With programs like Pay as You Earn -- an income-based repayment plan -- and loan deferment for the unemployed, there are opportunities for students and graduates to repay their loans in ways that fits their budgets. However, very few people take advantage of these programs because they lack accessible information. Making students aware of these options would lessen their financial strain and reduce loan default rates. The Department of Education, colleges and universities, and lenders should collaborate on making information about these initiatives available to all students and graduates. [Slate, 6/10/2014]
Simplify income-based repayment plans. Unlike other student loan repayment programs, which have fixed payments, income-based repayment plans calculate monthly payments by income and family size. This type of option makes payments more manageable for graduates in a difficult job market and reduces loan defaults. Low public awareness, along with a lengthy and confusing qualification process, has left these programs underutilized. Streamlining the application process and giving lenders more incentives to offer income-based repayment plans would make them more accessible to graduates. [U.S. Department of Education Income-Based Repayment Fact Sheet; Bloomberg Businessweek, 7/15/2013]
Enforce Veteran Protections
Protect veterans from predatory student loans and deceptive university marketing. In May, the Department of Justice settled a complaint with Sallie Mae, which agreed to pay almost $100 million in compensation for overcharging 60,000 military members on education loans. Veterans are often unaware of the many education benefits to which they are entitled, such as the new G.I. Bill and several tuition assistance programs. Worse, veterans are often the target of deceptive recruiting practices from for-profit schools that attempt to fill their coffers with VA education benefits. These schools frequently pressure veterans into enrolling in courses that do not help them reach their degree requirements, or they encourage them to take out hard-to-repay private loans. These brave men and women have made great sacrifices to protect our freedoms. The federal government must implement more protections to prevent abuses. [U.S. News and World Report, 11/11/2013; CNN, 5/13/2014; Federal Trade Commission, 10/31/2013]
Encourage Degree Completion
Encourage students from modest backgrounds to complete degrees by implementing support programs. Students from families in difficult financial circumstances often face the highest college dropout rates. According to The New York Times, only one-fourth of college freshmen born into the bottom half of the income distribution will graduate from college by age 24. On the other hand, 90 percent of freshmen born into families in the top income quartile complete their degree. In addition to the wasted talent and lost earning potential that come with dropping out, college dropouts are more than four times as likely to default on student loans. Programs aimed at students from needy families and historically underrepresented groups can ease the transition to college life by providing students support and guidance. The Department of Education can disseminate best practices and encourage colleges to provide these programs. [New York Times, 5/15/2014; Slate, 6/10/2014; Education Sector, accessed 6/17/14]
Background
The student debt crisis has several causes.
First, college tuition rates -- even for public colleges and universities -- have risen dramatically, especially as financially strapped state governments cut back their support. Second, students sometimes receive little to no financial counseling and are often encouraged by private colleges, counselors and even peers to pursue the most expensive educational options, when a public university or community college could be a more cost-effective place to meet their goals. Finally, student loan interest rates remain one of the few types of loans that cannot be refinanced at lower rates, leading to extraordinary cases where senior citizens are still trying to pay off decades-old student loans. [Washington Post, 4/1/2012]
Unfortunately, Mitch McConnell continues to ignore the problems that students and their families in Kentucky face in affording college.
Recently, McConnell led a filibuster to block Sen. Elizabeth Warren's proposal to allow existing student loan borrowers to refinance their loans at current, lower interest rates. I strongly support Sen. Warren's bill. [S. 2432; Senate roll call no. 185, 6/11/2014]
In 2007, McConnell was one of only 12 Senators to oppose a bill -- later signed into law by President George W. Bush -- that increased funding for Pell Grants while reducing rates on student loans from 6.8 to 3.4 percent. As Kentucky's next Senator, I will push strongly to protect and expand Pell Grants and to hold down student loan interest rates. [H.R. 2669; Senate roll call no. 326, 9/7/2007]
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