(Senate - June 27, 2013)

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[Pages S5477-S5478]
From the Congressional Record Online through the Government Publishing Office []

                           STUDENT LOAN RATES

  Mr. MANCHIN. Mr. President, if I may respond to my dear friend from 
Rhode Island for whom I have the utmost respect. We have a respectful 
difference as far as how to approach this problem and we are working 
through it. We really, truly, are working and we will work through it.
  We had a charge a year ago to fix it, so we started working on that. 
The President in a timely fashion gave us a piece of legislation that 
had a longer term fix, 10 years. We took that and worked off that 
original proposal given to us by the administration, by the President, 
and we started working in a bipartisan manner to make this work.
  With that being said, we looked at the 3.4 percent and I would say a 
majority of our Senate colleagues, both Democrats and Republicans, did 
not understand that the 3.4 percent only affected those that were 
subsidized loans. That is the smallest amount of loans we have out 
there. I think the majority of our colleagues, the majority of the 
people, the majority of the press thought we fixed it at 3.4 percent 
for everybody who had a student loan. That was not the case.
  We wanted to go back and make sure if we do something we do it for 
everybody, because the person who has income limits and qualified for 
the subsidized loan, the first year they get that loan it is $2,500; 
the second year it is $3,500; the third year it is $4,500; and the 
fourth year it is $5,500. That is the maximum they can borrow. So you 
know what. They borrow the nonsubsidized. Guess what they have been 
paying for the nonsubsidized: 6.8. Guess what students have been paying 
for what we call the PLUS loans. They have been paying 7.9. But we are 
not hearing anything about that.
  Put it in perspective as dollars. If we have a 1-year extension, as 
my dear colleagues have suggested, to try to fix the problem again, 
that will be about a $2 billion savings of interest payments that would 
be put on the backs of students. That is a tremendous amount of money.

  Guess what happens if we pass our bipartisan proposal. It saves $8.8 
billion, and everybody participates. Even the subsidized loan for the 
student who struggled the hardest and needs most of the help, they get 
most of the help. Not only do they get help on their subsidized loan, 
but they get help on their unsubsidized loan. We have looked at 
everything possible. We have a piece of legislation which we think not 
only fixes but basically repairs a broken system.
  When we look at where we are today and we look at sequestering--and I 
have been here not quite 3 years--I have watched us kick the can down 
the street to where my toe is hurting. We kicked this can so much, my 
toe is hurting, and it is starting to kick back.
  We need to start giving the people of this great country the 
confidence that we can work in a functional and respectful way. 
Democrats, Republicans, and Independents need to come together and put 
our country first, put our students first, and stop playing politics.
  We agreed--Democrats and Republicans--on this bipartisan bill that 
not $1 should go to debt reduction. We do not believe the students 
trying to get an education to better and improve their quality of life, 
their economic condition, and the economic condition of our great 
country should have to be burdened with reducing the debt of this 
Nation. They can do that by being productive citizens. We agreed on 
that. That was something that was not agreed on before because there 
were people who wanted the surpluses to go to debt reduction.
  We took out the surpluses and reduced the rate as low as humanly 
possible. It has been scored. We are bringing rates down. If we look at 
a top rate of 7.9 percent, that is going to come to 6.21 percent if 
they have a PLUS loan. If a student has a graduate Stafford loan, that 
is going to go from 6.8 percent to 5.21 percent. All the 
undergraduates--if it is a subsidized loan or a nonsubsidized loan--
will go to 3.6 percent, and that is a tremendous savings. That is the 
$8.8 billion, and that is what we are asking for.
  I respectfully--and I mean that--disagree with my colleagues who have 
signed on to a 1-year extension believing we are going to be able to 
come up with an agreement or a compromise that is better than what we 
have before us. We have worked this out with Senator Carper from 
Delaware, Senator King from Maine, myself from West Virginia, and 
Senator Alexander from Tennessee. Those are four former Governors. We 
knew we had to work together because we had to make things happen 
immediately. At the end of the year, everything had to balance out. 
Senator Burr and Senator Coburn also contributed, and they understand 
financing as well as anybody in this body.
  I say to all the students who have loans right now: Don't worry. July 
1 will come. We will come back on July 9 or 10, and it will be the 
first order of business we will ask to bring up. Both of our bills will 
be our first order of business.
  I assure everyone that we will come up with a compromise we can work 
out that will give the relief the students--those who desire an 
education and want to better their lives will have that opportunity and 
be able to have stability and not have the increased rate passed on 
because we will make this retroactive.
  With that, I yield the floor.
  The PRESIDING OFFICER (Mr. Cowan). The Senator from Maine.
  Mr. KING. Mr. President, I don't have a great deal to add to Senator 
Manchin's comments except to point out that everyone in this body wants 
to do best by our students. Everyone understands the importance of 
education, everyone understands how expensive it is, and everyone 
understands the problem of the debt burden on our students. We are all 
trying to search for a solution that can garner bipartisan support and 
pass the Senate, the House, and go to the President.
  The proposal we have put forward before the body today is based upon, 
in many ways, the proposal made by the President in his budget. It is 
similar to a provision that has already passed the House. I think a 
couple of points should be made. One point that should be made is there 
is a lot of talk about a floating rate. I think people think of 
mortgages and adjustable rate mortgages where the rate changes from 
year to year.
  Under our proposal, once a student takes out a loan in a given year, 
at whatever the rate is that year, that rate is fixed for the life of 
the loan. The following year, if interest rates--and we are talking 
about the 10-year Treasury bill of the U.S. Government, one of the 
lowest interest rates there is--go up, then it would go up. That is for 
next year's loan, not for the loan that has already been taken out.
  I think we have learned from our current circumstance the folly of 
Congress trying to set interest rates. Setting 6.8 percent and 3.4 
percent interest rates 5 or 6 years ago looked like a great deal. Today 
it is generating billions of dollars to the Treasury on the backs of 
our students.
  So I think our solution is a commonsense solution, and that is to 
base the interest rate for the students at the lowest available rate to 
virtually anybody in our society, which would be the 10-year Treasury 
bill, plus 1.85 percent, which protects the Treasury from the costs of 
administering the program and the risks inherent in the program. If we 
do that, we will have certainty in the program and the lowest interest 
rate that would generally be available in this society.
  If we started with a blank sheet of paper and said: We want the 
Federal Government to provide loans to students, I believe we would end 
up where this plan has ended up. It is where the President ended up, it 
is where the House has ended up, and I think we have an opportunity. 
The question is, Should we extend this for 1 year and take more time? I 
am new, but I stood here during the debates on the sequester, where 
both parties put forward their proposals, neither party got the votes, 
and we ended up with a sequester.
  We said the exact same thing with student loans about 1 month ago. 
Each party put forward their proposal, neither party got their votes, 
and here we are just about at the deadline and the rates are going to 
double for those subsidized Stafford loans.
  I don't know what we are going to know 1 year from now that we don't

[[Page S5478]]

know now. I believe the time is now to try to come to a resolution that 
meets everybody's requirements, and we are not that far apart. The 
differences separating us in this body are not that far apart. I 
believe we have an opportunity not only to solve this problem fairly to 
our students but to demonstrate to the country that we are able to make 
decisions and not simply delay them for another 1 or 2 years.
  That is why I rise to support the bill that Senator Manchin and I, as 
well as others, including Senator Burr, Senator Alexander--who I think 
is one of the most respected Members of this body, particularly on 
education matters--and Senator Coburn. We have a strong bill. I think 
as people see the details, understand it better, understand the terms, 
and understand the effects, we will save students in America over the 
next 3 or 4 years something like $50 billion. If we don't resolve this 
problem, it will come into the Treasury on the backs of our students. I 
don't think that is a result we want.

  I think we have a responsible proposal. It is a bipartisan one, and I 
believe it deserves full and fair consideration. I am sure all of these 
proposals will have a lot of discussion once we are back in session a 
week and a half from now, and I hope we can come to a resolution 
because the students of America deserve to know two things: that 
Congress has their back on student loans and that their Congress is, in 
fact, able to make decisions, handle issues, and move forward.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Rhode Island.
  Mr. WHITEHOUSE. Mr. President, I see that the Senator from New York 
and the Senator from Colorado are on the floor. I don't know if they 
seek recognition. I know this has been a terrific day for them as two 
of the principal architects of the immigration bill we just passed. It 
has been a landmark achievement.
  I am prepared to speak for about 15 minutes on my climate bill, so I 
am going to be here for a while. If the Senator from New York would 
prefer to proceed, then I will allow him to proceed. That will also 
allow me to relieve the Presiding Officer who I understand needs to go 
upstairs for a moment.
  I will yield to Senator Schumer with the hope that upon the 
conclusion of his remarks, I will be recognized.