student loans. $180 billion. i might just say that deriving savings -- deriving savings was not the intended purpose of the federal student loan program when it began in the 1960's and it shouldn't be a purpose of it now. the purpose should be to keep interest rates as low as possible for students and their families. now, so in four months when the g.a.o. submits this report to congress, i plan to use that information to inform us on the reauthorization of the higher education act. i'll have more to say about that in a second. to get a loan system that does not generate money for the government. so far this debate on student loan interest rates will continue, and i hope that my colleagues will join us in that discussion as we move to the higher education act reauthorization next year.

as i said, i'll have a lot more to say about that in a second. now, i have cosponsored this bill that's before us. i will vote for its passage. i will oppose other amendments because we have an agreement to move ahead. and i believe this was the best deal that we could get for students at this time. the bill before us is supported by a number of groups, including the united states student association, the american council on education, rock the vote, center for american progress and generation -- progress, generational alliance, the united states association of student financial aid administrators, and the committee for a responsible federal budget. i might also add to that this evening we received -- this morning we received a letter from the leadership conference on civil and human rights also supporting a "yes" vote on the bill before us. but i just want to make clear that i plan to revisit the issue

of student loan interest rates alonalong with other facets of higher education system in order to address the whole issue of college affordability. this fall the senate help committee which i chair will start consideration on the reauthorization of the higher education act that expires this year. now, the interest rate, all that we're talking about here today, the interest rates that we attach to federal student loans is an important issue. i don't deny that. it's one that deserves our attention. but i want to point out, it's just one piece, one piece among many that go into college affordability. and these many pieces that we will be tackling in the reauthorization of the higher education act to address the whole issue of college affordability. when i'm in iowa, i hear from students and parents about the financial squeeze they're facing from the spiraling costs of college, their anxiety about

student loan debt. i have charts here. i'll show this first chart. it shows the increase in the cost of a public four-year education over time. it has tripled since the 1980's. so if you look at that chart, from 1980 to today, the cost of a college education has tripled. that's the red line. the blue line is the consumer price index. so as you can see, our current system is out of step with the marketplace. the cost of that degree has high scoctd for students a-- has hig can i skyrocketed for ss across the country, far faster than the rate of inflation. why? why is this happening? why -- why has it gone up so rapidly, and especially if you look from about 1990-1991, it has just shot up. and in the 2000 -- from about 2000 it will now, it is really

skyrocketing. i think it's legitimate for to us ask the question: why is that happening? it's not just student loan interest rates causing that. we've had low student loan interest rates so that can't be just the sole cause of that. something else is going on and that's, again, why we need to examine in the higher education act why that's happening. now, the second chart i have shows what's happening here to our students. the average loan debt of a bachelor's degree has doubled since the 1990's. so in the 1990's, the cumulative debt -- the debt that a student would have after going to college would be $9,350. today it's $26,660. you know, that's -- what, that's in 20 years. why has that gone up so much? why has it gone up so much? mr. harkin: that's why we've got

to get into the whole panoply of things that affect college affordability. so in light of this crisis, i have chaired a series of hearings from our committee focused on what's being done to curb the costs and how we can have strategies to help keep the dream of higher education alive for students without giving them a ton of debt when they gradua graduate. now, to date, we've examined promising strategies employed by innovative colleges and universities to curb costs while improving student outcomes. we've looked at state policies for improving affordability, state barriers to innovation, efficiency and effectiveness. there's much room for progress and improvement when it comes to our system of higher education. i believe a consensus is emerging on the need break away from business as usual. we just can't keep going on the

way we've been doing over the last 20 years in funding for higher education. among the many ideas we've heard in these hearings, three major themes have emerged. first, states are cutting funding to public universities i,shifting the costs to student, their families and federal financial aid programs. now, in all of our hearings -- and we looked at all the things that go into -- going into these charts and the increase in costs to students and college -- costs of college, the single large ecorrelative -- largest correlatie factor has been the decrease in state support for higher education. what's become clear, at least to this senator, is that state legislators have figured it out. they can cut their budgets and cut their support for their public universities, shift the burden on the back of students and their families. the students come to the federal government, borrow more money.

we increase pell -- pell grants. and the burden on the students grows because their debt grows. and yet the colleges, the colleges themselves are not stepping in to do anything really -- some are, as i said, some are doing innovative things, but they're not doing enough to control the costs. but something a has to be done about this -- about the states backing off of their support. now, the second theme that emerged was that many of our more than 7,000 degree granting institutions are not making college affordability a priori priority. it's just not a priority. they're focused on chasing rankings, investing in efforts unrelated to academic success, failing to respond to a rapidly changing higher education landscape. and the third theme that emerged was that students and families are not empowered with accurate, clear and accessible information about the comparative cost,

quality and value when shopping for a college education. while college affordability is a complex issue with no easy answers, there are many things all stakeholders -- the federal government, state governments, institutions, families, students -- can do to increase college access and success and keep the costs down, regardless of a student or family background. that's why i say again, we're going to have to look at this in the higher education bill. interest rates are just one piece of that. that's what we're addressing today. but there's a lot more going on here than just interest rates. we've got to look at our system of accreditation. we've got to look at our campus-based aid programs, the financing of pell grants, the regulation of the for-profit colleges that my friend from illinois is always consistently pointing out here.

the structure that supports our federal loan system, from the loan origination process to the servicing done by private and nonprofit contractors after students have completed their course of study, and looking to debt collection, should they default to. this system that we have -- should they default. the system that we have is complex. i repeat again, the interest rate on student loans is only one piece of this jigsaw puzzle, an important piece to be sure and one that we're addressing today. now, throughout the discussions about the interest rates, both president obama and my ranking member and good friend, senator alexander, have personally committed to working with us as we take up the reauthorization of the higher education act in the coming year so that we can address all the issues affecting our entire higher education system and hopefully enact

much-needed reforms. we all understand how serious and important an issue the affordability of higher education is. i look forward to working with senator alexander, members of our committee on both sides, and the white house in the months ahead to come up with a -- with a higher education act reauthorization bill that is comprehensive and that really gets to the bottom of college affordability and starts to break away from the past, the way we've been doing things in the past. as i said, we just can't continue on the way we've been doing. so there are many who have been involved in negotiating the legislation before us today. you know, compromises are tough things sometimes. i've said before -- and i know my friend illinois said at our press conference last week -- if i were to write this bill and i could have it my way, this would not be what i would write. i understand that. well, it wouldn't be what my friends on the other side would write either, and that's the art of compromise. to bring both sides together to

get the best agreement you can. and this is a good agreement. this is good for students, it's good for undergraduate students, it's good for graduate students, good for their families. so i'd like to thank president obama for his leadership in negotiating this, my friends and my colleagues, senator durbin, who was just a great leader in bringing this about, senators manchin and senator kaine, senator carper, as well as senators alexander, coburn, burr, and their staffs for all the hard work and diligence in putting this proposal together. again, i say, this wouldn't be the bill i might have written but i think everybody who has been involved in this would say the same thing. but it's the best we can do, and, quite frankly, it's going to lower interest rates this year and for the next -- for undergraduate students for the next four years, it will be lower than 6.8%. in fifth year, it goes up just a little bit. as i said, as we look at the higher education act and as we

get this report back from g.a.o. in four months, we're all going to work together to see what is exactly the best path forward. so i hope that we can keep the interest rates low for students this year and into the future and support this bipartisan student loan certainty act. i encourage all my colleagues to vote in favor of its passage. and i would be glad to yield to my friend, senator durbin. mr. durbin: i'd like through the chair to direct a question to the senator from iowa. the presiding officer: the assistant majority leader. mr. durbin: and to start out by saying how much i respect the leadership he's shown on this issue and so many issues, whether it's health, education, disabilities. he has just been "the" voice of leadership in the united states senate for a long, long time. and i know that this is his last term as a senator, but i also know that he still has one big job ahead of him and he's talked about it here, the reauthorization of the higher education act. and we're going the going to hoo

that, senator harkin, because we need your voice in that room, your leadership, or it won't happen. and i saw his leadership on this particular issue, because senator harkin came to this negotiation with conservative democrats and republicans and sat down and said, there's some basics we're going to have to include in this before i'll sign off. and i remember, keep the interest rates as low as possible for students, number one, so that the students and their families don't have an increased burden. as he said, in the next four years, whatever category of student loan you're talking about, this bill is a break. for undergraduate students, $2,000 to $3,000 in interest that they otherwise would pay if this bill fails to pass. $2,000 to $3,000 in interest saved by students over the next four years, undergraduate students. the second thing he said is, we want a cap on interest rates so that if something unforeseen happens, if all the economic predictors are wrong and the interest rates, the base

interest rate on ten-year treasuries goes up faster than we thought, there's a cap to protect the students. he insisted on it. we put it in there. for the undergraduate students, 8.2%. that is a guarantee that it won't go to the high heavens, the 8.2%, which has been a traditional ceiling and cap. and the third thing -- and i want to make a point of this because it's likely to couple in debate -- likely to come up in debate -- this is an interesting process. we would dream up scenarios, well, what if we put the cap at this number? what is that going to mean in terms -- and the interest rate, what would happen to the interest rates? and when it's all over, if you calculate it over ten years, do we break even? we don't want to make a penny off of students and their families on student loans. we don't. and we tried to avoid it. and your best effort i think netted some $600 million to the treasury over ten years. this is in the range of $71 $715 million. a senator: if the senator would

yield for a question? mr. durbin: i'm asking a question of senator harkin and then i'll be happy to yield. and so what i'd like to put in perspective is $715 million to the treasury over ten years. over a ten-year period of time, i estimate the total cost of the government student loan program will be $1.4 trillion. and this $715 million, when compared against that, comes out to .005%. so we have cut it as close as we could. what does it mean to the students? it means to the students for each loan, this is the way they factored it out, each loan a student takes out for $2,000, for $2,000, $3,500, whatever it happens to be, there will be a surcharge of $2.76. that is what comes to $715 million. so the net result of it is we would like to bring it to zero, that was our goal. the way this place works, that

was hard to achieve, but i thank the senator for really dedicating himself to those things, and i would like to ask him in the form of a question to be complicit with the rules of the senate, if we fail to pass the bipartisan approach which we're bringing to the floor, what will be the impact on students and families immediately in the united states? mr. harkin: well, i would say to my friend, again, i thank him for his great leadership on this, before i get right to the answer. i would point out in the art of compromise, and we did. i would point out that the republican proposal that we had before us a few weeks ago raised $15.6 billion over ten years. so they have compromised a long way, too. and we have gotten it down to $715 million over ten years from $15.6 billion. the senator is absolutely right. we're looking at about close to $1.5 trillion over the next ten

years, and that kind of puts that $715 million in perspective. the effect, if we don't pass this today, there is one sure effect. student loans will be almost twice what they would be under this bill this year, almost twice for them and their families, and that would be true for this year and next year and the year after that. almost, almost, not quite -- this is 3.86%. so they would be paying 6.8% on every loan they take out this year rather than 3.86%. which i might point out also covers both subsidized and unsubsidized loans. and that's a good deal. and again, i -- i -- i say to the senator that -- that by keeping that loan like that -- and this is another good point to make. i think people should understand.

a student borrowing this year at 3.86% lox that in for the lifetime of the loan. lox that in. it doesn't go to 8.25%. that 8.25% is just a cap in case interest rates start going up. and i would point out to my friend from illinois that that 8.25% is what we had in the 199 1990's and five times -- in the 199 1990's, and five times we hit that cap. we expected students at that time. i say to my friend, we have got to pass this bill to keep students from paying 6.8% on their loans this year. madam president, on behalf of senator manchin, i call up his amendment which is at the desk. the presiding officer: the clerk will report the amendment. the clerk: the senator from iowa, mr. harkin, for mr. manchin and others proposes amendment numbered 1773. strike all after the first word and insert the following. mr. harkin: i ask unanimous consent that further reading of

the amendment be dispensed with. the presiding officer: without objection. mr. harkin: madam president, i yield the floor. mr. sanders: madam president? the presiding officer: the senator from vermont. mr. sanders: i call up my amendment, the text of which is at the desk. the presiding officer: without objection, the clerk will report the amendment. the clerk: the senator from vermont, mr. sanders, for himself and others proposes amendment unfunded mandate 1774 to amendment number 1773. at the end of the amendment, add the following -- mr. sanders: i ask the amendment be considered as read. the presiding officer: without objection. the senator from vermont. mr. sanders: thank you. madam chair, i have a lot of affection for my friend, senator harkin, of iowa, and senator durbin from illinois, but i must respectfully disagree with them and rise in opposition to the

bill and ask for support of an amendment that i am offering which is being cosponsored by a number of senators, and i want to thank senator leahy, senator wyden, senator whitehouse, senator gillibrand, senator blumenthal, senator schatz, senatorrer murphy and senator hirono for their support for this amendment. madam president, i also want to thank the largest educational organization in america, the national educational association, for their support of this amendment and thank the american federation of teachers for their support of this amendment. madam president, the truth of the matter is that if the bill on the floor is passed without amendment, it would be a disaster for the young people of our country who are looking

forward to go to college and for the parents who are helping them pay their bills. the job of the united states congress, it seems to me, is to improve upon the dismal situation we face today in terms of student indebtedness and college affordability. these are major crises in this country. millions of kids leaving school deeply in debt. parents borrowing at high interest rates to send their kids to college. we have a crisis. this bill makes a bad situation worse, not better. madam president, i ask my colleagues to support the amendment that i have offered which would provide a two-year sunset to this bill, an approach which would prevent student

interest rates from soaring and allow us the time through the reauthorization of the higher education act to deal with the issue of student indebtedness in a constructive, long-term manner. this issue is too important not to go through a hearing process, not to go through a committee, and i hope that we will pass my amendment supported by eight other senators which will sunset this bill in a two-year time and allow us to take advantage of the relatively low interest loans now and prevent student interest rates from soaring into the future. madam president, the very sad truth of the matter is that in a number of ways, our government,

congress, white house, is failing young americans today at all ages. we have the highest rate of childhood poverty of any major country on earth. almost 22% of our kids live in poverty. i think every working american understands that our childcare system is a disaster. if you are a working class mom or dad in vermont or i suspect any other place in this country, it is hard to get the quality childcare that you need so that many, many kids today, because of inadequate childcare from zero to 3 to 4 enter kindergarten or first grade already years behind where they should be intellectually and emotionally. we're failing our young children, but we're also failing our teenage young people as

well. today, madam president, the unemployment rate for high school graduates is close to 20%. that's the official rate real unemployment, counting those who have given up looking for work and are working hard time when they want to work full time is even higher than that. what does that mean for millions of kids who graduate high school, they can't get a job, their first year out of school, their second year out of school and their third year out of school. what does this mean for their entire lives? we are not dealing with that issue. i passed an amendment as part of the immigration bill to provide 400,000 jobs over a two-year period for young people. that's a part. we have got to go a lot further than that, but by and large, we are failing working last, middle class young people today who are desperately searching for jobs.

for minority youth, for african-american youth, madam president, if you can believe this, the official unemployment rate for ages 16-19 is over 43%, over 43% african-american young people unable to find jobs. that is unacceptable. madam president, our goal must be to make sure that the youth of this country, if they graduate high school and want to go out into the work force, are able to get decent jobs, or else if they choose to go to college to be able to afford to go to college, and to make sure that our young people do not end up on street corners doing drugs, not i

self-destructive activity. that is our job, to make sure that those who have the ability and capability are able to go to college and others are able to get meaningful work, and frankly we are failing in both of those areas, and when we do that, we fail not only the young people of this country but the future of this country because the future by definition is with our young people. madam president, all of us know that we live in a highly competitive global economy. if this country is going to succeed economically, we need the best-educated work force in the world. unfortunately, compared to much of the industrialized world, we are doing very, very little to make that happen. in june, the oecd, the

organization for economic cooperation and development, released its annual snapshot on the state of education in developed nations. the report showed the united states is losing ground to other nations that have made sustained commitments to funding higher education opportunities. we are losing ground, and the legislation on the floor today, which will result over a period of years in a strong likelihood that interest rates for student loans will go up, making it harder for low and moderate income kids to go to college will only accelerate those losses. madam president, the united states once led the world in college graduates. 30, 40 years ago, we led the

world in the percentage of our people who were college graduates, and in fact as a result of that, today those people between age 55-64 in the united states still lead their peers in other nations in the percentage with college degrees, about 41%. so if you are between 55-64, compared to the rest of the world, that age group has the highest percentage of people who are college graduates. tragically, over the years, we have lost substantial ground. in 2008 -- and this is a very, very sad story indeed, something that could concern every member of congress and every american.

the same percentage of american aged 25-34, the same percentage of that younger group has a degree compared to the older group of 55-64. what does that mean? what it means is that for the last 30 years, every president, every governor, every member of congress, virtually every parent in america has said to our young people the world is changing, technology is exploding. a high school degree no longer will do it if you are going to make it into the middle class. that's what everybody has said for the last 30 years. but 30 years later, nothing has changed. the percentage of americans who have a high school -- have a college degree today is no

higher than it was 30 years ago. and the result of that is that other countries have significantly surpassed us in terms of the percentage of their young people, younger people who now have college degrees. in terms of percent of college graduates, we lag behind australia, belgium, canada, denmark, france, ireland, israel, japan, luxembourg, new zealand, norway, sweden, and the united kingdom. in other words, when we were once first in the world in terms of percentage of college graduates, we are now 15th in the world. now, how do we compete in a global economy if we have descended from first to 15th in the world in terms of people

with college degrees? and that is why in the immigration bill you have people coming to the floor saying americans aren't educated, they can't do these high-tech jobs, we need people all over the world to come in and do that work. i don't agree with that, but that's the argument, people don't have the education. does anyone believe that any serious way the bill on the floor today is beginning, beginning to address the issue of making it easier for kids in this country to go to college? and the answer is nobody does. because according to c.b.o. projections, interest rates are going to go up, and, in fact, it is going to be harder for families to send their kids to college. and i'll get into that in a moment. madam president, the other very important point to be made --

and i think a lot of people don't understand this -- but according to the congressional budgetnited states government is making huge profits, huge profits from college loans. in fact, according to the c.b.o., the estimate is that the u.s. government will make about $184 billion in profits over the next ten years. what do we have? we have a middle class which is disappearing, we have poverty at a level as high as it's been in the last 60 years, we have millions and millions of families struggling to be able to send their kids to college. my parents didn't go to college. i was the first, my brother and i were the first in our family to go to college. millions of families in the same boat. and what is the united states

government doing now? we are helping to balance the budget, not by asking multinational corporations who make billions of dollars a year in profit and pay nothing in federal income taxes to pay their fair share of taxes, no, that's not what we're doing. we're saying to working class and middle-class families, oh, you want to send your kids to college? you want to borrow money from the government, well, over the next ten years we are going to make $184 billion in profits off of you. let me go on record as saying i think that that is a very counterproductive idea. it is a dumb idea. we have got to get out of the business of making profits off of struggling families who want nothing more than to be able to send their kids to college. madam president, let us be very clear about what this legislation on the floor would do. according to the c.b.o. -- and

i fully agree, i don't know what interest rates are going to be next year, tomorrow, you don't, nobody does, and the c.b.o. is by no means infallible. but the c.b.o. and most economists believe that we are leaving this period where interest rates have been historically low. are they absolutely right? i don't know. could they be wrong? quite possibly. but that is what the c.b.o. is estimating. this is what the c.b.o. says. the c.b.o. says that the ten-year treasury note on which this entire legislation is based is now at 1.8%, 2014 will be at 2.57%, 2015 at 3.35%, 216, 2.24%, 2017, 4.95%, 2018,

5.2%. everybody has to understand that what this legislation is about is basing student loans on a variable interest rate. interest rates go up, student loans go up. so let's look at what will happen with student loans under this legislation. the good news is because interest rates are low now, for the next few years, the interest -- the student loan programs, the subsidized stastled will be 3.8%, 2014, 4.6%. 2016, 6.2%. 2017, 7%. 2018, 7.2%. that's for undergraduate.

for the graduate stafford loans, under this proposal on the floor today, in 2015, 6.9%. in 2016, 7.8%. 2017, 8.5%. 2018, 8.8%. for the plus loans, those are for parents who are helping their kids, 2015, 7.9%. 2016, 8.8%. 2017, 9.5%. 2018, 9.8%. now, does anybody really believe that in a time when families and young people are having an enormously difficult time paying for college that

these interest rates make any sense whatsoever? they do not. they are going to put an increased burden on working families and young people. today, the average student graduating a four-year college leaves school $27,000 in debt. if you're paying interest rates of 7% or 8.5% for graduate school, there is no doubt in my mind that that indebtedness will rise. furthermore, not only is it a question of families and young people struggling with enormous debts -- we did on my web site i asked for vermonters and people all over the country to tell me what the impact would be on their lives of student

indebtedness and we heard just enormously painful stories, i mean from people some who say you know what, my husband and i wanted to have a baby. we can't have a baby right now because we don't have the funds, we're paying off our student debts. people who are going into professions that they really did not want to go into because they just have to make a whole lot of money to pay off their debt rather than doing what was the love of their life, what they studied to do. so what we have here is a bad situation today, which if the c.b.o. is correct will only make make -- make that situation worse. madam president, what my amendment does is say okay, it's not my preferred option, my preferred option would be to

do what a majority of the members in the senate voted to do, is to freeze interest rates for another year at 3.4% while we come up with a long-term solution. my republican colleagues has as they do on virtually every piece of major legislation, chose to filibuster that bill and we needed filibuster votes and we only got 51. a majority spoke for the american people, for the working families but we couldn't get to 60 votes. that was my preferred option but this approach at least and what my amendment would do is to say okay, between 2013 and 2014, we will keep interest rates fairly low, not as low as i would want it, 4.6% for undergraduate stafford, 6.1 pour graduate, and 7.1% for the plus program. not ideal by any means but it is a lot better than what will likely take place in years to come. so we take the best of this bill

bill -- this bill and we sunset it at the end of two years. so if people say that there is no option to going forward as opposed to 6.8%, i say sorry, you're wrong. there is an option. that's what we've done. we have a two-year sunset on this bill that would, i think, be at least a reasonable compromise, give us the opportunity to take a hard look at the higher education bill and figure out two issues, how we create low-interest loans over a long period of time and second of all, how we in fact make college more affordable than it currently is. madam president, let me be a little bit political as i finish my remarks, and say this: i

respect everybody's point of view, there are different points of view here, but i think what a lot of americans are asking themselves, they say let's see, we just had elections in november and we were told that elections matter. and we had a candidate for president of the united states, barack obama who won a decisive victory who wran ran on the platform of saying i'm going to stand up for the middle class, i'm going to stand up for working families. we had an election in which democrats, independents, wetained control of the united states senate. now 54 votes in the democratic caucus and almost exception, i ran independent, stand up for working families, stand up for the middle class. so what i don't understand is when you have a democratic president, a democratically controlled u.s. senate, why we are producing a bill which is basically a republican bill, very close to what the house

republicans passed and as most people know, the house republicans are perhaps the most conservative majority in the house that we have seen maybe ever, most conservative. they say this is a pretty good bill, we'll accept it. well, if the most right-wing congress in american history thinks that this is a pretty good bill, i would hope that many democrats say maybe there is something wrong with this bill. maybe we can do something better than that. and the other point that i would make as i did a moment ago, people have got to understand this -- this senate passed -- not passed -- a majority of members of the united states senate voted to keep interest rates at 3.4% for another year. 51 members voted. now, most people assume that 51

out of 100 is a majority. but we were unable to pass that legislation because of a republican filibuster. and what we have seen on virtually every single important piece of legislation is that majority -- the majority does not rule in the united states senate. you need to have a supermajority 60 votes and the result is legislation like this which could well end up raising interest rates for students and their families to an absolutely unacceptable level. so, madam president, let me conclude by saying this: we have a huge crisis in this country, and the crisis is that today hundreds of thousands of bright young people who have graduated

high school are now saying i would love to go to college, i can do it, i would like to be a professional, i would like to be a doctor, i would like to be a nurse, i would like to do one of many, many professions, i would love to do it, i'm smart fluff to do it, i have the drive to do it, i just come from a family which does not have the money to send me to college. so for those hundreds of thousands of young people whose dream it was to go to college, this legislation only makes that situation worse because it will make college even more unaffordable. and let's be clear, this is a loss not only to those families and to those young people, it is a loss to our country. a couple of months ago i had the ambassador from denmark coming to the state of vermont to do some town meetings with me and,

madam president, you may or may not know the cost of college education in denmark in terms of out-of-pocket cost. it is zero. it is zero. and it's not just denmark. there are a number of countries around the world who have the intelligence to understand that the most important thing they can do is invest in their young people, so they say to their young people, do you well in school, regardless of your income you are going to be able to go to the best colleges we have. not -- not only best colleges, graduate school, medical school, law school. and your costs will be zero. and you know what? i think that's pretty smart. i think investing in our young people is investing in the future of our country. that's what some colleges do. they make college education free in terms of out-of-pocket costs. other countries don't go that far.

i live an hour away from the canadian border. they heavily subsidize college. so we're seeing many american kids now going off to fine universities and colleges in canada, where even for people from the united states, college costs are less than they are in the united states alone. in terms of what we are demanding of young people and parents in out-of-pocket expenses, there is no country in the industrialized world that asks more than we do. and the result is that we have seen virtually no gain in the last 30 years in terms of the percentage of our people going -- graduating college. so, madam president, we have a crisis. it's a crisis which impacts millions of young people, those who have given up on the dream of college, those who are graduating college deeply in debt.

it impacts our entire nation because it is insane to me that we are conceding to other countries around the world and saying, okay, you're graduating large numbers of people, you're allowing them to go to college but we in this great country, we can't do that. makes no sense to me at all. it is bad for the future of this country, disastrous; bad for our economy; bad for millions of families. the legislation on the floor today only makes a bad situation worse. it is based on variable interest rates. it is, according to the c.b.o., likely that those interest rates will rise. and in 2018, we're talking about subsidized stafford, 7.25%; graduate rates, 8.8%; plus loans, 9.8%. can anybody really come to the floor and tell me this is where we want to go as a country?

so we have a bad situation which we have got to address, not make it worse. i want to once again thank all of the senators who have cosponsored this legislation, senator leahy, senator wyden, senator whitehouse, senator gillibrand, senator blumenthal, senator schatz, senator murphy, senator hirono. i want to thank the n.e.a., the largest educational organization in the country, for their support, the american federation of teachers for their support. madam president, let us stand tall today for the working families of this country who believe in the american dream and that dream is significantly about the desire to have our young people do better than we

have done. that was the dream my parents had, the dream that millions of families had. and an important part of that dream is, i am going to work hard as a parent to enable my kid to get a college degree. we are failing millions of families right now. this legislation will make a bad situation worse. we can do better. we can do better. let's stand with the working families of our country today. let's reject the underlying amendment and let us pass the sanders amendment. and with that, madam president, i would yield the floor.

mr. sanders: i ask unanimous consent the time during the quorum call be charged equally against the bill. the presiding officer: without objection. mr. sanders: and with that, i note the absence of a quorum. the presiding officer: the clerk will call the roll. quorum call:

quorum call:

quorum call:

a senator: madam president? the presiding officer: the senator from new hampshire. mrs. shaheen: thank you, madam president. i ask that the quorum call be lifted. the presiding officer: without objection. mrs. shaheen: madam president, we all know that on july 1

interest rates for subsidized stafford loans doubled from 3.4% to 6.8%. now, i've twice voted to extend the 3.4% rates to protect our nation's students. unfortunately, both times we had those votes the extensions were defeated. without congressional action, the 6.8% interest rates will stand as current law. i think today we're going to vote for a bipartisan compromise to keep student loan interest rates low this year. i plan to vote for that compromise, but i have some concerns about it. i do want to thank my colleagues who have spent many hours coming to an agreement that could pass this body. this is a bipartisan compromise, and i think it's very important that we work together to address this issue. and while the compromise isn't

perfect, our undergrads and our graduate students will be able to go to school this fall with peace of mind knowing that the interest rates are well below those that they would otherwise face. in fact, this compromise will save $30 billion in interest debt to students over the next four years. undergraduates borrowing this year will save about $2,000 over the course of their studies, and graduates could save between $4,000 and $9,000. today, assuming it's offered, i also plan to vote for the reed-warren amendment to lower the cap on interest rates and i would have supported senator murray's effort to allocate any resulting savings to shore up pell grants which would help fund those students who need it the most though i understand we are not going to be able to vote on this amendment.

while today's vote is important to keep students low for this year's students, i want to be very clear that i do not consider this compromise to be a permanent fix for our students. included in the bill is a requirement for a study to be conducted by the nonpartisan and independent government accountability office which will analyze the cost of running the student loan program. once we have the results of this study, we should use the information to determine what course of action is best for our students. one thing is very clear: any solution should not come at the expense of our students. affordable higher education is one of the best investments we can make in our country. it's essential to growing this nation's economy, to creating jobs and to protecting the middle class. our businesses need educated workers to compete in the new

global knowledge-based economy. an immigration bill the senate recently passed which i voted for, we increased the number of highly skilled workers that businesses could bring in because there's currently a shortage in this country of those highly skilled workers. i supported that, but that's really a crutch, a short-term fix. we should be educating american students for these high-skilled jobs. in my home state of new hampshire, the student loan debate is a very important one. last year, a survey found that our state had the highest average student debt in the nation at $31,408 per student. nearly 3/4 of new hampshire students are have some amount of student loan debt, the second highest percentage of students with debt in the country. we must protect our students. we should not be trying to solve

the fiscal challenges facing this country on the backs of our students. we can't afford to price middle-class families out of a college education. studies show that adults with degrees from two- and four-year colleges have far higher family incomes than adults with high school degrees. according to a recent study from georgetown university, people with with bachelor's degrees earn $1 million more than those who don't have a college degree. we need to get rid of any barrier that stops students who want to pursue degrees. recently i met a woman named ann from manchester who had been a recipient of student loans. she was able to go to school and get a degree because of pell grants. ann will tell you that without aid she would never have thought about pursuing a college cleg-degree. she is now working in a

professional capacity and she is contributing to our community in so many ways. unfortunately, ann is now worried about her daughter, a single mother who works part time, who has limited options to pursue her own dream job because of the high cost of education. she told me that as she said, these kids are our future. we can't limit them this way. student loans should not be an obstacle that is insurmountable. she's right. we need to make it easier and more affordable for americans to go to college, not harder and more expensive. i also heard from a woman named patricia. she's 45, a single mother with three children under 18 years of age. she's currently a student at granite state college who is relying on loans to get her degree. for the past ten years, she and her family have been in and out of homeless shelters, she grew up as the youngest of nine

children in a family where the option of college was never even considered or discussed. patricia has an incredibly tight family budget. student loans are critical to her getting a degree and ultimately to being able to provide for her family. sadly, any increase in student loan interest rates could limit patricia's ability to continue her education. the bottom line is clear. we all know it. we have to make college more affordable. it's essential for our students, it's essential for their futures and it's essential for the future of this country. if we expect to compete in this global economy, we have got to make sure we have the high killed work force we need and that means making sure those young people who want to go to college can afford to get that degree. it is just too important for our country's future to fail at this. thank you madam chair.

i will be voting for the bill, as i said, but i certainly hope that we are all committed to making greater progress and making college education more affordable. thank you. i yield the floor. a senator: madam president? the presiding officer: the senator from rhode island. mr. reed: madam president, i would at this time request that my amendment which is at the desk be called up. the presiding officer: without objection. the the clerk will report the amendment. the clerk: the senator from rhode island, mr. reed, proposes amendment 1778 to amendment numbered 1773. beginning on page 3 -- mr. reed: madam president, i would ask that the reading be dispensed with.

the presiding officer: without objection. mr. reed: thank you, madam president. i am pleased to offer this amendment along with senator warren and 17 of our colleagues. our amendment would provide the certainty students deserve and they will not receive under the proposed bipartisan student loan certainty act as it is currently drafted. simply put, our amendment will ensure that students and parents will not be any worse off than they would be under the current fixed rates of 6.8% or 7.9%. and to illustrate this, let me just present a chart. under the underlying legislation the stafford loans for students are essentially subject to the same interest rates. and they're depicted here, these are the undergraduate loans in yellow, and the graduate loans in white. and you can see in the first year that there is a roughly --

for the undergraduate loans approximately 4% and that is less than the 6.8% the current statutory limit. and for the graduate loans, they're up roughly about 5.5% which, again, is below that, but very quickly by 2015, the graduate loans exceed this 6.8% threshold. that's the current law. and then it keeps going up and up and up and actually this chart does not represent the entire impact because the last bar represents the estimates not just for one year but for five years. so you can see these increments. the white increments for the graduate loans keep going up and up and up and up indefinitely. this is permanent legislation. this is not a five-year fix or a ten-year fix, permanent legislation and a similar process is that the undergraduate stafford loans go up and up and up and up.

our legislation will say splai simply say if you want to provide an incentive and a benefit for students who are today going to school, that's commendable, but at some point we're going to have a much worse deal for students than we have just with the current law. so we are proposing very simply let's cap at 6.8% for stafford loans and then at 7.9% for the parent plus loans. this is a projection of the percentage interest rates for parents loans. and again, 2013, it's below the present 7.9% statutory limit but quickly, by 2016, it's above, 2017 and then this indefinitely from 2018 to 2023 and beyond, it goes up and up and up and up and up. and our amendment simply says let's give everybody -- if if

we want to give them the benefit of lower rates in the next few years, let's do it but let's give real reel certainty the states will not exceed the current statutory rates. as i have indicated previously in my remarks i want to commend the authors at least for putting in caps on rates. some of the original proposals coming from the house of representatives and other places had no real caps in place. at least now we have caps. i want to particularly thank chairman harkin because we really committed himself to ensuring that all these loan programs had a cap. our point, though, is the caps are so large that effectively our students and parents will be in a very short period of time paying much more than they are today. these caps are too high. they could go as high as 8.25% for stafford loans, undergraduate loans, 9.5% for graduate stafford loans and 10.5% for plus loans. and those are significantly

higher than our threshold. we can do better. we want to protect students from these high interest rates, and huffily 49,000 students will -- roughly 49,000 students will borrow in rhode island for this coming academic year. now, they would benefit, to be honest and frank, from this approach, but their brothers and sisters who may be, you know, freshmen in high school, they'll be at this part of the curve, with the interest rates and the parent loans, particularly the interest rates will be exceeding the current statutory rates. adopting the reed-warren amendment means that students can benefit from these lower rates initially but then we will have the existing statutory cap in place for future generations. as it exists now, the reality is, if you're a senior in high school and you're going to college next year, you're going to get the benefit of a rate but your younger brother and sister who's a freshman or in junior high school, they're paying for you. and the parents are paying for you, and they'll be paying

indefinitely. and as my colleague, senator warren, pointed out, they're doing it in a situation which actually the government on sort of a real accounting basis is making billions of dollars a year on these loans. this is not a question of we're putting subsidies in. for the first time, i believe, in the history of the student loan program, we're actually sort of reversing the subsidy. we're saying, no, students pay. education is so important to future of america that we're no longer going to invest in it as a nation, we're going to just let students pay. and that's the way this whole approach has been structured. they've picked as the benchmark the ten-year treasury bill. typically we've used the 91-day treasury bill. just from the baseline there's a higher interest rate for students to pay. then they've picked a premium to put on top to compensate the government for potential loss and risk. and some of my colleagues suggested, we're not quite sure. in fact, we feel very strongly that that premium is much too high for the actual risk and

actual costs of the program. and so this proposal has really baked in higher interest rates for students after the first few years. and it is a long-term, permanent fix to the interest rate problem. so i believe what we're doing really makes a great deal of sense. as many people are struggling in many different ways, and particularly students are struggling with student debt, we should ensure that this new rate structure does not leave students worse off. and not look at the first two years but let's be real stick and serious, let's look down the road, because this road is taking us to higher and higher interest rates for students. and i think we can do better. i think we must do better. i would point out that we have paid for this amendment by putting a surcharge on income, a very small surcharge, .55% --

not even 1% -- on incomes over a million dollars. so this is fully paid for. and, again, fully paid for and it will give students the certainty, the real certainty that they will not see interest rates go beyond the present statutory limits. and, again, i think what we should be doing as a nation is not shifting the burden to students but investing through students in our future. because we know today that if students are able to go on to college and to post-graduate education, they're going to make more money, they're going to contribute more to the economy, we're going to be more globally competitive. we are going to be in a much better position. frankly, that was the wise judgment our parents and grandparents made when, in the 1950's and the 1960's and the 1970's they decided to invest in the future of america by investing in higher education.

and i dare say, there are very few people in this chamber that, one way or another, did not directly benefit from that investment. but now we're saying today, no nope, it's on the students. they better pay market rates, they better pay us a premium and we will be generating, according to some c.b.o. numbers, over the next ten years about $184 billion, the difference between our borrowing costs and what the students and families are paying us. that is not the way to grow a strong process for america. we also understand, because there's been elaborate studies, that we have a jobs gap already between highly educated individuals and the jobs. there's about a 5 million job gap between those jobs requiring higher education and what we're projecting to be the graduates in the next several years going forward. so we have to do much more. and i think we also have to look

at the issue in a comprehensive way. we have to build in incentives for lower costs at colleges and universities. that's not being done in this legislation. and i think once we pass it, the likelihood of getting on to that issue is diminished. we also have to try to come up with ways in which students can refinance loans. a trillion dollars of student debt, surpassing credit card debt as the second biggest household debt in the country. and that's going to grow. it will particularly grow under this proposal, under the underlying proposal. and we have to figure out a creative way to do that. and, by the way, that's going to cost some money. so if one of the prince expelz premises of this -- principles and premises of this whole legislation is that we will spend no money in addition for higher education support, how are we going to fix that issue of students and families that are deeply, deeply in debt? not just those that are carrying the debt today but those that are going to accumulate the debt going forward. so, madam president, i would urge my colleagues to vote "yes"

on the reed-warren amendment. this will be the certainty that is proclaimed in the title of the underlying legislation. and with that, i would yield to the senator from massachusetts. mrs. warren: madam president? the presiding officer: the senator from massachusetts. mrs. wa warren: thank you, madam president. i want to start by saying to senator reed how much i appreciate his leadership in putting forth this amendment that takes a bad bill and turns it into something that would be helpful for our students, for our families struggling with student loan debt. i also want to say how much i appreciate the leadership of senator harkin, senator durbin, senator manchin, senator kaine, leader reid, all of whom have worked very hard, made best efforts under a very difficult circumstances. you know, we had a better bill that passed the united states

senate but it was filibustered by the republicans and as a result, we are where we are now. today the senate will vote on a plan that would fundamentally change the way government sets interest rates on student loans. my colleagues who support this proposal say that it will lower loans -- interest rates on loans for this year and that's all that matters. now, that's the same thing credit card companies said when they sold zero-interest credit cards, and it's the same thing prime -- subprime mortgage lenders said what they sold teaser-rate mortgages. in all these cases, the bill comes due. nobody disputes the fact that within just a few years, according to our best estimates, students, all students will end up paying far higher interest rates on their loans than they do right now. now, i want lower interest rates for students. with more than a trillion dollars in existing student loans, our students are drown

not guilty debdrownnot guilty d. drowning in debt. by lowering interest rates, refinancing existing student loan debt and bringing down the cost of college. but i cannot support a plan that asks tomorrow's students to pay more in order to finance lower rates today. and i cannot support a plan that raises interest rates on students in the longer term while the government continues to make a profit off them. according to official government estimates, the federal government will make $184 billion in profits off student loans over the next ten years over current law. this is obscene. students should not be used to generate profits for the government. we should be doing everything we can to invest in students and to offer them the best deal we can on student loans, not find more ways to make money off them.

now, i'm a realist about this. i know that eliminating those $184 billion in profits is going to be hard. the government and our republican friends liked having that money to spend. i know that getting there will take time to wring the profits out of the system and i know it will take compromise. but the plan before the senate today is not a compromise and it doesn't remove a single dime of profits from the student loan program, and that's not an accident. it was designed that way on purpose, with the high interest rates in the future, to preserve every penny of that $184 billion in profits. i want a compromise that actually saves some money for our students. in fact, the plan we will vote on makes even more money off the backs of our students, an

additional $715 million over the next ten years. that's right, the total profits on the plan we will vote on is nearly $185 billion. now, some have sought to minimize these profits. they say, this money is only a fraction of what students will borrow in the next decade. but i've spent months talking to families in massachusetts and it doesn't look small to them. families that are already squeezed by the economy and who are fighting to put kids through college, young graduates who are struggling to buy a home or to buy a car or to put away a little bit of savings in the future. that money should stay in their pockets, not go to the government. these students don't think that $184 billion in profits is small change. these students don't think that adding another $715 million on top of these already huge profits can be ignored as

rounding error. these numbers are not abstractions, they are real dollars coming out of the pockets of hardworking americans. middle-class families work hard and pay their taxes and now they have to pay an extra tax, an extra $184 billion tax to put their kids through college. meanwhile, this plan asks for nothing from our biggest corporations who take advantage of loopholes in the tax code to avoid paying their fair share. it asks for nothing from the millionaires and billionaires who get away with paying less taxes than their secretaries. it asks for nothing from the enormously profitable companies that get billions of dollars in subsidies from the government every year. it's our kids, our kids who are trying to get an education, who will pay more. senator jack reed has introduced an amendment that would change this. his amendment would substantially improve the plan before us today.

his idea is a simple one -- it would cap interest rates on all federal loans at their current levels. these caps would allow students to get a good deal right now while interest rates are low. but the caps would also ensure that when interest rates go up in a few years, as we all expect them to, our students will still be protected. the reed amendment is the only way to ensure that no students will be worse off under the new plan than if congress did nothing at all. it makes sure we don't pit our students against each other, making tomorrow's students pay more so that today's students can get a break. senator reed's amendment creates these protections for students by taking a chunk of profit out of the student loan system and replacing it with a .0055% -- that's about one-half of 1% --

surtax on people whose annual income is more than a million dollars. this amendment would turn this bill into a true compromise. it does not come close to taking all of the profits out of the student loan system, as i would like to see, but it's a very good first step in that direction. you know, like most of the things we do around here, this is a choice. anyone who says that we can't afford this amendment is saying, in effect, it's more important to keep making profits off the backs of our kids than to ask millionaires to pay just the tiny bit more. these dollars have to come from somewhere -- college kids or millionaires? a vote against this amendment is a vote in favor of higher interest rates for our students. a vote against this amendment is a vote in favor of making profits off the backs of our students. i don't believe that's how we build a future.

i believe we build it together. i support senator reed's amendment and i urge my colleagues to do the same. thank you, madam president. i suggest the absence of a quorum. the presiding officer: the clerk will call the roll. quorum call:

mr. manchin: madam president? the presiding officer: the senator from west virginia. mr. manchin: madam president, congress has trouble with deadlines. i think we all know that. the presiding officer: the senate is in a quorum call.

mr. manchin: i'm sorry. i ask to vitiate the quorum call. the presiding officer: without objection. the senator from west virginia. mr. manchin: thank you, madam president. as we know, congress has trouble with deadlines, and that's why we always seem to be missing them. when we have trouble finding a permanent solution, we seem to kick the can down the road, hoping to find one later. we're here today trying to fix the problem that we have with the government student loan programs because we kicked the can down the road last year and if we don't stop and start fixing things, we'll continue to do it. that breeds a lot of uncertainty into the minds of the families and the children who are trying to go on and better themselves. the results on july 1, the rates on government subsidized undergraduate stafford loans doubled to 6.8%. that's a fact. that's what we know we're dealing with. we're trying to reverse that. not surprisingly, it all set off alarms. we got excited about this.

what are we going to do? we had a year. we didn't do anything. we just extended it 3.4%, only the stafford subsidized loans and nothing for other loans that people were taking. when you consider 11 million students who are trying to better themselves are borrowing money every year, we're only talking about one million. that's all we were trying to help. we forget about everybody else. so it was time to fix it. so i say today with a yes vote on the bipartisan compromise that we worked out, i really can't even call it bipartisan. it's really a tripartisan. democrats, republicans and independents, that's pretty special around here if you can get everybody to agree and moving in the right direction. let me explain what the bill does and what this bipartisan compromise will do. we can lower the rate for all undergraduates, that's all of them, from 6.8% where it is right now to 3.8%. that means a savings, so we'll

understand, of $2,000 in interest for the average freshman student who starts college this year. and remember, doing nothing and voting against the long-term fix means that the 11 million students who will be borrowing money for this school year will pay a higher rate than they have to. let's look at the amount of people that we're talking about and the type of money. this is what we're really talking about. the legislation, the bipartisan plan has been scored and we know this first year saves $8.1 billion that students will not have to pay in interest. that we know. the first four years of this plan, 2013-2016, $31.8 billion. by doing nothing, that's what we're leaving. we're making the students pay that much higher by doing nothing. anything else we do other than the bipartisan, this is the type of money that they're paying in higher interest rates and more obligations on the families. all of us understand the importance of education.

it's what has made america the land of opportunity. all of us want to help students go as far as they can with their talent -- as far as their talent is going to take them. that's what brought us and all of us, so many of us together to come up with the tri-partisan fix, if you will, for the student loan program. we all understand the student loan rates are only one piece to the issue of making college more accessible and more affordable for all americans who want to further their education. we'll get to the other pieces when we debate the reauthorization of the higher education act, which senator harkin has been working so hard on. and i just truly look forward to him having those discussions, but today we have to know what we're dealing with. we're dealing today with something that has an immediate impact on the pocketbook of student borrowers and their families, people who need to borrow money to go to school. that's what's in front of us. we have talked all over and around it. we're talking about accounting principles.

we're talking about everything that needs to be looked on, but it's not going to change today what we're dealing with because this bipartisan agreement truly has the savings that families need. it's probably more accurate to call, as i have said, our proposal tri-partisan, and i'm proud to do that with all of us working together. when you think a bipartisan is hard to work, hard to get around here, tri-partisan is like hitting the trifecta. that's the megabucks. we're doing something right when we can get all three sides going in the same direction. this piece of legislation is a long-term fix, it's fair, it's equitable and it's fiscally responsible. we all agree on a set of priorities when we begin these negotiations. that's everybody. it's democrats and republicans. that's my colleagues on my side of the aisle, the democrat side, that have other proposals. what we all agreed on, we agreed that the interest rates should be as low as humanly possible.

we also agreed there should be strong front-end caps on interest rates to protect student borrowers in high interest rate environments so it doesn't just run wild with it. it has a cap of 8.25% which has been historic for some time. we kept that cap there. we ensured that also government did not profit or lose money on the loans. and i think that was a big thing that we all came to an agreement. because some of the bills we had had anywhere up to $16 billion of profit built into them. that money was going to go to debt reduction. we said basically every penny that we can reduce the interest, that money should go right back towards education for the student, and we've done that. i will admit to you that there is no legislation perfect. i have been around this process for many years, and i have never voted on a perfect piece of legislation, but i have tried to get the best that we possibly could that made a difference and make sure that we could get it passed, and we have that today, a good piece of legislation.

and then anything else that we think that needs to be fixed that we have talked about, we can do that when we do the reauthorization of the higher education act under chairman harkin which we will be looking at everything. so here's how good this bipartisan, tri-partisan compromise is. the undergraduate stafford loans, both subsidized and unsubsidized, are based around the ten-year t-bills, plus the 2.05% which would yield a 3.86% for this year. the current rate is 6.8%. now we're at 3.8%. let me show you another chart. nearly eight out of ten undergraduate borrowers, undergraduate borrowers will have both sub and unsub loans, while only one out of ten will have subsidized loans. these are the subsidized loans. that's how many students will have just a subsidized loan. that's what we thought we were

fixing when we froze it at 3.4%, that's all the people we helped. i don't think a lot of us understood. some people thought that it helped everybody, and it didn't. so those who buy only subsidized is this, stafford subsidized. those who borrow only unsubsidized, it's this. but if you look at those who need both, this is what we're talking about. 6.5 million more students we are helping and serving through this bipartisan, tri-partisan piece of legislation, this compromise, and this is what we have worked to do. how can we help? you want to help middle class? this is where the middle class is. this is where the people that need -- that need to have the assistance, this is where they come in. they have a very good job at doing that. we still have the plus loans. we have the graduate unsubsidized loans. all of those, right now, the

graduate unsubsidized stafford loans paying 6.8%. under our piece of legislation, they will be paying 5.4%, and if you look at the plus loans today, the plus loans current rate is 7.9%. under our bill, it's 6.4%. 100% of every students, 11 million of them that are borrowing money, will be benefited by the bipartisan agreement. everybody benefits. that's what we try to do. our plan keeps in place the i.b.r., which is the income-based repayment plan. this allows students -- let's say that you graduate after four years and you borrowed a lot of money, you have a lot of debt, and you get a job at $40,000. and you have two kids now. we have put in a protection that basically says that they can only charge you -- you can only have -- you only have to pay 10% of your disposable income, 10% of your disposable income. $40,000 income with two children could be as low as $142 a month.

now $142 a month and lefts just say the economy or the job you have, and that's where your heart and desires are, after 20 years, it's completely forgiven. after 20 years, you made a good effort and maybe 50% of your loan is still owed, the taxpayers are picking up that. so when people said we're not really helping and there's nothing that we're helping subsidize or we should be subsidizing our education, we're doing that. we are doing that. i think with tremendous help. the congressional budget office has said our imawrn proposal will save the government $715 billion over ten years, with a $1.4 trillion of money that will be borrowed and $700 million, that's over 10 years, that's $70 million a year, that's about as close as they are able to come. that's about as close as they are able to come. what that really amounts to is

give it to you this way, you might be better. over the ten years, $715 million means that the federal government -- someone says oh, but they are making a profit -- over ten years, the federal government will make $2.76. $2.76 on each loan. and if we can get it to zero, we'll take it to zero, we won't make a penny. that's about as close as you can get, working with the types of numbers that we're working with. we shouldn't deny students starting college this fall $2,000 in savings for the sake of a principle. say they are making $2.76 over ten years, so i shouldn't have the $2,000 of savings. it just doesn't make sense to me. chart number three here. this is the average freshman in 2013, the average freshman in 2013 who graduates in four years will save over $2,000 on our

plan. $22,000 versus current law at $24,000. $24,000. in the years ahead, the interest rates on newly issued federal student loans will be tied to the u.s. treasury, 10-year borrowing rates, plus add-ons to offset costs associated with defaults, collections, deferments, forgiveness and delinquencies. now, what we're talking about is if what they are saying rates will go up, c.b.o. is projected, they projected before. if everything that you are hearing and they say that rates will go up, that's where the difference of about $500 comes in. that's the difference. that's the worst case scenario that $500 would come in. setting the rates to the borrowing costs is fair, equitable and sustainable as long as we have strong borrower protections and are fiscally responsible. this way we can ensure that washington does not wind up either profiting from students

or losing money on them. depending on the method of accounting that you use -- you have heard so much about how much money we're making and this and that. let me explain a little bit about the accounting procedure. the student loan program either generates $184 billion if you use the federal credit reform act -- and i will say the federal credit reform act has been the way that the c.b.o. has scored for the last 23 years. 23 years, that's the way it's been done. if we use the fair value accounting which some have basically supported and one is to change to. even c.b.o. has pointed towards that, there will be a $95 billion loss. there is a $280 billion swing between what some people say we're making excess profit, others say we would be losing money, it's not paying for itself, we're still subsidizing at the $95 billion rate. that's a tremendous swing.

we're not going to fix that. senator harkin is going to look at all of this, and we'll be able to address all of this in the comprehensive bill. we should all agree that it's simply not fair to make a profit on the backs of students, and we agree on that, and that's why, no matter what happens in the market, in the long term, the senate compromise -- and we fought hard for this on the front end -- the senate compromise includes an interest rate cap of 8.25%. this is important because there will be approximately $140 billion in new loans issued every year which means $1.4 trillion in loans will be issued over the next ten years. madam president, in just a few short weeks, students will be returning to school and they will have plenty to worry about. what books to buy, where their classes are and how to haul all their stuff to their rooms and much, much more. this last chart i want to show you, there's been so much

discussion, so much argument, there will be -- there will be basically amendments that we'll be vogue on that's all based around what's going to happen after four years. let me show you in 2003 what the c.b.o. said that basically interest rates would be. we start here in 2003, around 4%. they felt they would go up to about 5.8%, 5.9% and level off the past decade. tweet to 2013. -- 2003 to 2013. if we lock into some of the amendments they're telling us to lock into, my colleagues, which i respect, and you'd have never been able to take advantage of these historic lows. we're able to adjust with that based on the market rate rather than just fixed rate. these are the things don't want know but we know we're going to score $31 billion in savings the first four years. we do know that. but this is how far they've been off before. so there's no science in this. and anyone think it's the

gospel, it's not. but with a yes vote on the legislation today one less thing students and their families will have to worry about, what the interest rate will be this year and how it will be calculated for years to come. we all came here to help our constituents do what we believe is right. we believe he ensuring college remains affordable and accessible for this and future generations of americans is the right thing to do. there is no better investment we can make than the education of our children and grandchildren. we will count on today's students to be the driving force of american creativity and innovation in the years ahead. some bedrock values define america. one of them is pretty fundamental. we believe in opportunity. we believe that everyone who wants to work hard and play by the rules should have a shot to succeed. to make good on that promise, the promise of the american dream, we must do all that we can for the students, for the students to have affordable education, with a vote today on

this bipartisan, more appropriately a tripartisan agreement, to lower the interest rates on all student loans will will take a large step in the right direction. that is why i urge all of my colleagues to support this bipartisan, tripartisan, agreed-upon piece of legislation that helps all the students in the future. with that, madam president, i yield the floor. the presiding officer: the senator from missouri. mr. blunt: mr. president, i rise in support of the effort that my friend mr. manchin has done so much to reach to a conclusion here on. i hope we do reach that conclusion today. i was a university president for four years before coming to the congress, and the 11 million people, the 11 million families that -- between now and the start of the school year will be making decisions based on how these programs work are very much impacted by what we do

here. working together to make this happen is important, and i'll be supporting that. i'd like to speak otherwise, mr. president, as if we were in morning business. i'm glad to be a cosponsor of this -- this bill that deals with scholarships but i want to talk quickly about one other topic and then i have another topic that i came to the floor to talk about. first i'd like to say, mr. president, that 15 years ago this week, we had two of our capitol police killed in this building. officer chest nut, jacob chestnut and detective joon gibson were killed, an intruder came into the building and these two people trying to protect and defend others were killed and later today there will be a moment of silence remembering them and at the same time remembering all of those who do this every day for us. i happen to be working in this

building on 9/11 and i remember as the capitol security, i was one of the last people to leave the building that morning but the people still here when i left were the capitol police. i remember one of the police, isabelle as i saw going out the door saying you need to get out of this building as quick as you can but she was still here. and officer gibson was -- actually died in the doorway of an office for a couple of years was my office here in this building that i moved into shortly after he and his family both made the sacrifice that all those at work here to protect us are willing to make and the other thing i'd like to say about that in light of all that, this building was kept open for people from not only the united states but for all over the world to come and see. one of the things that the congress appropriately never talked about after that tragedy was what do we do to keep people out of this building. the discussion was what do we do to let people continue to be in

this big building and we will be remembering that today. i rise today principally to talk about the fact that president obama today is pivoting back to jobs and the economy in a series of speeches in illinois and florida and in my state in missouri. he'll be speaking at the university of central missouri at warrensburg today and i'm glad he is. i was there recently, this is a campus that always hosts girls' state and boys' state, it's one of our great schools, warrensburg is a great community, i'm glad he's there and i'm glad the president is going to get to see that. but these speeches, the one that has already been given sound an awful lot like the 2012 campaign speeches. i think we need to move beyond that. we need to not just pivot to the economy, but we need to stick with the economy.

missourians and all americans are concerned about the economy and for good reason. in june a gallon-up pole -- gallup poll found americans continuing to say the economy is the biggest problem facing the country. certainly if you look at what we ought to be focused on in our domestic agenda of what we're going to do for america, private-sector jobs have to be at the top of that. the president has pivoted and i think usually the press and maybe even the administration were pivoting to jobs and the economy, done this a lot of times over the last several years. it's sort of like he goes to this issue and then he gets away from it. and i believe when he's there he's talking about the right thing. but you have to talk about the right thing all the time if you want the right thing to happen. there's that old saying even the stopped clock is right twice a day. well, the president in many ways and the administration, their

focus seems to be like that. occasionally we come around to the right topic but then we quickly get to other topics. in may of this year the president pivoted to jobs during his middle-class jobs and opportunity tour in february he pivoted to jobs during the state of the union message, in june of last year he pivoted to jobs during a campaign speech in cleveland, ohio, and aides said he was framing the speech but didn't have any new proposals. that was the way that speech was described that day. in september of 2011, president obama pivoted to jobs during a speech before a joint session of congress that was held to bring attention to jobs where he said he wanted a vote on a $447 billion jobs package. in august of 2011, the president pivoted to jobs during his speech at the white house following the senate debt

ceiling vote and then a midwest bus tour in january of 2010 he pivoted to jobs amid news that unemployment had reached 10% in the wake of the i think clearly a failed stimulus plan, a stimulus plan that didn't work. during the speech he announced there will be more tax credits for clean energy jobs. the december before that, he pivoted to jobs during a white house forum for business leaders and i think i read somewhere this morning maybe you could count as many as 18 pivots to jobs. we need to pivot to jobs and stay there. when the president's talking about private-sector jobs, he's talking about the right thing, but when he says -- what he says after pivoting to jobs is what matters. hopefully tomorrow the president will still be talking about jobs and every day in the next week

and longer until we get this done. we need to stay on the economy till we get it done. action speaks louder than words, and, unfortunately, the record isn't as good as we'd like it to be. lagging job creation, devastating manufacturing loss, the economy is now adding jobs again but barely enough to keep up with the numbers of people going into the work force. manufacturing has been particularly hard hit despite the president's goal of adding a million new manufacturing jobs by the end of the second term. i'd like to see that happen. and if the president will stay focused on that as the premier domestic topic every day for the next three and a half years, it might, but it won't if he doesn't. we have too much debt. that doesn't help in adding jobs. we've added $6 trillion in debt debt, and saw a stimulus plan that added a lot of that debt and didn't appear to create the

jobs it was supposed to create. the health care law, the nonpartisan congressional budget office estimates seven million people will lose their coverage because of the health care law, the chamber of commerce said that more than 70% of small businesses say the health care law makes it harder and less likely for them to hire new employees. the congressional budget office says the health care law will not reduce the number of uninsured below 30 million americans. but it's going to cost a lot of money in holding back full-time jobs, i read an article almost every day in some paper somewhere that people are looking at part-time rather than full-time because of the health care law. surely that's not what we should be doing. energy policies that don't make sense, the continued blockage of the key tony pipeline --

keystone pipeline that would have added tens of thousands of jobs just to build it and after you build it more american energy equals more american jobs. the president needs to embrace and the administration needs to embrace that concept of more american energy. you know, republicans in the senate and the house are united in calling for pro-growth policies like replacing the president's health care plan with something that will work and encouraging more american energy of all kinds. from renewables to solar to wind, but particularly understanding that the traditional sources of energy are going to be the main sources of energy for the foreseeable future and that will grow our economy. approve things like the keystone pipeline, stop overregulating with in ways that hold our national energy policy back. obviously, rein in wasteful government spending, give

americans more economic certainty, simple nigh -- there are lot of the things we can do, simplify the tax code. there's a lot we can do and i would say to the president keep talking about jobs. i hope today is the first of a lot of days in a row when we're talking about jobs but also do the things that help create private-sector jobs. do the things that help create an environment where people want to take that chance to create an opportunity because our society needs to be about that. and, by the way, it's the private-sector jobs that do that. the public sector jobs are fine and i'm glad to have one right here, but public sector jobs don't pay the bill, they are the bill. private-sector jobs are where we need to go and i encourage the president to stick with the pivot this time and i would note the absence of a quorum, mr. president. the presiding officer: the clerk

will call the roll. quorum call:

quorum call: the presiding officer: the senator from maine. a senator: mr. president, i rise to speak on the student loan issue. my time should be allocated -- the presiding officer: the senate is in a quorum call. mr. king: ask unanimous consent that the quorum call be suspended. the presiding officer: without objection. mr. king: i rise to speak on student loan issue and my time should be allocated to senator alexander's time. the presiding officer: the senator is recognized. mr. king: mr. president, we've been hearing really two debates

around here in the last few da days. in fact, in the last few weeks and months, about student loans. both are important. but they're separate and i think they need to be separated and thought of as two separate debates as we consider the issue that's before us this afternoon. the first and the larger issue is the cost of college. it's too high. everyone agrees to that. and, in fact, the cost of college, of higher education, has exploded in the last 30 years. in a former life, i used to interview people for a living on television. and in the 1980's, i interviewed the financial aid officer at one of our maine colleges, and he made a very interesting college. he said, angus, you know, if you look back over the last 40 or 50 years, the cost of a private college education in the u.s. has almost exactly tracked the cost of a new ford automobile. in the 1950's -- $1,500, a car

and a college education. in the 1960's, about $3,000, a car and a college education. that relationship continued into the 1990's. and then something happened. because today, a new ford is about $18,000 and a private college is approaching $60,000, something like $58,000. that is a real problem for all of us. it's a problem for parents. it's a problem for students. it's a problem for the government, who supplies the loans. it's a problem for pell grants. it's a problem for all of us. and it's one that we need to discuss. but that's not the issue that is before us today. there is some discussion in this earlier debated, in this bigger -- earlier debate, in this bigger debate about college cost and what should the federal role be. should it be to support and help students go to college? and, indeed, we've had this discussion for the last 25 or 30 years, going back to the time of pell grants, which were designed to help students, particularly

low-income students, go to school. we've had various iterations of the student loan program. at first it was lodged in the banks and it was a guaranteed student loan. and then some years ago it was made exclusively a federal loan. but -- and i can -- i can make the argument, and we've heard some of them on the floor. the senator from vermont very eloquently made the argument that we need to make college accessible and we should do th that. but not in the context of the discussion we're having today about student loans. it's a larger issue and i'm sure that senator harkin and his committee are going to take that up in the reauthorization of the higher education act later this year. i can be very passionate and persuasive about the affordability of college. in fact, i would argue that the g.i. bill back in the early 1950's and late 1940's is one of the most important economic development investments this country ever made.

because it sent a whole generation of young americans to college and it really was the main spring of our great economic growth in the 1950's and 1960's. the problem now, though, if we're talking about a massive new federal support for education, for higher education, is runs into three problems, it seems to me, that we're going to have to examine and really think about as we move forward in in debate. one is financial, another is political and the final one is economic. the financial problem is we're broke. every dollar we spend, in addition to what's being spent now -- and, in fact, including about 30% of what we're spending now, is borrowed. so if we're going to significantly increase federal grants or subsidies to students, they have to come from somewhere else. and as senator carper spoke yesterday -- i heard him talking about this -- and he said, do we really want to say, okay, we're

going to cut head start in order to give funds to students? are we going to cut somewhere else? or how are we going to make those kinds of allocations? every dollar must be borrowed. and that's just a real -- that's just a financial reality that we're in today. the political reality is that we're in a situation of divided government? the central reality of our political times is, nothing happens in this city without votes from both parties. it's simple arithmetic. we have a president who's a democrat. we have a house of representatives that's controlled by republicans. we have a senate with a majority of democrats. but important powers to the minority party. so the bottom line from all that is -- nothing happens without bipartisan votes. so as much as we or any group, whether it's the democrats, the republicans, our two independents, as much as we

might want something, if it doesn't have bipartisan support, it's simply not going to happen. that's the reality. and that's, indeed, is the reality that drove joe manchin and i to begin these discussions about six weeks ago when we were talking about student loans. there was a democratic proposal which didn't get enough votes. there was a republican proposal which didn't get enough votes. and everybody walked away. and i was haunted by the experience of the sequester, where the same thing happened, democratic proposal, republican proposal. everybody hates the sequester. but it's happening. so we felt we've got to open some discussions because we've got to find a way to get some votes, to get enough votes to get a proposal through the congress so that students aren't facing way higher interest rates this month than they should be. because no action, make no mistake about it, means that

students will be paying dramatically higher interest rates than they should be, given the current cost of money. why? because congress fixed an interest rate. i would argue that the last thing congress should ever do is fix an interest rate. it will always be wrong. either wrong for the students, as it is now dramatically, or wrong for the taxpayers at some point in the future. we can't predict what interest rates can or should be and fixing a rate, which is what we're facing now, 6.8%, is always -- at this point, as i said, is dramatically wrong for students. in terms of the political realities around here -- my dad was a lifelong poker player, and one of the things i learned from him, as one of the guiding principles of my life is, you've got to play the hand's that dealt you. and the hand's that dealt us rights now is it takes both democrat and republican votes to

get anything through the united states congress. that's the reality and that defines our ability to get things done. it doesn't mean we can't get things done. it just means we can't always get our way. and that compromise has to be part of our lexicon. the final issue about whether we want to create a massive, new support program for college education is economics. i'm not saying that this is a dispositive argument but i think it's something that we have to think about, that the explosion of -- of college costs that i talked about, that started in the 1990's corresponded to a large extent in the availability of additional money for scholarships and loans and grants and the colleges essentially ate it up. we can go through great efforts

here to find money and increase pell grants by $1,000. we all feel good, we've done something for the students. but if the colleges increase their costs by a thousand dollars, nobody wins. the federal government and the taxpayers are out a thousand dollars. the students are in exactly the position they were before. they've still got to find the difference because the money has just been eaten up by the increase in costs. and i think that's why we've got to be thinking about, what are the implications of actions that we take. and just saying we want to give more money to students for college if, indeed, that money immediately turns into higher costs and higher tuitions, nobody has gained, least of all the students because they end up with this huge debt burden. we can and should have this discussion. it's an important one but it's not the discussion that's before us today. the discussion before us today is really pretty simple. do we want to continue a program that has fixed rates at 6.8%,

when currently rates are running more in the 3% range? in other words, do we want to balance the federal budget for the next four or five years on the backs of our students? i don't think we should do that. and i think we've come up with a proposal that doesn't do that, that dramatically benefits students as long as interest rates are where they are, and it protects students on the upside. i try to always think about problems as if we didn't have all the history and we simply had a blank sheet of paper and said, how should we go about this? how should we structure a student loan program in the federal government? if we didn't have all the -- the back-and-forth and the history and the fixed rate and all those things. it would seem to me that if you sat down in a room with a group of bright people they'd say, well, number one, the government is going to have to borrow this money that it then lends to the students, because we're broke, and that, therefore, the students, in order to be fair to

the taxpayers and the students, the students should pay what it costs the government to borrow the money plus a little bit for the cost of administering the program and the risks of default. that's exactly where we landed in this proposal. and people talk about market rates. and, yes, they are market rates but it's the ten-year treasury bill, which is one of the lowest rates in the country. this isn't the prime rate. this isn' is the libor. this is the lowest rate for the united states government, which heretofore has a very low rate. and which is guaranteed the students will be outside the market. if they went to a bank with no collateral, no cosigning, no job, the rates would be much higher than what we're talking about here. by the way, it's important to understand, because there's been so much discussion about this, this is not an adjustable-rate mortgage.

once a student -- if a student -- if we can manage to pass this bill and get it through the house and get it to the president in the next week to ten days, once a student signs up for a loan this fall, their rate for that loan will be fixed at 3.86% for the term of the loan. for the term of the loan. now, it's true that the following year, if they need another loan, that rate will be the t-bill plus 2.05% for the term of that loan. in other words, the loans -- the loan rate doesn't change each year, according to the rates. and i think that's an important distinction. i think there's been some confusion about this. and in addition, there are provisions in current law, which this bill doesn't change, that allow for forgiveness of student loans under certain circumstances, depending upon how long the loan has been in place and the employment that you have and also limits on how much you have to pay as a percentage of your income.

as i said before, i don't believe congress should be setting rates. let's talk about the effect of this -- of this proposal on students. the first effect is that it will cut the rates that students are going to have to pay for their loans this year almost in half, from 6.8% to 3.86%. so a freshman going to college starting in 2013, this year, this is what they would pay over -- for the -- for their total loans under this proposal. this is bipartisan. it should say "nonpartisan." this is what they'll pay under current law. that's a dramatic difference. that's money out of the pocket, billions of dollars out of the pockets of students in the next two or three years. now, everybody says, but what if rates go up? rates might go up. well, they might go up. they might stay the same. they might go down.

but even if they go up, under the -- under the c.b.o.'s projections, the congressional budget office projection, here's a student starting college in 2017. and there's the -- they would pay a little bit more under our proposal. it's the difference between $24,800 and $24,25, about $500. this difference about $2,000. this is money in hand. this is "maybe," depending upon what happens with interest rates. it's a billion -- what's worth more? a billion in hand or a billion in the bush? i think it's a billion in hand, because these are the rates that kids are going to have to face right now. i think this is a great great -l for students. and thanks to tom harkin, who negotiated like a tyker, there's a cap on the upside so students aren't subjected subjected, if

rates happen to go way up -- as they have occasionally but not very often in our reasonability history -- up into double digits. there's a catch 8.25%. so the students -- there's a cap of 8.25%. so the students enjoy the benefit of the low rates but they're -- their exposure to the upper rates, to too high rates, is capped. i think that is a sensible and prudent and beneficial proposal for students. the savings to students next year will be something like $8 billion or $9 billion. otherwise, if we do nothing here this week, that's the amount they're going to have to pay the future is uncertain, but i think it's important to talk about projections of interest rates, because a lot of the discussion about -- that the students are going to have to pay so much more because the c.b.o. projects interest rates to go up. well, by the way, even on the c.b.o.'s projections for undergraduates, the rates would never hit the cap. they'd be in the low 7%, very

close to where the present rate is. but let's just talk about c.b.o. interest rate projections, because that's what's driving a lot of the anxiety around here. here is the c.b.o. -- let's pretend it is 2003, ten years ago. what are you projecting for interest rates, just as would did a few weeks ago? here's what they projected. interest rates are about 4%, but we think they're going to go up 5%, 5 -- around 6%. that's the projection that c.b.o. used in 2003. the good news is we know what actually happened. again, starting in 2003, here's the actual cost of interest rates. look at the difference. if we were basing our decisions on projected interest rates, look at the huge difference that took place and all of this represents money in the students' pockets as opposed to fixing the rate. so, yes, the projections are

that they'll go up. but we don't know that. and i take money in hand any day against a possibility that there might be a payment later on, and we don't really know that. it could go either way. if interest rates go way up, as i said, the cap kicks in. and the cap of 8.25% is very close to the 6.8% that we have now. it results in about -- i don't know -- $20 a month difference between the cap and the 6.% 8%, if indeed we go all the way to the cap. i think this is a prudent and responsible proposal. it is the best of all worlds for the students because they get low rates now and they get a cap, if rates go up. and i think it makes sense for the taxpayers. and i'm perfectly willing to have the debate, to have the discussion about, a what do we do about college costs, and, b, should the federal government be

playing a greater role in terms of support for students? i think that's a very honest discussion. but this is called the student loan program. it's about loans and the implication of a loan is it's to be paid back with some reasonable rate of interest. pell grants are grants, and we have tax credit programs that are, in effect, grants. this is one part of the student aid puzzle, and what we have before us today is a prudent, sensible, beneficial program for the students. and i'll conclude just by saying, the choice is really very clear. because if we don't act on this bipartisan proposal that we believe will have a receptive ear in the house of representatives, we know that the president supports it and is ready to sign it tomorrow, if we don't move this bill, nothing happens, nothing happens during

august, students are signing up for loans at almost double the rate they should be. i think that's unfair to students, and i think they sent us here to solve proficiency and this is one -- to solve problems, and this is one that we can tackle. mr. president, i yield the floor. mr. burr: mr. president? the presiding officer: the senator from south carolina. mr. burr: mr. president, i would like to be recognized on the student loan bill. the time can come out of the manchin-burr amendment. i am not sure exactly how we're allocating time. let me take this opportunity, mr. president, to thank the cosponsors of this bill, senator alexander, senator coburn, senator carper, senator king, senator manchin.

without this bipartisan approach, we wouldn't be here today. and it has not been lost on me that four of the six cosponsors were former governors. they recognize the importance of education, they recognize the importance of students having access to that education, and i think all of them are stalwarts, as it relates to good education. and i think they recognize, like senator coburn and i, that this was a good -- this was a good bill. it was good policy -- manchin, burr, king, carper, alexander bill. let me remind my colleagues where we are today. senator king just did it. under current law, we're at 6.8% for all undergraduate students,

higher for graduate, higher for plus, and just a month ago we had a bifurcated system where some undergraduates paid 6.8% and other undergraduates who were considered subsidized paid 3.4%. i would suggest that that's morally wrong. and i think collectively what we did is we said, how can we come up with a system that shows the equity that we believe in and that provides a financial benefit to all students that participate? and so i say to my colleagues, i want to point out the single most important part of this bipartisan bill -- or nonpartisan bill, and that's the fact that two students seated side by side, one whose parents have a different income level than the next one, we treat them

both the same. now, for the one who has a lower income level, as senator king said, they qualify for pell grants, for education tax credits, for loan forgiveness, for a lot of different things. but from a standpoint of the rate the federal government charges them to borrow money to go to school, we treat them the same. i think that's what we're supposed to do. and if we didn't treat them the same, let me back up for a second, and we were treating this one at 3.4% and this one at 6.8%, understand that this one can only borrow $3,400 at a subsidized rate. well, you're not going to enter any college today for $3,500. it's just not going to havment so you're going to have to borrow a little more. the maximum is $5,500 in your freshman year. you're going to get $3,,500 ovr here and more over here but

you're going to pa to 6.8%. what the nonpartisan bill does, it provides every undergraduate with this year 3.86%, and for the case of the subsidized student before they're not borrowing at a lower rate for some money and a higher rate for another money, actually subsidizing themselves. and for the undergraduate who was not subsidized, they're paying way more than they should for their college loan. so what do we do? we use the ten-year bond, market forces. i'm not sure there is fairer way to do it, fair he for the student, fairer for the institution, fairer forethe american t we tie it to the ten-year bond and we've got an add-on that's reflected in the cost to run the program and the risk of the loan. we hope every student it back but that doesn't always happen.

what we've tried to do is be good if i douchgood fiduciariese american taxpayer. we cap it. the trade goffed fo trade-off fn comparison to the house, is that when you take out a loan this year at 3.6%, that's your interest rate for the life of the loan. we don't readiswru readjust it n annual basis. we're not going come in and change the rules on you and say you owe it more interest in the future. but it does mean, just like in a home mortgage purchase, if you buy one thew year, the likelihood is the one you buy next year might have a different interest rate because the market has changed. i think that the american people can deal with that because it is predictable. it brings it some certainty. you can calculate it on your own. and as my colleague said, the

last person to set rates is the congress of the united states. we just shouldn't. we shouldn't be in that business. it should be market forces, and with this legislation it will be. now, mr. president, i sat over here trying to think of just the one phrase that i would say to my colleagues is the primary reason they should support this bill, and provide this benefit for the american people. i wrote down two words -- financially sustainable. you see, in 2007, congress created the current student loan program rate. and a year ago, after we had extended the program because it ran out for two years, we said, well, we're going to fix it;

we're going to have a long-term sliewsmghtlong-termsolution. and then all of a sudden we did a one-year solution. the senator from west virginia was the most vocal person. he said, what happened? we were going to gism it. we're not fixing it. when it came up this year, there was such outcry over the fact that mao is the tim now is the . let's go ahead and gism it. what's the test of, did we fix it? it's financial sustainability. can this withstand the test of time? and today we need that certainty from a standpoint of federal spending, from a standpoint of the american taxpayer. but we also need it from the standpoint of america's childr children. you know, we're speaking as much to the 10-year-old as we are to the 18-year-old. the 18-year-old may be a freshman next year. the 10-year-old has aspirations down the road, eight more years,

that they're going to have the ability to go to college. we want to provide them the certainty that there's going to be a student loan program out there that's equitable and fair and not question whether in fact it will exist. i think with the option that we've got on the table, we will be able to say that from one generation to the next. now, i know we will confirm this afternoon a couple of -- we will consider this afternoon a couple of different ongses. -- a couple of different options. there will be two options from the standpoint of plans that you can choose. if you believe that equitable treatment is right, then the bipartisan bill is the one you need to support. if you believe that financial sustainability is important, then the bipartisan bill is the one you need to support. i think if you tick down the things and least of all the

things that you probably ought to look at, what makes it most affordable? what's the best for the student? i think what you'll find is it's the bipartisan bill. mr. president, there's been a a lost work put into this to make -- there's been a lot of work put into this to make it a long-term solution. i want to urge my colleagues, congress changes every two years. that's the length of long-term. but let's not put into law a sunset on this in two years. that's the other amendment. why would we say we've come up with a great plan, one that sort of passes the test of equitiability and sustainability and then turn around and say, we're going to sunset it in two years? congress has the ability to look at any piece of legislation and change it. let's make that the function of what we learn from this and not prejudge it and say, let's cut it off in two years.

so i'm going to conclude, because my colleagues are here to speak on the programs as well. i thank the cosponsors -- four governors, senator cobun. without their help -- senator coburn. without their help, we wouldn't be at this point. i thank the leadership of the institution, the majority leader and the minority leader, and those that have brokered the ability for us to be here today. without them, we wouldn't be considering what i think is the best piece of legislation to address the challenges that we've got for students in need of loans for this year's and future colleges. soy witso with that, i yield the floor. the presiding officer: the senator from north dakota. mr. hoeven: i rise today to speak again in support of a permanent solution to the student loan program and, like my colleague from the great state of north carolina, i think

that's exactly what we have with the bipartisan student loan certainty act. and i want to acknowledge all those who have worked so hard to come together and support this legislation. it's actually not bipartisan. it's tripartisan. former governor king is an independent, so you've got republicans, democrats and independents in support of this legislation. and that's what it takes. it takes people coming together across the aisle doing good work, and that's what they've done here to put this legislation together. i'm pleased to be supporting it, and i come today to call on all of our colleagues to support it as well. the plan provides students with dependable low cost finance ongoing a long-term basis. that's the key. it is called the student loan

act because it provides certainty for students and for families. let's take just a minute to review how the plan works. the plan would tie all student loan rates to the ten-year treasury note rate to reflect both current market and employment conditions. for this year that rate index would be 1.81%. then both subsidized and unsubsidized stafford loans would be 2.05% over that rate. graduate student rates would be 3.6% over the ten-year treasury rate and plus loans would be 4.6% over the treasury rate. it's important to note that the rate on those loans is then fixed. so you have that certainty. when you take out the loan, you know what the rate on that loan is going to be for the life of the loan. it's important for our borrowers. so let's take just a minute to compare this program with the

existing student loan program. subsidized stafford loans right now are charged 6.8%. it was 3.4%, but now it's 6.8% because as my colleague just identified, the program had expired. we're in this situation we're we're going with short-term extensions so, we face these periods like right now where the program has expired. so the rate for subsidized stafford loans is 6.8%. under this program that goes to 3.86% this year. 3.86% compared to 6.8%. same they think for unsubsidized staffords. now 60% of the borrowers, the undergraduate borrowers borrow unsubsidized stafford loans. a lot o lower income students who borrow subsidized loans also borrow unsubsidized loans and

are paying that 6.8% even before the program expired. for all those undergraduate students the rate goes down to 3.68%. that is a big time savings for undergraduate students. the program is capped at 8.25%, so we have the certainty of a cap as well. they save money now, as was pointed out by my colleagues. they save money now, and they have the certainty of a cap as well. and there are caps for the graduate students and for the plus loans that parents take out as well. in addition to the caps, there's another safety net in the program. the other safety net in the bill is the income-based repayment level. under the income-based repayment level provision, student loan payments are limited to 15% of income and any balance remaining on the loan after 25 years is forgiven. so you've got both safety nets. you've got the caps and you've

got the repayment limit provision to protect borrowers. this program is designed solely for students and their families. let me repeat that. this program is designed solely for students and their families. unlike the existing student loan program, it does not subsidize federal health care or any other program. it is for the students and the students and their families alone, period. yet, as my colleague just noted, a year ago we extended the student loan program. i was actually a member of the conference committee for map-21, the department of transportation reauthorization legislation. in that legislation we not only reauthorized the d.o.t. budget, we also reauthorized the federal flood insurance as well. and in addition, we extended for one year the reauthorization of

the student loan program. the reason we extended the student loan program for one year was so that we could come up with a permanent solution. not so we could come up with another short-term extension but specifically so we could come up with a permanent solution. and that's just exactly what this is. the bipartisan student loan certainty act provides that certainty for students, for families, and it is a long-term permanent fix for our students. i join with my colleagues and i call on both sides of the aisle, all of us to come together, let's fix this for our students, let's get it in place, let's get it over to the house. i believe they will pass it as well, and let's have this ready for our students as they are preparing to enter college this fall. with that, again, i thank everyone who's worked so hard on this legislation, and i yield the floor.

a senator: mr. president? the presiding officer: the senator from tennessee. mr. alexander: mr. president, i ask consent that after i speak for about ten minutes that the senator from california be recognized for up to 30 minutes, and following her the senator from oregon be recognized, mr. merkley. the presiding officer: without objection. mr. alexander: mr. president, i think the senator from maine, the independent the senator from maine probably said it best when he observed on the floor and in private conversation that if you took four or five of us and said forget that you're elected to public office, here's a problem to solve, that we would have come up with about the solution that the president, the house of representatives and the bipartisan proposal today have come up with. this is a very good solution on a very big problem that affects millions of families and about 11 million students who are headed to college this year. the bipartisan proposal makes it

cheaper, simpler and fairer for students going to college. it makes their loans more certain because it locks in a rate for the life of the loan, whether it be 8, 10, 12 or 15 years. it takes it out of the political football game which we play every other year, it seems, on student interest rates, and solves the problem permanently. it is based upon an idea recommended by president obama, passed by the house of representatives, and endorsed by the bipartisan group that's been working on it. i wish all of the major problems that came before us could be solved in this way. as far as cost goes, it's a big difference. it's about two-thirds of all the undergraduate loans, of all the loans that are made in the united states. and there are about 11 million students will take out about 18 million loans because many students take out more than one

loan. and for all the undergraduates, about two-thirds of the loans, the cost of the loan will be cut about in half, which means that if you get a loan this year at 3.86% rate, that's the rate that's locked in for the entire life of the loan. it's simpler and fairer because there's a single rate for all undergraduates. beforehand, we had a, one rate for what we call the subsidized loan and another rate for the unsubsidized loan. that is confusing and unfair really because 80% of the lower income students who had the subsidized loan also had the other loan. so then everybody who shows up at the university of tennessee and borrows money, if they're undergraduates, all their loans are the same rate. it's fair to taxpayers because we ask the congressional budget office, compute for us what it costs the government to borrow the money and administer the

loan, take into account the costs, and let's try to make sure that we come as close to zero as possible with what we cost the taxpayers. and they've done that. and it's fair to students because we asked them to do the same thing for students. they said we're loaning more than $100 billion a year, $1 trillion over ten years, so help us find a formula that comes as close to zero as practical so we don't overcharge students and make money on the backs of students. and they came within .7% in their estimates which are only estimates, and for all practical purposes, that's a rounding error. that's a good-faith effort to get to zero in terms of fair to taxpayers and fair to students. what i would want to say to those who suggest it's not fair to students, let's keep in mind a few things. number one, thanks to senator harkin and many of the democratic members of the

senate, there are caps on the loan. so if they go up too high, there's a limit on how high they can go. second, there is, as has been mentioned, the income repayment plan, which means that under the existing law today, if you take out a student loan and you get a job, you only stro pay back about -- have to pay back about 10% of your disposable income. that's not all of your income. that's after you deduct your living expenses and your taxes, about 10% of what's left. if that's tphotd -- not enough to pay it back over 10 or 20 years, depending whether you have a government or private sector job, the government forgives it. so there is that cap as well. there is the interest subsidy. about 40% of the loans are subsidized. therefore, lower-income students, which means that the government, the taxpayer pays the interest while you're in college. so if euro a low-income -- if you're a low income student at the university of tennessee if you take that loan out the

government will pay your interest the whole time you're in college. in addition, there's the pell grant, and we spend $35 billion a year on taxpayer money on the pell grant which goes to low-income students. so a student at the university of tennessee might have a pell grant of up to about $5,000 or so, might have a hope scholarship in the state, another three, the tuition at the university of tennessee is about $8,000 or $9,000; at the community college it is $3,000 or $4,000. you can see relatively there is a lot of financial aid out there before you even get to these low-rate student loans that taxpayers are making available to 11 million students at a rate of 3.86% for undergraduates. then there's one aspect in which this is tpaefrbl to students and that is -- favorable to students and that is the accounting system we use. i've heard some say the government is making money on

the backs of students. let me try to put this in the simplest form that i can. all we're doing with the proposal we're making today is resetting the rates. very simple bill with a few pages. it's on top of a student loan system with a lot of cash going in and out of it. $100 billion going out this year to new loans. maybe about as much coming back in being repaid from all loans. there are two ways of accounting for that cash flow back and forth and whether it benefits the taxpayers or whether it benefits the students. under the law, we have something called the federal credit reform act which, if you adopt that would say, well, the taxpayers are benefiting to the tune of about $185 billion over ten years. that is correct. that's exactly what it says. not from the, what we're voting on tomorrow but for the underlying system that already exists. but the congressional budget office has said that's not the way they recommend measuring the

way we count the cost to the government of loaning money like this. to be specific, the congressional budget office says the federal credit report act estimates do not provide a comprehensive measure of what federal programs actually cost the government because they don't take into the market risk. c.b.o. says that adopting a fair value approach would provide a more comprehensive way to measure the costs of the federal credit programs and would permit more level comparisons between those costs and the costs of other forms of federal assistance. and the congressional budget office says we already use that fair value approach which includes taking into account the market risks with such things as the international monetary fund, the i.m.f., the troubled asset relief program -- those were the bailouts we called them in 2008. c.b.o. uses those with fannie mae and freddie mac.

in other words, the nonpartisan group we rely on to advise us about money says that if we actually use the right accounting method, the current student loan system benefits students to the tune of about $95 billion over the next ten years, not taxpayers. so there's another benefit to students. so it's not true that under the recommended form of evaluating the cost to the government, that taxpayers come out better than students. one other thing i'd like to say -- or two other things. one is i'd like to compliment those who have worked on this. my colleague, senator harkin, who is chairman of the education policy committee here in the senate, who argued forcefully for caps, i congratulate the president for including this idea in the budget and forcefully supporting it. i congratulate the house of representatives. i suppose it's not lost on anyone the president's a democrat and the house is a

republican. and this is a bipartisan proposal. i like the sound of that. i think it shows we can get results done when we keep our eye on the ball. i especially compliment senator burr and senator coburn and senator manchin and senator king and senator carper for working carefully on this and senator durbin for his leadership in putting this together. it -- it is true, we have a larger question before us, do we need to make some changes in student loans. it's a lot of money. $100 billion a year. that's a lot of money. we need to make sure it is available in the right way, that students aren't borrowing too much. right now, if you're 20 years old and you show up at the university of tennessee in novel and you want -- in knoxville, you want $5,500, you get it. the university can't say to you, i'm sorry, lamar, we don't think in your circumstances you will be able to pay that back in ten years. i can say give me that money.

that's what the law says. maybe we need to take a look at that. and we need to be careful about our facts. the federal reserve says, for example, that 70% of student loans today -- we're in the year 2012 in the fourth quarter -- have a balance of less than $25,000. 70% of all student loans at the end of last year had a balance of less than $25,000. 40% had a balance of less than $10,000. now, the trespassed is going in the wrong direction. some students are borrowing too much money, but the average undergraduate loan is about $25,000. that's the average debt. and the undergraduate student can't really borrow more than $31,800, and that's two-thirds of the loans. while there may be some problems with the student loan program, and i for one think some students borrow more than they should, we have 6,000 institutions out there from national diesel college to harvard to notre dame to university of tennessee, we need

to be careful that we understand exactly what the problem is, that we focus in on it, we don't apply a lot of mandates from washington, that we work with the colleges and universities and find those universities like tennessee tech university where they have very low level of student loans to others where they may have loan rates that are too high and make sure, yes, that students don't saddle themselves with too much, but when you have a 20-year-old in knoxville showing up entitled to $5,500 for a community college tuition that only costs $3,000 and she or he can put the other $2,500 in their pocket and they can't say no, that's one reason many have gotten out of the loan business is because they think that's wrong for the student. if that's the case, we in the senate ought to look at that. senator harkin and i are committed to doing that and the reauthorization of the higher education act looking at student loans. but forted, if the senate does what i hope it does, this is a

victory for students. it makes loans cheaper, simpler, fairer, more certain. it stops this annual business of political football with student interest rates, gives students a low interest rate that they can lock in over time, a cap at the top, so that if rates spiral through the roof, they -- student loans won't spiral through the roof, and it's done in the context of a larger system that includes pell grants and interest subsidies for low-income students, and that if it were based upon an accounting system that is recommended by the congressional budget office, would tilt the whole program to the advantage of students to the tune of $95 billion additional over the next ten years. so i congratulate all those who have worked on it from the bipartisan sponsors to the republican leadership in the house to the democratic president of the united states. i hope we adopt it by a big vote. i hope the 11 million students going to college this fall have the advantage of planning their long-term futures with the

lowest possible interest rate on those 18 million student loans that we will be taking out. i thank the president. i yield the floor. a senator: mr. president? the presiding officer: the senator from california. mrs. boxer: mr. president, i rise in opposition to the so-called bipartisan deal, and i have very strong reasons for opposing it and supporting the alternative, which is the reed-warren alternative. now, the senator from tennessee said he likes the sound of bipartisan deal. so do i. i mean, let me tell you, it feels good to get things done around here in a bipartisan way. but that doesn't mean because it's called bipartisan it's the right thing to do. sometimes democrats will have the right idea, sometimes republicans will have the right idea, and we debate it. i think it was interesting to hear senator alexander's

comments. it was a very interesting speech because it was part of a -- you know, saying it's wonderful, we're going to help students on the one hand. on the other hand, he talks about changing the way we do our accounting to crack down on students, and then he says in his state a student can get $5,500 loan even though the -- it only costs $3,500. what about the books you have to buy? what about the transportation? what about all the other out-of-pocket expenses? so i listened to my friend from tennessee and i know he is a leader on education, but i think he had kind of a dual message. on one hand, it is great to help our students. on the other, well, maybe it's just too much of a risk. you know, i have to tell you, according to the information i have from my experts, it's pretty tough when you take out a student loan, the federal government if you don't pay it

back and garnish your wages can do lots of things. so i am opposed to this bipartisan deal and in strong support of the reed-warren measure. now, i have up to 30 minutes, and i wanted to ask if the senator wanted to make a unanimous consent request. mr. harkin: i wonder if the senator would yield for a unanimous consent request? i ask unanimous consent that gabe sandler, megan miraglia of my staff be granted floor privileges for the duration of today's session. i ask that these remarks appear at the end of the senator's speech so her speech appears uninterrupted in the record. the presiding officer: without objection. mrs. boxer: i thank my colleague. i'm glad a lot of people are listening to this debate, because it's very important. i'm going to read some of the criticisms of this bipartisan deal that come from outside

groups. the first is the national association of graduate and professional students. this is what they said. this bill falls short in preventing higher student loan interest rates, especially for graduate and professional students, a company of 9.5% for graduate and professional students offers no guarantees that our rates won't increase. we should be encouraging students to enter higher education, to keep our economy growing, not deterring them with higher rates. the uninvisibles also oppose this bill, writing and i quote even as the federal government makes $184 billion off the federal loan program, students and families will be forced to pay more under this bill than under current law. if you just let the current law exist, at the end of the day because of the difference in the caps, students will be better off in the out years.

and into the future. and for anyone who says this is temporary, make no mistake about it. republicans have said this is permanent. this is permanent. we may revisit other things, and i hope we do. there is a lot we should look at. the ability of the students to refinance their loans, lots of other things i hope we can work on. but this particular deal, if you look at the republicans' own words, it's a permanent deal. u.s. public interest groups says this so-called deal, they oppose it because it's worse than current student loan policy. current law includes an unjustifiable ten-year revenue stream of $184 billion flowing directly from student borrowers to the federal government. this bill does not address that problem. instead, it exacerbates it, generating another $517 million in new revenue off the backs of

student loan borrowers to pay down the deficit. and they close their comments by saying enough is enough. now, people listening to this debate i'm sure could be a bit confused about exactly what we're talking about. so i'm going to try to take you through some of the facts surrounding this debate, but i think it's important that we understand what students are feeling out there, mr. president, what students are feeling out there. so i'm going to read a few. in california, amy and christian didi owe over $82,000 in student loans. amy, who has a master's degree in psychology, and christian, a cardiovascular nurse, says it's like carrying a big backpack filled with bricks all over the place and i can never let it go.

it's always there. i could get rid of a few bricks, but there is always going to be more. i don't see the student loans going away. and i have met people who are still paying off their student loans, and they are on social security. tammy brown of redding, she said the government has been taking $179, here it is, out of her social security disability check each month for the past five years. brown, 52, became disabled in 1986 after being involved in a car accident. unable to work, she fell behind on her student loan payments. she said the social security check is too small to cover her food and medical bills, so she quit taking prescription pain pills. it's kind of hard to live on this amount of money, she said. this is a woman on social security disability, and what are we doing in the bipartisan deal? we're laying on top of what we already make from student loans an additional $715 million.

joseph lucca of portland, maine, started college as a premed student, but he switched to mechanical engineering because the thought of graduating with more than $100,000 in student loans after medical school was too daunting. and i will get back to some of his comments at the close of my time. i mean, you have to ask a few questions. why are we piling on another $715 million of debt on the backs of our students so we could stand up here and say we need a bipartisan deal, and i know how hard it was. yes, there are great improvements from where it started, i appreciate that, but we have a better deal. it's called reed-warren. it matches those low rates that we see in the bipartisan deal

for the first three years. it matches it. but then it takes the rates down. and i will show you just how much money we save students from the reed-warren legislation because it takes the rates down. it students put two wars on a credit card, mr. president? is that why they have got to be punished here? were students running the banks that placed huge bets on wall street leading up to the crash? did students create a dug benefit in the medicare program without paying for it? did students create and sell toxic mortgages, swaps and securities? oh, no, they didn't do any of that. but apparently, we're forcing students to pay for them. by tacking another $750 million

on the backs of students. and i have to say when it comes to the banks, oh, hundreds of billions of dollars, no problem. too big to fail. it's very hard to explain to people, to students. oh, we say we love our children and we want them to succeed, and yes, we do, but we don't follow our words with actions, because if we follow our words with actions, we would have embraced the reed-warren solution. but the handwriting is clearly on the wall, and we're not going to have the votes to do that, so we're going to ask our students to continue to pay more and more

and more. we ought to look at what past presidents have said about the importance of education. i just feel i must point out americans have always said that our values include valuing our students, so let's go back. george h.w. bush." think about every problem, every challenge, the solution to each starts with education." how right he was when he said that. bill clinton -- "when we make college more affordable, we make the american dream more achievable." how right he was to say that. george w. bush -- "our country must focus our education system on helping workers learn the new skills of the 21st century so we can increase the job base of this country."

and barack obama -- "the jobs of the future are increasingly going to be those with more than a high school degree. we want americans getting those jobs of the future. we are going to have to make sure that they're getting the education they need." okay. so how about charging our students $715 million more? that really helps us do what these presidents have called us to do, which is to value our children, to value education. two democrats, two republicans. a clear message. and believe me, it's hard to find on a lot of issues. education is key, our students are important, they need the education to get the jobs. well, i'm going to show you exactly what this bipartisan bill is going to cost. i already told you it's $715

million over the course of time to the government. let's look at what each family will have to pay more under this so-called deal compared with the reed-warren substitute. first let's take a look at -- let's take a look at the ten-year loan. now, what we do on all these charts is we go out to the cap. because we know the caps will all be reached. all you have to do is looking at the experts, they've told us the caps will be reached. you take the 30-year average rate of the ten-year note, you add on the surcharge, and bingo, the caps will be reached in a few years. so let's look at it. the reed amendment versus the

deal. if you have a $15,000 loan, for ten years under the deal, you pay $1,363 more than you would have under the reed amendment. if you have a $25,000 loan, over ten years you pay $2,271 more under the bipartisan deal. if you have a $50,000 loan, and you can get those, by the way, -- for ten years you pay $4,500 more. so now let's see if you decided you wanted to take 20 years to pay back that undergraduate loan. i'm sorry, 25 years. so you decide you want to take 25 years.

you will pay for a $30,000 loan amount, $8,400 more under this so-called bipartisan deal than you would under the reed-warren amendment. you will pay $14,000 more over the course of the 25-year loan if you have a $50,000 loan. so i am saying to the american people who might be watching this the bad deal is the bipartisan deal, and the good deal is the reed deal. look at how much more money that individual has to pay for a $50,000 loan over 25 years, $14,000 more. some people don't even make $14,000 in half a year. now we're going to look at what happens to graduate students,

and this is why the graduate students are speaking out against this. look at this. if you pay back your graduate loan in ten years -- and we all know the caps are going to be reached -- you pay $2,500 more for $15,000 loan, $4,200 more for a $25,000 loan, $8,500 more on a $50,000 loan and a $100 loan you pay $17,000 more under the so-called bipartisan deal compared to the reed amendment. so what you're seeing now is a breakdown of why we say it's going to be $715 million more of debt on the backs of our students. i am showing you how it breaks down per family. let's take a look at the

graduate -- this is really worth looking at, mr. president. if you're a graduate student, mr. president, -- and i know you probably have a doctorate -- and you had to go borrow money, under this bipartisan deal you would pay if your amount was $30,000, $16,000 more than you would under the reed-warren amendment. if you had a $50,000 loan, you'd pay $26,000. and look at this, if you have a $100 loan, which many people have, you hear about what the average is, many people who go to graduate school have this -- you pay $53,000 more under the so-called bipartisan deal. now let's take a look at the parents. the parents who will have the misfortune of having to live

under this. if you look at the cap, under the reed-warren cap, it's 7.89% cap for -- 7.9% cap for the parents' loans. under the so-called bipartisan deal it is a 10.5% cap. so what does this mean? the additional money would be $2,500 for a $15,000 loan, $4,200 for a $25,000 loan. $8,400 for a $50,000 loan. and $16,000 for a $100 loan. that's how much more -- $100 loan. that's how much more the parents of the students would pay. the last chart to bring it home to you is the parents who are going to live with this bipartisan deal unless we pass reed-warren, they're going to have to pay over 25 years

because their cap is 10.5% under this great, quote-unquote, bipartisan deal, they'll pay $16,000 more on a $30,000 loan, $26,000 more on a $50,000 loan, and hold onto your pocketbook, $53,000 more on a $100 loan. -- on a $100,000 loan. why would we not support the reed-warren bill? did it cost us a few bucks? yeah, so we paid for the few bucks it cost us by putting in a millionaire surtax of half a percent. okay? but because the bipartisan deal expects students to pay and is putting the deficit burden on the students, their cap rages up to over 10% for the parent loans. so you might hear, oh, senator

boxer, it will never reach the cap, we need to get to the caps. well, i'll use a -- well, i won't go there. simply not true. we will get to the caps. why? i said before, the average ten-year treasury bond over the past 30 years is 6.22%. that's what it is. the bipartisan deal plugs us into the ten-year treasury note, treasury bond, and adds a few dollars, a few percentage points for handling fees, and you're going to get all the way up to the cap in every case. it's just going to happen. if you don't learn from past interest rates you can't predict the future. c.b.o. predicts the future. they're using the past. we have to use the past. the cap will be hit.

the cap will be hit. so where does it leave us? we have a stark choice to make. we can go with a bipartisan deal that people worked very hard on, and i compliment them for all the work they put into it, believe me. we can go with that deal that puts debt on the backs of our students, an additional $715 million worth of debt. or we can go with the reed-warren alternative that says students, you're already paying enough. we're not going to lay this on you. we figured out a way to do it so that you're capped at a much lower rate.

this is what we're talking about. this is what we're talking about. the deal will take $715 million out of the students' pockets over the next ten years. and anyone who thinks that's fair should vote for the deal. anyone who looks -- can look into the eye of a student, who is already struggling, who is already working, who is already asking their parents for help and trying to put it all together in a package, if they think it's fair, then vote for the deal. but don't kid yourself. this $715 million is going right on to the backs of our families i've shown you the charts. this is a permanent deal. senator coburn, the senators agreed on a permanent, principled solution. on friday the republican leader called this bill a permanent

reform that ties interest rates to market rates. the republican help committee, senator alexander called this a long-term market-based solution. they're not going to revisit this issue. i really have to compliment senators reed and warren. they deserve praise because they have come up with a plan that works, that is fair, that will give solace to our students because for the undergraduate and graduate loans, we will see them top out at 6.8% and for the parent loans, the cap is 7.9%. compared to over 10% in the so-called bipartisan deal. now, i promised i was going to

revisit some of the stories, and i'm going to close with those stories. sandy barnett, 58 years old, of illinois, took out a $21,000 loan to pay for graduate school in the late 1980's but even after earning her master's degree, barnett struggled to find a job that paid more than $25,000 a year, she fell behind on her payments. she suffered through a layoff, a stretch of unemployment, and the death of her husband while her student loan ballooned to $54,000. so what are we saying to sandy barnett? oh, great news, we had a bipartisan breakthrough and now we're going to add $715 million

to students' debts. when michelle basuti, a 41-year-old family practitioners finished medical school in 2003 her student loan debt amounted to $250,000. since then it has ballooned to $555,000, the entire balance of her federal loans over $200,000 will be paid off in 351 months when she will be 70 years old. what are we doing here? who are we fighting for here? how can we make one more speech on the floor of the senate saying our students are our future. we have an immigration bill that's letting in high-tech workers because we don't have enough trained american workers to fill the jobs. oh, we're going to make it easier on you students by piling

on another $715 million of debt on your back. and on the backs of your families. emanuel telles' mother is a laid-off factory worker and $120,000 from her unemployment check is garnished to pay the federal plus student loan she took out for her son. aren't we proud, federal government, this is great. we're garnishing emanuel telles' mother, her check, her unemployment check, because she took out a federal plus student loan for her son. why don't we talk about refinancing these loans? why don't we talk about making it easier for people to pay back these loans? instead of having a so-called bipartisan deal that adds $715

million to students, puts it on their backs. diane lunan at the national consumer law center in boston said she's been working with an 83-year-old veteran -- mr. president, an 83-year-old veteran -- whose social security benefits have been reduced the past five years. the client fell behind on a federal loan that he signed up for in the 1990's to help his son with tuition costs. loonan said the costs have left him without enough cash to pay for medicine for his heart problems. look, this is a national probl problem. and part of it is a national disgrace. so what's their solution? a so-called deal that makes it worse. last year the federal reserve

bank of new york reported that americans 60 and oiledde and oll only $36 billion in loans and social security security checks are being collected and debt collectors are harassing people in their 80's over decades-old student loans. you know, we can't do this. there was a recession, the worst one since the great depression. yes, people lost their jobs. yes, people had problems. so -- so why aren't we dealing with the underlying issues and making it easier for our families instead of having a deal that's cut -- i wasn't part of it; that's for sure -- that hurts our students and their families? mr. president, senator merkley is here, i'm going to yield the floor and thank you very much for your patience.

mr. merkley: mr. president? the presiding officer: the senator from oregon. mr. merkley: thank you, mr. president. we were going to have a moment of silence at approximately eight minutes from now for officer jacob chestnut and detective john gibson in recognition of the is beingifies thew they made -- in recognition of the sacrifice that they made in defending the capitol against an armed intruder. so i want to say now how much we appreciate the forces deployed

to protect us in this ability to slayer our -- and this ability to sharure thoughts on a host of issues, issues that here we speak to on the floor. someone across america someone violently disagrees with us. they dishied they do not want to -- they decide that they doonts do not want to engage. they come to the capitol and our wonderful force protects us and gives us the ability to speak our hearts and minds on this floor and on behalf of our constituents every single day. so not only are we paying respect today to the officer and the detective, but we're also paying respect to the entire delegation of security forces that work here at the capitol. i'm going to be brief in order to pause appropriately before that moment of silence.

i tell you that the conversation we are having today is part of a broader conversation about how to build the middle class here in america. there are some core pathways to the middle class, and one of those is fair mortgages, and indeed when we were having a debate on dodd-frank here in 2009 and 2010, we decided to put an end to steering payments in which mortgage originators were steering people from fair loans into predatory loans and paying big bonuses -- they were getting big bonuses for doing so. well, today the director of the consumer financial protection bureau announced that they're bringing a case against a company that was doing exactly this, paying $6,000 to $8,000 per mortgage to an originator so that they would essentially betray their customer and not put them in the best mortgage they qualified for, but in a

much higher mortgage. well, i am delighted that here in this chamber we decided to end such practices. i am disiet delightei am delighd to confirm the first senate-confirmed director just last week so that this agency can do its job, and its announcements today show it is hard at work in this critical area of fair home mortgages. and another key pathway to the middle class are living-wage jobs, and we're going tos to haa lot of debates about what creates and destroys those jobs in america because there is no program that substitutes in tirms of a foundation for -- in terms of a foundation for a family than a living-wage job. and another key pathway is education. now, this is very personal to me. i grew up in a working-class community. my dad www.a mechanic. i still -- my dad was a

mechanic. i still in that same community today. and i am surrounded by families who are struggling with near-minimum-wage jobs, with no benefits, hoping -- hoping and praying that they are children will be able to get the education necessary to have one of those remaining living-wage jobs, and they're hoping that we do our job here in congress in helping steer the economics in this nation and there will be more of those li living-wage jo. but right now, here is the viewpoint from the street. the viewpoint is it doesn't look like there will be a lot of those jobs for folks graduating from college, and they're concerned that if they send their kid to college and their child, their son or daughter ends up with a school loan the size of a mortgage, that that's going to hang like a milk stone around their son sons' or daugh'

next and haunt them for the rest of their lives. my colleague has just been sharing stories of people on the ground and what they're facing and the context of what these big, massive loans for school are weighting down the opportunities for our children. and in addition it is discourage our children from believing that they can even get that education. and if they don't believe that, then they don't put in the work in high school to prepare themselves to get that higher education and fulfill their potential. now, i grew up as a small child -- president kennedy speaking of a vision in which we can aspire to great things, of fulfilling the maximum of our opportunity for ourselves and for our families and for our nation. but right now on the ground there is an undercurrent of deep

discouragement, almost desperation, not seeing a broad boulevard into the middle class but seeing a crooked, broken path complete with tricks and traps. that's what this conversation is about. how do we create that broad path into the middle class? i'm going to stop here and i'm going to come back later and talk specifically about the loan program, because as i mentioned a couple minutes ago, we're going to be pausing for a moment of silence. and so i will come back and, mr. president, i yield the floor.

the presiding officer: under the previous order, the senate will now oak observe a moment f silence in honor of detective john gibson and officer jacob chestnut of the united states capitol police. [moment of silence]

mr. merkley: mr. president? the presiding officer: the senator from oregon. mr. merkley: thank you, mr. president. thank you, mr. president, for presiding over that moment of silence, and again on behalf of so i am of my cleeks, colleagut to thank the security forces here at the capitol for the incredible job that they do in protectinprotecting these roomse debates of democracy take place.

mr. president, the debate that we are engaged in right now is about how to create a broad path to access education, as education is one of the key factors in developing, realizing the dream of middle-class jobs in america. and i was starting to share that this is very personal to me because i come from a working-class family, and my parents had not gone to college. my grandparents had not dpon to- had not gone to college. i didn't know people on my street that had gone to college. my siblings had not gone to college. but it was a scholarship and loans and jobs that enabled me to attend a university and pursue an education that took me into this realm of public policy, the realm that we're still in right now.

my first deep interest was third world economic development, and i was blessed with a chance to work in central america and india and to live as an exchange student in west africa. then that same education gave me a chance to go to graduate school, a understand there ando prepare for working here on strategic nuclear policy. education took me into realms that matter to our nation and matter to our world and matter in terms of creating the foundation to be able to have a living wage. and so this is critically important to our children, and here is the proposal we have before us. the proposal here is that we are going to set up a loan program, and the loan program is going to take the cost of funds that are lent out and it is going to put

on an additional 2.05% gap or add-on in interest for those who are getting undergrat loans. and for those who are getting graduate loans, it is going to add a 3.6% spread, as it's called. and for those who are getting -- parents who are getting loans to help finance their kids' education, it is going to add on a 4.6% spread. now, this 2% spread for undergraduates and this 3.6% spread on graduates and this 4.6% spread on parents produce a lot of profits. now, so i have had my team consult with c.b.o. to make sure that what we're talking about when they say that the net profits of this program over the next ten years are going to be $185 billion, to make sure that we understand that they are taking the profits that come

from those spreads, the higher interest charged over the cost of money, and they're subtracting out the fact that some loans will be defaulted on, they are subtracting out the costs of administering the program, and they end up with a net profit, and how much is that net profit? $185 billion. which means we are providing a service to our students not at cost, but we're building in an equivalent of a massive $185 billion fee on the children of working families who are aspiring to get an education. that is not a great deal. in fact, it's a terrible framework. now, my colleagues who have worked to put this together point out that right now this may be the only option compared to locking in the 8.6% -- excuse

me -- 6.8% for the next ten years. and in the first few years it produces a lower interest for our undergraduates than it would otherwise get. and that is an important point to observe, that for a couple years the loans that our students will be getting will be at a significantly lower rate under the deal that's being proposed to date. but over the course of the ten years, the best estimate from c.b.o. of the profits generated is still $185 billion. in fact, $1 billion more rounding off than it is under the existing program. now those who feel like this is a great long-term solution, i disagree. is it better in the next couple of years? yes, it is.

but i ask you exactly why do we feel that adding on $185 billion in fees as a profit center for the u.s. government is a great idea if our goal is to create an affordable pathway to higher education? i have yet to have anyone explain that. and in fact, i often hear, well, you know, built in to the existing law which doubles to 6.8% from the 3.4% right now, well, that has profits built into that too, and that is a fair point. but let's step back and ask ourselves, is sustaining the situation when we're charging extravagant fees to generate extravagant profits and lock it in for ten years, is that really a good idea?

well, there are a couple of proposals that would make this a much better proposal, much better program. one is to say, no, we're not just going to have this big spread with a high cap of 8.25% on undergraduate loans and 9.5% on graduate loans and 10.5% on parent loans. but we're going to cap it at 6.8%. well, that makes a lot of sense, and i applaud my colleague from rhode island who has document floor to peek for that -- who has come to the floor to speak for that proposal. and i will be supporting that proposal. senator sanders has said, you know what? this is a pretty good solution for a two-year period, so let's sunset this after two years so that we can have this debate again. because if we lock this in for ten years and if we maintain the pay-for rules of the senate in which if you eliminate the

profit margin in one area, you have to increase a profit area in another, we might never be able to unlock this, and we'll continue treating college loans as a profit center of the u.s. government. so let's just terminate this after two years. let's sunset it and rethink this. well, that's a pretty good idea too, and i would certainly encourage my colleagues to consider doing that. i'll certainly be supporting that. nick writes to me from oregon. he says "after receiving paperwork the other day from d.o.e. servicer direct loans i dove into my information to see what i was filling out an application for. i took out my $5,-- i took out $5,500 my freshman year, $6,500 and $7,500 in my third and $7,500 to finish my senior year, so i borrowed $25,000. in january i deferred payment on

the loan because i had not yet found full-time employment. with a struck of luck," nick continues, "in february i landed two part-time jobs making $12 an hour doing manual labor to supplement my $10 an hour part-time gig in the health care field. since march," he continues, "since march i've been full time with the health care company. i earned a $1 raise. i gained a lot of experience but from a monetary perspective i wish i'd be earning more to pay off my loans. my loans, $32,266, up from the $27,000 he owed before. he continues saying my 6.8% loans are accruing over $1,800 in interest each year. that is about $150 per month. well, that's just the interest. then when he's able to stop deferring and start making payments and you include the

capital being paid off, it will be much more. and on a near minimum-wage job, that is extraordinarily difficult. here's this letter from melissa in oregon. i graduated with a master's degree in 1993. my loans have been paid off over ten years, for over ten years. my husband enrolled in college when he was 36 three years ago. he'll graduate next year with $60,000 in debt for a bachelor's degree. at this rate of increase and what it costs to get a college degree, i don't see how it's possible for our son who is now two to ever have a college experience. please do the right thing and help make education accessible to everyone. that's the plea of melissa, to do the right thing. the right thing would be to cap the interest in this program so that it doesn't go over 6.8%. the right thing to do would be to sunset this program after two years. both of those amendments will be

available to all of us here on the floor. i encourage my colleagues to support those amendments. our students already face $1 trillion in debt. it is weighting them down. it means they're postponing getting married, postponing having children. they're postponing moving out on their own because they can't afford an apartment with this debt. it's hurting the economy and it's hurting our future because children are discouraged about the possibility of going to college. that is not the vision. that is not the vision we want to have for america where our children don't believe that there is a path to the american dream for them. today if these amendments fail, it will be a very difficult choice, a very difficult choice between a couple years of interest that is better than the

status quo or a program that it locks in a profit center for college loans and we will have a very uncertain prospect about whether we can unlock that program a tkoupl years from now -- a couple years from now. so i hope we pass those amendments. and i'm not sure, quite frankly, which side i will come out on if we fail in that effort, but i will tell you this. if this deal becomes law, we must return to this floor time and time and time again because adding $185 billion in fees so that we can have a profit off working-class students trying to find a pathway to middle class is just wrong and deeply damaging to the american dream. thank you, mr. president. a senator: mr. president? the presiding officer: the senator from rhode island. mr. reed: mr. president i

would ask unanimous consent that at the conclusion of senator carper's remarks i be recognized to use the time allotted to me under the motion. the presiding officer: without objection. mr. reed: thank you, mr. president. the presiding officer: the senator from delaware. mr. carper: thank you, mr. president. i think what i'd like to do is try to set this discussion this afternoon in context if i can. one of the things i focus on a lot -- i know the presiding officer does as well back in delaware, is how we create a nursery environment for job creation. i think it is one of the most important things government does. it is not the only thing we do. one of the best things you can do to help people is to have a job. one of the ways to strengthen our economy is to make sure we're making smart investments.

with federal moneys and state and local moneys as well. public funds. one of the ways that we create that environment is to make sure we have a world-class workforce, that folks coming out of our high schools can read, write, think, do math, have science skills, technology skills, good work ethic. other parts of -- other parts of the nurturing environment includes access to capital. access to money. commonsense regulations. some certainty with respect to the tax code, a tax code that makes sense that,'s not burdensome, access to elected officials, modern infrastructure. those are some of the elements. if we're going to be successful as a country in this century, we need to invest among other places in a world-class workforce, the kind of skill sets. not why you have the in college -- not just in college, not just in postsecondary, almost from

cradle from well into their lives. a second area important for us to invest is infrastructure broadly defined: roads, highways, bridges, rails, ports, airports, water, wastewater, broadband deployed across the country. those are the investments that will pay great dividends in the form of a stronger economy. the third area we need to invest in is the research and development. we were reminded by dr. francis collins, the head of the national institutes of health, the kind of impact sequestration is something on our abilities to invest in all kinds of health-related areas, in pharmaceutical areas and medical areas. we're finding -- they're finding it difficult to make the kinds of investments we need to make. part of what we need to do is to invest in research and development that can be commercialized and turned into goods and services and products we can sell all over the world. in my view, in the end, how do we strengthen our economy?

how do we grow the economic pie for our country and citizens? going back to the first item i mentioned is the world-class workforce. it doesn't just start when people graduate from high school or go off to college, whether junior college or a certificate program. it is what they do before they go to first grade. the kind of investments that are made before kids ever go into kindergarten at the age of five in most states. today's debate is on college loans. i'll focus on that. but let me just remind us, the investments we don't make in the lives of children when they're young before they ever go to kindergarten can be demonstrated in head start. we only fund about half the kids in this country that are eligible for head start, full head start. only half. we fund roughly half the kids who are eligible for title 1 special education programs in our schools to make sure that if

they're way behind, they have a chance to at least catch up a little bit. we fund about half the kids that are eligible. some of our colleagues say we should just provide free college education for people. that should be our policy. well, we're not even meeting our obligation to fund head start for half the kids in the country and to fund special education title 1 for roughly half the kids in the country that are eligible. we have a $750 billion budget deficit this year, down from $1.4 trillion a couple of years ago but it is still large and it is going to remain unfortunately, coming down for awhile and then jump back up a number of years down the line. i think for us the question is, how do we get a better result for less money in almost everything we do? and in a way college loans is the symptom of the problem but not really the underlying problem. the underlying problem is unless the federal student loan program -- is less the federal student loan program. it is more the cost of education. my wife and i put two boys

include college in the -- through college in the last few years and we have a good idea of what it costs to go to school these days. they got a good education but it costs a whole lot. one of the things we need to be focused on while we have this debate is what are the things we can ensure that our young people get a good education and how do we do it in a cost-effective way. there are good studies going on at m.i.t. and harvard that are helping us inform us on this situation. let's talk about the student loan program. for a number of years we had set the rate, the cap at 6.8%. during the great recession, we lowered that cap so that the top rate that students would pay on their student loans, federal student loans was 3.4%. that period of time expired more than a year ago, june 30 of last year. so the rate was supposed to have popped back up to 6.8%, where it had been previously. there's a cap on what can be

charged to students. well, june 30 a year ago we weren't sure what to do, and we said let's kick the can down the road and put it off a year, the date of decision. we'll decide by june 30, 2013, what the new policy should be. and we got to june 30, 2013, and some were willing to kick the can down the road for another year and deal with it then. the president said we can't do that. we can't keep doing that. the president said we need to put in place a policy, a commonsense policy that is fiscally responsible but also that is morally responsible, i think, to the least of these in our society. i think we have a fiscal imperative here given the large deficits we face. we have a moral imperative to make sure the least in our society have the chance to, if they have the ability, to go to college and get a college education. be more productive in our society. now, a lot is being said about the different rates. two numbers we've got to keep in

mind. people are saying in years to come interest rates are going to go up. i suspect they will. they're pretty low right now and they probably will go up. we don't know. we have people saying it will be this amount, that amount. who knows? we don't know. what we do know is right now under current law and unless we pass something that can get bipartisan support and the support of the president, the interest rate is going to be 6.8% for some time. if we adopt the bipartisan proposal that a number of us are offering, tripartisan proposal actually with the support of the president, the rate for student loans this year won't be 6.8%. it will be 3.86%. if they take a loan this year, that rate doesn't go up even if interest rates go up. 3.86 is what they'll owe on the loan a student takes out this year. they take out another loan for the following school year and this rate is 4.1, whatever that rate is that's what they'll pay on that loan, that second loan

for the balance of the loan, 5 years, 15 years,20 years.y as interest accrues on these student loans over the next two, three, four years, while someone's in school, a reasonable question to ask is who pays for the accrued interest? well, if you're in school,, as most of us have been, the interest -- the interest accrues, and in the past we've had like subsidized loans for low-income students and unsubsidized loans for those who have higher income. and for a number of years, th the -- the student -- the subsidized student, lower-income student, their accrued interest for the loan, year one, year two, year three, year four accident year five, the subsidized student, the federal government has paid the accrued intvment theaccruedinterest. then when they graduate school,

they don't own that interest, it's been paid for, forgiven, if you will. for the -- for the unsubsidized, for the higher-income student, the federal government defers the interest but eventually it has to be paid for the higher-income student. we don't change that. we leave that into effect. so who pays the interest for the lower-income student? the federal government. when they graduate school, they have an obligation to start paying that interest and the principal on their own. as i've talked to my colleagues, i find that not everybody knows what i just mentioned about the lower rate. over in the house, the legislation that they passed in the house, they would allow, in that example i just gave, if the rate for the student loan taken out this fall is 3.6%, next year the rate is 5% or 6%, the house lets the rate go up each year. it's not a permanent -- it's not a permanent assigned rate that is in effect when the loan is taken out. okay. somebody graduates, they go to

work, and in this example, they go to work and they find a job that pays $25,000. one person. no kids, no spouse. the -- how much interest can they be -- let's say they have $45,000 worth of debt, $45,000 worth of debt. one person. how much can they be compelled to pay in interest starting in the year after they graduate? well, the answer is -- is not a thousand dollars a month or $500 a month. the answer is $97 a month. that's it. that's it. and there's a gna mathematical formula where you take their income, less what the poverty level is for that person times 0.15%. and in this case, it's $97 a month. what if in this example sally gets married, has a -- has a child. so it's a family of -- a family of le three. and let's say the family of

three is making, i don't know, $40,000 a year. they have $45,000 worth of loans. how much can they be compelled to pay in interest? again, three people in their family, $45,000 in loans. how much can they be compelled to pay? turns out it's about 120 bucks a month. it's about 120 bucks a month. not many people realize that this is the law and it's going to stay the law under the bipartisan -- tripartisan proposal. how about if somebody goes to work for the federal government or state government or local government or they go to work for a nonprofit and they do so at some sacrifice. maybe they could have made more money in the private sector but they have this urge, compulsion for public service. after ten years, their loan will be forgiven. if they're current on their loan, their loan will be forgiven after ten years of public service.

that's been the law. that would remain the law. how about if they're -- they don't work in public service, they don't work for state or local government or federal government, they don't work for a nonprofit, a 501-c-3 designation? in that case, their loan, they're current on their loan, they kept up with it, but after 25 years, their loan is forgiven as well. their loan is forgiven as well. now, we can argue about whether or not the rate that we use to determine what students are going to pay, what under graduates would pay, what parents would pay, we could argue whether it makes sense to peg that rate or key that rate off the ten-year treasury note. i think that the ten-year treasury that the president has recommended, that's a reasonable place to begin. some have said we should use the fed funds rate. what's the fed funds rate? that's the rate that's charged

overnight when one bank loans money to another bank overnight. many say that should be the rate. this is not an overnight loan, from one financial institution to another. so i don't think the fed funds rate is really the appropriate. or some said we should use the 90-day t-bill rate. this is not a 90-day loan. that may make sense for credit card interest rates but i don't know for a five, te 10, 15, 20, 25-year loan, i don't think in that makes sense for to us use. so we say, well, why don't we use the rate that would be charged for a three or four-year car loan. this is not a car loan that's collateralized with a loan. this is not a mortgage. a 20 or 30-year mortgage is collateralized with a house. this is a long-term loan that's uncollaterallized. and what the president has said additiosaid -- i agree and our bipartisan group agrees -- that it makes sense to use the ten-year treasury note, to peg the rate off of that, to add to

that a modest fee -- in this case, about, i don't want to say close to 1 1/2 points, but to use that to make sure that the program is soundly run and doesn't make the deficit larger. we've heard some very large numbers assigned to what this amounts to in terms of transfer from students to the federal government. the president's original proposal had a very large amount going from students under his initial proposal to the treasury and he was going to use that money to -- to go to pay for additional money for pell grants. and so it would be -- it would actually cost the cover of the pell grant increase. we don't -- we don't do that in our program. what we've tried to do is to take the very large transfer of money to the president's proposal to the treasury, to change that, to scale that down, come to as close to eliminating, and this is about a $1.2 trillion college loan program, $1.2 trillion, and

about as close as we could come to eliminating the transfer, if you will, from students to the government, to about $600 million, $700 million. that's a loft money. a lot of money. but out of $1.2 trillion, i think it works out to $2, $2.50 per student. and if we could bring it down to gleer proceezero from $600 mill. that would be great. should we have a student loan government program? i think we should. system people what say we shouldn't. should we allow people 20 then use the -- people to then use the money that the government then borrows to -- should we let them have that money at below government cost? well, when we do that, it makes the deficit go up and makes us squeeze programs even more, programs like head start and the title 1 program, like robbing peter to pay paul.

i think this is a good proposal, to use the government's purchasing power, borrowing power to be able to provide a lower than market rate for a lot of students, to lock in that lower rate and then to provide some help through the federal government paying for the accrued interest, the subsidized for lower income students. at the time they're in scoocialg the government picks it up. they don't have to pay it back, it's covered by the government. to make sure that when they do graduate, they go into a job that doesn't pay a lot of money, there are limits, significant elements, on the amount of interest they can be compelled to pay in a year. and further to say when a student goes to work in federal government, state government, local government, nonprofit, public service, after ten years, if they're current on their loan, it's forgiven. and for a person who doesn't go into public service but it still current on their own but still oaps a ton of money after 25 years, their loan is forgiven. that is not heartless, that is not unfair. i think it's pragmatic, i think it's reasonable and i think it's making sure that we've met our

fiscal obligation at the same -- to the taxpayers at the same time that i believe we need to meet and are meeting, would meet our moral obligation to those who need to borrow money to go to college. and with that, having said, mr. president, i'm going to yield the floor. and i think under the unanimous consent request, i think that there's a u.c. request, as i was beginning to speak, mr. president, for a senator from a state smaller than delaware had asked unanimous consent to be able to, immediately following my remarks, the senator from a state smaller than delaware, just by a little bit, had asked to be locked in on the floor and he is now back on the floor. and i yield with great pleasure to my army buddy, the senator from rhode island, jack reed. mr. reed: i thank the senator from delaware. the presiding officer: the senator from rhode island, the senior senator from rhode island is recognized. mr. reed: thank you very much, mr. president. and i recognize it's a much larger state. the nice thing about the senate is we all have two senators.

but thank you. mr. president, there's been a great deal of work put together by so many people here, senator carper, senator manchin, senator alexander, senator harkin, senator kaine. i could go on. senator burr. and they've been trying in a principled way to help students and they've provided short-run help. but the major criticism i have of the legislation is it locks us into long-run predictable rate increases and will add further to the burned students and families are veering to send their children and themselves to college and beyond and despite these great efforts, i just do not believe this approach, if unamended, is going to be the way we wanted to move forward. -- way we want to move forward. mark kantrowitz is a well-known expert on student aid and his comments i think are particularly telling. quote -- "it's still going to be

effectively an interest rate increase masquerading as a decrease. students currently enrolled will benefit from the low interest rates. but as the economy deteriorates and rates rise, today's students could ends up paying more than 6.8%. it's far from a permanent solution. and i think he's right. and i think i want to emphasize the fact too is, as the economy recovers and rates rise, one of the fallacies of the c.b.o. projections back in the early 2000's, which suggested that interest rates would stay very high, was they did not anticipate the collapse in 2008 and 2009 of our economy. and, honestly, i don't think we want to preps our student lending on -- premise our student lending on an economic premise. i think we want to assume and hope that if the economy recovers, it will do so, and that will invariably increase

interest rates. we're starting at the low point of interest rates and then we' we're -- inevitably we're moving up. we're moving up as the economy recovers. and we'll also move up as the federal reserve limits their very aggressive quantitative easing program, where they have been buying securities to depress the rates. and so if you look at the c.b.o. projections, parents and graduate students will begin paying more than the current fixed rate of 6.8% and 7.9% by 2015. that's not a long time. that means that the young freshman going into college next year might benefit from this proposal, but the younger brother or sister who's a freshman in high school will be paying much more. and i think collectively over time, since this is a permanent proposal, the debts that will accumulate to american families and american students will be significant. we're essentially adopting a new approach to federal policy on

higher education. we are not subsidizing it. we're not making it below the market rates. we are shifting the costs on to students. and that is because one of the premises in this proposal quite obviously that that there will be no cost to the government. and we're start to qulg the prince pam that the rate is 6.8% over time. and so as we decrease rates for the first few years, just simple arithmetic tells us we have to raise railts going forward. but the way this is structured also i think has to be considered. we have chosen not a short term t-bill rate, which is low. we have chosen a 10-year rate which in itself is higher. so we have begun our reconstruction of the rate structure by picking a much higher baseline than has been consistent in the past, even

with variable rates, and we have had variable rates in the past. and then we have added a premium to that to offer our costs, the cost of default, cost of the administration of the program. but interestingly enough, in this proposal, there is a study that the g.a.o. ordered us to do to tell us if our cost estimates are anywhere close to the real cost of the federal government. and in fact i think there is suspicion that the premium, the delta, if you will, that we are charging students is much higher than the real costs, even including default risks to the federal government. now, this is i think a proposal again that was generated with great sinsayerity and great diligence with you it just has not over time meet the test of consistency with our previous support of higher education.

we actually subsidized higher education. we did it at below market rates. we it because we believe we had to give students a chance to educate themselves, not just for their benefit but just as importantly for the benefit of this nation. i would suggest as i have been around this chamber and i have said this before, directly and indirectly, every one of my colleagues that are over a certain age has benefited from subsidized student loans. if they didn't, then a brother or sister or someone did. and yet, we're saying oh, that was good for us but it's not good for this generation of students. they should bear the risk of interest rate increases. they should bear the full costs. that at a time when we have to be much more, much more cognizant of the centrality of higher education, in terms of the lifetime wages and earnings of individuals, in terms of our

economic competitors across the globe. now, we have reached a point now, unless we adopt the amendment that i propose is we are locking ourselves into increasing waits that go way beyond the current statutory rate of 6.8% for stafford loans and 7.5% for plus loans. even with these rates, the current rates, 6.8% and 7.9%, c.b.o. has estimated that the government will generate about $184 billion in revenue, and that is the difference between the cost of funding and the return. it's not the way the c.b.o. scores the bill. it's just what it costs the government to borrow and what they are getting in revenue from students, and that instead of investing in students, we are basically profiting from them.

that point has been made by my colleagues, particularly senator warren, over time. and as we move to this new form of rate structure, ten-year treasury bills plus a premium, they are capped, but they are capped at high rates, we will, in fact, and the government will in fact be making even more money. what i would like to do and what we have tried to do is propose that we initially freeze rates at 3.4% and then spend the time to fix this problem as best we can completely. develop a rate structure that does not provide a huge profit as defined between the cost of funding and the revenue to the federal government, incentivize colleges to lower tuition, and that's going to be a very difficult and challenging endeavor, and also think seriously about refinancing because right now we have students that are facing it and

families are a trillion dollars in debt, and they are suffering under this debt burden. so we want to go ahead and take a comprehensive approach, but this is not the approach. this is simply fixing rates. the one certainty in this legislation is the rates will go up. not right away, but they'll go up, and they could go up very quickly and they could reach the limits very quickly, and that's an additional burden on students, and as a result, it will begin to make college more expensive, less affordable, less of an option for many families and youngsters, and it will hurt us in the long run in terms of our economic competitiveness and our -- our ability to grow our economy. now, we have had experience with market-based rates in the student loan program before. this is not new. most recently, the market-based rate for student loans in july 1, 1998, and june 30, 2006,

was the yield on a 90-day treasury build plus 1.7% while the student was in school and plus 2.3% while the student was in repayment. this rate was capped at 8.25% and applied to all stafford loans, subsidized, unsubsidized and graduate. for parent plus loans, the rate was the yield on a 91-day treasury bill plus 3.1%, capped at 9%. those rates were a good deal for borrowers. students who are repaying their loans under this system have a rate of 2.35% this year, and parents are paying 3.15%. that is because interest rates have come down dramatically. one of the reasons for that and perhaps the primary reason was because we faced an economic potential catastrophe in 2008 and 2009. economic activity shrunk, rates fell and the federal reserve took a very aggressive program of quantitative easing to

deliberately lower interest rates. now, instead of using the 91-day treasury bill, what this underlying proposal will be is the ten-year treasury bill. this usually results in a rate that in and of itself is 1.76 percentage points higher for this year alone. if we used the 91-day t-bill rate, we could lower the rates even further, but we're using the ten-year rate. so we're already building in almost two percentage points of interest for students who will be subject to this legislation. and since may 1, we have already seen the rates on the ten-year treasury bill climb nearly 1%. those rates are headed upwards, and the c.b.o. has projected them to rise. that is consistent, by the way, with an economic recovery. so the good news here is if the economy recovers, interest rates will rise. except it's not good news for students because their interest payments will rise.

the bad news, if c.b.o. is wrong, that means that we probably have an economic shock ahead of us which would be bad news for everyone. so we have to, i think, be very cognizant of the fact that there is a much better way to do this and there should be a comprehensive approach. now, what we are suggesting in the amendments and senator warren and i are urging is that we go ahead and at least cap the interest rates for the stafford loans, the undergraduate loans at 6.8%, which is the current rate, and for the plus loan at 7.9% so no one, regardless of whether you start school, college, next fall or four years from now, will be worse off than the current situation with the fixed interest rates. i think that would be an improvement. but i think if we don't adopt such an approach, then we are

locking students and families into a very costly and predictably increasingly costly structure. we are not making any reforms with respect to the costs of college. we are not going ahead and dealing with the issue of refinancing, and i think honestly, too, to be saying well, if it gets really bad, if you really start hitting those caps, we will go back and fix it, fundamentally ignores one of the principles that underlies this proposed legislation. there will be no further cost to the government, because to fix the interest rate several years from now when it's 8% again will cost a lot more than staying with the current regime of 6.8% fixed rates and 7.9% fixed rates. and so for that reason, mr. president, i will be opposing the underlying legislation unless we can make significant progress with respect to at least capping the

rates at 6.8% and 7.9%. with that, mr. president, i would yield my time. the presiding officer: the senator from alabama is recognized. mr. sessions: mr. president, i would like to talk a few minutes about the loan program and concerns i have about it. particularly the scoring conventions that are used by the congressional budget office in its cost analysis of these student loans. it's something i have looked at for some time as ranking member of the budget committee, and we have asked c.b.o. to analyze these issues and have offered the honest budget act which deals with all kinds of loans and the improper way c.b.o. scores them. not that they do it on their own but because we require it to be scored that way. so i would say in sum, the loans that have been referred to today do not make money for the

government. they just do not. they're going to cost money. it's simply a -- and that would be a soulsby to the borrower. we're talking about 2.05% above the 10-year treasury note. that's a good way to figure what the interest rates are. when they rise, the cost of money rises. the cost rises for the u.s. treasury as well as for the people who borrow from the u.s. treasury. but the federal credit reform act, fcra, requires c.b.o. to score these loans in a way that gives the impression that they do, in fact, make money. in a recent report on student loans, the c.b.o. wrote to us -- quote -- "fcra -- this is a law that tells them how they analyze the costs. they say -- quote -- "fcra accounting does notsome costs be

government. in particular, it omits risk that taxpayers face because federal receipts from interest and principle payments on student loans tend to be low when economic and financial conditions are poor, and resources therefore are more valuable. fair value accounting methods account for such risk." close quote. but fair value accounting methods aren't being used with these loans. in fact, c.b.o. utilized a fair value accounting system. please get this, colleagues. they used that system to analyze these loans in addition to the law -- the system they required by law, and that would show that student loans actually lose money for the american taxpayer. as so often around here, we have scores that indicate one thing.

senators advocate that they say one thing when the truth is it costs us money. as the senate moves forward in this debate, it is important that it consider the real costs that are associated with the federal student loan program. the budgetary cost of the federal direct student loan program, they are determined based on accounting rules specified by the federal credit reform act. under the guidelines set forth there, the cost of federal loans are recorded in the year in which the loans were made. the net cost of a student loan includes the estimated future repayment of principal and interest, -- principal and interest. the value of these future repayments are adjusted to reflect certain risk, the risk of default and the risk of inflation. c.b.o. cannot, however, include an adjustment for market risk. that is, if the country has a bad financial crisis, which

periodically happens. examples of market risks include current fiscal situation, our nation's current unemployment rate is 7.6% with 11.8 million people unemployed. some wanted to continue to bring in millions of people to take those jobs from abroad while we have 11 million people unemployed, it's time for us to re-evaluate that policy, in my opinion. but according to the bureau of labor statistics june, 2013, figures, the unemployment rate among college students is -- has about 1.9 million unemployed college students. all of these factors lead to lower loan repayment rates and higher collection costs for the government. with an interest rate well over 7% and college students struggling to find work, default rates are going to increase.

because the fcra method of accounting for student loans does not take into account all of the risks that are associated with making a loan, the government should require that c.b.o. adopt the fair value accounting method. as i said, unrelated specifically to this legislation, i offered legislation two years ago to do just that. because the american people need to know what the cost to the treasury writery will be when we make loans and we know and c.b.o. acknowledges that this method they're using required by law is not accurate. according to a june, 2013 c.b.o. report made for the budget committee, the senate budget committee, it was entitled "options to change interest rates and other terms on student loans" that i requested in my capacity as ranking member of the budget

committee, the c.b.o. admitted -- admitted and acknowledged -- that its current scoring rules failed to adequately account for the cost of these loans. and that's just the fact. i wish it weren't so. i wish we could cut these rates even more than they are. but i just have to say it's not accurate to say the federal government is going to make a bunch of money off of it. it goes on to say -- quote -- "using the fair value methodology represents a broader measure of cost that includes the cost of market risk." so c.b.o. has explicitly stated it would be better to use the fair value methodology and not the other. well, does that make a difference? does it change what the score and the analysis would be? they have their official analysis based on the

requirements that congress gave them, but they acknowledge that the market risk is a better analogy -- better analysis. what do they say that would do? well, the methodology difference between the frra system and the fair value accounting system produces alarmingly different results, alarmingly. under the fcra, c.b.o. estimates the student loan program will reduce the deficit by $37 billion in f.y. 13 and save $134 billion over 10 years. with those results, of course, the program looks good. but under the fair value accounting procedure that c.b.o. says is preferable, c.b.o. estimates that direct student loans issued between 2013 and 2023 would cost the government $95 billion. cost the government $95 billion.

suddenly the student loan program when adjusted for accurately -- for market risk is a deficit creator rather than an income producer. as i say, i wish that weren't so. i hate to report that but we've been looking at these numbers for some time. i urge my colleagues, i know we need to do something about student loans, we need to get it done now, i'm not here to say we shouldn't pass anything but what i'm saying is, colleagues, we've got to end this fooling ourselves system. we've got to go to an honest system that the private markets utilize and the federal government should be utilizing. and i'm going to continue to push for that. so we'll continue to work on this issue. i know that we've got a situation that's very painful for students, many of whom have overborrowed, didn't understand the significance of what they were doing and ran up more debt

than they should have and as a result they're in a painful circumstance for sure. but when we do our policy for the future and we analyze what it costs to make a loan program, what it costs the taxpayers, we need to have accurate account being. if the matter is accurately accounted using best accounting procedures, this bill as now presented would actually cost the taxpayers money rather than make them money. i thank the chair and would yield the floor. the presiding officer: the assistant majority leader is recognized. mr. durbin: i ask consent to speak ten minutes. the presiding officer: without objection, so ordered. mr. durbin: we're debating students. we're here having this debate because of russia. how did that happen? it was october of 1957. the russians launched a satellite called sputnik. we didn't have any satellites. we knew they had the bomb and then they had the satellite. it scared us. it frightened congress enough

that they created the first student loan program. oh, there were loans given to giessments coming back -- g.i.'s coming back to the war but this wasn't for veterans. they called at this time national defense education act. it was all about america's defense. and what they said was, we will loan money to student loans across -- students across america to go to college. i think that their rationale was sound. if more americans went to college and got educated we would have the engineers and scientists we need to make this a strong nation from a defense point of view and from our economy point of view. so i thank the russians for launching sputnik and i thank the congress for creating the national defense education act because a kid from east stlooth st. louis, illinois, whose parents had eighth grade educations had a chance to go to college and he's standing here today in the united states senate. it was a good deal, too. the national defense education

act said you don't have to pay it back until after you graduate, ten equal payments at 3% interest. i remember these because i was frightened to death in 1969 when i finished law school and added up all my student loans and they said to me you owe $8,500. i went home to my wife and i said we're doomed. we can't pay that back. $850 a year, it's impossible. it wasn't impossible. we did it. and many others did, too. what happened as a result of that satellite and that student loan program was a dramatic change in higher eduction in america in the 1960's and ever since. we democratized higher eduction. it used to be the only folks who went to college were the a lunchtime us in and alumni and those who were supersmart sand rich. well, kids like myself got a chance all across america. here we are today many years

later, some 50 years later we're talking about student loans for this generation of students. and we had have many choices before us. i happen to like the national defense education act. i like holding interest rates at 3%. i like the payback terms. but the number of students taking out loans and the cost of higher eduction have reached a point we can't really do that without some serious commitment of resources at the federal level at a time when our budget problems don't give us much latitude and much opportunity. so i sat down with a number of my colleagues, angus king, new senator from maine, independent democrat, at least independent who sits on the democratic side. joe manchin, a democrat from west virginia, tom carper, democrat from delaware and tom harkin, who is the chairman of the health, education, and labor committee and is in charge of this subject matter. that was the democratic side. on the republican side, lamar alexander of tennessee, richard burr from north carolina, tom

coburn of oklahoma. pretty diverse group. we hammered out a bipartisan answer to dealing with student loans that will be the last vote today. we'll have a series of votes. and that i think is the right answer because i think we've struck the right balance. there are many of my colleagues in the democratic caucus who are still opposed to this bipartisan approach. some of them believe and i don't quarrel with it, we should go back to the old days of the national defense education act, subsidizing interest rates, a small business administration amount of money keeping the coups low. i don't quarrel with that. i'm the beneficiary of that philosophy. but we tried to pass it in the senate several times with the leadership of jack reed of rhode island and we can't come up with 60 votes. we can't come up with a majority we need to make this a viable alternative. and so now we have to ask ourselves a very basic question. what will we do if you can't

have a subsidized federal program? i think what we've come up with is a good approach. what we've come up with says basically that we are capping the interest rate that any student will ever have to pay in undergraduate loans at 8.2%. 8-point % cap no matter what happens to interest rates. and we are saying that we're going to start at an interest rate that is even dramatically lower than the interest rate paid by students as of this moment. so if you vote against the bipartisan alternative on student loans, you're voting against an effort to bring student loan interest rates down from 6.8% to 3.8% and you're voting against the cap on interest rates of 8.2%. i don't see how that's going to benefit students. if you were offered a new home mortgage reducing your interest rate by 3%, you couldn't wait to go to closing, right?

because the interest you're going to pay on your home goes down dramatically. so our bipartisan approach is going to reduce the interest rates paid by 11 million students by 3%. and those who vote no, those who vote no to that approach are saying keep it at 6.8%. how can that be good for students or their families? and a cap of 8.2% on student loans for ten years is a protection that says to students in the future the highest interest rate you face is 8.2%. now, what does it mean in terms of savings? our approach in the bipartisan bill means if you're an undergraduate students in america over the next four years of your education you will save between $2,189 and $3,198 not paid. interest not paid. so those who are going to vote against the bipartisan bill are saying to students keep the-rate

at 6.8%, don't lower it and pay between $2,000 and $3,000 more over the next four years. with friends like that students and their families -- i won't finish the sentence but people ought to think twice about this. we're giving students a lower interest rate and a guaranteed cap. it isn't just for undergrad. in the next four years in the graduate programs will save over $4,000 in interest with the bipartisan approach. and those in the parent loans over $2,000 in interest paid. so for four years, this is a solid winner. now, in the efforts of full disclosure and honesty, after four years, the second four years interest rates we project will be going up and the cost of these loans go up. my position is let's vote for this now, roll up our sleeves and make sure four years from now we can replace it with something that is as good or better. but why stick people with 6.8% when we can bring the loan rate down to 3.8%?

at the end of the day, the groups that are supporting this bill are substantial. the american council on education, american association of community colleges, national association of independent colleges and universities, rock the vote, united states student association, and the committee for a responsible federal budget. because you see, we're not adding to our budgetary woes here. we found out that this program actually generates about $715 million more than the actual cost of loans as we projected. i wish it were zero. but put it in perspective. $715 million over ten years against the student loan program that will cost us $1.4 trillion? my colleague, senator king did an analysis and i think he calculated at .005% or somewhere in that range.

.0005%. you know what it means to the cost of the student loan, that $715 million? $2.76 for each loan over the life of the loan. so you borrow $2,000 or $3,000, over the life of the loan you'll pay $2.76 more but you will save $2,000 to $3,000 in interest. so for those who argue that $715 million is a deal killer, it isn't. i wish it were zero but it shouldn't stop us. if you're frustrated with the current situation, work to change it but don't be supporting a position which raises interest rates on the students who are struggling to get by. don't be voting against the bipartisan bill that puts a cap on these student interest rates. let's roll up our sleeves in the next four years, let's make sure we continue be affordable interest rates for students. mr. president, how much time do i have remaining?

the presiding officer: the senator's time has expired. mr. durbin: mr. president, i yield the floor. the presiding officer: the clerk will call the roll. quorum call:

quorum call quorum call:

mr. harkin: mr. president, i ask that further proceedings under the quorum call be dispensed with. the presiding officer: without objection, so ordered. mr. harkin: mr. president, i spoke on the floor earlier today

about the proposal that is before us. i want to reiterate what i said then. i can't stress enough that this bill represents a number of compromises made on both sides to come to a solution on how to keep interest rates low for students in the coming years. the compromise that we'll be voting on shortly is the closest we have gotten to a deal that represents two core democratic principles related to student loan interest rates. number one, the inclusion of hard, upfront caps for students so that, should we experience high interest rates in the future, they will be protected from those high rates. let me repeat, under this plan, undergraduates in this country will never pay more than 8.25%. that's what we had in the 1990

1990's. and five tiemed times we bumped up against that in the 1990's and history could well repeat itself in that regard. and five so we have a hard cap. graduate students will pay no more than 9.5%. parents and others -- and grad students taking out loans, no more than 10.5%. we wanted this to come as close to deficit-neutral as possible. that's what we've come to. to show you how we make compromises and $aroun around hl say that the republicans initial proposal that swreeted here. it went down, as well as the initial democratic proposal went down. the senate republicans initial proposal raised $15.6 billion n deficit reduction over ten years.