Bipartisan Student Loan Certainty Act of 2013

Madam President, I ask unanimous consent the Senate proceed to the consideration of H.R. 1911, as provided under the previous order.

Madam President, I suggest the absence of a quorum.

Madam President, I ask unanimous consent the order for the quorum call be rescinded.

Madam President, we are now on the student loan bill, so to speak. There is going to be a few hours of debate on the bill itself--actually 3 hours. As I understand it, there will be three amendments in order under the rule on this bill. So we will probably be on this bill for some time this afternoon. But we do want to finish it. I know the leader wants to finish it. Both the majority leader and Republican leader want to get this finished today, so we will be working on this bill for probably the better part of this afternoon.

I would like to set the stage for it by talking about the situation with student loans and why we are where we are right now. First of all, I would like to say the bill before us basically is the House bill. There will be a Manchin-Burr amendment that will be offered as a substitute. I will be supporting that. That is the compromise bill. That is the compromise we reached through several weeks of negotiations between the Republicans on the Senate side and the Democrats on the Senate side and the White House. It was a three-party negotiation that went on, and this is the compromise that was reached. So the bill before us represents a number of compromises that were made on both sides to produce legislation that would give certainty to students who borrow money from the Federal Government to attend college this fall.

As we all know, we have debated several different measures related to student loan interest rates for several weeks. This is the closest we have gotten to an agreement that represents at least two core Democratic principles, our side's principles, related to student loan interest rates.

I think it is only right to point out that we have had a couple of votes on keeping the interest rates at 3.4 percent for subsidized student loans for next year. That did not receive the 60 votes needed to move. As a consequence, on July 1, the interest rates on subsidized loans snapped back from 3.4 to 6.8 percent. We have been working hard to try to keep students from paying that 6.8 percent interest and on how we could reach some agreement, and that is what this bill does that is before us.

The two core principles we fought for were that the front-end caps-- they have front-end caps to ensure that undergraduate students taking out Stafford loans will not pay above 8.25 percent interest even if there are extreme fluctuations in the market. I point out that 8.25 percent is exactly the caps we had on student loans in the 1990s. This is not something new or out of line with what we have done before. We had 8.25 percent in the nineties, and I might add five times in the nineties we bumped up against that cap, so that cap protected students five times in the nineties from going above 8.25 percent.

Graduate students taking out these Stafford loans will have a cap of 9.5 percent in interest. Parents and graduate students taking out PLUS loans, these are the parent loans, will never pay above 10.5 percent. That is the first principle, to have these upfront caps.

Second, the principle we had is to get as close to budget neutral as possible. The composition of this bill places us about as close to budget neutrality as possible, meaning that billions of dollars will not be generated off the backs of students to reduce our budget deficit, something that was included in the version of this legislation that passed the House and which was a key feature on an earlier Republican bill that received a vote in the Senate--not a passing vote, it received a vote.

Again, these are the compromises made on the Republican side. They had several billions of dollars to raise on the student loans in the future. We did not. So we compromised down. Basically, it is $715 million over 10 years. Since there is going to be over $1 trillion over 10 years, $715 billion is not much compared to the $1 trillion in student loans that will be taken out over the next 10 years. That comes down to about $71 million a year. That is just about as close as we can get it to budget neutrality.

What does this mean for students? It means this fall all undergraduate students, subsidized or unsubsidized, will only have to pay 3.86 percent interest. That is down from 6.8, down to 3.86 percent. That means they will have that interest rate for the life of the loan. That is locked in. It will not vary.

Graduate students will see a 1.4-percent rate decrease from what it would be and parents will see a 1.5-percent rate decrease, so in all cases a decrease. That means real savings for borrowers. That means an average of $1,500 savings for undergraduates, $2,913 for graduate students, and $2,066 for parents, again over the life of the loan.

This bill also includes a provision that requires the GAO to submit a report to Congress within 4 months, detailing what the actual cost to the Federal Government of administering the Federal student loan program is and what the appropriate interest rate should be to avoid generating any unnecessary revenue. Again, I am sure people referred to it. There was an editorial in the New York Times this morning talking about the fact that the government should not be generating revenue off the backs of students. We all agree with that. That is why we tried to get this as close to budget neutrality as possible. As some will point out, under the system the way it is set up over the next 10 years, the CBO estimates the Federal Government will make more than $180 billion on Federal student loans.

I might just say, deriving savings was not the intended purpose of the Federal student loan program when it began in the 1960s, and it should not be a purpose of it now. The purpose should be to keep interest rates as low as possible for students and their families. So in 4 months, when the GAO submits its report to Congress, I plan to use that information to inform us on the reauthorization of the Higher Education Act--I will have more to say about that in a second--to get a loan system that does not generate money for the government. This debate on student loan interest rates will continue, and I hope my colleagues will join us in that discussion as we move to the Higher Education Act reauthorization next year. As I said, I will have more to say about that in a second.

I have cosponsored this bill that is before us. I will vote for its passage. I will oppose other amendments because we have an agreement to move ahead. I believe this was the best deal 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 National Association of Student Financial Aid Administrators, and the Committee for a Responsible Federal Budget. Also, this morning we received a letter from the Leadership Conference on Civil and Human Rights that supports this with a ``yes'' vote on the bill before us.

I wish to make it clear that I plan to revisit the issue of student loan interest rates, along with other facets of the 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.

The interest rates--what we are talking about here today--we attach to Federal student loans is an important issue. I don't deny that. It is one that deserves our attention, but I want to point out that it is just one piece among many that go into college affordability. We will be tackling the many pieces that go into the reauthorization of the Higher Education Act so we can address the whole issue of college affordability.

When I am in Iowa, I hear from students and parents about the financial squeeze they are facing from the spiraling costs of college and their anxiety about student loan debt.

I have charts here. The first chart shows the increase in the cost of a public 4-year education over time. It has tripled since the 1980s. If we look at that chart, we can see that from 1980 to today the cost of a college education has tripled. That is the red line. The blue line is the Consumer Price Index. As we can see, our current system is out of step with the marketplace.

The cost of that degree has skyrocketed for students across the country. The costs have risen far higher and faster than the rate of inflation. Why is this happening? Why has it gone up so rapidly? If we look at 1990 to 1991, it just shot up. From about 2000 to now, it has really skyrocketed. I think it is legitimate for us to ask this question: Why is that happening? It is not just student loan interest rates causing that. We have had low student loan interest rates, so that cannot be the sole cause. Something else is going on. Again, that is why we need to examine that in the Higher Education Act--so we can find out why that has happened.

The second chart I have shows what is happening to our students. The average loan debt for a bachelor's degree has doubled since the 1990s. In the 1990s the cumulative debt a student would have after going to college would be $9,350. Today it is $26,660. That is over a 20-year period. Why has that gone up so much? That is why we have to get into the whole panoply of issues that affect college affordability.

In light of this crisis, I have chaired a series of hearings in our committee focused on what is being done to curb the cost 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 graduate. To date, we have examined promising strategies employed by innovative colleges and universities to curb costs while improving student outcomes. We have looked at State policies for improving affordability and State barriers to innovation, efficiency, and effectiveness. There is much room for progress and improvement when it comes to our system of higher education. I believe a consensus is emerging on the need to break away from business as usual. We cannot keep going on the way we have been doing over the last 20 years in funding for higher education.

Among the many ideas we have heard in these hearings, three major themes

have emerged. First, States are cutting funding to public universities, shifting the costs to students, their families, and Federal financial aid programs. In all of our hearings--and we have looked at all that goes into these charts, such as the increase in costs to students and the cost of college--the single largest correlative factor has been the decrease in State support for higher education.

What has 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 public universities, shift the burden back on students and their families, the students come to the Federal Government and borrow more money, we increase Pell grants, and the burden on the student grows because their debt grows. Yet the colleges themselves are not stepping in to do anything. There are some colleges doing innovative things, but they are not doing enough to control the costs. Something has to be done about the States backing off of their support.

The second theme that emerged was that many of our more than 7,000 degree-granting institutions are not making college affordability a priority. It is just not a priority. They are focused on chasing rankings, investing in efforts unrelated to academic success, and they are failing to respond to a rapidly changing higher education landscape.

The third theme that emerged was that students and families are not empowered with accurate, clear, and accessible information about the comparative costs, quality, and value when shopping for a college education. While college affordability is a complex issue with no easy answers, there is much that all stakeholders--the Federal Government, State governments, institutions, families, and students--can do to increase college access and success and keep the costs down regardless of a student or family background.

Again, we are going to have to look at this in the higher education bill. Interest rates are just one piece of it, and that is what we are addressing today, but there is a lot more going on than just interest rates. We have to look at our system of accreditation. We have to look at our campus-based aid programs, the financing of Pell grants, and the regulation of the for-profit colleges that my friend from Illinois is always consistently pointing out here. We need to look at 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 debt collection should they default. The system we have is complex. I will repeat that the interest rate on student loans is only one piece of this jigsaw puzzle. It is an important piece to be sure and one we are addressing today.

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 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 the issue of affordability is for a higher education. 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 Higher Education Act reauthorization bill that is comprehensive and really gets to the bottom of college affordability so we can start to break away from the way we have been doing things in the past. As I said, we cannot continue on the way we have been doing this.

There are many who have been involved in negotiating the legislation before us today. Compromises are tough sometimes. I have said before-- and I know my friend from Illinois said this at our press conference last week--if I were to write this bill and if I could have it my way, this would not be what I would write. I understand that. It wouldn't be what my friends on the other side would write either. And that is the art of compromise--to bring both sides together and get the best agreement we can. This is a good agreement. It is good for undergraduate students, it is good for graduate students, and it is good for their families.

I thank President Obama for his leadership in negotiating this bill. I would also like to thank my friends and colleagues. I thank Senator Durbin, who was a great leader in bringing this about. I thank Senator Manchin, Senator King, Senator Carper, as well as Senator Alexander, Senator Coburn, Senator Burr, and their staffs for all the hard work and diligence in putting this proposal together.

As I said, this might not have been the bill I would have written, and I think everybody who has been involved in this would say the same. But it is the best we could do. Quite frankly, it is going to lower interest rates this year. For undergraduate students, for the next 4 years it will be lower than 6.8 percent. In the 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 back from GAO in 4 months, we are all going to work together to see what exactly is the best path forward.

We can keep the interest rates low for students this year and into the future, and I support this bipartisan Student Loan Certainty Act. I encourage all of my colleagues to vote in favor of its passage.

I am glad to yield for my friend Senator Durbin.

Again, I thank my friend from Illinois for his great leadership. Before I get right to the answer, I would point out the art of compromise, which we did. The Republican proposal we had before us a few weeks ago raised $15.6 billion over 10 years. So they have compromised a long way too. We have gotten it down to $715 million, over 10 years, from $15.6 billion. The Senator is absolutely right. We are looking at close to $1.5 trillion over the next 10 years, and that kind of puts that $715 million in perspective.

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, almost--not quite--this is 3.86, it would be 6.8. So they would be paying 6.8 percent on every loan they take out this year rather than 3.86 percent, which I might point out also covers both subsidized and unsubsidized loans. That is a good deal.

Again, I say to the Senator that by keeping the rates like that--and this is another good point to make and I think people should understand. A student borrowing this year at 3.86 percent locks that in for the lifetime of the loan--locks that in. It doesn't go to 8.25 percent. That 8.25 is a cap in case interest rates start going up.

I would point out to my friend from Illinois that 8.25 is what we had in the 1990s, and five times in the 1990s we hit that cap, so we protected students five times in the 1990s at that 8.25 percent.

I say to my friend we have to pass this bill to keep students from paying 6.8 percent on their loans this year.

Amendment No. 1773

On behalf of Senator Manchin, I call up his amendment which is at the desk.

I ask unanimous consent that the reading of the amendment be dispensed with.

Madam President, I yield the floor.

Amendment No. 1774

Mr. President, I ask unanimous consent that the order for the quorum call be rescinded.

Mr. President, I spoke on the floor earlier today about the proposal that is before us. I wish to reiterate what I said then: I cannot 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 we will 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: No. 1, the inclusion of hard, upfront caps for students, so 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 percent. That is what we had in the 1990s, and five times we bumped up against that in the 1990s. History could well repeat itself in that regard.

We have a hard cap. Graduate students will pay no more than 9.5 percent; parents and graduate students taking out PLUS loans, no more than 10.5 percent--hard cap.

Secondly, we wanted this to come as close to deficit neutral as possible, and this is what we have done.

To show how we made compromises around here, I will say that the Republicans' initial proposal that we had voted on here--and it went down, as well as the initial Democratic Senate proposal went down--the Senate Republicans' initial proposal raised $15.6 billion in deficit reduction over 10 years. We negotiated down to $715 million over 10 years. Put that in context. Over the next 10 years the student loan program will probably loan out somewhere in the neighborhood of $1.4 to $1.5 trillion. What we are talking about is only $715 million over the next 10 years. That is the closest we could come to zero and at the same time have hard caps and keep interest rates low.

I can't stress enough that this is a true compromise. If I were to write it, I would write it differently, and I have expressed myself in votes on the Senate floor in the past. But we have to deal with the art of the possible and reach compromises that answers both what the Republicans sought to do and what we sought to do.

I would also reiterate that this is not the end of the conversation. It is the beginning.

As important as student loans are--Stafford loans so students are able to get an education and their parents being able to afford it--as important as that is, it is only one part of the jigsaw puzzle that is college affordability.

In 4 months, when the GAO report comes back--and I will again repeat that one of the elements we got in this compromise was a requirement that the GAO do a study on student loans, what the real cost is to the government, what the real cost is to administer that, and get that back to us in 4 months. When we are in our committee reauthorizing the Higher Education Act, we can take that into account.

My good friend from Maine, who has been so instrumental in working out this agreement, has said many times that the rule book we have to go on is CBO estimates. I have been here long enough to see how many mistakes CBO has made in the past. We don't know if they are right. We have no way of knowing that. We also don't know what those interest rates are going to be in the future, and we don't know if a 2.05 add-on or 3.6 add-on is the right thing. We don't know. That is why we have required the GAO to give us an in-depth study so we can have a better handle on the cost to the government, what it costs to administer the program and all of its elements. We will take that into account.

I was pleased to hear, again, Senator Alexander, my good friend and ranking member on our committee, earlier today on the floor. He expressed the same commitment he has expressed to me personally that I mentioned today; that is, working together to get a reauthorization of the Higher Education Act done in this Congress. Senator Alexander is committed to that, and so am I.

I might also add that I am pleased that President Obama has also said he is personally committed to working with us to get a Higher Education Act through and working with us to look at all of the college affordability issues. This was displayed in his speech today.

This is just one element--an important element but only one element.

I look forward to working with Senator Alexander, the White House, Secretary Duncan, the Department of Education, and members of my committee on the Democratic side to really look at all aspects of college affordability and how we are going to address this issue comprehensively.

I again want to point out for the Record--because soon we will be voting--that there are two amendments that will be voted on. I think one is by Senator Reed of Rhode Island and the other is by Senator Sanders of Vermont, and then we will have our final passage, if I am not mistaken. I know the two amendments that have been offered--one by Senator Sanders and one by Senator Reid--look very nice, and I know many on my side will be tempted to vote for them, but I will not be voting for them. They look nice, they sound nice, they would be nice in a perfect world, but we have to deal with CBO estimates. Quite frankly, the cost of those amendments, as judged by CBO, is something we can't do. Again, they sound nice, they look nice, they might feel nice, but we can't do it. So I will be opposing those amendments. I will be opposing them because we can't do that at this time.

What we can do is do the compromise we have reached. That is what we can do. And don't let anyone tell you this is a bad deal for students. This is not a bad deal for students. If we don't pass this, undergraduate students this year will pay 6.8 percent on their loans. With this bill, they will pay 3.86 percent. Tell me which is the best deal. Next year it is 4.26 percent, the year after that it is 5.4 percent, and the year after that it is 6.29 percent. It doesn't get up to 7 percent for 4 years, if CBO is right. In any case, for the next 4 years it is going to be lower than 6.8 percent for every undergraduate student in college.

Don't let anybody tell you this isn't a good deal for students. It is a good deal for students. This is why today we received an endorsement by the United States Student Association endorsing this bill, endorsing the compromise. They are not walking away from it. The Leadership Conference on Civil and Human Rights has endorsed this bill. Any way you look at it, this is a good deal for students, and it is a good deal for their families. Don't let anybody tell you otherwise.

Could there be a better deal? Well, I suppose. How about free money? That is always a good deal, free money. There is always something better out there. I say to my friends on the Democratic side, don't let the perfect be the enemy of the good. Yes, there is probably a more perfect thing we could do. We can't afford it. We don't have the CBO scoring that would allow us to do that. Plus, we need the votes of our colleagues on the Republican side, so that is why we have to have a compromise. That is the way this place should run--on compromises. Legitimate, yes, hard-fought-out, but good compromises.

What Senator Manchin and Senator Burr have offered is that compromise--a good bill, a good, solid compromise, one that will make sure interest rates for undergraduate students will be lower for the next 4 years and under 6.8 percent. As Senator Alexander worked so hard to make sure we got into this compromise, when students get these loans at 3.68 percent this year, that is it for the life of the loan--that is a good deal--or next year at 4.26 percent or the next year at 5.24 percent. That is a good deal. So don't let what you might think would be more perfect take you away from voting for this bill. This is a good bill.

Again, I thank so many who are responsible for putting this together. I thank Senator Durbin, Senator Manchin, Senator King, and Senator Carper, who worked so hard through so many days and weeks to get this pulled together. Of course, I thank my ranking member and good friend Senator Alexander, who has been here from day one trying to find that sweet spot that we could all agree on and vote on. I thank Senator Coburn, Senator Burr, and all their staffs for all of their hard work and diligence in putting this proposal together. I thank President Obama and his team and Secretary Duncan and his team for working together, and all of our staffs.

This is the best we could do on a compromise for students given all the various priorities of this side, that side, the White House, and everybody else. This is a good deal. We shouldn't turn it down.

I will vote against the amendments offered by Senator Reed and Senator Sanders, well meaning though they are. As I said, they sound nice and they look pretty, but don't be lured into thinking that somehow that is going to happen. It is not. We have to stick with this compromise and get a good deal for the students, even though you may not think it is perfect. It is a good deal.

I support the Bipartisan Student Loan Certainty Act. I encourage all of my colleagues to vote in favor of its passing and against amendments that would detract from it.

Mr. President, I ask unanimous consent that all time be yielded back with the exception of 2 minutes equally divided prior to each vote.

The Senator from Rhode Island knows I have the highest respect and affection for him. I might say that he makes excellent points.

As I said earlier, this amendment looks good, looks pretty, sounds pretty, and might be nice in a perfect world, but that is not where we are. Like my colleagues, like Senator Reed, I want to make sure we are only asking students and families to pay as much interest as needed in order to properly administer the program and no more. Student loans should not be a profit center for the Federal Government. As I said earlier, that is why we put into our underlying bill, the Manchin-Burr bill, a requirement that GAO report back to us in 4 months as to what it actually costs. My good friend from Rhode Island doesn't know what it costs. I don't know what it costs. No one really knows what the cost of this is.

As Senator Alexander said earlier, we are going to be looking at all of this in the Higher Education Act, what college affordability is.

Let me repeat. Under the bill before us, students pay less interest rates than 6.8 percent until 2017.

While the Reed bill may sound good, we are not there. We are not there to move on the Reed bill yet or anything like it. Plus, the offset he has for that, even though he has fully paid for it, is not acceptable to a lot of people here in the Senate Chamber.

Stick with the underlying bill and defeat the Reed amendment.

Mr. President, I can't support this amendment. By sunsetting this effort 2 years because CBO uses a 10-year window, the amendment would cost an estimated above $20 billion, and there is no offset to pay for it. So, again, the lack of that offset would violate the agreement we made under our bipartisan agreement of trying to get as close to deficit neutrality as possible.

Like Senator Sanders, I also want to make sure we make any needed changes to student loan interest rates before they become too high. Let me remind everyone, in the 1990s we had an 8.25-percent cap. We hit it five times. We got back in this agreement an 8.25-percent absolute cap.

Beyond that, for the next 4 years every student--subsidized and unsubsidized--in college will have a lower interest rate than 6.8 percent. In the outyears, who knows what the interest rates are going to be. We don't know that, and neither does CBO. But we do know what they are going to be this year and probably next year, and the students get a much better deal under the compromise.

So I say, don't support the Sanders amendment. Let's vote and let's keep the compromise in place and give our students a good deal, this year and next year and the year after and keep that 8.25-percent cap that we negotiated.

Mr. President, the vote comes on what we are going to do and that is--as my good friend Senator Manchin said--to keep interest rates low for students.

What this means for our students is that the student loans for all undergraduate students will be reduced from 6.8 percent to 3.86 percent this year. It will be lower than 6.8 percent for the next 4\1/2\-- almost 5--years.

Do our students and our families a favor. Vote for final passage. Keep the interest rates low and make sure our students are not paying a 6.8-percent interest rate this year, next year, and the year beyond.

Madam President, I ask unanimous consent at this time that my amendment, which is at the desk, be called up.

I ask unanimous consent that the reading of the amendment be dispensed with.

Madam President, I am pleased to offer this amendment, along with Senator Warren and 18 of our colleagues. Our amendment would provide the kind of certainty students deserve and that 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 percent or 7.9 percent. To illustrate this, let me present a chart.

Under the underlying legislation, Stafford loans for students are essentially subject to the same interest rates, and they are depicted here. These are the undergraduate loans in yellow and the graduate loans in white. We can see in the first year for the undergraduate loans it is just under 4 percent, and that is less than the 6.8-percent current statutory limit. For the graduate loans, they are up roughly about 5\1/2\ percent, which, again, is below that. But very quickly, by 2015, the graduate loans exceed this 6.8-percent threshold. That is the current law. Then it keeps going up and up and up.

Actually, this chart does not represent the entire impact because the last bar represents the estimates not just for 1 year but for 5 years. So we can see these increments--the white increments for the graduate loans--keep going up and up and up indefinitely. This is permanent legislation. This is not a 5-year fix or a 10-year fix. It is permanent legislation. A similar process is that the undergraduate Stafford loans go up and up and up and up.

Our legislation will simply say if you want to provide an incentive and a benefit for students who are today going to school, that is commendable, but at some point we are going to have a much worse deal for students than we have just with the current law. So we are proposing, very simply, to cap at 6.8 percent the Stafford loans and then at 7.9 percent for the parent PLUS loans.

This is a projection of the percentage interest rates for parent loans. Again, 2013, it is below the present 7.9-percent statutory limit, but quickly, by 2015, it is above, and then it is indefinite. From 2018 to 2023 and beyond, it goes up and up and up and up. Our amendment simply says if we want to give everybody a benefit in the next several years of lower rates, do it, but let us give real certainty that rates will not exceed the current statutory rates.

As I have indicated previously in my remarks, I wish to commend the authors at least for putting in caps on rates.

Some of the original proposals coming from the Senate Republicans and other places had no real caps in place. At least now we have caps.

I want to particularly thank Chairman Harkin, because he committed himself to ensuring that all these loan programs have a cap. Our point, though, is the caps are so large that effectively students and parents in a very short period of time will be paying much more than they are today. These caps are too high. They could go as high as 8.25 percent for undergraduate Stafford loans, 9.5 percent for graduate Stafford loans, and 10.5 percent for PLUS loans. Those are significantly higher than our threshold. We can do better. We want to protect students from these high interest rates.

In Rhode Island, roughly 49,000 students will borrow for this coming academic year. They would benefit from this approach, but their brothers and sisters, who may be freshmen in high school, will be taking out loans when the interest rates will be exceeding the current rates.

Adopting the Reed-Warren amendment means students can benefit from these low rates initially, but then we will have the existing statutory cap in place for future generations. As it exists now, if you are a senior in high school and you are going to college next year, you are going to get the benefit of the rate, but your younger brother or sister, who may be a freshman or junior in high school, and your parents are paying for it in the future, and will be paying indefinitely.

As my colleague Senator Warren has pointed out, they are doing it in a situation in which the government is making billions of dollars a year on these loans. This is not a question of putting subsidies in. Contrary to the history and purpose of the student loan programs, we are actually reversing the subsidy. We are saying, No, the students pay.

Education is so important to the future of America, yet we are no longer going to invest in it as a Nation. We are going to let students pay. That is the way this whole approach has been structured. They picked as their benchmark the 10-year Treasury bill. Typically, we use the 91-day Treasury bill. Just in the baseline, there is a higher interest rate. Then they picked a premium to put on top to compensate the government for potential risk of loss. As some of my colleagues suggested, we are not quite sure what the premium should be, and we feel very strongly that premium is much too high for the actual risks and costs of the program. So this proposal has baked in higher interest rates for some students after the first 2 years, and for all students and parents in the long run.

I believe what we are doing in the Reed-Warren amendment makes a great deal of sense. Many people are struggling in many different ways, and particularly students are struggling with student debt. We should ensure that the new rate structure does not leave students worse off-- and not just for the first 2 years, but let's be realistic and serious. Let's look down the road. This road is taking us to higher and higher interest rates for students. 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 very small surcharge of 0.55 percent on incomes over $1 million, so this is fully paid for, and it will give students the real certainty that they will not see interest rates go beyond the present statutory limits.

I think what we should be doing as a Nation is not shifting the burden to students but investing through students in our future. We know if students are able to go on to college and to postgraduate education, they are going to make more money, they are going to contribute more to the economy, we are going to be more globally competitive, and we will be in a much better position.

Frankly, that was the wise judgment our parents and grandparents made when, in the 1950s, 1960s, and the 1970s, they decided to invest in the future of America by investing in higher education.

I daresay there are very few people in this Chamber who in one way or another did not directly benefit from that investment. But now we are saying today, No, it is on the students, they are going to pay market rate premiums, and, according to CBO numbers, we will be generating about $184 billion--the difference between our borrowing costs and what the students and families are paying. That is not the way to grow a strong, prosperous America.

Because there have been elaborate studies, we also understand that we have a jobs gap already between highly educated individuals and the jobs. By 2020, there will be about a 5-million-jobs gap between those jobs requiring higher education and the projected 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 is 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 has surpassed credit card and automobile debt as the second biggest household debt in the country, and that is going to grow. It will particularly grow under the underlying proposal. We have to figure out a creative way to do that. And, by the way, that is going to cost money. So if one of the principles and premises of this whole legislation is we will spend no additional money for higher education support, how are we going to fix that issue of students and families who are deeply in debt--not just those who are carrying the debt today but those who are going to accumulate the debt going forward?

I 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.

Madam President, I yield the floor.

I ask unanimous consent at the conclusion of Senator Carper's remarks I be recognized to use the time allotted to me under the motion.

Mr. President, I recognize it is a much larger State. The nice thing about the Senate is that we all have two Senators.

There has been a great deal of work put together by so many people here: Senator Carper, Senator Manchin, Senator Alexander, Senator Harkin, Senator King, and Senator Burr. I could go on. They have been trying--in a principled way--to help students. They provided short-term help, but the major criticism I have of the legislation is that it locks us into the long-run, predictable rate increases and will add further to the burden that students and families are bearing to send their children, and themselves, to college and beyond.

Despite these great efforts, I just do not believe this approach, if unamended, is going to be the way we want to move forward.

Mark Kantrowitz is a well-known expert on student aid. His comments are particularly telling.

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 recovers and rates rise, today's high school students

could end up paying more than 6.8 percent. It's far from a

permanent solution.

I think he is right. I wish to emphasize the fact that as the economy recovers and rates rise, one of the fallacies of the CBO projections is that back in early 2000s they suggested that interest rates would stay very high. They did not anticipate the collapse in 2008 and 2009 of our economy.

Honestly, I don't think we want to premise our student lending on an economic collapse. I think what we want to do is assume and hope that the economy recovers, which will invariably increase interest rates. We are starting at the low point of interest rates, and then inevitably we are moving up. We are moving up as the economy recovers. We will also move up as the Federal Reserve limits their very aggressive quantitative easing program, where they have been buying securities to depress the rates.

If we look at the CBO projections, parents and graduate students will begin paying more than the current fixed rate of 6.8 percent and 7.9 percent by 2015. That is not a long time. That means the young freshman who is going into college next year might benefit from this proposal, but the younger brother or sister who is a freshman in high school will be paying much more. 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 are essentially adopting a new approach to Federal policy on higher education. We are not subsidizing it; we are not making it below market rates. We are shifting the costs on to students. That is because one of the premises in this proposal, quite obviously, is that there will be no cost to the government, and we are starting with the principle of a rate of 6.8 percent over time. So as we decrease rates for the first few years, just simple arithmetic tells us we have to raise rates going forward.

Also, I think the way this is structured has to be considered. We have chosen not a short-term T-bill rate--a 91-day 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. Then we have added a premium to that to cover our costs--the cost of default, the cost of the administration of the program.

Interestingly enough, in this proposal, there is a study the GAO is ordered to do to tell us if our cost estimates are in any way close to the real cost to the Federal Government. I think the factor is significantly sufficient that the premium--the delta, if you will--we are charging students is much higher than the real cost, even including default rates, to the Federal Government.

I think this is a proposal that, again, was generated with great sincerity and great diligence, but over time it does not meet the test of consistency with our previous support for higher education. We actually subsidized higher education, and we did it at below-market rates. We did it because we believed we had to give students a chance to educate themselves not only for

their benefit but, just as importantly, for the benefit of this Nation.

I would suggest--and around this Chamber I have said this before-- directly or indirectly, every one of my colleagues who is of a certain age has benefited from subsidized student loans. If they didn't, then a brother or a sister or someone did. Yet we are saying that was good for us, but it is not good for this generation of students. They should bear the risk of interest rate increases.

They should bear the full cost. This is at a time when we have to be much more cognizant of the centrality of higher education in terms of the lifetime wages and earnings of individuals and in terms of our economic competitiveness across the globe.

We all have reached a point that unless we adopt the amendment I propose, we are locking ourselves into increasing rates that go way beyond the current statutory rate of 6.8 percent for Stafford loans and 7.9 percent for PLUS loans. Even with these rates--the current rates-- 6.8 and 7.9 percent--CBO has estimated that the government will generate about $184 million in revenues. That is the difference between the cost of funding and the return. It is just what it costs the government to borrow and what they are getting in revenue from students, accounting for defaults and borrower benefits. So instead of investing in students, we are basically profiting from them, and that point has been made by my colleagues, particularly Senator Warren, over time.

As we move to this new form of rate structure--10-year Treasury bills plus a premium; they are capped, but they are capped at high rates--the government will, in fact, be making even more money.

What I would like to do and what we have tried to do is to propose that we initially freeze rates at 3.4 percent and then spend the time to fix this problem as best we can completely. We need to 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 will be a very difficult and challenging endeavor--and think seriously about refinancing because right now we have students and families facing $1 trillion in debt, and they are suffering under this situation.

We want to take a comprehensive approach, but this is not the approach. This is simply fixing rates. The one certainty in this legislation is that the rates will go up--not right away, but they will go up--and they could go up very quickly, and they could reach the limits very quickly, and that is an additional burden on students. 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 ability to grow our economy.

We have had experience with market-based rates in the student loan program before. This is not new. Most recently, the market-based rates for student loans from July 1, 1998, and June 30, 2006, was yield on a 91-day Treasury bill plus 1.7 percent while the student was in school and plus 2.3 percent while the student was in repayment. This rate was capped at 8.25 percent, and it applied to all Stafford loans-- subsidized, unsubsidized, and graduate. For parent PLUS loans, the rate was the yield on the 91-day Treasury bill plus 3.1 percent, capped at 9 percent.

Those rates were a good deal for borrowers. Students who are repaying their loans under this system have a rate of 2.35 percent this year and parents are paying 3.15 percent. That is because interest rates have come down dramatically. One of the reasons for that--perhaps the primary reason--is 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.

Instead of using the 91-day Treasury bill, what this underlying proposal uses is the 10-year Treasury bill. This decision results in a rate that in and of itself is 1.76 percentage points higher for this year alone. If we use the 91-day T-bill rate, we could lower rates even further, but we are using the 10-year rate, so we are already building in almost 2 percentage points of interest for students who will be subject to this legislation.

Since May 1 we have already seen the rates on the 10-year Treasury bill climb nearly 1 percent. Those rates are headed upward, and the CBO has projected them to rise. That is consistent, by the way, with an economic recovery. So the good news is if the economy recovers, interest rates will rise except it is not good news for students because their interest payments will rise. If CBO is wrong, that means we will probably have an economic shock ahead of us which will be bad news for everyone.

So I think we have to be very cognizant of the fact that there is a much better way to do this, and there should be a comprehensive approach.

What we are suggesting, and in the amendment Senator Warren and I are proposing, is that we at least cap the interest rates for the Stafford loans--for the undergraduate loans--at 6.8 percent, which is the current rate, and for the PLUS loans at 7.9 percent so no one, regardless of whether one starts college next fall or 4 years from now, will be worse off than the current situation with the fixed interest rate. I think that would be an improvement. 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 cost of college. We are not dealing with the issue of refinancing.

Honestly, I also think to say, well, if it gets really bad, if we really start hitting those caps--to say we will go back and fix it fundamentally ignores one of the principles that underlies this proposed legislation--that there be no further costs to the government. To fix the interest rate several years from now, when it is 8 percent, again, will cost a lot more than staying with the current 6.8 percent fixed rate and 7.9 percent fixed rate.

So for that reason, I will be opposing the underlying legislation unless we can make significant progress with respect to at least capping the rates at 6.8 percent and 7.9 percent.

With that, I reserve the remainder of my time, and I yield the floor.

The Reed-Warren amendment would provide students and families with certainty by ensuring that interest rates will go no higher than they would under the current fixed rates in present law-- 6.8 percent for student loans and 7.9 percent for PLUS loans. The amendment is fully paid for by a very small--about one-half of 1 percent--surcharge on income over $1 million.

We should do this for students all across the country, and we should do it not only for the students who might be going to college next year but for those who are in high school today and will face, as we know, predictably higher rates.

A young man from Rhode Island wrote a letter to me. He said:

My brother, who is in college, will be paying a lot of

money for college and he's worried he will have a hard time

paying the loan. I'm afraid that by the time I go to college,

loans will be so expensive that I will not be able to pay it

off. My parents help with paying for college but they might

not be able to help with a loan that big. I really want to be

able to go to college.

For those young men and women who are in high school today or who are going to high school, we have to at least vote for this Reed-Warren amendment to make sure interest rates stay at least within the present bounds.

With that, I urge a ``yes'' vote.

I ask for the yeas and nays.

Mr. President, a point of order. I believe we are prepared to voice vote this, and at the proper time I ask that such a motion be made.

Mr. President, I oppose the proposed amendment. It is short-term rate relief, but it is long-term rate pain for thousands of students and families across the country. We can do much better than that. In a few moments, we will have an opportunity after the voice vote to have another small discussion prior to final passage.

Again, I believe this amendment is not--despite the best work and best intentions and great effort by my colleagues--the best work we can do with respect to students and families.

Mr. President, as I indicated previously with respect to the amendment proposed by Senator Manchin, this proposal will provide short-term rate relief but lock in long-term rate pain for thousands of families and students across the country. It also represents the fundamental shift in our approach to student lending. It goes from investing in students and in our future economy to making those students be profit centers for the Federal Government. There is an estimated $184 billion over 10 years of profit in the current baseline. It is the difference between the cost of funding and the revenue paid by the students to the Federal Government. This proposal adds $715 million to that.

Also, we have done nothing to address the $1 trillion of outstanding debt that students face today. This measure will add to that debt.

Education has always been the engine of opportunity in this country. With this legislation, that engine will leave the station with many fewer students aboard.

I urge a ``no'' vote.

Madam President, will my friend from Illinois yield?

Madam President, I call up my amendment which is at the desk.

I ask unanimous consent that the reading of the amendment be dispensed with.

Madam President, I have a lot of affection for my friend from Iowa Senator Harkin and Senator Durbin from Illinois, but I must respectfully disagree with them and rise in opposition to the bill.

I ask for support for an amendment I am offering which is being cosponsored by a number of Senators. I wish to thank Senator Leahy, Senator Wyden, Senator Whitehouse, Senator Gillibrand, Senator Blumenthal, Senator Schatz, Senator Murphy, and Senator Hirono for their support for this amendment. I also wish to thank the largest educational organization in America, the National Educational Association, for their support of this amendment, and I thank the American Federation of Teachers for their support of this amendment.

The truth 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 going to college and for the parents who are helping them pay their bills. The job of the 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 are deeply in debt and parents are borrowing at high interest rates to send their kids to college. We have a crisis. This bill makes a bad situation worse, not better.

I ask my colleagues to support the amendment I have offered which would provide a 2-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 process. I hope we will pass my amendment, supported by eight other Senators, which will sunset this bill in 2 years and allow us to take advantage of the relatively low interest rates now and prevent student interest rates from soaring into the future.

The very sad truth of the matter is that in a number of ways, our government--Congress, the 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 percent of our kids live in poverty.

I think every working American understands that our childcare system is a disaster. If a person is 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 they need, so that many kids today, because of inadequate childcare from zero to 3 and 4, enter kindergarten or first grade already years behind where they should be intellectually and emotionally. We are failing our young children.

We are failing our teenage young people as well. Today, the unemployment rate for high school graduates is close to 20 percent. That is the official rate. For real unemployment, counting those who have given up looking for work and those who are working part time when they want to work full time, it is even higher than that. What does that mean for millions of kids who graduate high school, 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 had passed an amendment as part of the immigration bill to provide 400,000 jobs over a 2-year period for young people. That is a start. We have to go a lot further than that. By and large, we are failing working-class, middle-class young people today who are desperately searching for jobs.

For minority youth--for African-American youth--if my colleagues can believe this, the official unemployment rate for ages 16 to 19 is over 43 percent--over 43 percent, African-American young people, unable to find jobs. That is unacceptable.

Our goal must be to make sure the youth of this country, if they graduate high school and they want to go out into the workforce, are able to get decent jobs or if they choose to go to college, to be able to afford to go to college, and to make sure our young people do not end up on street corners doing drugs--not in jail, not in self- destructive activity. That is our job, to make sure those who have the ability and capability are able to go to college and others are able to get meaningful work. Frankly, we are failing in both of those areas. 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.

All of us know we live in a highly competitive global economy. If this country is going to succeed economically, we need the best educated workforce in the world. Unfortunately, compared to much of the industrialized world, we are doing 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 moderate and low-income kids to go to college, will only accelerate those losses.

The United States once led the world in college graduates. Thirty, forty years ago, we led the world in the percentage of our people who were college graduates. In fact, as a result, today those people between age 55 and 64 in the United States still lead their peers in other nations in the percentage with college degrees--about 41 percent. So if a person is between 55 and 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 sad story indeed, something that should concern every Member of Congress and every American--the same percentage of Americans aged 25 to 34--the same percentage of that younger group--has a degree compared to the older group of 55 to 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 is what everybody has said for the last 30 years. But 30 years later, nothing has changed. The percentage of Americans who have a college degree today is no higher than it was 30 years ago. The result is that other countries have significantly surpassed us in terms of the percentage of their younger people who now have college degrees.

In terms of the percentage of college graduates, we lag behind Australia, Belgium, Canada, Denmark, France, Ireland, Israel, Japan, South Korea, Luxembourg, New Zealand, Norway, Sweden, and the United Kingdom. In other words, where we were once first in the world in terms of percentage of college graduates, we are now 15th in the world.

How do we compete in a global economy if we have descended from first to fifteenth in the world in terms of people with college degrees? That is why

on the immigration bill we have people coming to the floor and saying: Americans are not educated. They cannot do these high-tech jobs. We need people from all over the world to come in to do that work.

Well, I do not agree with that, but that is the argument out there: Our people do not have the education. Does anyone believe in 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? The answer is nobody does because, according to CBO 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. I will get into that in a moment.

The other very important point to be made--and I think a lot of people do not understand this--according to the Congressional Budget Office, the U.S. Government is making huge profits--huge profits--from college loans. In fact, according to the CBO, the estimate is that the U.S. Government will make about $184 billion in profits over the next 10 years.

So what do we have? We have a middle class which is disappearing. We have poverty at a level as high as it has 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 did not go to college. My brother and I were the first in our family to go to college. Millions of families are in the same boat.

What is the U.S. Government doing now? We are helping to balance the budget not by asking multinational corporations--that make billions of dollars a year in profit and pay nothing in Federal income taxes--to pay their fair share of taxes; no, that is not what we are doing. We are 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 10 years we are going to make $184 billion in profits off of you.

Let me go on record as saying I think that is a very counterproductive idea. It is a dumb idea. We have 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.

Let's be very clear about what the legislation on the Senate floor would do. According to CBO--and I fully agree; I do not know what interest rates are going to be tomorrow, next year. You do not. Nobody does. And the CBO is by no means infallible. But the CBO and most economists believe we are leaving this period where interest rates have been historically low. Are they absolutely right? I do not know. Could they be wrong? Quite possibly. But that is what the CBO is estimating. This is what the CBO says.

The CBO says the 10-year Treasury note on which this entire legislation is based is now at 1.8 percent. In 2014 it will be at 2.57 percent; in 2015 it will be at 3.35 percent; in 2016 it will be at 4.24 percent; in 2017 it will be at 4.95 percent; in 2018 it will be at 5.2 percent.

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 that because interest rates are low now, for the next few years the interest rate for the subsidized Stafford loans will be, in 2013, 3.8 percent; in 2014, 4.6 percent; in 2015, 5.4 percent; in 2016, 6.2 percent; in 2017, 7 percent, in 2018, 7.2 percent. That is for undergraduates.

For the graduate Stafford loans, under this proposal on the floor today, in 2015, 6.9 percent; in 2016, 7.8 percent; in 2017, 8.5 percent; in 2018, 8.8 percent.

For the PLUS loans--those are for parents who are helping their kids--in 2015, 7.9 percent; in 2016, 8.8 percent; in 2017, 9.5 percent; in 2018, 9.8 percent.

Now, does anybody really believe that at 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 from a 4-year college leaves school $27,000 in debt. If you are paying interest rates of 7 percent or 8.5 percent for graduate school, there is no doubt in my mind that indebtedness will rise.

Furthermore, not only is it a question of families and young people struggling with enormous debt--on my Web site I asked Vermonters and people all over the country to tell me what the impact would be on their lives of student indebtedness. We heard just enormously painful stories from people who said: You know what. My husband and I wanted to have a baby. We cannot have a baby right now because we do not have the funds. We are paying off our student debt.

We heard from people who are going into professions 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 is a bad situation which, if the CBO is correct, will only make that situation worse.

My amendment is not my preferred option. My preferred option would be to do what a majority of the Members in the Senate voted to do, which is to freeze interest rates for another year at 3.4 percent while we come up with a long-term solution. My Republican colleagues, as they do on virtually every piece of major legislation, chose to filibuster that bill, and we needed 60 votes. I think we only got 51. A majority spoke for the American people, for the young people, for working families, but we could not get the 60 votes. That was my preferred option.

But this approach, at least, and what my amendment would do is to say, OK, between 2013 and 2014 we will keep interest rates fairly low-- not as low as I would want it--4.6 percent for undergraduate Stafford loans, 6.1 percent for graduate Stafford loans, and 7.1 percent for the PLUS program. It is 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 and sunset it at the end of 2 years.

So if people say there is no option to going forward as opposed to 6.8 percent, I say: Sorry, you are wrong. There is an option. That is what we have done. We have a 2-year sunset on this bill that would be at least a reasonable compromise to 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.

Let me be a little bit political, as I finish my remarks, and say this: I respect everybody's point of view, and there are different points of view here. But I think what a lot of Americans are asking themselves--they say: Well, let's see. We just had elections in November, and we were told elections matter. We had a candidate for President of the United States, Barack Obama, who won a very decisive victory, who ran on the platform of saying: Hey, I am going to stand up for the middle class. I am going to stand up for working families.

We had an election in which Democrats, Independents, retained control of the Senate. Now there are 54 votes in the Democratic caucus, and almost without exception Democratic candidates--I ran--Independents stand for working families, stand for the middle class.

So what I do not understand is, when we have a Democratic President, a Democratically-controlled Senate, why we are producing a bill which is basically a Republican bill--very close to what the House Republicans passed.

As most people know, the House Republicans are perhaps the most conservative majority in the House that we have seen maybe ever--the most conservative body. They say: This is a pretty good bill. We will accept it.

Well, if the most rightwing Congress in American history thinks this is a pretty good bill, I would hope that many Democrats would say maybe there is something wrong with this bill; maybe we can do something better than that.

The other point I would make, as I did a moment ago--and people have to understand this--a majority of the Members of the Senate voted to keep interest rates at 3.4 percent for another year. Fifty-one Members voted for that. Most people assume that 51 out of 100 is a majority. But we were unable to pass that legislation because of a Republican filibuster.

What we have seen on virtually every single important piece of legislation is that the majority does not rule in the Senate. We need to have a supermajority of 60 votes. 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 let me conclude by saying we have a huge crisis in this country. The crisis is that today hundreds of thousands of bright young people who have graduated from high school are now saying--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 professions. I would love to do it. I am smart enough to do it. I have the drive to do it. I just come from a family that 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. 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 months ago I had the Ambassador from Denmark come to the State of Vermont to do some town meetings with me.

The Presiding Officer may or may not know the cost of college education in Denmark in terms of out-of-pocket costs. It is zero. It is zero. It is not just Denmark, there are a number of countries around the world that 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: You do well in school, regardless of your income, and you are going to be able to go to the best colleges we have. Not only the best colleges but graduate school, medical school, law school, and your cost will be zero.

You know what. I think that is pretty smart. I think investing in our young people is investing in the future of our country. That is what some countries do. They make college education free in terms of out-of- pocket cost. Other countries do not go that far.

I live an hour away from the Canadian border. They heavily subsidize college. So we are seeing many American kids now going off to fine colleges and universities in Canada, where even for people from the United States college costs are less than they are in the United States.

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. The result is that we have seen virtually no gain in the last 30 years in terms of the percentage of our people graduating from college.

We have a crisis. It is a crisis which impacts millions of young people: those who have given up on the dream of college and those who are graduating from college deeply in debt.

It impacts our entire Nation. It is insane to me that we are conceding to other countries around the world and saying: OK, you are graduating large numbers of people. You are allowing them to go to college. But we in this great country, we cannot do that. It makes no sense to me at all. It is bad for the future of this country, 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 CBO, likely that those interest rates will rise. In 2018, we are talking about subsidized Stafford loans at 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 to address, not make it worse.

Once again, I wish to thank all of the Senators who have cosponsored this legislation: Senators Leahy, Wyden, Whitehouse, Gillibrand, Blumenthal, Schatz, Murphy, and Hirono. I want to thank the NEA, the largest educational organization in the country, for their support, and the American Federation of Teachers for their support.

Let's stand tall today for the working families of this country who believe in the American dream, and that dream is significantly about the desire of our young people to do better than we have done. That was the dream my parents had. It is the dream that millions of families have had. An important part of that dream is 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's pass the Sanders amendment.

With that, I ask unanimous consent the time during quorum calls be charged equally.

I suggest the absence of a quorum.

Mr. President, I want to thank Senators Leahy, Wyden, Brown, Whitehouse, Gillibrand, Merkley, Blumenthal, Schatz, Murphy, and Hirono for supporting this amendment. I also wish to thank the NEA and the AFT, the two largest teachers organizations in the country, for supporting this amendment.

This amendment is very simple. It sunsets this legislation after 2 years, takes advantage of current, relatively low interest rates, and gives us the time to reauthorize the Higher Education Act and come up with sensible long-term solutions to the crisis of student indebtedness and college affordability.

According to the CBO, by the year 2018, under this legislation undergraduate Stafford loans will be 7.25 percent, graduate Stafford loans will be 8.8 percent, and parent loans will be 9.7 percent. We have a crisis right now in student indebtedness. We need to solve that crisis, not make it worse.

I ask for support of this amendment.

I ask for the yeas and nays.

Mr. President, I rise in opposition to the so-called bipartisan deal. I have very strong reasons for opposing it and supporting the alternative, which is the Reed-Warren alternative.

The Senator from Tennessee said he likes the sound of bipartisan deals. So do I. It feels good to get things done around here in a bipartisan way. But that doesn't mean, because it is called bipartisan, it is 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--you know, saying that it is wonderful and we are going to help students on the one hand; on the other hand, he talks about changing the way we are doing our accounting to crack down on students; and then he says that in his State a student can get a $5,500 loan even though it only costs $3,000. What about the books they have to buy? What about 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 the one hand, it is wonderful to help our students. Well, maybe it is just too much of a risk.

I have to say that according to the information I have from my experts, it is pretty tough when you take out a student loan. The Federal Government, if you don't pay it back, can garnish your wages and it can do lots of other things.

I am opposed to this bipartisan deal and strongly support the Reed- Warren measure.

I am pleased that a lot of people are listening to this debate because it is very important. I am going to read some of the criticisms of this bipartisan deal that come from outside groups.

The first is the National Association of Graduate-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 cap of 9.5 percent for graduate and professional

students offers no guarantees that our rates won't

significantly increase in the future. We should be

encouraging students to enter higher education to help keep

our economy growing, not deterring them with higher interest

rates.

The Young Invincibles also oppose this bill, writing:

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 current law.

If you let the current law exist, at the end of the day, because of the difference in caps, students will be better off in the outyears and into the future. For anyone who says this is temporary, make no mistake about it--Republicans have said this is permanent. We may revisit other things, and I hope we do because there is a lot we should look at, such as the ability of students to refinance their loans. There are many other things I hope we can work on. But this particular deal, if you look at the Republicans' own words, is a permanent deal.

U.S. Public Interest Group says:

We oppose S. 1334, the Bipartisan Student Loan Certainty

Act, because it is worse than current student loan policy.

Current law includes an unjustifiable 10-year revenue stream

of $184 billion flowing directly from student borrowers to

the Federal Government. [This bill] does not address this

problem. Instead, it exacerbates it, generating an additional

$715 million in new revenue off the backs of student loan

borrowers to pay down the deficit.

They close their comments by saying, ``Enough is enough.''

I am sure people listening to this debate could be a bit confused about exactly what we are talking about. I am going to try to go through some of the facts surrounding this debate. I think it is important that we understand what students are feeling out there. I am going to read a few.

In California, Amy and Christian Diede owe over $82,000 in student loans. Amy, who has a master's degree in psychology, and Christian, a cardiovascular nurse, say:

It's like carrying a big backpack filled with bricks all

over the place, and I can't ever let it go. It's always

there. I may get rid of a few bricks, but there's always

going to be more. I don't see the student loans going away.

I have met people who are still paying off their student loans and they are on Social Security.

Last year, Tammy Brown of Redding, CA, said the government has been taking $179 out of her Social Security disability check each month for the past 5 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. She said, ``It's kind of hard to live on this amount of money.'' This is a woman on Social Security disability, and what are we doing in the bipartisan deal? We are laying on top of what we already make from student loans an additional $715 million.

Joseph Luka of Portland, ME, started college as a pre-med 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.

I will return to some of the comments at the close of my time.

We have to ask a few questions. Why are we piling another $715 million of debt on the backs of our students--so we could stand here and say we did 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 is called Reed-Warren. It matches those low rates you see in the bipartisan deal for the first 3 years. It matches them, and then it keeps the rates down. I am going to show just how much money we save students in the Reed-Warren legislation because it keeps the rates down.

Did students put two wars on a credit card? Is that why they have to be punished? Were students running the banks that placed huge bets on Wall Street, leading up to the crash? Did students create a drug 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 are forcing students to pay for that by tacking another $715 million on their backs.

I have to say, when it comes to the banks, oh, hundreds of billions of dollars, no problem; too big to fail. It is very hard to explain to people and to students. 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 followed our words with actions, we would embrace the Reed-Warren solution. But the handwriting is clearly on the wall, and we are not going to have the votes to do that, so we are going to ask our students to continue to pay more and more.

We ought to look at what past Presidents have said about the importance of education.

I feel I must point out that 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, we face. 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 all want Americans

getting those jobs in the future. So we are going to have to

make sure that they're getting the education they need.

OK. 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, that is hard to find on a lot of issues. Education is key. Our students are important. They need the education to get the jobs.

I am going to show exactly what this bipartisan bill is going to cost. I already said it is $715 million over the course of time to the government. Let's look at how much more each family will have to pay under this so-called ``deal'' compared with the Reed-Warren substitute.

First, let's take a look at the 10-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 one has to do is look to the experts. They have told us the caps will be reached. Take the 30-year average rate of the 10-year note, add on the surcharge, and, bingo, the caps will be reached in a few years.

Let's look at the Reed amendment versus the deal. If you have a $15,000 loan for 10 years, under the deal you pay $1,363 more than you would under the Reed amendment. If you have a $25,000 loan, over 10 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 10 years, you pay $4,500 more.

So let's say you decided you wanted to take 25 years to pay back that undergraduate loan. Let's say you have decided 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 a 25-year loan if you have a $50,000 loan amount.

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 an 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.

Let's 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 10 years--and we all know the caps are going to be reached--you pay $2,500 more for a $15,000 loan, $4,200 more for a $25,000 loan, $8,500 more with a $50,000 loan, and for a $100,000 loan you pay $17,000 more under the so-called bipartisan deal compared to the Reed amendment.

So what we are seeing now is a breakdown of why we say it is going to mean $715 million more in debt on the backs of our students. I am showing how it breaks down for a family.

This is worth looking at. If you are a graduate student--and I know the Presiding Officer probably has a doctorate--and you had to go borrow money under this bipartisan deal, if your loan amount was $30,000, you would pay $16,000 more than you would under the Reed- Warren amendment. If you had a $50,000 loan, you would pay $26,000.

Look at this: If you have a $100,000 loan, which many people have-- you hear about what the cost is, and many people who go to graduate school have this--you will pay $53,000 more under the so-called bipartisan deal.

Let's take a look at the parents--the parents who will have the misfortune of having to live under this. Look at the cap. Under the Reed-Warren cap it is a 7.9-percent cap for the parent loan. Under the so-called bipartisan deal it is a 10.5-percent cap. So what does this mean? The additional money for a 10-year loan 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 $100,000 loan. That is how much more the parents of the students would pay.

The last chart, to bring it home to everyone, is the parents who are going to live with this bipartisan deal unless we pass Reed-Warren are going to have to pay, over 25 years--because their cap is 10.5 percent under this great bipartisan deal--$16,000 more on a $30,000 loan, $26,000 more on a $50,000 loan, and--hold on to your pocketbook-- $53,000 more on a $100,000 loan.

Why would we not support the Reed-Warren bill? Did it cost us a few bucks? Yes. So we paid for the few bucks it cost us by putting in a millionaire's surtax of \1/2\ percent. OK? But because the bipartisan deal expects students to pay, and is putting the deficit burden on the students, their cap ranges up to over 10 percent for the parent loans.

So you might hear: Oh, Senator Boxer, it will never reach the cap. We will not get to the cap. Well, I will use a--well, I will not go there. That is simply not true. We will get to the cap. Why? I said before, the average for the 10-year Treasury bond over the past 30 years is 6.22 percent. That is what it is. The bipartisan deal plugs us into the 10-year Treasury bond and adds a few dollars, a few percentage points for

handling fees, and we will get all the way up to the cap in every case. It is just going to happen.

If you don't learn from past interest rates, you can't predict the future. CBO predicts the future. They are using the past. We have to use the past. The cap will be hit. The cap will be hit.

So where does this 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 to students: You are already paying enough. We are not going to lay this on you. We figured out a way to do it so that you are capped at a much lower rate.

This is what we are talking about. This is what we are talking about. The deal will take $715 million out of our students' pockets over the next 10 years, and anyone who thinks that is fair should vote for the deal. Anyone who can look into the eyes 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, anyone who thinks that is fair, then vote for the deal. But don't kid yourself. This $715 million is going right onto the backs of our families. I have shown the charts. This is a permanent deal.

Senator Coburn: I am pleased 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. From the Republican HELP Committee, Senator Alexander called this a long-term market-based solution. They are not going to revisit this issue.

I have to compliment Senators Reed and Warren. They deserve praise because they have come up with a plan that works, that is fair, and that will give solace to our students. For the undergraduate and graduate loans, we will see them capped out at 6.8, and for the parent loans the cap is 7.9 compared to over 10 percent in the so-called bipartisan deal.

Now, I promised I was going to revisit some of the stories, and I am 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 1980s. 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 are going to add $715 million to student debt.

When Michelle Bisutti, a 41-year-old family practitioner in Columbus, OH, finished medical school in 2003, her student loan debt amounted to $250,000. By 2010 it had ballooned to $555,000. The entire balance of her Federal loans--over $200,000--will be paid off over 351 months, when she will be 70 years old.

What are we doing? Who are we fighting for? 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 is letting in high-tech workers because we don't have enough trained American workers to fill the jobs. Yet we are going to make it easier on students by piling on another $715 million of debt on their backs and on the backs of their families?

Emmanuel Tellez's mother is a laid-off factory worker, and $120 from her $300 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 are garnishing Emanuel Tellez's mother, 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; that puts it on their backs?

Deanne Loonin, a staff attorney at the National Consumer Law Center in Boston, said she has been working with an 83-year-old veteran--Mr. President, an 83-year-old veteran--whose Social Security benefits have been reduced for the past 5 years.

The client fell behind on a Federal loan that he signed up for in the 1990s to help his son with tuition costs. Loonin said the government's cuts have left the client without enough cash to pay for medicine for his heart problems.

This is a national problem, and part of it is a national disgrace. So what is the solution? A so-called deal that makes it worse.

Last year, the Federal Reserve Bank of New York reported that Americans 60 and older still owe $36 billion in student loans. Social Security checks are being garnished and debt collectors are harassing borrowers in their eighties over decades-old student loans. 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 why aren't we dealing with the underlying issues and making it easier for our families, instead of having a deal that is cut--I wasn't part of it, that is for sure--that hurts our students and their families.

Mr. President, I yield the floor.

Mr. President, I ask unanimous consent that the order for the quorum call be rescinded.

Mr. President, I rise to speak on the student loan issue, and my time should be allocated to the time of Senator Alexander.

Mr. President, we have been hearing really two debates around here the last few days--in fact, over the last few days and months--about student loans. Both are important, but they are separate, and I think they need to be separate and thought of as two separate debates as we consider the issue before us this afternoon.

The first and larger issue is the cost of college. It is too high. Everyone agrees to that. 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. In the 1980s I interviewed the financial aid officer at one of our Maine colleges. He made a very interesting point.

He said: Angus, if you look back over the last 40 or 50 years, the cost of a private college education in the United States has almost exactly tracked the cost of a new Ford automobile. In the 1950s, $1,500 bought a car and a college education. In the 1960s, about $3,000 bought a car and a college education. That relationship continued into the 1990s. 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 is a problem for parents. It is a problem for students. It is a problem for the government that supplies the loans. It is a problem for Pell grants. It is a problem for all of us. It is one we need to discuss. But that is not the issue before us today.

There has been some discussion in this bigger debate about college costs and what the Federal role should be. Should it be to support and help students go to college? Indeed, we have 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 have had various iterations of the student loan program. At first it was lodged in the banks, and it was a guaranteed student loan. Then some years ago it was made exclusively a Federal loan.

I can make the arguments--and we have heard some of them on the floor, including from the Senator from Vermont, who very eloquently made the argument that we need to make college accessible. We should do that, but not in the context of the discussion we are having today about student loans. It is a larger issue. I am sure 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 importance of the affordability of college. In fact, I would argue that the GI bill, back in the early 1950s and late 1940s, 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 was the mainspring of our great economic growth in the 1950s and 1960s.

The problem now, though, if we are talking about massive new Federal support for higher education--it runs into three problems, it seems to me, that we are going to have to examine and think about as we move forward in this debate. One is financial, another is political, and the final one is economic.

The financial problem is we are broke. Every dollar we spend--in addition to what is being spent now; in

fact, including about 30 percent of what we are spending now--is borrowed. So if we are going to significantly increase Federal grants or subsidies to students, they have to come from somewhere else. I heard Senator Carper speak yesterday about this.

He said: Do we really want to say, OK, we are going to cut Head Start in order to give funds to students? Are we going to cut somewhere else? How are we going to make those kinds of allocations?

Every dollar must be borrowed, and that is just the financial reality we are in today.

The political reality is we are 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 is simple arithmetic. We have a President who is a Democrat. We have a House of Representatives that is controlled by Republicans, and we have a Senate with a majority of Democrats but with 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 is the Democrats, the Republicans, or our two Independents--as much as we might want something, if it doesn't have bipartisan support, it is simply not going to happen. That is the reality.

That is indeed the reality that drove Joe Manchin and I to begin these discussions about 6 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. I was haunted by the experience of the sequester, where the same thing happened: Democratic proposal, Republican proposal, everybody hates the sequester, but it is happening.

So we believed we had to open some discussions because we have to find a way to get enough votes to get a proposal through the Congress so students aren't facing way higher interest rates this month than they should be. No action, make no mistake about it, means 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 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 are facing now--6.8 percent--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. One of the things I learned from him--one of the guiding principles of my life--is you have to play the hand that is dealt. The hand that is dealt us right now is that it takes both Republican and Democratic votes to get anything through the Congress. That is 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 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 am not saying this is a dispositive argument, but I think it is something we have to think about. The explosion of college costs I talked about that started in the 1990s corresponded, to a large extent, to the availability of additional money for scholarships and loans and grants, and the colleges essentially ate it up. We can go through great effort to find money to increase Pell grants by $1,000, and we will all feel good that we have done something for the students. But if the colleges increase their costs by $1,000, nobody wins. The Federal Government and the taxpayers are out $1,000. The students are in exactly the same position they were in before. They still have to find the difference because the money has just been eaten up by the increases in costs.

I think that is why we have to be thinking about what the implications are of the actions we take. Just saying we want to give more money to students for college--if, indeed, that money immediately turns into higher costs and higher tuition, 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 is an important one. But it is not the discussion before us today. The discussion before us today is pretty simple: Do we want to continue a program that has fixed rates at 6.8 percent when currently rates are running more in the 3- percent range?

In other words, do we want to balance the Federal budget for the next 4 or 5 years on the backs of our students? I don't think we should do that. I think we have 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 of 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 back-and-forth and the history and the fixed rates and all of those things?

It would seem to me if we sat down in a room with a group of bright people, they would say: Well, No. 1, the government is going to have to borrow this money that it then lends to the students because we are broke. Therefore, 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 is exactly where we landed in this proposal.

People talk about market rates. Yes, there are market rates, but it is the 10-year Treasury bill, which is one of the lowest rates in the country. This isn't the prime rate. This isn't LIBOR. This is one of the lowest borrowing rates we can ever have. It is the borrowing rate for the U.S. Government, which heretofore anyway has had a pretty good credit rating. Therefore, the students are guaranteed that they will always be below the outside market. If they went to a bank for a loan with no collateral, no cosigning, no job, the rates would be much higher than what we are talking about.

By the way, it is important to understand, because there has been so much discussion about this, that this is not an adjustable rate mortgage. 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 10 days, once a student signs up for a loan this fall their rate for that loan will be fixed at 3.86 percent for the term of the loan--for the term of the loan.

It is true that the following year, if they need another loan, that rate will be the T-bill plus 2.05 percent for the term of that loan. In other words, the loan rate doesn't change each year according to the rates. I think that is an important distinction. I think there has been some confusion about that. 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 a person has, as well as limits on how much a person has to pay as a percentage of their income.

As I said before, I don't believe Congress should be setting rates.

Let's talk about the effect of this proposal on students. The first effect is that it will cut almost in half the rates students are going to have to pay for their loans this year, from 6.8 percent to 3.86 percent, as this side of the chart shows. So a freshman going to college starting in 2013--this year--this is what they would pay for their total loans under this proposal.

It says ``bipartisan''; it should say ``nonpartisan.'' This is what they will pay under current law. That is a dramatic difference. That is money out of the pockets--billions of dollars out of the pockets of students over the next 2 or 3 years.

Everybody says, well, what if rates go up? Rates might go up. They might stay the same. They might go down. But even if they go up, under the projections of the Congressional Budget Office, here is a student starting college in 2017, and they would pay a little bit more under our proposal--it is the difference between $24,800 and 24,295--about $500. This difference is about

$2,000. This is money in hand. This is maybe, depending upon what happens with interest rates--what is worth more, $1 billion in hand or $1 billion in the bush? I think it is $1 billion in hand because these are the rates kids are going to have to face right now.

I think this is a great deal for students. No. 1, it dramatically lowers the rates in the early years. No. 2, thanks to the hard work of Tom Harkin, who negotiated like a tiger, there is a cap on the upside. So students aren't subjected, if rates happen to go way up--as they have occasionally but not very often in our recent history--into double digits, there is a cap of 8.25 percent.

So the students enjoy the benefit of the low rates, but 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 this week, that is the amount they are going to have to pay.

The future is uncertain, but I think it is important to talk about projections of interest rates because a lot of the discussion is that the students are going to have to pay so much more because the CBO projects interest rates to go up. By the way, even on the CBO's projections for undergraduates, the rates would never hit the cap. They would be in the low 7s--very close to where the present rate is.

But let's just talk about CBO interest rate projections because that is what is driving a lot of the anxiety around here. Here is the CBO. Let's pretend it is 2003--10 years ago--and we go to the CBO and say: What are you projecting for interest rates--just as we did a few weeks ago? Here is what they projected. They said: Well, interest rates are at about 4 percent, but we think they are going to go up around 5, 5.5, 6 percent. That is the projection CBO used in 2003. OK.

The good news is, we know what actually happened. Again, starting in 2003, here is 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 will go up, but we do not know that. I would take money in hand anyday against a possibility that there might be a payment later on. And we do not know that. It could go either way.

If interest rates go way up, as I said, the cap kicks in. The cap of 8.25 percent is very close to the 6.8 percent we have now. It results in about--I do not know--$20 a month difference between the cap and the 6.8 percent, 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. I think it makes sense for the taxpayers. I am 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 is a very honest discussion.

But this is called the student loan program. It is about loans. And the implication of a loan is that it is 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.

I will conclude by saying the choice is very clear because if we do not act on this bipartisan proposal that we believe will have a receptive ear in the House of Representatives--we know the President supports it and is ready to sign it tomorrow--if we do not 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 is unfair to students, and I think they sent us here to solve problems. This is one I believe we can tackle. We can and have solved it.

I yield the floor.

Three zeroes.