Student Loan Debt
Thank you, Mr. President. I rise today to talk about the growing problem of student debt and the college affordability crisis that is gripping our Nation. I also rise to talk about one of the things we need to do to address this crisis;…
Thank you, Mr. President.
I rise today to talk about the growing problem of student debt and the college affordability crisis that is gripping our Nation. I also rise to talk about one of the things we need to do
to address this crisis; that is, to pass the Bank on Students Emergency Loan Refinancing Act, which I was proud to join Senator Elizabeth Warren of Massachusetts in introducing yesterday.
We have to take action on student debt because it is a huge problem in this country. The total amount of student loan debt held by Americans is more than $1.2 trillion today--surpassing the total amount of credit card debt in our Nation. More and more Americans are becoming saddled with large amounts of student debt and that limits their ability to buy homes, save for retirement, and make other purchases that will help keep our economy growing.
My State--Minnesota--has the unfortunate distinction of being the State with the fourth highest average debt for students graduating from a 4-year college, at over $30,000 per student. Over the last several years, I have held college affordability roundtables in Minnesota to hear from students and families about the challenges they face in paying for college and to talk about ways to make the situation better. Let me tell you about one of the stories I heard.
Last month, at the University of Minnesota in Minneapolis, I met Joelle Stangler, a sophomore who is the incoming student class president. With a 4.12 GPA, Joelle graduated from Rogers High School in Minnesota as their valedictorian. She was also senior class president and the captain of her volleyball team. Joelle does not lack motivation when it comes to school.
Both of Joelle's parents were teachers, and, in fact, she comes from a long line of educators going back six generations. But a couple years ago, Joelle's mom Cassie Stangler made the difficult decision to quit her job as a fifth grade teacher to go to work in the private sector, where she could get more money, so she could help send her four kids to college.
Among the fifth grade classes in her school district, Mrs. Stangler's students showed some of the highest rates of improvement on test scores. We lost a great teacher because of how expensive post-secondary education is.
Not only that, even with her mom's sacrifice, Joelle, who is only in her second year of college, already has $12,000 in student loans. She estimates that her total debt will be around $30,000 by the time she graduates. Again, that is even with her mom leaving the job she loves, the job as a society we would want her to be in and that she is so great at.
At the roundtables I have around the State of Minnesota, I always hear about students working multiple jobs, sometimes even putting in 40 hours a week while going to school full time. Working and school is good. It is not bad necessarily. Some work can help students manage their time, become more productive, and of course help pay for college, but evidence shows that when a student starts to work more than 15 hours a week, it becomes harder for the student to maintain good grades in school and to graduate from school on time. Students are working more because college is becoming less and less affordable and they are still taking out more and more student loans and graduating with more and more debt, despite having worked while they were in school.
I do not think that is right. I do not think it is productive for our country. One student at the last roundtable I did told me: I can work 40 hours a week and have less debt or I can work 20 hours a week and be more involved in school. That is not the kind of choice students should have to face in America. I have talked to students who work full time while going to school and actually sell their blood every once in a while to help pay maybe their rent or their housing.
Recently, some encouraging things have happened in Minnesota. Thanks to the work of Gov. Mark Dayton and the State legislature, our State's public colleges and universities received an increase in funding from the State. Last year, after more than a decade of spending cuts to higher education and tuition increases in Minnesota, the State increased higher education funding for this academic year and next academic year by 10 percent, including a 15-percent increase in need- based State grants.
This much needed funding has allowed the public universities and colleges in Minnesota to hold their tuition steady, instead of passing on higher costs to Minnesota's students. This has been a significant victory for Minnesota students and families, but students are still facing daunting costs in paying for college and they are still graduating with far too much debt.
In the Senate I have been working on a number of solutions to the college affordability problem. I have two bipartisan bills with Senator Chuck Grassley of Iowa that would help students and families understand college costs and compare the costs of different colleges as they go through the process of selecting a school. Our Net Price Calculator Improvement Act makes these online tools more user friendly in order to give students and their families a better estimate of college costs before they decide where to apply to college.
Senator Grassley and I have another bill that will require schools to use a universal financial aid letter. Right now these letters are incredibly confusing. They do often clearly indicate what is a grant and what is a loan. A lot of people do not think--they say ``award letters'' on them sometimes and they include loans. A lot of people do not consider a loan an award. They use different terminology. If you get a Stafford subsidized loan in one letter, it might say ``Stafford subsidized loan,'' this amount.
Another, it might have a code number, an X5382. When we put out this bill, I got all kinds of calls from college counselors and from high school counselors, saying thank you. Our bill would make sure students and their families and their counselors get clear and uniform information so they can make apples-to-apples comparisons between what the different schools are offering.
Another part of the college affordability problem which is often overlooked is the price of textbooks. Students in Minnesota are spending an average of $1,400 per year on textbooks, $200 more than the national average. One Minnesotan I have heard from, Kari Cooper at Bemidji State, has to choose between paying for her textbooks and paying her rent. She ends up putting her textbook costs on her credit card.
I introduced a bill with Senator Dick Durbin of Illinois called the Affordable College Textbook Act that would address this problem. Our bill would expand the use of free, online, open-source college textbooks, which are a great alternative to the traditional expensive kind. This is a great way to reduce the overall cost of going to college.
College students such as Kari, Joelle, and countless others are working incredibly hard when they are still taking on significant amounts of debt. Part of the reason this debt will stay with them for a good portion of their lives is that they are paying such high interest rates.
Many college graduates are locked into loans with interest rates as high as 10 percent, which makes it all the more difficult to pay off your student loan. The last thing our students need is to be saddled with high interest rates on student loans that continue to burden them long after graduation. There is a clear commonsense solution. That solution is contained in the bill I am proud to have joined Senator Warren in introducing, the Bank on Students Emergency Loan Refinancing Act.
Students and graduates should be able to take advantage of lower interest rates and refinance their loans. When interest rates are low, homeowners, businesses, and even local governments regularly refinance their debt. Yet despite being the biggest student lender by far, the Federal Government offers no refinancing options to student borrowers.
Once a person graduates, if they have a high interest rate on their student loans, they are stuck with that high interest rate forever. That is not right for our students and families and it is damaging to the long-term well-being of our country because it holds people back from making decisions that help drive economic growth: the decision to buy a home, to start a family, start a new business, to purchase big- ticket items such as a car.
Our new bill would allow students and graduates who have existing private and public student loan debt from
their undergraduate education to refinance these loans at less than 4 percent. Last summer we came together in Congress to prevent the interest rate on new student loans from doubling. Thanks to that effort, undergraduate students taking out new loans now have a rate of 3.86 percent. The bill we introduced yesterday would enable students and graduates who are saddled with higher interest rates on their undergraduate loans to refinance at the same 3.86 percent rate.
There are nearly 40 million Americans with outstanding student loans. Many of them face interest rates higher than 3.86 percent, some of them much higher. This legislation will give them a chance to cut down their debt and keep more of their hard-earned paychecks. It will help thousands of students in Minnesota who, similar to Joelle and Kari, are doing everything they can to get their college degree.
So many Minnesotans in schools across the State show tremendous perseverance and grit in getting a college education and in cobbling together the resources to pay for it. They should not end up with crushing debt and be unable to take advantage of lower interest rates to reduce that debt, when so many other kinds of debt--almost every other kind of debt you are able to refinance.
We have a lot to do and a long way to go to reduce student debt for our students and make college more affordable. Doing that will help more Americans find jobs to support their families, help more employers find qualified workers for their businesses, and help our economy prosper. Passing this bill will be one important step we can and we should take.
I yield the floor.