Madam President, a college graduate who pays more than $1,000 a month on student loans recently wrote the New York Times, ``I was told to chase down a bachelor's degree by any means necessary. But no one mentions just how expensive and…
Madam President, a college graduate who pays more than $1,000 a month on student loans recently wrote the New York Times, ``I was told to chase down a bachelor's degree by any means necessary. But no one mentions just how expensive and soul-crushing the debt will be.''
The United States, our country, has most of the best colleges in the world, but we also have the most graduates paying off college debt. Roughly 40 million borrowers owe $1.5 trillion in collective student loan debt.
The questions I hear most often about college are, No. 1, can I afford it? No. 2, is it worth it? And No. 3, can you make applying for financial aid and repaying student loans simpler? And from administrators, as well, I hear: Can't you do something about the jungle of red tape that makes it so hard to apply for Federal financial aid, to pay back student loans and that wastes money on overhead that ought to be spent on students?
Today, I addressed a group at the American Enterprise Institute, and I made three proposals to help make the answer to all four of those questions a yes. I want to briefly discuss those proposals today and other work that is going on in the Senate Education Committee, which I chair, and on which Senator Murray is the senior Democrat from the State of Washington. I will discuss what we are doing to answer those questions. Then I will ask at the appropriate time to submit most of my remarks at the American Enterprise Institute into the Record.
My first proposal was to simplify the FAFSA.
I ask unanimous consent to use a piece of demonstrative evidence in my speech.
Thank you.
This is a FAFSA. You may say that nobody knows what that is. Well, 20 million American families know what this is because 20 million American families fill this out every single year.
If you want a Federal loan to help you go to college or if you want a Pell grant that you don't have to pay back--60 percent of the 20 million students who go to college receive a Federal loan or grant--to do that they first must fill out this Federal student aid application form.
In our first hearing on this subject in 2013--I can remember it as if it were yesterday--we had four excellent witnesses who came from different parts of the country, with different directions. They weren't all singing the same song. One of them was Kim Cook from the National College Access Network. She said that simplifying the FAFSA would encourage as many as 2 million more Americans to go to college and make it more affordable for them.
In our State of Tennessee, we became the first--thanks to the leadership of Governor Bill Haslam in our State legislature--to make 2 years of college tuition-free for high school graduates and now for adults as well. But in order to get the money from the State to make your tuition free, you first have to fill out this FAFSA. Those who help students file FAFSA at the community colleges and in the high schools tell me that it is the single biggest impediment for low-income Tennesseans to have a chance to go to college.
The President of Southwest Tennessee Community College in Memphis told me that he thinks he loses 1,500 students a semester because the families say to him: Well, we don't know how to fill this out. We are uncomfortable with the information. We have already given the same information to the Internal Revenue Service, so why should we give the same information to two governmental Agencies?
Here we have an opportunity in our State for every single student who wants to have 2 years tuition-free, and this form is the biggest impediment. From what I can remember of the testimony in 2013--and Senator Bennet of Colorado and I really came to the same conclusion-- all four witnesses said that these 108 questions are unnecessary. They also agreed that they could probably be reduced to two questions. Ms. Cook said that if that were done, as many as 2 million more students would apply for student aid.
So Senator Bennet and I went to work. We worked with counselors in high schools. We worked with college aid specialists. We worked in a bipartisan way, and we came to a conclusion that we could reduce the amount of questions from 108 to between 15 and 25.
Senator Bennet is now on the Finance Committee and not on our education committee, but he stays very involved. Soon Senator Bennet with Senator Doug Jones of Alabama, Senator Susan Collins, and I, are all going to introduce this legislation this year as one way of making college simpler and more affordable for students.
The second proposal that I hope to make and that I will talk about today is a new system of repaying loans. Today, there are nine different ways to repay student loans. Senators Burr and King, among others, have introduced legislation to make that simpler.
Well, my proposal is to scrap the current system that has been called by Dr. Susan Dynarski a ``rigid archaic payment system that unnecessarily plunges millions into financial distress'' and reduce it to two new options. The first new option would be based on a student's income. If you were to get a student loan under this option--which is the option I think most students will take--you would never be required to pay back more than 10 percent of your discretionary income. Your payments each month would be deducted from your paycheck, and you would continue to make those payments until your loan was paid off.
If you didn't make enough money to make your monthly payment, you would owe nothing, and if you would pay nothing, it would not reflect on your credit.
Let me give you one example of how this income-based repayment system would work. Let's take Joe, who earns a bachelor's degree in engineering. He has an average loan for college graduates, which is $28,500. That is the average loan for an American graduate with a 4- year degree. Joe makes about $60,000 in his new job as an engineer. That is what the Census Bureau says is the median starting salary for someone with an engineering degree.
Joe is unmarried and has no children. Here is the way the repayment plan works for him. We deduct a portion of Joe's income that is needed for necessities under a government formula; that is, about $18,700. What is left we call his discretionary income; that is, $41,265. So Joe will pay no more than 10 percent of that $41,000, which is $4,127 to be exact, or $343 a month. That is Joe's payment on a student loan. Under this proposal, if Joe, the engineer, never gets a raise, he will pay back his loan in 9 years.
There are other examples, which I will submit later for the Record, but here is one more example. For Maya, who earned a bachelor's degree in economics, the average salary for that degree is less, according to the Census Bureau--closer to $43,000. The same amount for living necessities and expenses is deducted. She will pay 10 percent of a lesser amount, which will be $202 a month, in her case. Now it takes a little longer to pay off her loan, but if she never gets a raise she will still be able to pay it off within 16 years.
What if you can't pay off your loan? What if you don't make enough money to pay toward your loan? What if you drop out, and you owe money? Well, if you don't earn anything, you don't pay anything. And if it isn't paid off at the end of 20 years, your loan is forgiven under current laws, and we don't propose to change that.
My new loan repayment system should make it possible for students to avoid nightmares about paying back their student loans. Since the money to repay the loan is deducted from the paycheck each month, it should make the taxpayer whole. Under my proposal I believe most students will choose the option I just described. But if they want to choose to pay their loan in 10-years--like a mortgage loan with a flat payment--they can still do that and they will pay their loan off a little faster. The money will be deducted from their paycheck too, and it will be paid off a little faster.
The third proposal is a new accountability system for colleges based upon whether borrowers are actually repaying their student loans. This should encourage lower tuition for some programs or even discourage schools from offering programs that are not worth it to students.
So all three of these proposals--simplifying the FAFSA application form from 108 questions down to 15 to 25, No. 1; No. 2, scrapping the current method of paying back student loans from this archaic system we have now and replacing it by giving the students the option of an income-based repayment program with monthly payments deducted from their paychecks that are never more than 10 percent of their discretionary income or keeping the 10-year mortgage style payment, if they prefer, with monthly payments deducted from their paychecks; and the third is a new accountability system based upon whether borrowers are actually repaying their loans.
Now before I submit the rest of my speech for the Record, let me just mention the activity in our Senate education committee.
During the last 4 years, we have held 27 hearings on the Higher Education Act, and there are a number of bipartisan proposals that have emerged from that.
I mentioned the proposal by Senators Jones and Bennet and Collins and I to simplify the FAFSA.
There is another proposal to simplify the FAFSA that Senator Murray and I passed in the Senate last year and that we plan to introduce this year. It allows a student, with one click, to answer 22 questions.
Senators Burr and King have proposed ways to simplify loan repayment.
Senators Murphy, Enzi, and Hassan are interested in expanding competency-based education programs. Professor Walter Russell Mead describes these programs as ``measuring whether a student is learning stuff instead of measuring how long he or she sits in their seat.'' In other words, if you show up and already know how to be a welder, you don't have to stay there just because of the Federal dollars it is giving out based on how long you sit in your seat.
Senators Grassley and Smith have a bill that would require institutions to tell you exactly whether the money you are being awarded when you are admitted is a loan you have to pay back or is a grant you don't have to pay back. Financial aid letters are confusing for many students. Senators Cassidy and Warren have legislation about data. Senators Grassley and Smith have other legislation to counsel students about how much money they should borrow. Senators Murphy and Warren want to expand Pell grants to prisoners, which I think is a good idea. Senators Young and Hassan are interested in experimental sites. Senator Kaine and I have discussed allowing students to use their Pell grants to pay for shorter programs.
In 2013, Senators Bennet, Burr, Mikulski, and I asked a distinguished group of college administrators to give us specific steps to simplify and to make more effective the thousands of pages of regulations that govern our 6,000 institutions. The result was the Kirwan-Zeppos report that gave us 59 grant recommendations to eliminate the jungle of red tape.
In conclusion, this year, I have met with Senator Murray several times and with most of the members of our committee. We want to work on a broad piece of legislation that would update the Higher Education Act. Our goal would be to have it ready for the committee this spring so the Senate can consider it this summer. That schedule should permit a conference with the House of Representatives that would produce a Christmas present for 20 million families by the end of the year.
Our Federal aid for students began with the GI bill for veterans in 1944, when only about 5 percent of students attended college and had bachelor's degrees. Today 35 percent of students have bachelor's degrees, and 60 percent of our country's 20 million college students receive Federal aid--$28 billion in grants and $90 billion in new loans.
It is time for us to update our Federal laws on higher education. My proposal is to simplify the FAFSA--to scrap the current system of repaying student loans with an income-based option, by which a student would never pay more than 10 percent of his discretionary income, and create a new accountability system that would apply to all colleges and all programs that would be based on whether students are actually repaying their loans, which would tend to discourage colleges from offering programs in which students couldn't earn enough to pay back their loans and could encourage lower tuition. All of those, along with the other proposals we have seen in our committee, should give the Senate plenty to work on.
First, simplifying the FAFSA.
The cumbersome FAFSA is one major impediment to low-income students who want to go to college.
They and their parents are intimidated by the complexity, are wary of the government form, and don't see
why they should have to give the Education Department information they have already given to the IRS.
The former president of Southwest Community College in Memphis told me he believes that he loses 1,500 students each semester because of the complexity of the FAFSA.
A woman who has mentored with Tennessee's free tuition program, the Tennessee Promise program, said the complex form has a ``chilling effect''--intimidating parents who may themselves never have attended college and have no experience navigating the process.
And over and over families have asked me, ``I've already given most of this information to the federal government when I paid my taxes. Why do I have to do it again? Once is enough.''
To make matters worse, there is a verification process that stops the payments of Pell Grants while the family scrambles to resubmit its tax information again and the government checks to make sure that the information is correct.
I recently talked with another administrator from Southwest Community College who told me that over one third of the applicants who put down the school as an option on their FAFSA applications were selected for verification last fall.
At a school where over 60 percent of students receive a Pell Grant, this is a huge burden for the low-income students who we want to fill out the FAFSA the most.
This is happening across Tennessee--the President of East Tennessee State University told me one third of his students who receive federal financial aid were subjected to this verification procedure this year.
I have two proposals to simplify the FAFSA:
First, Senator Jones and I, along with Senators Bennet and Collins, are reintroducing legislation soon that would reduce the number of questions from 108 to 15-25 basic questions about students, their families, and their plans for college.
We would keep providing the information that States and institutions use to calculate additional aid to prevent students and families from having to complete additional paperwork down the line.
Senator Jones's and my legislation would allow students as young as middle school to easily learn about their likely Pell Grant awards with a phone app or a chart so they can begin to think about and plan for college.
The second way to simplify the FAFSA is legislation the Senate passed last year and that Senator Murray and I plan to reintroduce this year, which would allow families to answer up to 22 FAFSA questions with just one click.
It does this by ending the need for families to give the same information to two different federal departments--the Department of Education and the Internal Revenue Service.
It would also:
Simplify the burdensome application process for the 40 percent of applicants who do not file Federal income taxes but likely qualify for Pell Grants;
Dramatically decrease the number of students whose aid is tangled up when they are selected to be verified; and
Eliminate the $6 billion in mistakes that the Treasury Department estimates are made each year by awarding an applicant too much or too little aid.
My second proposal, to help make federal loans more affordable once students graduate, will simplify the nine different ways to repay loans into two options.
The current system is so complex that even college administrators struggle to navigate it.
At a roundtable at the University of Tennessee--Martin, a Tennessee college president, told me it took him months to figure out how to help his daughter pay off her Federal student loans in full even with the money in hand.
This proposal would streamline those nine plans into a new option that guarantees that borrowers would never have to pay more than 10 percent of their income that is not needed for necessities.
And if a borrower loses his job or does not make enough, he would not pay anything, and it would not hurt his credit score.
The monthly payment would be automatically withheld from borrowers' paychecks, just like Federal taxes.
I believe all students will want to take advantage of this simple and affordable new option, but if not, they will still be able to opt to pay on the existing 10-year loan repayment plan schedule, which, for many borrowers, will help them pay off their loans faster.
Just like the new repayment plan, borrowers who wish to pay their loans off faster would have their payments automatically deducted from their paychecks.
Let's talk about how the new income-based repayment plan would work:
Joe earned his bachelor's degree in engineering.
He has the average loan for college graduates of $28,500.
He makes $60,000--that is what the Census Bureau says is the median starting salary for someone with an engineering degree.
He is unmarried and has no children.
So that year, we deduct the portion of his income that is needed for necessities--that is $18,735--and what is left is what we call his discretionary income--$41,265.
He will pay ten percent of that $41,265 a year, which is $4,127--or $343 a month.
Under this proposal, even if he never gets a raise, Joe will pay back his loan in 9 years.
Now let's take Maya, who earned a bachelor's degree in economics.
She also has the average loan of $28,500.
Her starting salary is $43,000--the median starting salary for someone with a degree in economics, according to the Census Bureau.
She is also unmarried and has no children.
So, that year, we deduct the same thing for necessities--$18,735--and that leaves her discretionary income at $24,265.
Maya will pay 10 percent of that $24,265 a year, which is $2,427, or $202 a month.
Under this proposal, even if she never gets a raise, Maya will pay back her loan in 16 years.
Stephanie earned her associate's degree from a local community college.
She has $10,400 in student loan debt--the median amount a recent community college graduate would expect to have.
Her starting salary is $39,000--the median salary for a 25-29-year- old with an associate's degree.
She is unmarried and has one child.
So the portion of her income that is needed for necessities-- $25,365--is larger because it is supporting two people. That leaves her discretionary income at $13,635.
Stephanie will pay 10 percent of that $13,635 a year, which is $1,364, or $114 a month.
Under this proposal, Stephanie will pay back her loan in 10 years even if she never gets a raise.
Finally, let's look at someone who isn't able to repay his loan.
John went to community college for a year, took out $7,500 in student loans, but dropped out after his first year.
He makes $20,000 a year.
He is unmarried and has no children.
So we deduct the portion of his income that is needed for necessities--$18,735--and that leaves his discretionary income at $1,265.
John will pay 10 percent of that $1,265 a year, which is $127.
Under this proposal, assuming he never gets a raise, John will have not repaid his loan in 20 years.
In three out of these four examples, the borrowers were able to pay back their loans in 20 years.
And if these students have reasonable salary increases, they would pay off their loans even sooner.
But for those undergraduate students like John who never make enough to pay back their loans in 20 years, the amount that hasn't been paid after 20 years is forgiven under current law, and that seems like a policy we should keep.
Under this new repayment system, students will have manageable payments and most will completely pay off their loans, which is good for the students and is good for the taxpayers.
This new option should end the nightmare that many students have of never being able to afford their student loan payments.
My third proposal is a new accountability system for colleges to make sure the degrees they offer are worth students' time and money.
This new accountability system would measure whether students are actually paying off their loans.
The proposal would simplify and expand what the gainful employment rule--proposed in 2014 by the U.S. Department of Education--tried to accomplish.
What is different is it would apply to every program at every college--public, private, and for-profit--and the measure will be much simpler.
For some programs, this should provide colleges with an incentive to lower tuition and help their students finish their degrees and find jobs so they can repay their loans.
Title IX
There will be other good ideas, and some of them are difficult.
One of these is a rule about campus safety.
The U.S. Department of Education has proposed a rule addressing campus safety by clarifying what is required by title IX.
I'm glad to see the Department is going through the rulemaking process, which allowed the public to submit comments.
It is my belief that Congress can also address some of these issues, and I am committed to trying to do that.
Conclusion
We have a committee with many different voices and diverse views, but we have been successful in bringing legislation with broad bipartisan support, including with a divided government, including fixing Federal student loans, the law fixing No Child Left Behind, the 21st Century Cures Act, and legislation to combat the opioid crisis.
In my conversations with Democrat and Republican Senators, I have found a remarkable degree of bipartisan consensus about the directions we should take to make college affordable and make students' degrees worth their time and money.
Of course, there will be differences of opinion, and if there are, we will resolve them the traditional way: by voting.
And if we cannot agree on one thing, I would be willing to do, as our committee has in the past, which is to move forward on those important matters on which we can agree.
There has never been a time when more Americans have agreed that education and training beyond high school is essential to a good life and a higher income.
It is our responsibility to take whatever steps we can to help students afford college and make sure that the degrees they earn are worth the time and money they pay for them.
I yield the floor.