Mr. President, I want to echo the words of my colleague from Iowa about the upcoming vote this week, which is so important. We know a lot of what has happened with student loan debt, which now exceeds $1 trillion--that is 1,000 billion…
Mr. President, I want to echo the words of my colleague from Iowa about the upcoming vote this week, which is so important. We know a lot of what has happened with student loan debt, which now exceeds $1 trillion--that is 1,000 billion dollars. It is more than credit card debt in this country. It is more than auto loan debt. It is also second only to mortgage debt of 300 million people of this great country.
According to the Wall Street Journal, the average student loan debt for a college graduate who borrowed to finance a bachelor's degree this year is nearly $30,000.
My wife, who graduated some years ago from Kent State University--the first of her family to go to college--graduated with just $1,200 in debt. Her father carried a union card, worked at the local utility company in Ashtabula. Her mother was a home care worker. They had no real money to put into her education or the education of her two younger sisters and younger brother. Yet she graduated with only $1,200 in debt, getting a 4-year degree from Kent State University and going on to a very good career in journalism.
For students such as the young man named Amish Patel, who works two jobs to pay tuition at that same university, Kent State, Stafford loans are important. Stafford loans are essential to helping students such as Amish achieve their goal of obtaining a college degree.
Just 7 days ago, because of inaction by Congress--as we know so well from the comments of Senator Harkin and others on the floor--the Stafford interest rate doubled from 3.4 percent to 6.8 percent.
We have a chance to address this private student loan market today also. My legislation, introduced not so long ago, helps those 2.9 million students across the country with more than $150 billion in private student loan debt. Overall, student loan debt is $1 trillion. Most of that is with the direct lending program--the Stafford loan program from the Federal Government. But $150 billion, or about 15 percent, which burdens about 2.9 million students, is private student loan debt. Private loans typically have higher interest rates, sometimes topping 15, 16, 17, 18 percent. They are more difficult to refinance, and they offer fewer payment options than those loans administered by the U.S. Department of Education.
Recent graduates with private loans, such as Lynsay Spratlen of Macedonia, a community in northeast Ohio, are living with their parents because their heavier debt burden often means they are unable to buy a home, to start a business, to buy a car, or to go on to graduate school. So along with Senator Heitkamp, I am introducing legislation to help stop the fleecing of college graduates who are stuck under a mountain of private student loan debt.
Often these banks will not refinance these loans. They are paying much higher interest rates. Sometimes they are cosigned, other times they are not cosigned, by a family member, by a parent, typically. But either way they are a huge burden, and a significantly lower interest rate would be available if they could refinance these loans.
The legislation authored by Senator Heitkamp and myself--Refinancing Education Funding to Invest for the Future Act--addresses this problem by authorizing the Treasury Department to make the private student loan market more efficient.
I want to read a couple of letters. We come to the floor of the Senate and talk about statistics, but we don't often enough illustrate or recite notes and letters and stories and discussions from people we meet or who write our office or we meet on college campuses or around our States.
This is a letter from Chad, age 25 from Toledo. He is from the University of Toledo:
I am currently pursuing a Bachelor's Degree in electrical
engineering at the University of Toledo. I live 15 minutes
away from there so I am a commuter living at home. My parents
don't have the funds to help me pay for college, so in order
to attend I must work full time to cover expenses. The
Federal aid I receive helps me cover a good portion of the
tuition costs. Increasing the interest rate for my loans
would be devastating to me on a financial level. It is hard
enough to pay them at the rate they are now; increasing them
would only make things a lot worse.
They are now at 3.4 percent. He wrote this before it had gone up to 6.8.
Mr. Brown, if there is anything you can do to prevent this
from happening please do so. I am not the only one that will
feel the major effects.
That is why this upcoming vote is so important.
Let me share one other letter from Oregon, OH, also near Toledo. It is from Mlynek:
I have been a single mother of twin boys since 1989. They
were born October 1, 1986. I co-signed on loans for both of
them so they could further their education in the field they
love ``music.'' Jason Mlynek went to Ball State University
for 2 years and then transferred to Carnegie Mellon
University for his BA and obtained his Master's Degree in
arts management. Jason is working in New York City for
Distinguished Concerts International, but due to the loans he
incurred and the cost of living barely has enough to buy
food. He is paying $1,300 a month on his loans.
Shawn Mlynek received his BA from Carnegie-Mellon and then
went to the University of Miami 1 year and then transferred
back to the University of Cincinnati Music Conservatory and
received his Master's Degree in vocal performance. He works
as a singing waiter and has voice students but is in the same
situation. His income for 2012 was under $20,000, but he is
paying over $900 a month on his loans.
I work full time, have been at the same company 19 years,
make $35,000 a year, have good credit, own by own home . . .
and wanted to refinance. I was told I have too much
outstanding debt due on the loans I cosigned for my children.
Too much debt to ratio so I cannot refinance to lower my
payments.
So not only do these burdensome student loans with interest rates too high--if they double to 6.8 percent, but with costs already too high-- affect the student when she or he graduates and wants to buy a house or start a business, but they affect the whole economy, and they also affect the debt burden of parents, such as this mother--Jason and Shawn's mother--who couldn't refinance her own mortgage because of the debt burden she was carrying because she cosigned on student loans for her sons.
Finally, she writes this:
The American Way is to help our children and they would not
have been able to accomplish their dream of an education in
the music field if I hadn't cosigned for their educational
loans.
Mr. President, I think that sums it up. These two letters--the one from the University of Toledo student and from the mother of the twins--sum up in so many ways why this issue is so important and why the Senate needs to act, and act quickly, because the interest rates on student loans doubled last week.
I suggest the absence of a quorum.