A picture of Senator Richard J. Durbin
Richard D.
Democrat IL

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  • Nomination of Roy K.J. Williams to Be Assistant Secretary of Commerce for Economic Development

    by Senator Richard J. Durbin

    Posted on 2014-05-14

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    DURBIN. How much time do we have on the Democratic side? The PRESIDING OFFICER. The Democrats control the next 45 minutes.



    College Affordability Mr. DURBIN. Madam President, this week Democrats are going to continue the conversation about college affordability. I was joining Senator Elizabeth Warren of Massachusetts, Jack Reed of Rhode Island, Al Franken of Minnesota and many others--in fact, 24 others, to introduce the Bank on Students Emergency Loan Refinancing Act.

    Why are we talking about student loans? Ask working families; ask their kids why we are talking about it. Because there is more student loan debt in America today than there is credit card debt. It is huge. It is growing. If you finished college a few years back like me and had a student loan that worried you, you would not believe what students are facing today.

    The average student coming out of college: $25,000 in debt. Imagine sitting down at the desk in the college admissions office at age 19 as they push the papers across the desk to you and ask you to sign up for $10,000, $15,000 or $20,000 in loans so that you can start your class on Monday. There you sit with $20,000 in loans to start your class on Monday. You are 19 years old.

    Wait a minute. Mom and dad have to cosign them with you. That is not unusual. So now it is a family debt. I had a press conference in Chicago on Monday. This wonderful woman came in and told the story about how she and her husband with two sons were determined to get them both through college. But she has not been able to do it. Do you know why? Because the first son took 5 years. She and her husband had to borrow the money to get him through school--good schools. But it is so much debt for their family that they cannot even consider allowing their other son to start college yet. He is waiting for his turn.

    That is where we are in America today when it comes to college education. If you did not happen to be wealthy or so smart that you get everything paid for, and you are stuck in the middle with working and middle-income families, you are facing debt challenges families have never seen in the history of the United States.

    There are 1.7 million Illinoisans--that is more than 10 percent of our population or almost 15 percent of the population of the State of Illinois--who have outstanding student loan debt--15 percent. That is 1 out of 6, 1 out of 7 people in my State with student loan debt.

    Nationally, there are 40 million borrowers with more than $1 trillion in student loan debt. On the average, graduates of the class of 2012 left with $28,000 in debt. But the individual debts are often much higher. I have had students whom I have invited to come to my Web site and tell me their story. It is heartbreaking.

    These students have debt of over $100,000 with a bachelor's degree. God forbid they went to one of those for-profit colleges or universities. You know the ones I am talking about. They are the ones that absolutely inundate you with advertising.

    You cannot get on a CTA train or bus in Chicago without getting hit between the eyes with all of these for-profit colleges, for-profit schools. The biggest ones: The University of Phoenix, Kaplan, DeVry, just to mention a few. It is a different category. These are not the public colleges and universities. They are not even private colleges and universities. They are for-profit schools.

    Believe me, they make a profit. What is the difference between for- profit schools and community colleges, the University of Illinois, DePaul University, Georgetown University? The difference is this. As a category, for-profit colleges and university have 10 percent of the high school graduates going to school, like the ones I mentioned. But they receive 20 percent of the Federal aid to education. Why? They are so darned expensive. That is why. The [[Page S3012]] students who sign up for these schools--these glamorous schools with all of the marketing--end up signing up for more debt than you can imagine--twice the debt of students that go to most other schools.

    But here is the kicker. Here is the one the for-profit colleges and universities do not want to talk about: 46 percent of all the student loan defaults or student loan failure to pay off their loans--46 percent of them--students from for-profit colleges and universities.

    Set that aside for a minute. As awful and scandalous as that is in this country--the exploitation of these students and their families by schools which many times offer worthless diplomas, worthless degrees, and absolutely no ticket to a job--as bad as that is, let's talk about the bigger picture, 90 percent of the other college students and what they are facing.

    They are borrowing money right and left. They are sinking themselves, and many times their families, more deeply in debt than they ever imagined, and they have no idea what they are getting into. You see, student loan debts are not like other debts. It is not like you borrowed money for a house, a car, a boat or a temporary loan to get by. Student loan debt is one of the few debts in America not dischargeable in bankruptcy.

    What does that mean? No matter how bad things get for you or your family, no matter what economic tragedy comes your way, if you end up in bankruptcy court and try to clear the table and start over, you will never, ever be able to discharge your student loan debt.

    Oh, there is an extreme circumstance when you can. It is so extreme it almost never happens. So a student loan debt is a debt for a lifetime. You will either pay it off or you will carry it to the grave. They actually execute--these debt collectors--on grandmothers on Social Security. I am not making it up. Grandma wanted to help her granddaughter. She cosigned a student loan. The granddaughter dropped out of school, never paid back the loan, defaulted. They went after granny's Social Security check on the student loan. That is what we are talking about.

    That is why we have to change it. That is why the Democrats have come forward on this side of the aisle. We are waiting for our first Republican to join us, to do something about refinancing college debt in America, to at least bring down the interest rates, to allow students to consolidate their loans at lower interest rates, so that they will pay less in interest.

    That poor family I told you about from Chicago where the mother came and testified, they could not let the second son start college because they had never paid off the debt on the first son and could not see how they would. Year after year they were churning thousands and thousands of dollars into payments all retiring interest and not retiring the principal. The interest just keeps piling up. God forbid you miss a payment. It is awful.

    The bank on students refinancing bill, which Senator Elizabeth Warren, Jack Reed, and myself are bringing to this floor, will help current borrowers take advantage of what we have in low interest rates right now. Those with Federal loans can refinance at the lower rate, the same rate as students who are taking out their first loans this year: 3.86 percent for undergraduate Direct Loans; 5.41 percent for graduate loans; 6.41 percent for PLUS loans taken out by the student's parents.

    Now, you are going to say: Those are not rock-bottom interest rates. Believe me, they are a bargain in every category here against what these students are facing today in paying off old debt. Many students will find their interest rate on their loan cut in half. What does it mean? Those of us who borrowed some money in life to buy a home or buy a car, a change in the interest rate of 3 or 4 percent gives you a chance to finally start reducing the principal. That is what we want to do, so that this debt can be put behind these people.

    Those who have private loans, many of which have sky-high interest rates, few protections for borrowers, at least in the version of the bill we have introduced, can refinance into Federal loans with lower rates and stronger consumer protections. You ought to hear what these collection agencies do to students and their families when they do not pay on these loans. You think you have had some problems on the telephone with people calling and harassing you. They never quit. They need their money. They want their money. They will not let you go no matter what your circumstances.

    This bill will allow young people to lower their payment by hundreds of thousands of dollars a year. They have a chance to actually get ahead on their debt. What is more, the bill we are offering is fully paid for. Here is how we pay it. You know the name Warren Buffett, third or fourth wealthiest man in America. I happen to know him. He comes by and has lunch with us from time to time and talks about business and investments.

    But the one thing he wanted to talk about the most was something that he thinks is fundamentally unfair. Do you know what it is? Warren Buffett came in here and said: Why is it that Warren Buffett, the billionaire, has a lower income tax rate than his secretary? Why? It is not fair. And it isn't fair. Because when profits in life--his income in life--come from capital gains, it is treated at a lower tax rate than ordinary income, which his secretary receives.

    So Warren Buffett has said: For goodness' sake, I shouldn't pay a lower tax rate than my secretary.

    So we put in what is called the Buffett rule, so there will be at least a minimum income tax charge for millionaires so they pay at least as much of an income tax rate as their secretaries. Does it sound radical? I don't think so. I think it sounds reasonable and so does Mr. Buffett.

    We take the revenue that comes in from charging the millionaires-- that we just talked about under the Buffett rule--and we apply it to the refinancing of college debt. That is how we achieved this. That is how we get it done.

    This bill would help people such as Grace Steging. She is from Champaign and just recently wrote me a letter. She took out a $33,000 Federal student loan to get a degree in special education, and she is just completing her first year as a teacher in a low-income school district in Central Illinois. In her letter she said: ``I am shocked and distressed at the way my student loan debt continues to multiply even through I graduated a year ago.'' She tells me she made her payments faithfully each time every month, but even so her payments continue to rise as the interest rate accrues. It is a shame that even with a degree from a respected school and a good, secure job, Grace can't save money and she can't keep up with her student loans. She wrote and said: Senator, I am not a banker or a businessperson, I was born to teach. . . . Shall I teach my students to follow their dreams or to follow the money? It is a good question. Reasonable borrowing has always been part of getting a higher education for many Americans. I know this story personally because I was a beneficiary.

    The National Defense Education Act was passed in this Chamber in 1958, when Congress was scared to death. Scared by what? Scared by a basketball-size satellite that the Russians had launched called Sputnik, and it was beeping as it went around the world. We thought it was the end of life as we knew it because we knew the Russians had the bomb. Now they were in outer space and we weren't--1957.

    So this Chamber met with the House and said we have to do something. One of the first things we are going to do, we are going to get more Americans in college. We need better trained, better educated Americans to fight the Soviets and to make sure we don't lose the space battle.

    Along came the National Defense Education Act, and it opened the door for me to borrow the money to go to college and law school and pay it back over 10 years with 3 percent interest.

    I paid it back. I didn't think I could because it seemed like a huge amount of money at the time. I will not tell you the amount because it will date me, but I will tell you today students don't face the same circumstances. The debt they face is so dramatic.

    Jon and his wife from Chicago recently contacted my office. They both went to great, not-for-profit public [[Page S3013]] schools for their undergraduate studies. Jon went on to law school. His wife went on to medical school.

    Jon is a first-year lawyer in a firm. His wife is in her second year of medical residency. They received good educations from respectable schools and now they have jobs in their fields.

    Let me tell you what else they have. They have a combined student debt, Jon and his wife, of $300,000 on student loans. They pay $1,300 a month in student loan payments. Thankfully, they will participate in the Federal income-based repayment program, which moderates their payments, but here they are, just starting out, maybe with a family and a $300,000 debt.

    How can they buy a house? They have explored it. No bank will come near them to even loan them the money for a house. That, to me, is what is disgraceful--not only that these students end up coming out of school in debt, they are postponing their lives. They are postponing marriage, children, homes, and cars.

    Many of them are moving right back in with mom and dad in that basement apartment, because dad just came out of retirement to help them pay off the loan. I am not making this up. These are real stories that I run into.

    One of the other ones I mentioned earlier, Hannah Moore--or at least I want to make a reference to Hannah Moore. I spoke about her on the floor. She is from Chicago and what a sweet young lady. She made a fatal mistake. She went to one of these for-profit colleges in Chicago called the Harrington College of Design--great advertising if you have seen it. Do you know what her reward for pursuing the American dream by seeking a college education at this for-profit school was? It was $124,570 in student debt, much of it in private loans for what is basically a worthless--worthless--diploma from a for-profit college.

    Her story isn't unique. I just saw her last Monday and her debt has gone up. It is now over $150,000. This poor, attractive, smart, and determined young woman doesn't know where to turn. Her life looks like a brick wall when she looks ahead. I think she is 30, maybe 32.

    Can you imagine. This is what she has in store, having thought she did the right thing, went to that college and got this degree which she thought was worth something. It turned out it wasn't.

    The Federal Reserve Bank in New York warns us student debt isn't just a student problem, it is a national problem. It threatens Americans in terms of investing in our future, investing in homes, investing in businesses, and it even threatens their future retirement security. Hannah's father had to come out of retirement to help pay off the bills.

    In addition to last week's refinancing proposal, Senators Warren, Jack Reed, and I have several proposals to address student debt and college affordability, a bill that would give colleges financial incentives not to overload students with debt.

    We have also introduced the Student Loan Borrowers' Bill of Rights Act. I think there ought to be an open, complete disclosure to students about the debt they are getting into. If there is a better alternative, taking government loans that you can consolidate at a lower interest rate as opposed to a private loan which rips you off with a high interest rate--some of this is very basic.

    Senator Harkin and I introduced a bill to bring better coordination and focus to Federal oversight for for-profit colleges and universities. It is called the Proprietary Education Oversight Coordination Improvement Act. It is a long title for a bill that basically is trying to come to grips with the scandalous behavior of for-profit colleges and universities.

    For too many young Americans, the promise of a fair shot at affordable college education has become a long shot. That is not the American way. We want to have an educated generation prepared to lead this country. They cannot do that saddled with debt and going to worthless schools.

    It is time for this generation to step up, allow these students to refinance their debt to get their lives back in order and to start looking ahead with some promise and hope and get their parents out from under the debt burden they assume with their kids. Stop the rip-offs that are coming from these for-profit colleges and universities and put an end to some of the rip-offs, even by semigovernment agencies.

    All of these things have to come to an end, and it will only happen if we do it--and it will only happen if we do it on a bipartisan basis.

    I hope my colleagues, particularly on the other side of the aisle, will join our efforts.

    I yield the floor.

    The PRESIDING OFFICER. The Senator from Delaware.

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