Statements on Introduced Bills and Joint Resolutionsby Senator Richard Burr
Posted on 2015-01-07
BURR. I thank Senator Alexander and Senator Bennet, and I thank
them for what they propose in the FAST Act.
As a parent who went through two kids going to college, when I was presented that form, I realized I wasn't capable of doing it.
I remember a story still today of a dear colleague of mine in the House of Representatives--many know Sonny Bono. We asked Sonny one day: Why did you come to Congress? How did you get into politics? He said: Well, I became mayor of a city for one reason--because I opened a restaurant. When I went to get a sign permit, they gave me 50 pages to fill out. I didn't graduate from high school, but I figured out it was easier for me to run for mayor, win, and make the sign permit 1 page than it was for me to fill out 50 pages.
That is how he got his start in politics.
I might say, as a parent, to be able to--on a post card--apply and know whether I was eligible for my children's student aid would be a tremendous thing for all parents.
Senator King and I are on the floor to talk specifically about the Repay Act.
As we have looked at student loans and as the government has become the primary loan component for student loans, what we have seen is that the consolidation of one's loans has dramatically increased in an incoherent way. Now, some might say that is exactly what government does. We say we are going to fix a problem, and we fix it in a way that you don't understand it; it is way too cumbersome.
What we have tried to do is we have made an effort to provide more avenues for or options for children to choose or parents to choose how to pay back student loans. What we have done is we have made it as complicated as the form that Senator Bennet showed, which determines eligibility.
Currently, the Federal Government offers 12 repayment options for students. Among these 12 options, students are offered a series of terms and [[Page S64]] conditions that often overlap amongst several other programs with very similar sounding names and stated benefits. The problem gets worse annually.
The administration continues to do new regulations every time we see a problem, and those regulations then overlap with existing regulations on student loans to where individuals don't know exactly what their options are--what Senator King and I want to do.
We will introduce, hopefully later today, the Repay Act. It provides two options that kids choose from: a fixed-rate option for repayment and an income-based option for repayment.
We also realize that under the income-based options that are out there today an individual who is married could file as married--filing an individual tax form--and their household income isn't considered for the amount they are going to repay on a monthly basis. That is not how we designed it.
We designed it so what their income capability was, their repayment would reflect it. In other words, we have people who are gaming the system today because their one spouse makes a lot of money and one spouse doesn't make much, and they pay a minimal amount of monthly student loan repayments. When they do that, they cheat the other students behind them because they take money out of the system that can be used for those individuals who desperately need it.
The Repay Act streamlines a multitude of loan programs and creates a fixed-base and income-based repayment. It does it by consolidating all income-based repayment programs into one repayment program that caps borrowing at $57,500 for 20 years and limits to 25 years the repayment period for loans over $57,500, while ensuring the monthly payments rise at a reasonable rate based upon that annual income level--again, the household income level.
The benefit for students is they will up front have the knowledge they need of what they will expect to pay based upon the amount they borrow.
We believe this will drive smarter borrowing decisions and will lead students to limit the amount of debt they take prior to going to school. Behavioral economists argue that when an individual's options are less complex and straightforward, individuals are more likely to make rational decisions.
Senator King and I believe the changes included in the Repay Act will promote those rational decisions that will ultimately lead to smarter borrowing that leads to repayment and ultimately healthier financial situations for our Nation's graduates.
Why are we here? It is because only 80 percent of our student loans are being repaid. That means 20 percent is in default.
What we want to do is we want to see kids get a great education. We want to see the ability for that to be paid for, and we want that money to be repaid based upon their success in the marketplace. I believe this act will put us on that road to do it.
Now, I don't want to pretend, and I don't think Senator King will pretend, this isn't something that we crafted and created. This is the result of ideas that were put forward by the National Association of Student Financial Aid Administrators, the Lumina Foundation for Education, the Education Finance Council, the American Council on Education, the Young Invincibles, the Institute for College Access and Success, the New America Foundation, and many other groups.
This is truly Congress, the Senate at its best, reaching out to organizations that do this day in and day out, just as I think the chairman did on the application-card student aid form.
We have tried to search the best ideas. From that we have gleaned them and put them into the Repay Act. We will introduce this bill. I thank the chairman. It does complement very much the FAST Act.
I thank my colleague, Senator King, for his help on the introduction of this bill.
I yield back.
The PRESIDING OFFICER. The Senator from Tennessee.