Floor Speech on Student Loans
Senator Warren delivered a floor speech on student loans on July 18, 2013. The video of her remarks is here. Full text of the remarks is below.
Madam President, it has been eighteen days since the interest rate on new direct student loans doubled from 3.4 percent to nearly seven percent. Students will head off to college in just a few weeks, and Congress still has not found a way to keep their interest rates low. In Massachusetts, our kids, our parents, our and schools are worried.
I just want to go over the history so that we're all clear about how we got here.
For months, Democrats have argued we need to keep interest rates low. We've made at least three attempts to do this. For example, I introduced a bill that would have dropped interest rates on direct loans for one year to the same levels at which banks borrow from the federal government - which is currently less than one percent. I introduced that proposal because I believe that the federal government should invest in our students, and not just in our biggest banks.
Now, we also proposed to extend the current interest rates at 3.4 percent for two years, paid for by closing tax loopholes. And Senator Reed and Senator Hagan offered a bill to keep rates low for one year.
All three proposals had two features in common: They cut costs for students and they gave us some short-term breathing room to take on bigger problems, including how to refinance a trillion dollars in outstanding debt and how to reduce the overall costs of college for all of our students.
When we brought the last two proposals to a vote, they won by a majority. But they didn't pass, because the Republicans filibustered both bills. We could have kept rates low, but the Republicans-every single one of them-voted to block that.
Instead, Republicans put together their own long-term plan-and it was an amazing plan. According to official government accounting, it would have generated $184 billion in profit that the government is already projected to make on these programs over the next 10 years, and then the Republicans would have added another $16 billion in new profits. Now that's billions in pure profits-profits after we've accounted for the cost of money, after the cost of administering the loan and after the costs for bad debt losses-all those profits would be made off the backs of our kids who are trying to get an education.
So here we are, eighteen days past the July 1 deadline, and students are being hurt because Republicans filibustered these reasonable plans - even though the plans had support from a majority of Senators.
Chairman Harkin, who has been a leader on this issue from the very start, has been doing his absolute best to find a solution that the Republicans will not filibuster - so that when students start taking out loans in just a few weeks, they won't be the ones to pay for Republican obstruction. Others like Senator Jack Reed, Senator Stabenow, and the Majority Leader have also worked very hard to find a solution.
But here's the problem. From the very beginning, Republicans have dug in their heels and insisted that any new student loan proposal maintain the same $184 billion in profit that the government currently makes on student loans. They insist that whatever we do, the government must make the same profits off students that they will make now by doubling the interest rate to 6.8%. They say, whatever you do, make sure that the government makes $184 billion off our students.
Many Senators who care deeply about this issue, like Chairman Harkin, Senator Durbin, Senator Manchin, and Senator King have been doing their best under these circumstances to help the students out. I applaud their commitment to our students. They have succeeded in getting at least some Republicans to support a proposal that will result in lower interest rates for some students for a couple of years.
But in the end, this is a simple math problem. If Republicans insist that we continue to make the same amount of profit in the student loan program, that just means that students in future years will have to pay higher rates to make up the difference. In other words, kids who are sophomores in high school right now will end up paying even more so students who are sophomores in college today can pay a little less.
I don't believe in pitting our kids against each other. I don't think high school sophomores should pay more so college sophomores can get a break. In fact, I think this whole system stinks. We should not go along with any plan that demands that our students continue to produce huge profits for our government. This is wrong.
Making billions and billions in profits off the backs of students is obscene.
The Republican position is that they refuse to give up a single dime of these profits. In fact, this latest proposal adds another $715 million in additional profits. The Republican position is that we don't need to close tax loopholes or ask wealthy Americans to pay their fair share, because we have a ready-made profit center for funding the federal government: middle class families who are struggling to pay for college.
I have the deepest respect for the Senators who have tried hard to come up with a deal for our students under these Republican conditions and I have no doubt their intentions are honorable. But I can't support this proposal.
I have fought for hard-working middle class families for nearly all of my grown up life. I fought back against credit card companies that put out zero-interest cards, planning to make all their profits in the fine print. I fought back against teaser rate mortgages that promised low payments in the first two years, but then shot up to rates that pushed millions of people into foreclosure. And now the US Senate is offering its own teaser-rate student loan system -a great deal for students this year and next, but every kid who borrows after that gets slammed. That's not the business the United States government should be in.
I understand that compromise isn't always pretty, but there's no compromise in this bill. With student loan rates now at 6.8%, if Congress does nothing, the government will make $184 billion in profits. Under the new proposal, the government will make the same $184 billion in profits - plus another $715 million in additional profits - and that all comes directly off the backs of our students.
I want to see those profits go down. I know we may not be able to do it all at once, but we need to take a step now to lower the profits we make off the backs of our kids-not lock them in for the next ten years.
At a minimum, I would urge my colleagues to support Senator Jack Reed's amendment to cap the interest rates under this plan at current law. That amendment is the only way to ensure that no student ever ends up paying more than they would if Congress does nothing.
And long term, we need to do three things:
• First, eliminate government profits from new student loan programs - period.
• Second, refinance existing student debt to reduce the profits that are crushing our young people.
• And third, reduce college costs so that American families can pay for college without burying themselves in debt.
That's what we need to do, and, no matter what happens with this current proposal, that's exactly what I'm going to keep fighting for.
I appreciate the hard work that my colleagues have done to try to defeat the Republican filibuster on keeping student loan rates low. But our students are drowning under a trillion dollars in student loan debt. And I cannot support a compromise proposal that squeezes even more profits out of our kids.