Mr. REED. I thank my colleagues Senator Franken and Senator Brown for their leadership and very wise comments on this issue, which is one of the most difficult ones that young Americans face, and that is paying for college and student loans.
As my colleague had indicated, this is just really the tip of the iceberg because these debts that they have accumulated will prevent them from buying homes, from starting families, and ultimately affects our economy in a tremendously disruptive way.
All of this is coming into very sharp focus as we begin the graduation season. We have high school seniors who are choosing a college to attend. We have college graduates who are leaving campus and facing a very difficult job market. Those who are going to college are looking at huge potential debt. Those who are leaving college already have, in most cases, those debts and are now thinking about how they can deal with them as they go forward.
Outstanding student loan debt today is at an estimated $1.2 trillion, and it is growing.
According to the Institute for College Access and Success, between 2008 and 2012, average student loan debt increased by an average of 6 percent per year--much, much faster than the rate of inflation. So we have an issue that is not only critical today, but it is getting worse each and every day.
Seventy percent of the class of 2012 graduated with student loans, and the average student debt was $29,400. That is a lot of money. With that debt and with a job that is paying modest wages, or in many cases not being able to find such a job, it is very difficult to pay those loans.
I just met with the presidents of all my colleges and universities in Rhode Island, and we talked about the urgency of this issue. Rhode Island ranked fifth in the Nation for average debt, with students owing an average of more than $31,000 when they graduate from college. We are fifth in the Nation.
We are also, I would like to point out, regretfully, first in the Nation in unemployment. We have the classic situation of Rhode Island graduates leaving with an average of $31,000 of debt and struggling in one of the toughest job markets in the United States to find work. That is a very difficult combination to bear; that is so for so many young people not only in Rhode Island but in Ohio, Massachusetts, and people across this country.
This debt is a huge drag on our economy. It is a threat to our future.
We have to take action. We just can't sit back and watch this get worse each day as it is.
First, we must commit to lowering costs for low- and middle-income families. The Pell grant is the foundation for making college affordable.
It is the work of my distinguished predecessor, Senator Claiborne Pell, who understood that if you could make college affordable for talented Americans, they could remake this country and the world. For decades we did that. We provided the kinds of resources and grants that allowed talented, but not wealthy, students to go to school, to leave school without huge debts, and to begin immediately to apply their talents to the issues that confronted this country and this world.
In fact, I would argue that his foresight back in the 1960s and 70s set the stage for all of these great sorts of revolutions.
Why did we have a telecommunications revolution? Because we had not only the educated scientists and engineers to develop transistors, to develop all of these new technologies, but we also had the most educated population in the world to use them.
That wasn't an accident. That was building on the GI bill in the 1940s, with the Higher Education Act in the 1960s, adding the Pell grant in the 1970s, to make college affordable and accessible to the widest section of Americans.
That has been the engine that has driven our growth and our economic progress over many decades. That engine is sputtering right now because of the debt that is being put on these students because the cost of college is going up.
We certainly have to reject the proposal in the House by some of our Republican colleagues that would roll back investment in the Pell grant. We have to do more to make the Pell grant accessible to more citizens, more Americans.
Second, we have to tackle this student loan debt crisis.
The Federal Government should not be generating revenue from student loan interest payments. Instead, we should be offering lower rates. That is why I introduced the Responsible Student Loan Solutions Act to set interest rates to cover our costs and nothing more, and allow for refinancing of loans that are at high fixed rates.
I was pleased to work with Senator Warren of Massachusetts, who is an extraordinary leader on this issue, to develop a new student loan refinancing bill that would enable student loan borrowers to refinance at the rate that was enacted under the Bipartisan Student Loan Certainty Act last year.
We also have to hold loan servicers accountable for treating borrowers fairly. Students must get accurate and clear information about their repayment options, and that is why Senator Durbin's Borrowers' Bill of Rights Act is so critically important. I am proud that he has joined us on the floor, and I am very proud to be a cosponsor of this legislation.
Third, States, colleges, and universities have to step up. They have to do more to provide the resources, to provide the efficiencies, so that we can make college more affordable for all of our citizens.
I have introduced the Partnerships for Affordability and Student Success Act to reinvigorate the Federal-State partnership for higher education with an emphasis on need-based grant aid.
One of the problems we have, frankly, is that in the 1970s, if you looked at the Pell grant, it would cover roughly three quarters of tuition at a public four-year university. Now it covers only about one-third of tuition for those who can get the grant.
If we could go back to those times where you could basically get--if you were a low-income deserving student--a grant, we wouldn't have such a crisis in student debt. So we have to make grant aid more accessible, and that requires a State, Federal, university, and college partnership. A recent report presented at the American Educational Research Association found that grant aid increased the likelihood of graduation for low-income students while unsubsidized student loans resulted in a decrease in graduation rates.
If we are worried about graduating young people from college, the one thing we can do is take the worry of debt off their shoulders, take the uncertainty of trying to put together, cobble together, financing for education by giving them the grants that used to be something we thought were part and parcel of the American dream.
We also know that one of the main reasons tuition has skyrocketed is that State appropriations for higher education have declined. According to the State Higher Education Finance report, State spending per full-time equivalent students reached its lowest point in 25 years in 2011.
States do have to put more into their State and university college systems. I say that knowing full well the challenges the States face, some of which are the result of policies and guidance that we have given them. But if the States are not willing to put more resources in, it ultimately is shifted on to the shoulders of students, and ultimately there is only so much weight they can bear.
States have to reinvest in higher education, and we can help give them incentives to do that, rather than disincentives. I hope our legislation will do that.
Finally, colleges and universities must take greater responsibility for affordability and student loan debt. This is not something that is beyond their prerogatives. They are not helpless in this. They have to not only advise students on the best course of action--in fact, in my view, colleges, public, private, for profit, nonprofit, should be fiduciaries, really. They should operate in the best interests of students, not the best interest of the bottom line, not to make up for lost State contributions, not to sign up for esoteric deals with financial companies because they get a huge payment back in return.
Just as in the classroom, they should be trying to give these students the best education. In the financial aid office they should be giving them the best deal possible on paying for college.
To ensure that, to basically make sure that all of these institutions have some, as they say, skin in the game, I introduced the Protect Student Borrowers Act with Senators Durbin and Warren. I must say this is also the result of some hard lessons we learned in the financial crisis.
If institutions don't have an interest in the loans they are making--in fact, if they are encouraging people to take loans they cannot afford--disaster is just days, months, weeks away. It is coming. We want them to be more responsible. So we would ask them, as the percentage of their students who default rises, that these institutions start sharing some of the risk; that they start being conscious of the arrangements they are giving, the tuition they are charging, the courses they are offering; that they have a vested interest in their students succeeding, and not the institution getting as much money as possible.
I know there are other colleagues on the floor, and I have more to say about this, but we have a great deal of work to do here. This is about a fair shot for all of our students and all of our families. Working with Senator Warren and Senator Durbin and my other colleagues, we are going to try to make a difference for students across this land.
With that, Mr. President, I yield the floor.