Mr. REED. Mr. President, we need to rethink financial aid in this country. We need urgent action if we are to reform our system, to return to the roots, the ideals that made college affordable for generations past, and hopefully for this generation and generations to come. Back in the 1970s and 1980s when several Members of today's Senate were college students, the Pell grant, which is the cornerstone of our Federal student aid programs, covered as much as 72 percent of the cost of attendance at a 4-year public college.
For the 2014-2015 academic year, the maximum grant is expected to cover less than one-third of the cost. Investing in things like Pell grants is critical to ensuring the doors to higher education remain open to all students with the talent and desire to pursue a college degree.
Young people today deserve the same fair shake that Members of this body got when we were undergraduate students, when grants and not loans covered most of the cost of college.
Now, I was fortunate enough at 17 to join the Army and attend West Point. So I did not have to face the rigors of financing college education. But everyone I know in my generation will tell you it was easier then because there was a strong Federal commitment to supporting men and women of talent and desire to go on to college. Ever-rising costs today are just pricing out a whole generation from college education.
We see more and more hard-working young people and their families falling behind as they try to pay for their degrees that were supposed to help them get ahead. In fact, an analysis of student loan debt by Demos predicts that today over $1 trillion in outstanding student loan debt will lead to a total lifetime wealth loss of $4 trillion for indebted households. Not only do people start off after college with great debt, but their ability to build assets in the future is also reduced. So it is a much deeper hole than even the initial debt.
Student loan debt is jeopardizing this generation's ability to buy a home, to start a business, to start a family, to do things that my generation took for granted after getting out of college. For the last 30 years, tuition increases have outpaced inflation. Outstanding student loan debt has quadrupled since 2003. It is time for action.
First, we must provide relief for borrowers who are currently repaying their loans. We must ensure that student loan servicers are held accountable for providing borrowers with accurate and clear information and the full range of borrower benefits they are due. That is why I was pleased to join Senator Durbin in introducing the Student Loan Borrower Bill of Rights Act.
Even more important to families' bottom line is reducing their payments and overall debt burden. We should allow borrowers with high fixed-rate loans to refinance at the lower rates approved on a bipartisan basis under the Bipartisan Student Loan Certainty Act that became law last year. That is the premise of Senator Warren's Bank on Students Emergency Loan Refinancing Act which I am also very proud to cosponsor.
I hope my colleagues will let us vote on this proposal so we can provide relief to millions of Americans who are struggling under the weight of student loan debt.
We also have to demand more responsibility from colleges and universities. While student loan debt skyrockets, we are also seeing college executive salaries climb ever higher. Clearly institutions need to have more skin in the game when it comes to student loans. That is why I introduced, along with many colleagues, the Protect Student Borrowers Act, specifically with Senators Durbin and Warren. The Protect Student Borrowers Act will hold colleges and universities accountable for student loan default by requiring them to repay a percentage of defaulted loans. As the percentage of students who default rises, the institution's risk-share payment will rise. Essentially, they will now have an interest, and a real interest, in ensuring that their students take out appropriate loans and they have coursework that leads to remunerative employment after they graduate. Colleges can play a key role in all of these things. Today it is a spotty record. Some are very good, some are indifferent, and some are very bad.
The Protect Student Borrowers Act also provides incentives for institutions to take proactive steps to ease student loan debt and reduce default rates. Institutions can reduce or eliminate their payments if they eliminate a comprehensive student loan management plan -- again, if they talk to their students, if they advise them what to do, if they help them manage this debt.
The risk-sharing payments will be invested to help struggling borrowers, preventing future default and delinquency, and reducing shortfalls in the Pell Grant Program. This money will stay in the system to help other students.
With the stakes so high for students and taxpayers, it is only fair that institutions bear some of the risk in the student loan program. I would argue a basic premise, that they will do a lot better as custodians and managers and advisers for the students when they have money at risk.
Right now, it is the students and their families who bear it all -- and the government, if there is default. As a result, you don't have the active participation at the institutional level that could make a real difference.
In many respects, this is a lesson we learned, at a very expensive cost, during the financial crisis in the mortgage markets, where mortgage makers had no interest in who was borrowing money. They didn't care if they could pay it back, because the minute the paper was signed, they sold it off to the secondary market and they walked away to the next closing. We can't have that attitude pervasive in higher education.
We know there are many forces that are driving increases in costs in higher education, and one of the cost drivers is, frankly, the falloff on State contributions to public higher education. According to the State Higher Education Finance report, state spending per full-time equivalent student reached its lowest point in 25 years in 2011.
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. Remember back in the sixties and seventies, nearly 80 percent of the financing was grant aid. You didn't have to pay it back. You had a chance to get an education and start off without a lot of debt.
Simply put, I believe the States have to begin to renew their investment in education at the college level.
I urge the Senate to come together with a sense of real urgency on finding solutions to all of these issues, to move forward, and to give this generation and the next generation the same opportunity that many of us here took for granted in the sixties, seventies, and eighties.
I yield back the remainder of my time and I yield the floor.