Ted Kennedy

Mr. KENNEDY

Mr. KENNEDY. Mr. President, at the outset, as we begin this debate on the Higher Education Act, I thank my good friend, the chairman of our committee, Senator Jeffords, and all of the members of the committee for their broad support for this legislation and for the workmanship which was reflected in this product over a considerable period of time. This legislation was reported unanimously out of our committee, and I think it reflects the best judgment of the members of the committee. I am particularly impressed by the work of our friends and colleagues on the Republican side--Senator Coats, Senator Collins, and many of the others, members who were very, very much involved; and on our side, Senator Dodd, Senator Murray, and many, many others whom I will refer to in my opening comments as well. This has been really a very strong bipartisan effort. Those of us who have had the honor to serve on the Education Committee for a number of years have always felt that education is something which should have a special position in the thinking of not only the families of America but elected officials in trying to find a common ground in these areas that are so important to families across this country. This bill reflects that continued effort by the membership of the committee. We have strong differences on some policy issues, which we have seen in recent hours and recent days, which we will see coming through these next several weeks, the next 35 days that we are in the Senate. Thankfully, we have been able to keep that kind of view out of the consideration of this legislation. There will be several amendments from our side and from the Republican side. Those are based upon rather thoughtful consideration and thoughtful differences on education policy, but they are certainly serious amendments and thoughtful ones, and we look forward to addressing these issues as we move ahead. We are very hopeful that we can move this legislation, because of its importance, to an early conclusion with due opportunity for the membership to express their views. I want to pay particular tribute, as I mentioned, to the chairman of our committee, Senator Jeffords. He has had a longstanding, continuing commitment to a number of different issues in our Human Resources Committee, but I believe personally the commitment in terms of education generally has been a very special interest. He has been absolutely tireless in working with all the members of the committee to bring this product forward. All of us are grateful to him and to his staff for all of the efforts they have made and for the strong and good leadership that he has provided in fashioning this legislation. Our goal in this bill is to strengthen the Federal support for higher education. A recent study from the Institute of Higher Education Policy summarizes the public and private benefits of higher education, both economic and social. As you can see on this chart, higher education provides major economic benefits, such as increased tax revenues, greater productivity, increased flexibility in the workforce. We are all mindful that when we had the GI bill after World War II, for every dollar that was invested in the GI bill, more than $8 was actually returned by those who participated in those scholarship programs. The Nation benefits, the individuals benefit, our communities benefit, America benefits, and our position in the world and our values in the world benefit from the strong investment that we make in education and by the extraordinary talent that we have in the young people of our country. This legislation provides vital social benefits as well. College graduates have greater involvement in their communities, give more to charities. They also show an appreciation of diversity that is vital in our increasingly complex society. This legislation expands access to college for all qualified students. It increases the maximum authorization for Pell grants for the neediest students and expands the formula for need analysis to protect more of the income of working parents and students. The bill also continues the critical investments in graduate education through the program of Graduate Assistance in Areas of National Need and the portable Javits fellowships for talented students in the arts, humanities, and social sciences. The bill also will enable colleges to work with faculty and administrators to improve teaching for students with disabilities. Many more students with disabilities are benefiting from higher education, and faculty members often have little experience in teaching these students. This bill reaches out to all colleges and universities and includes training in this area for graduate teaching assistants--the faculty of the future. The bill takes a major step in improving training of teachers. Senator Jeffords has spoken to that issue in very considerable detail, but let me underline some points on that subject. Fifty percent of the funding in this category goes to local partnerships that include elementary and secondary schools, colleges, and even teachers unions, businesses, and community organizations. The other 50 percent goes to competitive grants to State education agencies. The bill also includes greater loan forgiveness for teachers. It forgives up to $8,000 of loans for teachers who teach at least 3 years in high-need schools. Many college graduates with heavy debtloads cannot afford to go into teaching in schools that need help the most. This program will make it easier for idealistic young men and women to work with the needy children. The bill also includes early intervention initiatives to encourage students to plan for college as part of their future. One of the greatest tragedies of education today is that so many young students in elementary school, middle school, and high school regard college as out of reach. I know many of our colleagues have had the opportunity that I have had in going out and talking to middle-school students around our States. You ask those young people, those young students, ``How many of you would want to go to college?'' and almost before the words come out of your mouth, every hand goes up in that classroom. There is a great desire, a great interest, on the part of these young students to continue their education. Then something happens as they go through eighth and ninth grades and begin to become more disillusioned about the possibilities of going on to college and continuing their education, perhaps somewhat more realistic about some of the financial obligations that they have. It is not completely separate from the fact that the increased use of drugs in the eighth and ninth grades increases about 300 percent to 350 percent. The time when kids are beginning to cool off in terms of their realization of the possibilities for their continuing on to higher education corresponds to the period of dramatic increase among young people in terms of substance abuse. Mr. President, the hope and the desire of young students in our society to go on to higher education is there in the middle schools, and so many of them are discouraged from doing so. This happens at a time when there has been a corresponding record of increased use of illegal substances. Many people believe it is the increased use of the substances that have discouraged students. On the other hand, there are many others who believe that these young students, when they find out they will not have the opportunity to go on to higher education or continue their education, become discouraged, in many instances despondent, lose interest and subject themselves to the adverse behavior that some young people involve themselves in. The whole question in terms of trying to reach out to these students in elementary school, middle school, and high school is very, very important. We need to do what we can to change that distressing mindset. This bill is a major step in that direction. The bill also expands the Federal aid for student learning through distance education. The managers' package broadens the demonstration programs, and allows the use of Federal aid for certain distance education certificate programs. Distance learning can open the doors of higher education to many who cannot attend classes because they live in remote areas or because of their job or family responsibilities. Some have some special needs, as well. But we must also ensure that the promise of these programs do not lead to abuses. The bill calls for the Department of Education to monitor these changes in distance education, and to report to Congress on the result. Another important provision in the bill calls for the creation of a Performance Based Organization in the Department of Education. Its goal is to streamline and improve the financial aid functions of the Department, and give it more flexibility to deal with the many aspects of Federal aid. The bill also enables guaranty agencies to enter into voluntary flexible agreements with the Secretary of Education. It will be more businesslike and will focus more heavily on preventing defaults. The guaranty agency in Massachusetts has been in the forefront of this reform. Under these arrangements, guaranty agencies can concentrate on preventing defaults instead of simply collecting from students after they have defaulted on their loans. Under current law, these agencies are paid too much when the students go into default and they are not paid enough to prevent the defaults in the first place. In a pilot project, the Great Lakes Guaranty Agency reduced its default rate by 96 percent, 96 percent over 18 months by emphasizing the prevention of defaults. This is a win-win-win idea. The student borrowers win because they avoid default and ruining their credit. Government wins because it saves millions in reinsurance payments. The lenders win because the loan continues to earn interest in their portfolios. This bill accommodates the concerns of many individuals. Senator Torricelli in his bill, S. 1534, says students who are called to active duty in the Reserves of our Armed Forces will not have to worry about repaying their student loans before they return. Senator Moseley-Braun sponsored a program to encourage more individuals from underrepresentative groups to become college professors. Senators Sarbanes and Mikulski spearheaded efforts to include the Thurgood Marshall Legal Education Opportunity Program. The major issue in this bill is the interest rate on student loans. The bill reduces the interest rate that students will pay on loans by almost 1 percent, a substantial benefit for students. The average borrower with a loan of $12,000 will save $650 in interest payments over the 10-year life of the loan. The average master's degree student with a debt of $20,000 will save more than $1,000. For borrowers with larger loans, the savings will be even greater. Unfortunately and unwisely, the bill trims the rates paid to banks only slightly. As in the House bill, students will pay the same lower interest rate to the banks that they pay to the Government in the Direct Loan Program. But the bill offers a sweetheart deal to the banks by giving the banks a half of a percent interest rate subsidy. This subsidy means that bank receipts will go down only slightly from the excessive receipts they receive under the high interest rates now in effect. It is estimated that the average bank return on student loans will be 16 percent--far higher than the average bank return of 12 percent on its overall assets since 1970. This interest rate subsidy will be paid by the taxpayers. The Congressional Budget Office calculates that the costs will be at least $1 billion over 5 years and maybe as much as $3.6 billion. The Office of Management and Budget calculates that this subsidy will cost $2.7 billion over that period, a cost that is not paid for under the bill. This failure could trigger a sequester of mandatory inventory programs in October, including Medicare, and we need to deal with this problem more effectively. The best solution is to change the current system under which Congress sets the interest rates the banks can charge. Instead, we should adopt, I believe, a market-based system for interest rates, not one based on price fixing by Congress. We are considering offering an amendment that allows the Secretary of Education and the Secretary of the Treasury to conduct pilot programs using auctions as an alternative for setting these interest rates. Competition should determine how much of a premium lenders need in order to offer and service these loans. The results of the pilot programs would be reported to Congress and full-scale implementation would follow only after a subsequent vote of approval by Congress. These pilot programs will give Congress the information to make a sensible decision providing adequate incentives to the banks without gouging students or taxpayers. I look forward to final Senate action on this bill. I commend the constructive bipartisan spirit that has brought us to this point. Our colleges and universities deserve no less.

Mr. KENNEDY. Mr. President, I ask unanimous consent congressional fellow Jennifer Krone and Jim Butler be granted floor privileges.

Mr. KENNEDY. Mr. President, I yield for a consent request. Privileges of the Floor

Mr. KENNEDY. I object then.

Mr. KENNEDY. Mr. President, the Senator has this consent request. I hope he will offer it and we can consider it, if the leadership so desires. I would certainly support it. Can't we wait until we get the agreement?

Mr. KENNEDY

Mr. KENNEDY. I urge acceptance of the amendment.

Mr. KENNEDY. I move to lay that motion on the table. The motion to lay on the table was agreed to. Amendment No. 3118 (Purpose: To reduce student loan fees, and for other purposes)

Mr. KENNEDY. Is it the Senator's understanding that this origination fee was really developed to help pay costs of the loan program when we had soaring interest rates?

Mr. KENNEDY. Mr. President, just for the information of Senators, following that, I know our friend and colleague from West Virginia has been here for some period of time and is prepared to speak on an amendment, which he has talked with us about. We are prepared to accept the amendment, but he wants to comment about it. In terms of our side, we have one more amendment by the Senator from Minnesota, Senator Wellstone, and then an amendment by Senator Bingaman, and an amendment by Senator Harkin. That is where we are. We haven't been able to get time agreements, but it gives you some idea about the amendments. And then I expect we will have one or two other Senators that want to speak on the measure. I think that gives us some idea about the work that remains for the evening--at least from our side. Is that your understanding?

Mr. KENNEDY. Mr. President, I wanted to mention, as well, that I have an amendment on a market-based study on interest rates, which we may or may not be able to get to. I thank the Chair.

Mr. KENNEDY. That is the estimate by the FDIC. And was used by the committee.

Mr. KENNEDY. I have 1\1/2\ minutes left, I believe. Is that right?

Mr. KENNEDY. The pilot program, yes. This is for a pilot program. We will have to come back. But to test and put both aspects out, to have it fair.

Mr. KENNEDY. That's fine.

Mr. KENNEDY. I am not prepared to take the whole program, Senator. I am talking about a pilot program.

Mr. KENNEDY. Just for 20 seconds, Mr. President. You have to start someplace. This is a pilot program. If the Senator--if we accept this this evening, I guarantee we will work with the Senator from Indiana to try to make any kinds of adjustments in any types of ways to get whatever kind of pilot program that will accurately reflect the market forces on student loans. Whatever way the Senator wants to, we will work with him closely and we will look forward to his vote this evening. I yield the remaining time to the Senator from Connecticut.

Mr. KENNEDY. Mr. President, I think these are very good suggestions and recommendations. I think they will improve the accountability in the important areas of recovery of debt, and also give better information on these default rates, and will help to assist some of the proprietary schools. I think they are all very solid, good management recommendations that can make the programs more efficient. I thank the Senator for those initiatives. I urge that we accept the amendment.

Mr. KENNEDY. Will the Senator yield? Do we have any information on how we are doing on our Patients' Bill of Rights?

Mr. KENNEDY. You will let us know--next week?

Mr. KENNEDY. I move to lay that motion on the table. The motion to lay on the table was agreed to.

Mr. KENNEDY

Mr. KENNEDY. Will the Senator from New Hampshire yield for a brief observation for a minute or two?

Mr. KENNEDY

Mr. KENNEDY. Reserving the right to object----

Mr. KENNEDY

Mr. KENNEDY. Just let me make a brief comment because I was denied the opportunity last evening by the Republicans to have a conversation or ask questions last night. I will make a brief statement, and then I will yield. Last night, my friend from the State of Washington said: ``Republicans will decide whether this great body is going to debate health care. I want to say that to the Senator from Massachusetts. Republicans will. They'll make the decision. Democrats won't. And we decided that because the Senator from South Dakota has raised this issue we are not going to permit a debate on this issue on the floor of the U.S. Senate.'' That is what they have said.

Mr. KENNEDY. The Republican leadership, in issuing their list of priorities about what we are going to consider during July and during September, has denied us the opportunity to debate the health care issue.

Mr. KENNEDY. For a question.