Joe Manchin

Mr. MANCHIN

Mr. MANCHIN. Everybody in college during that period of time could borrow at the low rate of 2 percent with no interest at all?

Mr. MANCHIN. Would the Senator yield?

Mr. MANCHIN. I thank the good Senator for working in such a bipartisan manner. I think this truly is a bipartisan bill. This bill has been described as belonging to one party or the other, and that is wrong. Senator Burr, Senator Alexander, Senator Coburn, Senator King, Senator Carper, and I sat down and looked at how we could fix something. We looked at it from the standpoint that this deadline has hit. One year ago we extended it. They said it was the political atmosphere and we had to extend it. We knew that year would come and, similar to everything else that has happened here for the last 2 or 3 years, nothing gets done. We just said: Enough is enough. It has to be fixed, and if we want to fix it, to understand the program, we have to look at the whole program. I think now they are making accusations that students are paying profits so we can pay down the debt. Whether there is profit built in depends on the accounting procedures used by our Federal Government. It was built in. You can blame whomever you want to blame, but it is built into it. We have to deal with the facts in front of us. What I would ask the Senator, all of us have agreed in a bipartisan manner that no profit will be made on the backs of students, what we can determine through the bill we are working on, right?

Mr. MANCHIN. So we have all come to that agreement--Democrats and Republicans--no profit in debt reduction. It should go to lowering the rate.

Mr. MANCHIN. We agreed on that. We have agreed on a long-term fix, 10 years, rather than kicking it down the road another year, knowing another year will come and go and we are probably going to be standing here debating. That is the conclusion we have come to, which is different than what the House sent us. I applaud the Senator for working with us to put in a fixed rate. So if it is at 3.66 this year and I am able to qualify and I am subsidized at $3,500 of a subsidized loan the taxpayer will be paying, that 3.66 is fixed for the full life of the loan. We agreed on that, correct?

Mr. MANCHIN. So when they say it is a Republican bill or a Democratic bill, that is erroneous. That is not fair. This is truly a bipartisan effort, and we are working with all of our colleagues in my caucus--and I know the Senator is in his caucus--to understand that if I have a subsidized Stafford loan, that means the Federal Government--the taxpayers of this country--will pay my interest while I am in school, correct?

Mr. MANCHIN. At the end of that, then I pick up whatever interest rate has accumulated while I was in school, and I take it from that day forward. What I think a lot of our colleagues don't understand, I can't make it just on that $3,500. I have to borrow more money. So now, if I go with my colleagues on the Democratic side, if I borrow more money, I have to borrow that at 6.8 percent. We were able, in a bipartisan way, to bring that to 3.66 percent for all undergraduates, correct?

Mr. MANCHIN. So the money I would have to borrow, even though I qualify because of my income for a subsidized loan, I don't have to pay the interest on an annual basis. So by bringing it down to one low rate, I am making much lower payments. So that is less obligation and less hardship on me as a college student to make that lower payment than it would be to make that higher payment. We want to help the subsidized, very poor kids. I might be poor, but I can't make it on just what you give me because I am poor. I have to have a little more help. Then, on top of that, I want to go to graduate school after I get my college degree. So then I am at 6.8 again. Ours brings it down to 5.21, which is more savings, which I know the Senator agrees to. If I may ask my colleague from Tennessee, right now we know we have a consolidated cap at 8.25 percent. Let's say I graduate and I went to school during the high recession times. At the end, I have an 8.75- percent accumulative interest I owe. I can cap that and consolidate at 8.25, correct?

Mr. MANCHIN. I think what they are referring to--and I might have misunderstood, but I think I am accurate on this. Everyone will take the loans for the longest period of time, and I just got out of school so I want the smallest payment. Four or five years out I have a better job. Instead of paying $150 a month, I can afford to pay $300 or $400. There is no penalty for me to shorten that, as it would be in a conventional market. Is that how the Senator understands it?

Mr. MANCHIN. To both of my friends, let me say that I graduate from college--no matter what the interest rates are, no matter what they might have been--I graduate and economic times are tough. I find a job that is not what I think my value is, but I find a job at $40,000-- $40,000. I am married now, and I have a child or two. Don't we have in our bill a protection which has been in place for a long time--both Democrats and Republicans have supported this protection--which is called income-based repayment? By law, I can only pay 15 percent of my disposable income. I think that breaks down to my payment can only be $142. Isn't that a subsidy too? Wouldn't we be subsidizing that to an extent? I am also understanding that if my economic condition does not improve and that is all I pay, by the end of 25 years it is exonerated. I pay nothing. I am done.

Mr. MANCHIN. Let me say very quickly--and I will use $10 million hypothetically that is borrowed every year--$10 billion, $10 million, whatever you want to use--25 percent of that money goes to the subsidized, just 25 percent. I understand that it is close to about 40 percent of the students who participate in borrowing money, but the volume of money is about 25 percent, one-fourth of the money that is loaned out. So if we are keeping the rates low on one-fourth of the money, that means we artificially have much higher rates on three- fourths of the money students need to get an education. What we are saying is that we are going to bring a larger majority of that down to the lowest rate. We think it is a good policy that we should be discussing and talking about. That is where we are. That is why we came up with the plan we did, but we reduced all the rates. The PLUS loans I think went from 7.9 to 6.21, yes, and then the graduate loans went from 6.8 to 5.21. But if you do all of the undergraduate, it would go from 3.4 to 3.66, a quarter and a point--.26.

Mr. MANCHIN. Right. Right.

Mr. MANCHIN. That was the bipartisan agreement we had. I appreciate that very much. Let me say, here is the last 10 years. If we would use the last 10 years, with the bipartisan bill kicked in, this is what the students who basically are paying the higher rate now--6.8 percent frozen--would have been able to take advantage of, the lower rates. They never got a chance to take advantage of the lower rates. All we are assuming is that if rates go up in 3 or 4 years, they are going to be paying higher rates. We never assume the market--that is the reason why you fluctuate with the market on the 10-year T-bill. This would have happened with the 10-year T-bill. Look how much lower they would have been paying in the last 10 years. I know we can all use figures any way we want to use them, but the bottom line is that it is either going to be market--it has always been that before. There have been caps that have been much higher, and we are trying to find something that is affordable, but the bottom line is, do we try to protect the lowest rate? Most undergraduates have the hardest times. Once you get your undergraduate degree, you have a much higher percentage of making it. If you want to get a graduate degree and a higher Ph.D. degree, you have a much better chance. The bottom line is that we want to keep the rates low so that when students go out they are not burdened with the highest payments. We have a lot of protections built in that a lot of times are misunderstood and are not explained properly, and I am glad we are having this colloquy.

Mr. MANCHIN. Yes.

Mr. MANCHIN. Would the Senator yield?

Mr. MANCHIN. I am not sure how the Senator voted on the extension a year ago. I voted for the extension a year ago.

Mr. MANCHIN. I don't intend to vote on the extension again because we have not fixed it. By voting on this extension, what we are voting on is 3.4 percent just for the subsidized, and everybody will be at 6.8 percent, and 7.9 percent for PLUS loans. When my colleague is talking about that, the difference of savings between our bill--if we got a vote on our bill, which is a compromised, bipartisan bill, we would save close to $9 billion in interest that students wouldn't have to pay. I believe we agree on that.

Mr. MANCHIN. I think we are going to have a chance to vote on one bill, and that is about $2 billion. In West Virginia that is a lot of money in savings of $7 billion that students don't have to pay in interest, which is across the board for students who have subsidized and unsubsidized loans. That is the point we are trying to make, and we hope we get that through. I know the Senator hopes, as I do, that we get a vote on this today.

Mr. MANCHIN. I believe Senator Burr has the floor.

Mr. MANCHIN

Mr. MANCHIN. Madam President, I wanted to speak in a little detail on another topic, and that is the direction we are going on the student loan crisis, I guess. It is a shame we have come to this. A year ago, I voted for the extension. We were told at that time that due to the political atmosphere, we had the big election year coming up, that we couldn't get into the details and fix it the way it maybe needed to be fixed and should have been fixed back then. So a lot of us went ahead and voted for the extension, and now we find ourselves in the same position this year as we were last year. There will be another election in 2014. So it seems as though we are always in an election cycle, and if we allow that to continue to direct what we do and how we do it, we would get little done here, which is what the public is getting frustrated with. A few of us got together, myself, Senators Alexander, Carper, and King, and we decided maybe we could come together and work on something. There is no perfect fix for anything here, I have found, and this is complicated and confusing if you don't delve into it. So I started looking into it more this year than I had before. I think a lot of our colleagues, and a lot of people in the country, believe the so-called ``doubling of the rates'' from 3.4 to 6.8 meant everybody's rates had doubled. First of all, there was just a small percentage of the loans we loaned out that were getting the advantage of the 3.4 if we extend it. Seventy-five percent of the loans--75 percent of the money out there--is at the higher rate of 6.8 or above. I have tried to understand, the best I can, all the different aspects of the loans we have out there. We have the subsidized loans. Because of family income and participation someone is able to get a subsidized loan. What that means, if we break it down, is the first year you qualify for a subsidized loan you can borrow up to $3,500, and $3,500 in today's higher education world doesn't go very far. You are also allowed to borrow $2,000 of unsubsidized money, which means you would have been paying 3.4 percent on the $3,500 and 6.8 percent on the unsubsidized. So as you can see, it is not all clear-cut. Then, in the second year, you can borrow $4,500 subsidized and $2,000 in unsubsidized; and then it goes to $5,500 and stays at $5,500 for the fourth year. The thing that happens is the unsubsidized loans, if we are looking at the unsubsidized loans at 6.8 percent, they are staying. We have had some say it is better to leave it alone, do nothing. Let it go ahead and double at 6.8 and leave it where it is. We worked out a proposal along the lines of the President's proposal. Also, we had the so-called House Republican proposal. Our proposal is much different. This is not a Republican or Democratic piece of legislation. It is a bipartisan piece. We looked at all aspects of what we have to deal with in today's market. On July 1 the rates went up. If we are able to come to agreement this week or maybe the first of next week, we can retroactively bring those back so that when you go to school this fall you will know exactly what your rates will be. We came to a bipartisan agreement that those rates could be 3.66 percent, and that is for all undergraduates. Now if you are getting a subsidized or unsubsidized loan, a 1-year extension goes from 3.4 percent to 6.8 percent. Under our proposal, everything is at 3.66 percent. That will save about $9 billion this year in interest that students would be responsible for paying--$9 billion for the youth of this country trying to get a higher education. If we just do the 1-year extension, that is only a savings of $2 billion. So there is a $7 billion savings beyond what the 1-year extension would do. We are just dealing with the facts that we have in front of us. So let's say you are going to a graduate unsubsidized Stafford loan, which many people in graduate school get. Right now, that is at 6.8 percent. Under our proposal, that goes to 5.21 percent. If you have a PLUS loan--that is parents and graduate students--today you are paying 7.9 percent, and you have been paying 7.9 percent. Our bill takes that to 6.21 percent. You can see the savings. Some might say, well, the interest rates will go up after 3 or 4 years, and then you will be at a higher rate. We put also, the same as in the law right now, an 8.25 percent cap. So if you borrow money this year at 3.66 percent, that is locked in for the life of the loan. That is what you pay for the money you borrow this year for the life of that loan. Now, next year it could be 4.5 percent. It could go up with inflation. When I was in school, and later on, inflation kicked up to 16 or 17 percent. That is outrageous. In the Senate, Republicans and Democrats have come to an agreement that we don't think the policy of this country should be that we should make a profit on the loans that students are receiving to educate themselves to have a better quality of life and opportunity. We have come to that agreement. That is not the bill we got from the House. They want to use profits to pay down debt. Now, I understand there is a lot more that needs to be done on the profit end of it and how we get to the true cost. The Presiding Officer has been working hard on that, and I am willing to work with her. But the agreement we have in front of us today is that we are not going to make any profit that will go to debt reduction. If there is a so-called profit, it should go to reduce and give the lowest rate we could possibly offer. That is what we have agreed on. We agreed on fixing the rates for the life of the loan. That is not what came from the House. So when I say it is a bipartisan bill, these are things we are agreeing on that make a better piece of legislation. People might say: But 4 years from now it might go up higher than 6.9 percent. In the 3 or 4 years that we know we will have tremendous savings, there is a difference of $36 billion versus maybe $8 billion if you just keep extending 1 year at a time. A $2 billion savings here, a $9 billion savings here. It is not hard to do the math. Then, talk about a comprehensive education bill, I pray to God that we can get a comprehensive education bill, but I am not sure the American public believes we are able to get any type of a consensus on any type of comprehensive bill. When I first got here, they told me we were trying to get our financial house in order. Then we had the sequester coming at us. The sequester basically was a penalty we voted on, but no one ever thought we would let it get that Draconian, to the point we couldn't come to an agreement and we would have to have this type of a punishment put on ourselves. So we put a supercommittee together for the purpose of getting a superdeal so we could get our financial house in order. It wasn't that super. It didn't work. So then the sequester kicked in and the Draconian cuts across the board. You don't run your life that way, your business that way, whether it is small or large. You don't cut everything. You have your priorities and necessities you have to maintain in your life on a daily basis. Then you have excesses you can do without. So you make adjustments and you pick and choose. That is not working right now, and what is happening is people are suffering needlessly because we cannot come to an agreement to get our financial house in order, to find a budget that works for this country, to find a tax system that is fair and equitable that people believe in. We haven't been able to do that. We are being told: Let's go ahead and extend the 3.4 percent for the smallest portion of the amount of loans that we loan out, and everyone else can pay the higher rate. I am not willing to do that. I think we can do better. I think we are better than that--on both sides of the aisle. Chastising each other and saying one wants to raise rates and one is insensitive toward students, and it is a Republican or Democrat plan, doesn't fix anything around here. It hasn't since I have been here, and I don't think it is going to. It will if we put our country first. And we know one thing: By putting our country first, we put our students first. Without educating the populous, we have nothing. We can't compete in the world of economics. We can't compete in the world of science and technology. We just can't. The best investment we can make is in our youth. The best investment we can make is in education. We might buy a car and think that is a great investment. We might buy a piece of property or a house and think that is a great investment. The best investment we will ever make is in education. We want to make it as affordable and doable as humanly possible, and that is what we have worked on together, on a bipartisan basis. We are hoping we can find common ground. We have talked about caps. The caps are inherently built in. Let's say you graduate, get a degree, and find a job that pays $40,000--which is not a lot in today's market for the money invested--and get married and have a child or two. With the system we have built in right now, you only pay 15 percent of your disposable income. That breaks down to about $142 a month that you will pay on your student loan to make it affordable. If you are not able to pay that off at the end of 25 years, it is exonerated and wiped out. Pell grants. If a person is in need because of their income, they can get up to $5,645 a year free. Those are grants we give out, which are excellent, helping students who don't have an opportunity or chance, with any support from their family, to be able to get a higher education. We are doing an awful lot of things to help. The bottom line is that we have come to an agreement that it shouldn't be subsidized, there shouldn't be a profit made, and it should be affordable--and it has to run efficiently. I think $36 billion in savings over 4 years is pretty substantial compared to us doing nothing. I also think those who say let the rates go up to 6.8 percent are misinformed. I don't think they have been told the facts or the truth. What we are asking for is basically a level playing field, looking at what we can do that is positive, getting more groups to sit down and sincerely work toward what I think is going to be a good outcome and a good process. Extending what we have doesn't work. Not being able to come together to make sure our loans are affordable is not acceptable. I think if we continue to strive to work toward finding a reasonable outcome, we will be able to succeed. Tomorrow we will have a vote, and there will be more discussions about student loans. The bottom line is we want rates to come down for everybody. Every student in every category should have the benefit of the lower rates that are available to the public today. Madam President, I yield the floor

Mr. MANCHIN

Mr. MANCHIN. Mr. President, if I may respond to my dear friend from Rhode Island for whom I have the utmost respect. We have a respectful difference as far as how to approach this problem and we are working through it. We really, truly, are working and we will work through it. We had a charge a year ago to fix it, so we started working on that. The President in a timely fashion gave us a piece of legislation that had a longer term fix, 10 years. We took that and worked off that original proposal given to us by the administration, by the President, and we started working in a bipartisan manner to make this work. With that being said, we looked at the 3.4 percent and I would say a majority of our Senate colleagues, both Democrats and Republicans, did not understand that the 3.4 percent only affected those that were subsidized loans. That is the smallest amount of loans we have out there. I think the majority of our colleagues, the majority of the people, the majority of the press thought we fixed it at 3.4 percent for everybody who had a student loan. That was not the case. We wanted to go back and make sure if we do something we do it for everybody, because the person who has income limits and qualified for the subsidized loan, the first year they get that loan it is $2,500; the second year it is $3,500; the third year it is $4,500; and the fourth year it is $5,500. That is the maximum they can borrow. So you know what. They borrow the nonsubsidized. Guess what they have been paying for the nonsubsidized: 6.8. Guess what students have been paying for what we call the PLUS loans. They have been paying 7.9. But we are not hearing anything about that. Put it in perspective as dollars. If we have a 1-year extension, as my dear colleagues have suggested, to try to fix the problem again, that will be about a $2 billion savings of interest payments that would be put on the backs of students. That is a tremendous amount of money. Guess what happens if we pass our bipartisan proposal. It saves $8.8 billion, and everybody participates. Even the subsidized loan for the student who struggled the hardest and needs most of the help, they get most of the help. Not only do they get help on their subsidized loan, but they get help on their unsubsidized loan. We have looked at everything possible. We have a piece of legislation which we think not only fixes but basically repairs a broken system. When we look at where we are today and we look at sequestering--and I have been here not quite 3 years--I have watched us kick the can down the street to where my toe is hurting. We kicked this can so much, my toe is hurting, and it is starting to kick back. We need to start giving the people of this great country the confidence that we can work in a functional and respectful way. Democrats, Republicans, and Independents need to come together and put our country first, put our students first, and stop playing politics. We agreed--Democrats and Republicans--on this bipartisan bill that not $1 should go to debt reduction. We do not believe the students trying to get an education to better and improve their quality of life, their economic condition, and the economic condition of our great country should have to be burdened with reducing the debt of this Nation. They can do that by being productive citizens. We agreed on that. That was something that was not agreed on before because there were people who wanted the surpluses to go to debt reduction. We took out the surpluses and reduced the rate as low as humanly possible. It has been scored. We are bringing rates down. If we look at a top rate of 7.9 percent, that is going to come to 6.21 percent if they have a PLUS loan. If a student has a graduate Stafford loan, that is going to go from 6.8 percent to 5.21 percent. All the undergraduates--if it is a subsidized loan or a nonsubsidized loan-- will go to 3.6 percent, and that is a tremendous savings. That is the $8.8 billion, and that is what we are asking for. I respectfully--and I mean that--disagree with my colleagues who have signed on to a 1-year extension believing we are going to be able to come up with an agreement or a compromise that is better than what we have before us. We have worked this out with Senator Carper from Delaware, Senator King from Maine, myself from West Virginia, and Senator Alexander from Tennessee. Those are four former Governors. We knew we had to work together because we had to make things happen immediately. At the end of the year, everything had to balance out. Senator Burr and Senator Coburn also contributed, and they understand financing as well as anybody in this body. I say to all the students who have loans right now: Don't worry. July 1 will come. We will come back on July 9 or 10, and it will be the first order of business we will ask to bring up. Both of our bills will be our first order of business. I assure everyone that we will come up with a compromise we can work out that will give the relief the students--those who desire an education and want to better their lives will have that opportunity and be able to have stability and not have the increased rate passed on because we will make this retroactive. With that, I yield the floor.

Mr. MANCHIN

Mr. MANCHIN. I ask for the yeas and nays.

Mr. MANCHIN. Mr. President, I rise today to speak to an important amendment to S. 744, the immigration bill now before us. My amendment would cap compensation for private contractors employed for border security at $230,700 a year. That is the same cap we now have on nonelected civilian employees of the Federal Government. I am offering this amendment because over the last couple of decades the United States has increasingly relied on private contractors to do the work that the men and women in our armed services used to do, and they are getting exorbitant salaries to do it--in some cases, up to $763,000 a year. That is almost twice the salary of the President of the United States, and it is almost four times the salary of the Secretary of Defense or Homeland Security. If we do nothing, that will soon rise to $951,000 a year. With the war in Afghanistan winding down, defense contractors are looking for new opportunities, and border security is at the top of their list. The New York Times said that some of them will demonstrate military-grade surveillance equipment this summer in an effort to get homeland security contracts worth billions of dollars. I urge that this amendment be adopted. It caps it at $230,000 across the board for all civilian employees.

Mr. MANCHIN

Mr. MANCHIN. Hers is the 20th also.

Mr. MANCHIN. I thank the Chair, and I suggest the absence of a quorum.