Senate Floor Speech on Student Loan Interest Rates
Wednesday, May 9, 2012
Mr. President, our Republican colleagues could have allowed us yesterday to begin debate on legislation to fix the looming increase in student loan interest rates. They could have helped us avoid adding to the already crushing weight of student debt that the families of our country face. They could have joined us in taking a step toward letting parents do what parents desperately want to do, which is to help their kids to a better future.
American families are waiting for us to act. On July 1, the interest rate on student loans is going to increase from 3.4 percent to 6.8 percent. It’s going to double unless we act. For every year we do not act, it will cost the typical college student and their family $1,000. That’s $1,000 many families do not have to spare. More than 7 million students and their families nationwide would be affected. So the need to act is urgent.
Instead, in what has come to be a damaging ritual here in the Senate, Republicans have filibustered a motion to proceed to important legislation. Republicans have voted against even allowing the United States Senate to begin to debate a bill. Why not debate it? Why not offer relevant amendments? Why not address this important issue? By their filibuster, our Republican colleagues have refused to let the Senate even start this process.
Republicans say they, too, want to prevent this increase in student loan interest rates. They differ with us, they say, on how to pay for this. Republicans say the only way they will support legislation to prevent this rate increase is with cuts from a fund that helps to prevent infectious and chronic diseases.
Now, the program that Republicans seek to eliminate has provided more than $8 million to my state to help fight major health problems such as influenza, diabetes, HIV, heart disease and cervical cancer. It even helps provide critical funding for childhood immunization programs.
So, what Republicans propose is to choose between helping college students and their families, and helping to prevent expensive and debilitating health problems. Choose between education and health care. Mr. President, choosing to allow more illness in order to help students and their families is no choice at all.
Democrats are offering a different alternative. We recognize that the tax code is riddled with loopholes and special breaks that allow some individuals and some corporations to avoid paying taxes. In this case, what’s identified is a tax break that allows some professional service providers, such as lawyers, to avoid paying their payroll taxes by organizing their businesses as so-called “S corporations,” and then paying themselves in the form of dividends instead of salaries. The Government Accountability Office recently examined this issue and found widespread problems, costing taxpayers and the Treasury billions of dollars each year in uncollected revenues.
What our bill would do is require that professional services providers with incomes above $250,000 a year pay payroll taxes on the income that they derive from these S corporations. We would use the revenues from closing that loophole for those with incomes above $250,000 to prevent the interest rate hike that is going to hit middle-class families and, at the same time, and we would be able to do so while also we avoid increasing the deficit or slashing important programs.
Our Republican colleagues have accused us, to quote one of them, of raising taxes on “the people that are doing some of the very serious job creation in this country.”
Well, not long ago, Republicans were saying something different about this loophole. For starters, they actually called it a loophole. That’s what former Vice President Cheney called it, during his 2004 vice presidential debate – a “special loophole.” He accused his debate opponent of dodging $600,000 in payroll taxes using this loophole. Likewise, a Republican candidate for Senate not long ago called this “a deceptive tax scheme to get around the IRS.” There were no Republican cries then about raising taxes on job creators.
The fact of the matter is this loophole ought to be closed, no matter who is taking advantage of it, Democrats or Republicans. And closing it, at least for those with incomes above $250,000, in order to avoid another blow in a long series of blows to middle-income Americans just makes sense. It is fundamentally fair.
Hundreds of thousands of students in my state of Michigan depend on federal student loans to help afford college. They and their families know that college is not getting any cheaper. They don’t need a doubled interest rate on top of tuition increases. For many, an affordable loan is the difference between staying in school or giving up the dream of a college education. We should not let this loophole stand in the way of those dreams. I urge our Republican colleagues to end their filibuster of this vital bill. If Republicans think they have a better way, let us debate their alternatives and let us vote. Let us end this filibuster and let us end it today.