Remarks on the Student Loan Program and Student Assistance - Transcript

Weekly Compilation of Presidential Documents, Oct 9, 2000

October 2, 2000

Give her another hand. Wasn't she great? [Applause] Good job. Thank you. You know, I thought I'd be having withdrawal today, after the Olympics--[Laughter]--and I was wondering what I would do for an encore, and the answer was, meet Raquel. [Laughter] Thank you very much for being here and for your example.

And Secretary Riley, to you and to all these wonderful people at the Department of Education, I thank you for the astonishing work you've done on the student loan program and on student assistance, generally.

When I ran for President in 1991, late 1991 and 1992, I talked a lot about redoing the student loan program and increasing access to financial assistance through grants, work study, tax credits, and an improved student loan program. I'll never forget one night; it was about 1990, I think. I was then serving as Governor of my home State, and I was up in Fayetteville, Arkansas, which is the home of the University of Arkansas. And a friend of mine and I went out to a coffee shop to have a cup of coffee.

And I did what I always do; I went around and shook hands with everybody at all the tables in there. [Laughter] And there were three young students there having coffee, so I sat down and started talking to them. Two of them were planning to drop out of school. They were already in college--I'll never forget this. And I asked them why in the world they would do that, given the fact that the economy that they would live in for their adult lives put a higher premium on education than ever before.

And both of them said they had to go ahead and get out and work for a couple of years because they knew they could not meet their student loan repayment schedule. And they didn't want to take the money and not be able to pay it back. And it had a searing impact on me. So I said, "Surely, these people are

the exception to the rule," so I started nosing around and come to find out there were a lot of people like this.

And that's basically how we got into the idea of the direct student loan with the option to repay as a percentage of your income. I also found a lot of young people who wanted to be teachers, like Raquel, or police officers or nurses, who instead were taking jobs that they found less rewarding but paid more money so they could meet their loan repayment schedule.

The background to all these things that we're going to talk about here in a minute, for me at least, came alive through the stories of young people I met. And then when I went around the country in 1992, I met more and more and more of them. So, Raquel, I'm grateful to you, but I'm also grateful to all those young people, many whose names I don't even know, who took the time to share their stories and tell me about the personal challenges they faced. And it was very important to me because I never could have gotten through college and law school without loans and grants and jobs. And I wanted everybody else to have those opportunities, as well.

Now, one of the big problems we faced in 1993, when I took office, is that the student loan program itself was in danger because its credibility, its very financial underpinnings were threatened by a very high default rate. Nearly one in four students was failing, for a variety of reasons, to repay their student loans. And yet, again I say, we all knew that we needed more people going on to college, not fewer people. So the trick was how to figure out how to get more people to go to college and do a better job of collecting on the student loans and get people to be more responsible in discharging their student loans.

Since 1993, as Secretary Riley said, we have more than doubled our investment in student aid. We've increased Pell grants; expanded work-study slots from 700,000 to a million; created AmeriCorps, which has now given more than 150,000 young people a chance to earn money for college while serving in our communities; created education IRA's, the $1,500 HOPE scholarship tax credit for the first 2 years of college, and then a lifelong learning credit for the junior and senior years and for graduate school. More than 5 million families already have taken advantage of the HOPE scholarship tax credit in '98 and '99.

We made it easier and cheaper to get loans and for students now to pay them back as a percentage of their future income, and you heard Raquel talking about that.

The Direct Student Loan Program we started, also by fostering competition, have saved students more than $9 billion in loan repayment costs, just from lower interest rates alone. Taken together, these actions amount to the largest increases in college access and opportunity since the passage of the GI bill after World War II. And we can now say to every student in America, "The money is there. You can actually go on to college." This is profoundly important.

Students are getting the message; two-thirds of them are now going to college. That's up more than 10 percent over the last few years. We have also tried, as I said, to increase responsibility for repaying these loans. Otherwise, the whole thing would be undermined over the long run. And here's what the Department of Education did, and again, it's just another example of Secretary Riley's sterling leadership and the great qualities of the people there. But here's what they essentially did to reduce the student loan default rate.