[Public Papers of the Presidents of the United States: William J. Clinton (1995, Book II)]
[September 11, 1995]
[Pages 1335-1341]
[From the U.S. Government Publishing Office www.gpo.gov]

Roundtable Discussion With Students on Student Loans at Southern 
Illinois University in Carbondale, Illinois
September 11, 1995

    The President. Is everybody in? For the members of the press corps 
that came in with me, as you know, I have been doing these roundtable 
discussions with students and faculty members and others in colleges 
around the country. And this is the kickoff of a back-to-school week 
we're doing this year to emphasize the choices that have to be made in 
Washington in the next 60 days that will affect education. And so I came 
here to Southern Illinois University.
    One of the big issues is what's going to happen to the student loan 
program and, particularly, the direct loan program which our 
administration started. So I thought that we should start by having Pam 
Britton, who is in charge of financial aid here at SIU, talk a little 
bit about how it works--the direct loan program--and what you're doing 
    So, Pam, why don't you lead it off.

[At this point, Ms. Britton welcomed the President and asked the 
participating students to introduce themselves. Following the 
introductions, Ms. Britton explained the importance of the student loan 
program at Southern Illinois University.]

    The President. Thank you. Let me explain--how many of you come from 
schools that have the direct loan program? You know the old guaranteed 
student loan program basically gave banks a 90 percent guarantee if they 
made a student loan to a student and the student didn't

[[Page 1336]]

repay. And they got a handsome commission and fee on it. Under the 
direct loan program, the Government makes the loan directly through a 
Government institution like a lot of the other Government mortgage 
institutions. And what we found is that, number one, as Pam said, the 
loans are going out much faster, much, much faster. There is less 
paperwork for the college administrators, less paperwork for the 
students. If the students get the loans on time, then they don't have to 
go borrow money, what you talked about, short-term loans.
    In addition to that, believe it or not, they are less expensive 
because the fee doesn't get paid. So the Government actually spends less 
money on them. And best of all, for students that have to borrow a lot 
of money, unlike the old guaranteed student loan program, there are four 
different repayment options, including an option to pay the money back 
as a percentage of your income, so that, for example, if you decide to 
take a job that you find very rewarding but doesn't pay very much money 
and you have a big loan, you still can't ever go broke doing it. There's 
no incentive ever to drop out of school because you can pay the money 
back as a percentage of your income.
    This was a major part of my administration's economic proposal in 
1993, and we got it through. And ever since then it's been under assault 
by the bankers who made the money under the old loan program. It is true 
that they're worse off. I mean, they lost a lot of business. But the 
students are better off, the administrators are better off, the Federal 
Treasury's better off, and the country's better off because now we're 
going to have more people borrowing money and going to school. But the 
bankers aren't better off, and they've persuaded the House of 
Representatives to get rid of the program, go back to the old system. 
And now it's under assault in the Senate; they'll be voting this week.
    So one of the reasons I wanted to come here is to try to galvanize 
people like you all across the country to ask our Congress to stand up 
to the special interests that, you know, want their money back and to 
keep this program, which is working better for you.
    I mean, ultimately, the purpose of the loan program is to educate 
more young people, to make loans--and not-so-young people going back to 
college, because a lot of people my age are now going back, and they 
can't do it without student aid.
    So I want to hear all of your stories, but Pam told me she had sort 
of a testimonial--the experience that SIU has had with the direct loan 
program, and I must say, I hear that everywhere.
    I met a young couple in Florida the other day who were both 
graduated from medical school with $140,000 in student loans between 
them, and they told us that if it weren't for the direct loan program, 
which permits them to repay as a percentage of their income--because, 
see, they're all going to become interns; they won't make a lot of money 
when they get right out of medical school. They said they would be 
spending over half of their monthly income repaying their loans. They 
wouldn't have enough money, literally, to pay for food and rent but for 
the direct loan program.
    So, Pam, why don't you take over now. Let's go around and listen to 
the other students.
    Ms. Britton. Okay. One of our student participants would like to 
begin by speaking to direct loan issues at her institution. Noemi?
    Noemi Rivera-Morales. Mr. President, Ms. Britton, fellow students, 
good morning. Buenos dias.
    The President. Buenos dias.

[Ms. Rivera-Morales recounted her past difficulties in receiving her 
loan disbursement under the Pell grant program, but stated that this 
year she had received her loan within a week of applying to the direct 
loan program.]

    The President. So it was one week?
    Ms. Rivera-Morales. One week. With a holiday in between.
    The President. With a holiday in between. So much for Government 

[Ms. Rivera-Morales explained that the efficiency of the direct loan 
program had increased the amount of money given yearly to students at 
the university from $16 million to $28 million.]

    The President. From 16 to 28?

[Ms. Rivera-Morales stated that she was fearful that future cuts in 
spending would prevent some people from attending college.]

    The President. So am I. That's why I'm here.
    Ms. Britton. We are concerned about direct loans, but we're also 
concerned about the Pell grant program here at SIU as well as other

[[Page 1337]]

undergraduate grants. And Duane would like to speak to that.

[Duane Sherman explained that without the help of Federal grant programs 
he and many other students would not be able to attend college. He also 
stated that the education students receive enables them to become 
productive, tax-paying citizens who are able to compete in a global 

    The President. I agree with that. You know, I think most taxpayers 
resent it if they think their money is going to people who don't need 
it, people who get tax breaks who are very well off or people who won't 
work, who won't try to help themselves. The student loan and the student 
scholarship program, by definition, go only to people who are trying to 
help themselves.
    We have increased the maximum amount of the Pell grant and propose 
to do it some more and to have some smaller Pell grants, between $400 to 
$600 a year, to help people who maybe have a little money but don't have 
    One of the big arguments that I'm in now with the Republican 
Congress is that both of us agree we should balance the budget, but I 
think it better to take a little longer, have a smaller tax cut, and 
increase our investment in education. So the difference between our two 
proposals is there would be 360,000 fewer people getting Pell grants 
under their proposal than mine, and the maximum grant would be 
considerably smaller, and the smaller grants would be cut out under 
their proposal.
    Again, I would say that it seems to me that the main thing we ought 
to be doing today is try to help people who are willing to help 
themselves, trying to empower people to make the most of their own 
lives. And they say that's what they believe in, but it's just 
inconsistent. You do not have to cut education to balance the budget; 
you don't have to do it. And it's sort of cutting off our nose to spite 
our face. I mean, the whole argument for balancing the budget is that 
it's going to strengthen the economy. And you know, I mean, that's the 
argument for doing it, right? And if we do it right, it will. Obviously, 
if we don't keep borrowing money every year just to pay the same bills, 
it will lower interest rates and free up money for people to borrow 
money and start businesses or expand businesses and create jobs. But if 
the way to balance the budget is to make the American people less well-
educated, all it will do is to continue to drive wages down in this 
global economy where most people are working harder for less money 
    I consider this decision on education basically one of the three 
most important decisions that will be made in the Congress in the next 
60 to 90 days over this budget. Is it worth it to balance the budget in 
the way they want to do it if to do it you have to cut education, if 
there is a better way to balance the budget? I think the answer is, no, 
take the better way. But that is the big--I mean, Duane just sort of 
laid it out, what the choices are for you, and you can multiply that by 
millions and you can see the future of America.
    Who's going next?
    Ms. Britton. We have some concern related to graduate students, and 
Mary wanted to speak to especially----
    The President. Mary, I read about you. [Laughter]

[Mary Armstrong explained how important subsidized loans were to her 
education. She said that if they were reduced due to budget cuts, she 
would have a difficult time paying for her education because the 
profession she has chosen will not pay a very high salary. She then 
added that the student loan program was an investment in the future.]

    The President. Good for you.
    Ms. Britton. We have one last student that is prepared to give just 
an indication of their personal experience, Rick Collie.

[Mr. Collie explained how the Federal loan program had helped him to go 
to college and become a successful and productive citizen.]

    The President. A great story. You know, Mary, one of the proposals 
on the student loan program has been to start charging students interest 
on the loan while they're in school and then to maybe--and also start 
charging them the so-called grace period, you know, the 6 months after 
school you can go look for a job and finally try to find placements.
    If that happened and the direct loan program were abolished or made 
unavailable to huge numbers of students, the combined impact of that, on 
the average for graduate students, would be an increase in the debt of 
about $9,300 without the option to pay it back as a percent of your 
income, which for graduate

[[Page 1338]]

students--which for graduate students in the nonprofessional areas would 
be a disaster--I mean, like the lawyers and the doctors and the 
accountants, you know, you might argue--well, even the accountants, a 
lot of them are not going to make much money in the beginning. But I 
mean, the----
    Q. I couldn't do it.
    The President. It's a serious problem. I really do believe if enough 
of your voices are heard between now and whenever we finally adopt this 
budget, which will probably be sometime in October or November, in that 
range--they're not going to do it by September 30th, which is the 
deadline and they won't make it this year--but I just think it's very 
important to get this story out there.
    And Rick, I'll just use you as an example. When I ran for President, 
I was in my fifth term as Governor of my State; I was having a good 
time. A lot of my State looks like southern Illinois, which is probably 
why I did so well here when I ran. But I just realized that unless 
somebody did something to change the direction of the country, we were 
going to face--we had already faced by 1992 almost 20 years of stagnant 
wages for hourly wage earners. Now we have--since '73, the average male 
worker in America today, once you adjust for inflation, is making about 
10 percent less than he did in 1973 working a slightly longer workweek.
    Almost all of the economic gains have gone to those people like me 
in the upper 20 percent of the society. So my goal has been as President 
not only to create more jobs but to raise the incomes again, to give 
working families some sense of stability. It's the biggest economic 
problem in the country.
    Most people who do what they do, like Mary said, most people do what 
they do knowing they're never going to be rich. That's not the point. 
The point is that people ought to know that if they work hard and are 
diligent that at least they'll do a little better year-in and year-out--
not that you're going to get rich but that you'll be able to have a 
family and raise children and have a stable life. And so that's a very 
serious concern.
    And if you look at the last 2 years of our administration--now, this 
wage thing has been going on for 20 years. So you just can't turn it 
around like that. So in the last 2\1/2\ years, we have--to show you how 
pervasive it is--since the day I became President, we've got 7 million 
more jobs, 2\1/2\ million more homeowners, 1\1/2\ million more--
actually, probably like 2 million more small businesses now--the most 
rapid growth of small business in American history. The stock market is 
at a record high. Corporate profits are high. Inflation is low. The 
combined rate of employment and inflation is at a 25-year low. But the 
median income, the person in the middle--not the average because the 
average gets jerked up by the people at the top--the median, the person 
in the middle has dropped one percent.
    And why is that? There are only--there are two or three things we 
can do about it. The first thing we have to do is to try to change the 
mix of jobs in America, to try to get more higher wage jobs with a 
longer term future. But you can't do that overnight. The second thing we 
have to do is to raise the educational level of the American people 
because the people who are being just hammered out there in this country 
today are people who don't have at least 2 years of community college 
education. Basically people that have 2 years or more tend to do pretty 
well in this economy, tend to be able to hold their own and then sort of 
move forward. And it strengthens the American economy. That's what this 
issue is about.
    So if we balance the budget--and I'm all for that. We've cut the 
deficit from $290 billion a year to $160 billion a year since I've been 
President. I think it's nuts just to run a permanent debt. But if we cut 
it by cutting education, then we will compound the most important 
economic problem we have which is that people are working harder for 
less. So what we need is more people like you, not fewer.
    Mr. Collie. The student loan program allowed me to free up my 
distress and bills that were due and things I had to pay, and I could 
focus on my education. And I graduated with honors.
    The President. Don't you believe, though, if we dramatically raised 
the cost of higher education that fewer people would go and more would 
drop out?
    Students. Absolutely. Most definitely.
    The President. We have evidence of that, by the way. I just was in 
California over Labor Day where--California had the worst recession of 
all the States in the last few years because they had the huge impact of 
the defense cuts because they had most of the defense industry

[[Page 1339]]

when we built it up. And there were other reasons as well.
    And one of the decisions they made in California was when times got 
tough, they would cut education and raise the cost. And the California 
system of public education was generally believed to be the finest ever 
created by any society anywhere. They have 21 colleges in the State 
university system. And then I think they have another 9 or 10 in the 
University of California system.
    And it used to be free, and--they had to put some fees on it. But 
they raised the cost so much in the last few years that enrollment is 
down 19 percent. Well, if you've got a high unemployment rate and 
stagnant incomes, the last thing you want to do is drive down college 
enrollment, right? You want to drive up college enrollment. So, I don't 
want our country to do that.
    So, it's not just all of you, there are millions of people out there 
like you, millions. And the whole future of the country depends in part 
on--in other words, it doesn't matter what I do in terms of economic 
policy or how much I try to change the job mix in America unless the 
people in America have the education to do the jobs of the 21st century.
    To me, this is self-evident. You cannot imagine how important this 
event is today. I'm telling you, this is one of the two or three most 
important decisions we're going to make in the next 60 to 90 days, and 
it will color the whole future that you will have.
    Q. Mr. President, I was lucky enough to get in under this program. I 
have a son who is a junior in college who was lucky enough to get in. I 
have a son in Maine who has a five-year-old child who had a liver 
transplant at the age of 6 months. Rex wants desperately to go to 
school, but he doesn't fit into this program.
    Ms. Britton. You talked about the higher cost of education. We might 
want to hear from our Knox College private----
    The President. I'll look into that. Go ahead.

[A student explained that he was able to attend Knox College due to 
Federal money and a work-study program at the Knox College youth 

    The President. That's good.
    Q. And while I was working there, I learned the skills that enabled 
me to acquire a job with the National Football League this summer in 
terms of enterprise computing.
    The President. Really?

[The student said that he now had a full-time position with the NFL 
because of the experience he received through the work-study program. He 
also emphasized the importance of a graduate degree in the job market. 
Another student then explained the importance of loan programs to 
students from low-income families.]

    Ms. Britton. And at the graduate level, Vanika is on the special 

[Vanika Mock spoke about the importance of a grace period for students 
who must repay a large amount in student loans after graduating from 

    The President. You've got to have a job first.

[Ms. Mock explained that in order for her to pursue a career as a 
teacher, her loan would have to continue.]

    The President. So you could pay it back as a percentage of your 

[Ms. Mock said that was the only solution for people who wanted to work 
in a profession that they enjoy but which would not pay a lot of money.]

    The President. And, of course, most of the jobs will be in service 
job growth, too.
    Brian, were you going to say something?

[Brian Szuda commented on the importance of the grace period in loan 
repayment for people who were unable to find jobs immediately after 

    Ms. Britton. I know Michelle's been trying to say something here.
    The President. I'm sorry, Michelle.

[Michelle Birch explained how difficult it would be for her to attend 
college without help from Federal loans and subsidized day care for her 
son. She stated that in order to stay off of welfare she would need to 
continue receiving this assistance.]

    The President. That's the argument we're having in Washington now 
over welfare reform.
    Ms. Birch. I know.
    The President. I told them that I would gladly support programs that 
would save money on spending and welfare reform and put limits on how 
long people could stay, if you would give

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more for child care and if we keep the student aid programs. Because 
basically, welfare reform is about education and work and child care; 
it's not very complicated.
    You know, I have spent since 1980, when most of you were real 
children, I have spent a lot of time with people on welfare. And I found 
that people with the deepest desire to change the system are people who 
have been on it.
    I've almost never met anybody that didn't want to get off, and also 
who all have the best ideas. I'm glad to hear you say that. Good for 
you. I'm proud of you.

[Ms. Birch stated that she had a strong desire to succeed in life 
because she was raised by a family who instilled those values in her.]

    Ms. Britton. We're running short of time, and I want to give Ramon 
and Allison an opportunity to say at least one thing.
    The President. You guys are great.

[Ramon Blakley explained how Federal loans help students from low-income 

    The President. That's why I'm with you.
    Allison Crabtree. I guess I have a question more than anything. I 
was talking with one of your aides beforehand about the proposals by the 
new Congress to limit the growth of the direct lending program, and 
that's been so beneficial, I know, on my campus. It's so much more of an 
efficient program. And as I was talking to my Congressman this last 
weekend, he was informing me that what it does bottom-line is it takes 
more of the money that you put into the student loan programs at the 
Federal level into the hands of students as opposed to administrators, 
such as banks and private lending institutions.
    The President. You got it.
    Ms. Crabtree. So I was wondering how you felt about the possibility 
it will be capped off?
    The President. I think it's a terrible idea. But capping is not as 
terrible as getting rid of it altogether, though. The House of 
Representatives wants to get rid of it altogether. I mean, not the 
Congressmen that are here, they all fought it, but the majority. This is 
not complicated. Banks used to make a lot of money doing this, and they 
want their money back. This is not a complicated thing.
    They want--and, interestingly enough, they pulled an incredible 
gimmick. They basically got--the new majority in the Congress got the 
people who run their budget office to pull an incredible gimmick. They 
said that in calculating the cost of the direct loan program, as 
compared with the cost of the old student loan program, the guaranteed 
loan program, we had to calculate the administrative costs of the direct 
loan program and put it in, but we couldn't count anything of the 
administrative costs that we paid for the guaranteed loan program to try 
to make the direct loan program look more expensive than the guaranteed 
program when everybody knows it's cheaper. It is bizarre. I mean, that's 
the kind of stuff that's going on up there.
    And it's just classic--it's a special interest grab that overlooks 
the fact that the stories that all of you have told are good stories for 
America's future.
    Let me just say one other thing. I will say this: A lot of these 
guaranteed loan providers have gotten quicker and cheaper and more 
responsive because of the competition. So what we wanted to do--I've 
never wanted to deprive a student or an institution of the right to use 
a guaranteed student loan provider. Because if we did that, the 
Government might get sort of fat and sassy, too, and unresponsive, if 
you see what I mean.
    In other words, my goal always was to set up a competition where 
people could choose a direct loan program because of its obvious 
strengths, where the others would have to do more to try to compete, and 
where, if the direct loan program started to fail people down the road 
because they thought they had a monopoly, there were other options 
available as well.
    That's what my goal is. My goal is to have 100 percent open option 
for the colleges and universities of the country. But the worst thing to 
do would really be terrible if it were abolished, and I think it would 
be a mistake to cap it.
    Ms. Britton. That's probably a good note for us to end on. We'd like 
to have you for the rest of the afternoon; but there's a few thousand 
people out there who would also like to hear you.
    The President. You know, I'll give a better speech because I was in 
here with you. I mean, really, you know. One of the problems we have in 
Washington is that people like you, the people who basically are out 
here making this country go are--normally tend to be so busy keeping 
body and soul together and doing what you want

[[Page 1341]]

that you're not organized. The people that are organized and can hire 
lobbyists and have influence up there, you're not them.
    So that's one of the biggest problems in decisionmaking. And that's 
why I try to do everything I can to get out in the country and give 
people like you, by my presence here, a chance to have your voice heard 
up there because there's more of you than them. You're just not there. 
You're here. And I hope we can save this program.
    Yes, Brian, what were you going to say?

[Mr. Szuda stated that many students were able to relax and concentrate 
on their classes because of the efficiency of the direct loan program.]

    The President. Didn't you say you had a national defense loan?
    Q. Yes.
    The President. I did, too. And you're the first person in your 
family to go to college?
    Q. No.
    Q. I am. I'm the first in my family.

[A student showed the President an example of the application form for 
the direct loan program.]

    The President. A one-pager.
    Q. One page, that's it. That's it. The margin of error is extremely 
    Q. I've got that myself.

[Several students explained the less efficient application process for a 
Pell grant.]

    The President. Let me just point out one other thing----
    Q. It's just a long--a long period of time. You need a crystal ball 
just to find out where the problem is--[laughter]
    The President. I'll tell you something else----
    Q. It's just----
    Q. Let the President talk. [Laughter]
    The President. No, no. The loan default--another thing, because of 
this you need to know the loan default rate. If you look at it from the 
point of view of the taxpayers who want their money back--I mean, I paid 
my college loan back. I felt morally obligated to. And I think I feel 
like you, that one of the reasons I never resented the taxes I pay is 
that my country helped me get an education; I figured I ought to give it 
back so other people could get one.
    But what I was going to say is, one thing the taxpayers need to know 
is that we have cut the loan default rate in half since I've been 
President--the loss to the taxpayer. And part of it is because the 
system is different. If you're running a bank, right, and you loan me 10 
grand and you've got a 90 percent guarantee from the Government, and I 
don't pay you back, if you don't lift your finger to get $9,000. If you 
hire a lawyer you've already spent more than $1,000, right? So the whole 
thing--that's another thing--the whole system is organized to maximize 
    Our system is organized to make it easy for everybody and to be 
tough on getting the money back. I mean, it's very different.
    Q. Here is another point. [Laughter]
    The President. I'd better take her back to Washington with me. 

[Several students described past problems with receiving loans.]

    The President. This has been unbelievable. I don't want to leave you 
guys. You're great. Thank you.
    Ms. Britton. We thank you very much for all you do for us.
    The President. Thank you.

Note. The President spoke at 10:51 a.m. in Pulliam Hall.