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THE WHITE HOUSE Office of the Press Secretary ______________________________________________________________ For Immediate Release October 21, 1994
2:32 P.M. EDT
THE PRESIDENT: Good afternoon. Ladies and gentlemen, when I became President, I did so with a commitment to help more Americans seek a higher education, because it was important for our people and important for our long-term economy.
A big part of the problem of getting more Americans into college and having them stay there has been the broken federal college loan program. It's too expensive; it did not provide eligibility for too many middle-class people; and there were too many people who didn't go to college or, having gone to college, dropped out, because they never thought they could meet their repayment options. There were others who were frustrated because they thought they couldn't take a job they might want because they simply wouldn't earn enough money to meet their repayment obligations.
Today, I want to talk about what we have done to fix that system. We already give Americans looking forward to their retirement the chance to save in what we called an Individual Retirement Account. Now, we offer people at the beginning of their careers the chance to pay for college in what we call Individual Education Accounts. Here's how it works.
The Individual Education Account enables you to borrow money for college and then to determine how best to pay it back in the way that best fits each individuals' needs as their work life changes. There will be four ways to repay the accounts, and people will be able to switch back and forth among payment options at any time and at no cost, depending on what's best for them.
Under one option, you can simply pay a fixed amount back on your loan over 10 years. Two other options will permit people with very high debts to spread their repayments over a longer period of time. And as I promised during our campaign, people will be able to pay back their debts as a percentage of their incomes for the life of the loan.
This income contingent repayment, or pay-as-you-can option will give people the chance to start a business, do community service, work as teachers, police officers or in other public service-oriented employment, and make payments in smaller amounts in the early years if their wages are lower.
Our plan eliminates the middle man in the student loan process, who used to impose enormous and inefficient transactions costs and, in so doing, to save $4.3 billion for U.S. taxpayers and $2 billion for students in lower loan fees. It means that more people will be able to borrow in a simple, fair and affordable way.
Over the next few years, as part of our larger school reform, named for Congressman Bill Ford, who's retiring this year, every American will be eligible for an Individual Education Account. Already, 300,000 students have taken out these new college loans. By next year, 40 percent of all of our colleges, some 1,500 of them, will be enrolled. In January, we'll announce a phased-in plan to allow millions of people who have already borrowed for their educations, to consolidate loans into an individual education account and get the benefits of these new repayment options.
As more and more middle-income Americans will discover, this is a very good deal, which is a very important part of America's long-term strategy for economic health.
Unfortunately, there are those who don't support this approach and want to take us back to the days when working families couldn't afford to sent their children to college. Every single one of our political opponents voted against the college loan reform plan. Most of them have now signed a contract telling us what they would do if they controlled Congress. They would give a $200 billion tax cut to the wealthiest Americans. They would explode the deficit and, to help pay for their promises, they have made a specific pledge to cut the student loan programs for three million American student borrowers every year. Well, our contract is with the future. I don't want to go back, and I don't believe the American people will support this approach.
Ten days ago I got a letter that shows how important this issue is. A 16-year-old boy named Artur Orkisz, who immigrated here from Poland just four years ago, attends Elk Grove School in Des Plains, Illinois -- here's what he wrote me about his dream of going to college.
"Since I came to the United States my dream has been to attend a school like Harvard or Stanford. I rank number one in my class, but I know for a fact my parents are not going to be able to pay my tuition if I should get accepted to a good university. I'd like to know if students not as rich as others will get the opportunity to fulfill the American Dream and graduate from a great university."
Well, Artur, if you're listening, I got your message and the Individual Education Account will help you get your wish.
Before I take your questions I'd like to say just a word about the framework with North Korea that Ambassador Gallucci signed this morning. This is a good deal for the United States. North Korea will freeze and then dismantle its nuclear program. South Korea and our other allies will be better protected. The entire world will be safer, as we slow the spread of nuclear weapons.
South Korea, with support from Japan and other nations, will bear most of the cost of providing North Korea with fuel to make up for the nuclear energy it is losing. And they will pay for an alternative power system for North Korea that will allow them to produce electricity, while making it much harder for them to produce nuclear weapons.
The United States and international inspectors will carefully monitor North Korea to make sure it keeps its commitments. Only as it does so will North Korea fully join the community of nations.
NOTE: The question and answer segment has been removed.