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Office of the Press Secretary

For Immediate Release November 2, 1994


                         University of Michigan
                           Dearborn, Michigan

PRESIDENT DUDERSTADT: Mr. President, on behalf of the University of Michigan, I'd like to take this opportunity to welcome you, Congressmen Ford, Dingell, and Carr and other distinguished guests to the University of Michigan's Dearborn Campus, in the sense, to sunny southern Michigan. (Laughter.) I would point out the rain arrived late Saturday afternoon. We're kind of concerned that Wisconsin brought it with them -- (laughter) -- and it's been here ever since.

We're absolutely delighted that you've selected the University of Michigan as a site to talk about a very important federal program, the Federal Direct Student Loan Program, or as it is known, the William D. Ford Direct Student Loan Program. This is a program of enormous importance, we believe to the nation. It recognized the importance of the college education to all of our people. But beyond that, it recognizes the importance of developing new mechanisms to help students and their families afford the cost of that education.

We have seated around the table, in addition to Congressmen Carr, Ford, and Dingell, several students of the University of Michigan. Let me introduce them to you.

Seated next to Congressman Dingell is Erica Hodge, a student at the University of Michigan's Ann Arbor campus, in a master's program of library science. Next to her is Chancellor Jim Renick, chancellor of our Dearborn campus. Next to him is Stacy Tenderson, University of Michigan, Dearborn student, studying elementary education. Next to me is Alex Vincent, a senior in political science at the University of Michigan, Dearborn. Seated to the left of Congressman Carr is Kelly Macalaney, a Ph.D. student in higher education at the University of Michigan's Ann Arbor campus. President David Adamany, president of Wayne State University next to her. And then, seated next to President Adamany is Charles Tisdale of the University of Michigan Dearborn campus, a senior in electrical engineering.

Let me make just a couple of quick comments about the federal direct student loan program, since the University of Michigan is one of the first 104 institutions to have implemented this program. We have been very supportive of this program over the course of the last several years as it took shape. And we have appreciated enormously the strong leadership and support provided by you and by Congressman Ford, other members of the Michigan congressional delegation in making this possible.

The new William D. Ford Direct Student Loan Program, as it is now called, has greatly simplified the process for our students. It's a program that really works, and works from the get-go. We've already seen on the Ann Arbor campus a 43 percent increase in the past year because of this program. Our early experience in the first two months are that students found it significantly easier to apply for loans. They have been particularly attracted by the more flexible repayment options that have been offered under this program, including income contingent, graduated and extended plans.

We think that it is being very well received by the campuses. And David Adamany's institution Wayne State, will be a part of the roughly 1,500 institutions that will come on board in the second phase of this program as it builds over the next year to roughly 40 percent of the loan activity.

This is a federal program, as I said, that is working very, very well. Estimates are that it will save upwards of $4 billion to the American taxpayer, saving almost $2 billion to students over the course of the next five years; a program of great success, but a program we believe of greater importance to the future of higher education and to the future of the nation.

Students around here will have an opportunity to express to you directly their own experiences. But I'd like to first take this opportunity to invite remarks you might have about this important program.

THE PRESIDENT: Thank you very much, President Duderstadt. Ladies and Gentlemen, first let me say how delighted I am to be back at this campus again. I visited here in 1992, and I'm glad to be here again.

One of the most important commitments I made to the voters in 1992, at least from my point of view, was that if I were to become President I would try to do something about the Student Loan Program to make it easier for more people to access and for more people to go to college and stay in college. I've been very concerned based on my experience as a governor with the number of our young people who either didn't go to school or who started and then dropped out because of the high cost of the college education, because they either couldn't get the loans or they though thought if they did get the loans they would never be able to pay them back.

I was also, frankly, outraged by the high default rate among people who had loans and didn't pay them back. So it seemed to me that there ought to be an easier way to get the loans, to pay them back, and a better way to actually see that they were paid back.

What this program is designed to do is to lower the cost of the college loans to the students; give the students more flexible repayment terms; guarantee that if you choose to go into some line of work which doesn't have a high salary when you get out of college, that there is a limit to how much you can be required to repay as a percentage of your income, but that if something happens and your circumstances improve and you want to pay the loan off quicker with lower interest rates, obviously you have that option as well.

So I came here today, just to learn how this program is working. I want to say a special word of thanks to Congressman Ford, who, as the Chairman of the House Education Committee, spearheaded this; as well as to Congressman Dingell and Congressman Carr. We passed this program by the narrowest of margins in the Congress. There were a lot of people who didn't want us to pass it because there were a lot of people who were sort of middle men in this operation who were making a good deal of money off the program.

But this is amazing. We saved over $4 billion over a five year program in the cost to the taxpayers. We already know we're going to cut $2 billion in the cost to the borrowers. And we're going to be able to help more people in a better way, if it is properly implemented.

So, we're here today, in large measure, to thank the University of Michigan and to thank Wayne State for joining the program next year. Michigan has probably had the strongest participation in the program of any state in the country so far. It's a real tribute to the leaders of your institutions of higher education that you're out ahead of this curve. But I think the students of America will demand to be included in this program, the more they hear about it, if it's properly implemented.

So I came here today to listen and see how it's going and hear from all of you.

Q: Well, I feel that the new program is much better than the old system. When I was an undergraduate I was borrowing on the old GSL loans, and what I was doing was getting a loan check every semester, waiting for it to come, accumulating late fees from my institution while I was waiting for the check to be disbursed.

And the new system is much easier. It works out great. And I can particularly appreciate this aspect of income contingency as far as repayments are concerned, because I'm going into the library profession, and as everybody knows, its not as lucrative as some of the other fields out. So as far as income contingency is concerned, I'd like to start out possibly by repaying my loans that way, and then moving on to a more standardized payment plan as my salary potential increases.

PRESIDENT DUDERSTADT: You find the flexibility in the repayment is really attractive?

Q: Oh, yes, most definitely.

Q: Well, I'm planning on going to teach in an area of Native American concentration which would probably put me in a low income earning potential category also. So, basically, that was one of the reasons why the GSL program was just ideal for me. Plans change, and in order to move with the things that happen in your life, having the options is always a plus.

Q: Well, first of all, I found out it was less cumbersome, as far as the process of getting your checks.

Also, with Americorps, as far as the public service, because I'm a political science major, that's what I plan to go into. And that's really good because I'll be able to like pay my loan back while also providing a service for my fellow citizens as well.

THE PRESIDENT: Let me interject here. For those of you who don't know, what Alex is talking about is Americorps, the national service program, allows young people to earn credit against a college education, at the same annual rate as the G.I. Bill, for service to the United States here at home in community service work. So the two of these things together, he said, can have an even bigger impact in making it easier to complete your college education.

Q: I guess, President Clinton, I'm your standard quintessential Generation X student in that I've been out, have two degrees already through loans; went to the corporate world, thinking that was what I wanted to do; made a lot of money, paid off my student loan; and then decided around some point of misery that wasn't what I wanted to do with my life. And I also -- one of the big decisions for me in coming back to school, taking a year off, going to China and teaching and earning $100 a month, working on my Ph.D. -- which who knows how long that will be -- all through student loans was that, I could not afford to do this. I'll not longer have that income coming in.

So from my perspective, it's what allowed me to dedicate my life to education and community service within higher education. So I've studied a lot the Americorps proposals as well as this proposal, and really see the benefit not only financially and empowering students to manage their own assets rather than letting someone -- or, not assets, liabilities -- rather than letting someone else manage them; also to commit their lives to service, because I do -- I'm in that part of the generation, I think, that really is interested in service.

Q: Well, Mr. President, in my case, I've come from a low income family, which basically means without the loan, period, I wouldn't even be here. College would not have been an option for me. College was an option made available by the loan. And, as a result of that, I am now a graduating senior -- preparing to graduate in May of 1995 -- from here at University of Michigan in Dearborn. I'm going to be graduating with an Electrical Engineering Degree, which will probably put me in the middle class. I don't think I'll be in the lower end of it, so I probably won't have to take advantage of some of the specials with the paying back. But at least I will be able to pay back the loan, and I do intend to pay back the loan.

One of the nice things about this new process and this new procedure is that there's a lot less paperwork. In the year's before, we had a lot of paperwork; we had a lot of things to fill out -- a lot of forms. It was very cumbersome. The drudgeries of it were extremely high.

Another thing that I'd like to point out here is that as a result of the less paperwork and having to deal with the office of the financial aid less, this has allowed me to manage my own time. I'm able to take more classes; I'm able to take less work. I have a part-time job at this point in time. And as a result of the loan I have been able to take a full-time schedule of classes.

PRESIDENT DUDERSTADT: Very good. As I said at the outset, the University of Michigan has had a very, very positive experience in being in the vanguard of this first set of institutions. Perhaps President Adamany, you'd like to make comments from the perspective of the institution that's about to come on board -- your own perspective.

PRESIDENT ADAMANY: Well, Mr. President, we're very pleased with the direct loan program, and with the opportunity to become a participant in the second wave. I think I'd emphasize for you the importance of the income contingent feature. And perhaps I could say a word about that.

Wayne is an institution in the city of Detroit, almost all community students -- twice as many students of low income as the average in the country; but at the same time, only about a quarter as many of our students presently take student loans. The students are afraid of loans, especially poor students and especially minority students. We have the largest number of African-American students on any campus in the United States, except the historically black institutions. But our students are afraid of loans, and what they've done is reduce their course loads in order to work more hours, rather than take loans, of which they're so fearful.

The income contingent feature gives them a reasonable assurance that no matter what their prospects are in a fierce economy, they should go on to school at an accelerated rate. So we're very grateful for the income contingent feature and it will make a world of difference.

Two-thirds of our students -- of our African-American students -- were full-time students in 1982; today, a third because of the diminishing value of the Pell Grants and the fearfulness of loans. So I think you've reached out to communities that badly need to be served through the income contingent feature and other features of direct loans.

I do want to say to you while we have you here, we're very grateful for the work of Secretary Riley and the Assistant Secretary of Education in working with our institutions. I'm on the committee that Secretary Riley has set up to work with the department. And of course, our prayers are with him as he recovers from his recent surgery. But we're very grateful for the work of the officials of your administration and the Department of Education who have worked with us on this.

THE PRESIDENT: Thank you very much. I think we should give a little credit here, as you did, to Secretary Riley and Deputy Secretary Kunin and the Assistant Secretary and all the others. They have worked very hard to get the mechanics right, the details right on this and to keep it going.

The other thing that I'd like to emphasize on the points you just made is that I have been very concerned about the number of our young students, and not-so-young students, who are having to really string out their college education because they want to do it all on a pay-as-you-go basis for this reason -- it actually is not good economics for our country.

The average college graduate in the first year of work makes, as you all know, I'm sure, much more than the average high-school graduate in the first year of work. What you may not know is that the gap between what they make now in 1994 is twice as great as it was in 1984. So these trends are rather dramatic and they are not going to be reversed in the foreseeable future, which means that, especially in areas which have traditionally had either high unemployment or low income, if you want to change the income mix of the people and change the nature of the economy, one of the things you simply have to do is to dramatically increase the percentage of people who have a college education. It's one of the few things you can do in a short period of time -- meaning over a five-six year period -- to change the income distribution in a community.

And so this is a very important thing not just for individual Americans and their opportunities, this is a big deal for our country and for whether we can continue to promote equality of opportunity and a better living standard and a rising living standard among people who have absolutely no way other than an education to achieve it.

PRESIDENT DUDERSTADT: One of the individuals that played an extremely important role in this, as he has in many other areas of education over the years, is Congressman Bill Ford. Indeed, Congressman Ford is known as "Mr. Education" in the U.S. Congress. I think it's only fitting and appropriate that Congressman Ford, you be allowed -- invited to make a few comments on how you saw the opportunity and the challenge as you put together the legislation for this.

CONGRESSMAN FORD: Well, the first thing that everyone ought to know is that a lot of us saw the trends that David talked about here. And he and I have discussed this, Mr. President, many times at great length.

As the purchasing power that Pell Grant was going down, we had a vacuum created; and the vacuum was being filled by more and more borrowing, but by a borrowing system that continued to get more and more expensive to the student. And when you came along saying you wanted a national service program, and that you wanted to be able to forgive loans for people who went into national service, and started talking to us about how that could be done, it was just as if we started a whole new era; because without the White House wanting to do it, it wouldn't happen. The bankers didn't want us to do it -- we took $4.3 billion of profit out of their pocket in the first five years. The bankers and their friends and, as you mentioned, there's a tremendous infrastructure that built up over the years of people who make a very good living out of trading this paper back and forth. We're getting rid of the paper.

The important thing that's coming up, however, I get the impression from some of the students that this comes in for them in the middle of their career in college. And one of the questions that I've been asked a lot is, what about me -- I've already got loans for two or three years in school; and now you come along with this better deal, how does this help me? Well, the present schedule that Secretary Riley has is for the President to sign a consolidation roll-out about February -- this coming February -- that will let the people that are coming in now, but have preexisting loans under the old interest rate, consolidate those loans with their new direct loan at about 2 percent less than they're paying now. And like the way they advertise on radio, there are no closing costs, nothing else to go with it; so that it actually gives you a chance to refinance that which you had already financed under the old system.

And I think that when you add that factor to it, you're going to see one of the last little blocks to participation. People are afraid -- I'm already doing it this way, you're asking me to change; how can I be sure I'm better off? I'd have no hesitation, and I haven't, telling my grandson why he's better off. But he'll believe me. I'm not sure that other people will believe me after 30 years in Congress -- (laughter) -- but for what it's worth, I'm not a candidate, so you can believe me now -- (laughter) -- I'm a statesman, I'm not running anymore. It will work.

And the way Secretary Riley and his people have set it up, the real magic is that this is the most paperless program for education we have ever seen. There aren't even checks written in this program. Everything goes back and forth between the college and the Treasury by computer. And one of the schools said to me, that's fine for the University of Michigan because they've got computers. We'll buy their computer for them. The President signed for enough money to say to a school, if you aren't computerized and you want to come into this program, the Department of Education will give you the equipment to run the program on. The government has never, ever come out and paid for your shovel in the past, and that's literally what they do here.

CHANCELLOR RENICK: Mr. President, I'd like to add that not only has this program increased opportunity, but it hasn't added bureaucracy; that the process of administering the program is not highly bureaucratic. And so we're actually able to serve more students without having to hire additional people to administer the program. And that's just an incredible benefit from the program.

PRESIDENT DUDERSTADT: I'm interested -- we've had a number of students that have been involved in the program thus far comment. But from the student's perspective, is there general knowledge among other students that you know about this program? Is the word getting out?

Q: Well, I had actually not heard of federal direct student loans since I came to the University of Michigan and started this summer. I attended an historically African American university in Virginia, undergrad, and we did not have this program. I think that it would have helped a lot of my friends stay in school who were especially attending out of state. And now my brother is attending an institution in Chicago, and they do not have federal direct loan. So my family is sort of -- not necessarily supporting me, because I'm a graduate student now and I'm independent, but they just got me through school -- I just graduated in '93 -- they're recovering from me, and now they're having to contend with his financial situation in school now.

So my point in saying this is that I think you do need to sort of expand this program, or we need to expand this program so it includes more institutions, so that students have the option of borrowing directly from the government as opposed to the GSL system.

Q: The President mentioned -- this passed, and it's extraordinary when you pass an education initiative without a single Republican vote in the body, because the way that we got this on the books was to make it part of the budget action and the reconciliation act. As a result, to get an agreement that would finally get us through Congress, we had to do some compromising.

And as she mentioned the effect on her family, depending on where they're going to school, we came out finally with an agreement that in the first year only 5 percent of all the loans in the country could be made with this program. That's how we got 104 schools. The second year it can go up to 40 percent of the loan volume. And then in the third year it can go up to 50 percent of the loan volume, plus any school that doesn't get picked up in the 50 percent can ask the Secretary to come in. So there's no ceiling after the third year.

In the first three years we're going to have a very uneven thing with some schools that get in and others that will drag their feet to the detriment of their students. But if you read the statute, in the fifth year, we only require 60 percent of the loans to be in this. And we're not at all worried about that now because the rate at which schools are signing up indicates that probably at the end of the fifth year, even though only 60 percent are required to be in, virtually everybody will be in.

THE PRESIDENT: This law passed the Congress last summer -- I mean, summer before last, summer of '93. And then we had to do the rules, the regulations, set the system up. So no one could have been involved in it before then. And this is the first year, and then next year we'll have up to 40 percent of the institutions in the country involved. And then, eventually, we'll be offering it to everybody within a couple of years.

And if we can get this message out across the country that it's working very well, then I think some of the reluctant student loan offices and institutions around the country will be changing their position rather rapidly.

PRESIDENT ADAMANY: Sir, I'd like Mr. President to make a further point about the advantage of this, which is that this program will clearly fix the responsibility for the collection of loans with the federal government.

Previously, because the loans were guaranteed, the private lenders had very little incentive to attempt to collect these loans. The default rates may have, therefore, been too high. Of course, the default rates were credited to universities who had no authority whatever to collect the loans. But it placed a considerable stigma on the institutions which take students who are at some risk, because those students are most in jeopardy, most likely to leave school, and most likely to default.

This doesn't trouble me so terribly. After all, we are a society which tries to increasingly open its doors, and we're going to take some risks. But the institutions that were working hardest to open doors for Americans who otherwise didn't have educational opportunities were getting a terrible black eye. Our default rate was only 3.5 to 7.5 percent, but high as compared to certain others.

Now the federal government will have the fixed responsibility to do this. We, of course, will work with the federal agencies to accomplish this result, but it will eliminate that special burden, special stigma that so often attached to institutions which especially reached out to students who were struggling to get an education. I think the federal government's willingness to take this responsibility is a great advantage, for which we're grateful.

Q: You had two degrees with loans?

Q: That's right.

Q: How many places are you making payments now?

Q: Two. Well, actually, now I'm making none. I'm back in school.

Q: How many places were you making payments at one time?

Q: Two at one time, two payments a month or two different --

Q: It's not unusual to find a student in her status that's on a situation where they're making payments in three different directions at the same time; maybe not even the same day of the month, and it's a terribly confusing -- that's the existing system. Now there's only one place -- IRS; that's it. And the default rate will disappear because people don't default on paying their income tax.

Q: May I offer something? Number one, I want to join you in applauding Bill Ford. We've been so lucky to have him a member of our delegation, one of the nation's experts in education. And we're going to really miss Bill in the next Congress.

And to you, Mr. President, thank you for being here, and thank you for fighting for these middle class families and making affordable student loans available to everybody.

I have a special affinity for this program for I guess two reasons. One is that, as a student, I would not have been able to go to the University had it not been for student loans. So I've had my own personal experience. And I had to pay back in two places, and I wish it was only one. So we're making some progress.

But there was another thing. Aside from the statistics of about 580,000 Michigan students who will be in this program within a few years, there's something more than just the statistics. And I thought that I'd share with you a personal experience that I had. Most people in the state know that I've represented Michigan State University for 18 years, and one of my favorite things to do when they were on a different time schedule than they are today was to go through the student registration lines and shake hands during those election years. And it was a wonderful experience from the standpoint of what happens when people have the eligibility and the affordability.

As you've said so many times, Mr. President, and you're to be congratulated for it, you wanted a government that looked like America. Well, we had educational institutions that ought to look like America. But there was a time in the early '80s when student loan eligibility was drastically cut back. And I could see from one election to the other as I was shaking hands among the people standing in line, that during that time of restricted eligibility, the student registration lines really didn't look like America anymore. They didn't look like the America that I was seeing as I was walking door to door in other parts of my district.

And so, I think there's a complexion of our population that needs to be recognized here; that without these kinds of supporting, affordable help, we're just going to have an education system that's going to be more and more and more elitist, and that's not good for America.

We have good, hard-working kids from all walks of life in this state, and they all ought to have the opportunity to be at this institution, Mr. Adamany's institution, Michigan State, and the other nine institutions of higher learning in the state of Michigan.

Q: I think Michigan State is in the second year, are they not?

Q: Well, I had to speak up for Michigan State because they were at the table. (Laughter.)

Q: They're in the second wave.

THE PRESIDENT: They're coming the next time.

Q: As soon as Michigan did, perhaps, but they were in your district, not mine. (Laughter.)

Q: And I hope they weren't penalized for that. (Laughter.)

Q: I think something else is happening with this program which, for the longer term, is particularly important. We've generally thought of a college education almost like a consumer good. The idea is that we save up for it, and then we purchase it and enjoy it.

And yet, the figures you pointed out, Mr. President, about the fact that the earning capacity of college graduates is diverging every more beyond that of simply a high school graduate means that a college education has to be looked upon much more as an investment -- an investment not simply in the quality of life, but in actual financial return. And because of that, I think our society is beginning to realize that those who benefit from those investments must understand that, like they would invest in a mortgage for a house, they will invest in their own future.

Beyond that, what more appropriate investment could a nation make than in the knowledge, the skills, the education of its people? So, to the degree that this program shifts the American attitudes of a college education away from that of a consumer good -- a consumed item -- to that of an important investment in the future for individuals and for a nation, I think it's going to make this a much stronger country. It's going to be very important to us.

Q: I think on a personal level that that whole idea is something that is very true and near and dear, basically. Minority retention is something that all universities should stress. Native Americans are under-represented throughout the country. A lot of it has to do with low economic status. The availability for financial aid is key to getting these students the opportunity and just the incentive to do it.

And the GSL program enables a student to supplement their income by not working as much, maybe participating in more community volunteering capacities, and it just enlightens the whole university atmosphere. It diversifies it. It gives you a feeling of what America is really about. I mean, it's not just one way, it's lots of different ways. And we really needed to start thinking about that, too.


Q: Well, I was just going to say that I would like to personally thank Congressman Ford for the loan program. It has made a difference in my life and I've seen it made a difference in a lot of other young Americans' lives.

One of the problems that I think does exist is that I know a lot of people -- a lot of young Americans who do not know about this program. As President Duderstadt mentioned earlier, I also know a lot of people who don't know of any financial aid programs or of any way to go to college. And I think that this is an excellent opportunity to tell the young Americans that there is a way to make it possible. And I think this program is a way that will allow a wider road for young Americans to get into college and to be more actively involved in the academic world.

THE PRESIDENT: I think that's a very good suggestion. Let me say, we do have some money set aside for an advertising outreach program. And we wanted to wait to start to run the advertising until this first year -- which is 5 percent of the institutions, as you've heard -- until we had these programs up and going so we knew what would work, we had some of the kinks ironed out, and yet we wanted to get people's attention up because, as you heard Bill Ford say, we're going to 40 percent next year, then 50 percent the year after, then anybody who wants to get in.

So I think you will see some -- if our program works the way it's supposed to, you should see some advertising about this program through the media within a matter of a couple of months.

CONGRESSMAN FORD: There should be an 800-number open by -- Secretary Riley as soon as they've got a base for it. Actually, the 104 schools are spread all over, and in this first go-around, Michigan has just a couple of them. And the second time around, they'll deal with more widespread availability in the country and people will -- all they have to do is advertise the 800-number; and if you want to know how to do it, just pick up the phone and dial 1-800 and they'll tell you.

Q: I guess I'd like to say that it's nice to see a program being started small and quality, before it's rolled out to every university across the country. Before it's advertised to every student, let's see -- let's make it work, let's make it a quality program. And I guess I wanted to address one of the criticisms I've been reading about this program is that college students aren't going to understand all these different repayment options -- oh my gosh, there's four options; how are they going to understand? And that frustrates me a little bit because I guess I take offense to it somewhat in that chances are that if I've been through college, then I hope I do understand -- (laughter) -- and if I don't, then there's a problem with college to begin with.

Let's become part of the solution, instead of part of the problem. And that's what I would say to that group of critics out there -- if you think it's a problem, then get in there and get some classes -- some educational courses -- in high school on future financial planning and in college on future financial planning. That's their cup of tea.

And I know I worked for a bank for four years, so I know those critics quite well. And I think that they could become part of the solution, rather than complaining about the problem.


Q: We should also note that you don't have to make a decision about anything until you reach repayment.

Q: That's right.

Q: And then if you make one decision, you can change it. You're not stuck for the rest of your life with what you decide the day you graduate from college. You can adjust what's happening in your life.

Q: Which is key, because I may plan to get out and do more service. But I guess I don't plan to be a poor starving graduate student forever, and I'd like the ability to adjust my finances accordingly.

PRESIDENT DUDERSTADT: One additional comment that I think is apparent from these discussions, this is almost a model federal program. It saves the taxpayers money; it eliminates bureaucracy; streamlines; makes it easier; and it opens the doors of opportunity for people. You couldn't ask for anymore.

And I think that, speaking on behalf of our university, but I think those of our sister institutions that are having success and enjoying this first year, we're deeply grateful to you, Mr. President, and to Congress for putting this program into place. It's really helping us a great deal.

We're beginning to run out of time now, but perhaps, Mr. President, you'd like to make some final comments about the program.

THE PRESIDENT: Well, I think, first of all, the students have said it all, from my point of view. I do want to thank the members of Congress who are here -- Chairman Dingell, who's been characteristically reticent, but has been so important to all of us; and Chairman Ford, thank you. And I'm very glad this program is named for you; it ought to be. And Bob Carr, I thank you for your help on this education initiative.

But mostly I thank the students for what they've said because they have pointed out why this program will work and why it's important.

Again I will say, I got interested in this because I got tired of hearing young people in my own state tell me they were going to drop out of college because they couldn't afford to take out another loan; or tell me that they wouldn't go until they had some money because they knew they'd never be able to repay the loan. And I think we have changed all that now.

We've also been able to change it with good management and actually lower the cost to the government, not increase the cost to the government. It's unheard that we can make better loans available at lower cost to the borrowers and still lower the costs to the taxpayers, and drastically simplify it.

I will say this is a part of a series of things we are doing. We have done the same thing with the Small Business Association loans, where a small business person can now fill out an SBA application that's one-page long and get an answer within three days, something which was unheard of before. So we're trying to do this piece by piece by piece throughout the government.

I also appreciated what Kelly said about the fact that we were willing -- and wanted, in fact -- to have one year where we started out on a very modest way, because there's always the possibility there could have been some difficulty here we had to deal with. But in the end, the important thing is the students of this country -- increasingly nontraditional students, increasingly not students that are just between the ages of 18 and 21 -- understand that this program is out there for them; now they have to use it.

We -- I will say again -- this country is dealing with about 20 years in which the average earnings of hourly wage-earners has been virtually stagnant when you adjust for inflation. If we want to get earnings up in America, and we want to make a big dent particularly in population groups like Native Americans that have traditionally been lower income, there is no other way to do it in the near-term, apart from dramatically increasing the number of young people who -- and perhaps not-so-young people -- who go to, and finish college. There is no other near-term way for us to turn our society around on this economically.

So what I'm really hoping will happen as a result of this direct loan program is that enrollments will continue to rise dramatically, and people who do not drop out will continue to drop dramatically, so that our country becomes a more educated place and our economy will become more powerful, and our society will become more equal because people will be able to compete and win in a global economy. That is the ultimate goal of this entire enterprise. And from what I've heard today, I think it's been an effort worth making.

I thank you all for being here. (Applause.)

Q: Mr. President, on behalf of the University of Michigan and our sister institutions, we want to express our gratitude for your meeting with us today and sharing in this discussion.

I should point out that the President and I had a brief discussion before we came in, and we've agreed that we are going to arrange a little basketball match-up the first week in April between Arkansas and Michigan out in Seattle. (Laughter.) Of course, we've got to do a little bit to get there first.

THE PRESIDENT: That's right.

Q: The rematch.

Q: Thank you very much for returning to Michigan.


END 11:00 a.m. EST