[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]
KEEPING COLLEGE WITHIN REACH:
THE ROLE OF FEDERAL STUDENT AID PROGRAMS
=======================================================================
HEARING
before the
SUBCOMMITTEE ON HIGHER EDUCATION
AND WORKFORCE TRAINING
COMMITTEE ON EDUCATION
AND THE WORKFORCE
U.S. House of Representatives
ONE HUNDRED THIRTEENTH CONGRESS
FIRST SESSION
__________
HEARING HELD IN WASHINGTON, DC, APRIL 16, 2013
__________
Serial No. 113-14
__________
Printed for the use of the Committee on Education and the Workforce
Available via the World Wide Web:
www.gpo.gov/fdsys/browse/
committee.action?chamber=house&committee=education
or
Committee address: http://edworkforce.house.gov
U.S. GOVERNMENT PRINTING OFFICE
80-339 WASHINGTON : 2013
-----------------------------------------------------------------------
For sale by the Superintendent of Documents, U.S. Government Printing Office,
http://bookstore.gpo.gov. For more information, contact the GPO Customer Contact Center, U.S. Government Printing Office. Phone 202�09512�091800, or 866�09512�091800 (toll-free). E-mail, [email protected].
COMMITTEE ON EDUCATION AND THE WORKFORCE
JOHN KLINE, Minnesota, Chairman
Thomas E. Petri, Wisconsin George Miller, California,
Howard P. ``Buck'' McKeon, Senior Democratic Member
California Robert E. Andrews, New Jersey
Joe Wilson, South Carolina Robert C. ``Bobby'' Scott,
Virginia Foxx, North Carolina Virginia
Tom Price, Georgia Ruben Hinojosa, Texas
Kenny Marchant, Texas Carolyn McCarthy, New York
Duncan Hunter, California John F. Tierney, Massachusetts
David P. Roe, Tennessee Rush Holt, New Jersey
Glenn Thompson, Pennsylvania Susan A. Davis, California
Tim Walberg, Michigan Raul M. Grijalva, Arizona
Matt Salmon, Arizona Timothy H. Bishop, New York
Brett Guthrie, Kentucky David Loebsack, Iowa
Scott DesJarlais, Tennessee Joe Courtney, Connecticut
Todd Rokita, Indiana Marcia L. Fudge, Ohio
Larry Bucshon, Indiana Jared Polis, Colorado
Trey Gowdy, South Carolina Gregorio Kilili Camacho Sablan,
Lou Barletta, Pennsylvania Northern Mariana Islands
Martha Roby, Alabama John A. Yarmuth, Kentucky
Joseph J. Heck, Nevada Frederica S. Wilson, Florida
Susan W. Brooks, Indiana Suzanne Bonamici, Oregon
Richard Hudson, North Carolina
Luke Messer, Indiana
Juliane Sullivan, Staff Director
Jody Calemine, Minority Staff Director
------
SUBCOMMITTEE ON HIGHER EDUCATION AND WORKFORCE TRAINING
VIRGINIA FOXX, North Carolina, Chairwoman
Thomas E. Petri, Wisconsin Ruben Hinojosa, Texas,
Howard P. ``Buck'' McKeon, Ranking Minority Member
California John F. Tierney, Massachusetts
Glenn Thompson, Pennsylvania Timothy H. Bishop, New York
Tim Walberg, Michigan John A. Yarmuth, Kentucky
Matt Salmon, Arizona Suzanne Bonamici, Oregon
Brett Guthrie, Kentucky Carolyn McCarthy, New York
Lou Barletta, Pennsylvania Rush Holt, New Jersey
Joseph J. Heck, Nevada Susan A. Davis, California
Susan W. Brooks, Indiana David Loebsack, Iowa
Richard Hudson, North Carolina
Luke Messer, Indiana
C O N T E N T S
----------
Page
Hearing held on April 16, 2013................................... 1
Statement of Members:
Bonamici, Hon. Suzanne, a Representative in Congress from the
State of Oregon, on behalf of Hon. Ruben Hinojosa, ranking
minority member, Subcommittee on Higher Education and
Workforce Training......................................... 4
Prepared statement of Mr. Hinojosa....................... 5
Foxx, Hon. Virginia, Chairwoman, Subcommittee on Higher
Education and Workforce Training........................... 1
Prepared statement of.................................... 3
Statement of Witnesses:
Hartle, Terry W., senior vice president, American Council on
Education.................................................. 7
Prepared statement of.................................... 9
Madzelan, Daniel T., U.S. Department of Education (retired).. 24
Prepared statement of.................................... 25
McGuire, Patricia, president, Trinity Washington University.. 15
Prepared statement of.................................... 16
Miles, Moriah, state chair, Minnesota State University
Student Association; student, Minnesota State University,
Mankato.................................................... 28
Prepared statement of.................................... 29
Additional Submissions:
Barletta, Hon. Lou, a Representative in Congress from the
State of Pennsylvania:
The Pennsylvania Association of Private School
Administrators (PAPSA), prepared statement of.......... 62
Mrs. Foxx, questions submitted for the record to:
Mr. Hartle............................................... 63
Mr. Madzelan............................................. 67
Ms. McGuire.............................................. 70
Mr. Hartle, response to questions submitted by:
Mrs. Foxx................................................ 64
Kline, Hon. John, Chairman, Committee on Education and
the Workforce.......................................... 65
Mr. Hudson............................................... 65
Mr. Messer............................................... 65
Hudson, Hon. Richard, a Representative in Congress from the
State of North Carolina, questions submitted for the record
to:
Mr. Hartle............................................... 64
Ms. McGuire.............................................. 70
Mr. Kline, questions submitted for the record to:
Mr. Hartle............................................... 64
Mr. Madzelan............................................. 67
Ms. McGuire.............................................. 70
Mr. Madzelan, response to questions submitted by:
Mrs. Foxx................................................ 68
Mr. Kline................................................ 68
Mr. Messer............................................... 69
Ms. McGuire, response to questions submitted by:
Mrs. Foxx................................................ 71
Mr. Kline................................................ 72
Mr. Hudson............................................... 72
Mr. Messer............................................... 73
Messer, Hon. Luke, a Representative in Congress from the
State of Indiana, questions submitted for the record to:
Mr. Hartle............................................... 64
Mr. Madzelan............................................. 67
Ms. McGuire.............................................. 70
KEEPING COLLEGE WITHIN REACH: THE ROLE OF FEDERAL STUDENT AID PROGRAMS
----------
Tuesday, April 16, 2013
U.S. House of Representatives
Subcommittee on Higher Education and Workforce Training
Committee on Education and the Workforce
Washington, DC
----------
The subcommittee met, pursuant to call, at 11:05 a.m., in
Room 2175, Rayburn House Office Building, Hon. Virginia Foxx
[chairwoman of the subcommittee] presiding.
Present: Representatives Foxx, Petri, Walberg, Salmon,
Heck, Brooks, Hudson, Messer, Hinojosa, Tierney, Bishop,
Bonamici, Holt, and Davis.
Also present: Representative Kline.
Staff present: Katherine Bathgate, Deputy Press Secretary;
Heather Couri, Deputy Director of Education and Human Services
Policy; Amy Raaf Jones, Education Policy Counsel and Senior
Advisor; Brian Melnyk, Professional Staff Member; Krisann
Pearce, General Counsel; Nicole Sizemore, Deputy Press
Secretary; Emily Slack, Legislative Assistant; Alex Sollberger,
Communications Director; Alissa Strawcutter, Deputy Clerk;
Juliane Sullivan, Staff Director; Tylease Alli, Minority Clerk/
Intern and Fellow Coordinator; Kelly Broughan, Minority
Education Policy Associate; Jody Calemine, Minority Staff
Director; Jamie Fasteau, Minority Director of Education Policy;
Brian Levin, Minority Deputy Press Secretary/New Media
Coordinator; Rich Williams, Minority Education Policy Advisor;
and Michael Zola, Minority Deputy Staff Director.
Chairwoman Foxx. A quorum being present, the subcommittee
will come to order.
John Donne famously asked a long time ago for whom the bell
tolled, and we know that we are--when there is a tragedy we are
all touched by it in our country. The people of Boston,
especially the victims and their families, remain in our
thoughts and prayers today.
We are thankful for the first responders and brave citizens
who bravely ran to the scene to help others in the midst of
chaos and uncertainty. Terror and cowardice will be met with
justice and resolve.
Mr. Tierney, who is a member of our committee and this
subcommittee represents the state of Massachusetts, and I
especially want to express to him that our hearts go out to him
and all of the people of Massachusetts today for what happened
in Boston yesterday.
Good morning. Welcome to our subcommittee hearing to
explore the role of federal student aid programs in the
nation's higher education system. We have an excellent panel of
witnesses with us today.
And thank you all for joining us.
In the coming months we will work together to reauthorize
the Higher Education Act. Established in 1965, this law is
intended to help low- and middle-income students earn a degree.
The 2008 reauthorization of the law includes several provisions
to help enhance transparency, requiring colleges and
universities to make information about price, demographics,
financial aid, and graduation rates available to the public for
the first time.
However, more work must be done. College costs continue to
skyrocket and too many students struggle to navigate our
financial aid system. Families face uncertainty about repayment
options and confusion about the differences between various aid
programs.
Under the Higher Education Act there are several student
financial aid and college access programs, from Pell Grants and
Stafford Loans to GEAR UP and Federal Work-Study programs. Each
program has unique characteristics, eligibility requirements,
and funding streams.
As we begin exploring ways to strengthen the Higher
Education Act we must first take a hard look at federal student
aid programs to determine what is and is not working for
students, families, and taxpayers.
Without a doubt there are opportunities to strengthen the
current system. The Bill and Melinda Gates Foundation's
Reimagining Aid Design and Delivery project recently released
several reports from business, higher education, civil rights,
and public policy leaders that offer proposals to improve
federal financial aid so more students can realize the dream of
a college education.
The reports offer a wide range of suggestions, including
reducing the current aid system to a ``one grant and one loan''
structure, eliminating program inefficiencies and simplifying
the federal aid application process by linking it with IRS
information.
The reports also raise the question of whether the federal
government should maintain its traditional focus on improving
access to higher education or should move toward a system that
ties federal student aid to student outcomes: job placement, or
graduation rates. President Obama has indicated his support for
the latter, proposing campus-based federal aid only be
allocated to higher education institutions that limit tuition
increases and provide good value.
In this debate we find ourselves at a crossroads between
accountability and limited government. The federal government
spends more than $140 billion on financial aid programs
annually. Given the significant amount of taxpayer money being
spent and our nation's budgetary challenges, we all want to
ensure dollars are actually helping more students earn college
degrees.
However, we must also be mindful of the consequences that
could come with expanding the federal government's role in the
allocation of financial aid. Federal financial aid programs
intended to help low-income Americans pay for college should
never be used as bargaining chips to impose federal price
controls, nor should we take any action that could limit
students' ability to choose the institution that best suits
their needs. Additionally, adding more reporting mandates could
create more costs and red tape for institutions, which could
trickle down to students in the form of higher tuition.
We are fortunate to have with us today a panel of higher
education leaders who can discuss the merits of various
proposals for reform as we begin a larger discussion on the
appropriate federal role in higher education, and I look
forward to their testimony.
Before I yield to my distinguished colleague, Ms. Bonamici,
who is substituting currently for Mr. Hinojosa, I would be
remiss if I did not mention the President's fiscal year 2014
budget proposal, which was released last week after much delay
and anticipation. While the plan as a whole is disappointing,
there is one bright spot in the higher education arena.
I am very pleased to see that the President seems to have
embraced Republicans' proposal to shift the calculation of
student loan interest rates away from Washington politicians
and toward a market-based formula. As you may recall, this was
the subject of a recent hearing before the full committee where
we heard from economists and higher education experts about the
way this plan will help provide more stability for borrowers
and taxpayers. I hope we can work together with the
administration to find common ground on a student loan interest
rate plan.
Again, I would like to thank our witnesses for joining us
today. And I now recognize Ms. Bonamici, the senior--one of the
Democrat members of the subcommittee, for her opening remarks.
[The statement of Chairwoman Foxx follows:]
Prepared Statement of Hon. Virginia Foxx, Chairwoman,
Subcommittee on Higher Education and Workforce Training
Good morning, and welcome to our subcommittee hearing to explore
the role of federal student aid programs in the nation's higher
education system. We have an excellent panel of witnesses here with us
today. Thank you all for joining us.
In the coming months, we will work together to reauthorize the
Higher Education Act. Established in 1965, this law is intended to help
low- and middle-income students earn a degree. The 2008 reauthorization
of the law included several provisions to help enhance transparency,
requiring colleges and universities to make information about price,
demographics, financial aid, and graduation rates available to the
public for the first time.
However, more work must be done. College costs continue to
skyrocket, and too many students struggle to navigate our financial aid
system. Families face uncertainty about repayment options and confusion
about the differences between various aid programs.
Under the Higher Education Act, there are several student financial
aid and college access programs--from Pell Grants and Stafford Loans to
GEAR UP and Federal Work-Study programs. Each program has unique
characteristics, eligibility requirements, and funding streams.
As we begin exploring ways to strengthen the Higher Education Act,
we must first take a hard look at federal student aid programs to
determine what is and is not working for students, families, and
taxpayers.
Without a doubt, there are opportunities to strengthen the current
system. The Bill and Melinda Gates Foundation's Reimagining Aid Design
and Delivery project recently released several reports from business,
higher education, civil rights, and public policy leaders that offer
proposals to improve federal financial aid so more students can realize
the dream of a college degree.
The reports offer a wide range of suggestions, including reducing
the current aid system to a ``one grant and one loan'' structure,
eliminating program inefficiencies, and simplifying the federal aid
application process by linking it with IRS information.
The reports also raise the question of whether the federal
government should maintain its traditional focus on improving access to
higher education, or should move toward a system that ties federal aid
to student outcomes, job placement, or graduation rates. President
Obama has indicated his support for the latter, proposing campus-based
federal aid only be allocated to higher education institutions that
limit tuition increases and provide good value.
In this debate, we find ourselves at a crossroads between
accountability and limited government. The federal government spends
more than $140 billion on financial aid programs annually. Given the
significant amount of taxpayer money being spent and our nation's
budgetary challenges, we all want to ensure dollars are actually
helping more students earn college degrees.
However, we must also be mindful of the consequences that could
come with expanding the federal government's role in the allocation of
financial aid. Federal financial aid programs intended to help low-
income Americans pay for college should never be used as bargaining
chips to impose federal price controls, nor should we take any action
that could limit students' ability to choose the institution that best
fits their needs. Additionally, adding more reporting mandates could
create more costs and red tape for institutions, which could trickle
down to students in the form of higher tuition.
We are fortunate to have with us today a panel of higher education
leaders who can discuss the merits of various proposals for reform as
we begin a larger discussion on the appropriate federal role in higher
education, and I look forward to their testimony.
Before I yield to my distinguished colleague, Mr. Ruben Hinojosa,
I'd be remiss if I did not mention the president's fiscal year 2014
budget proposal, which was released last week after much delay and
anticipation. While the plan as a whole is disappointing, there is one
bright spot in the higher education arena.
I am very pleased to see that the president seems to have embraced
Republicans' proposal to shift the calculation of student loan interest
rates away from Washington politicians and toward a market-based
formula. As you may recall, this was the subject of a recent hearing
before the full committee, where we heard from economists and higher
education experts about the ways this plan will help provide more
stability for borrowers and taxpayers. I hope we can work together with
the administration to find common ground on a student loan interest
rate plan.
Again, I'd like to thank our witnesses for joining us today, and I
will now recognize Mr. Hinojosa, the senior Democratic member of the
subcommittee, for his opening remarks.
______
Ms. Bonamici. Thank you very much, Chairwoman Foxx. And I
am making this statement on behalf of ranking member Hinojosa,
and I know we would join you in keeping the families and
victims of Boston in our thoughts and prayers.
To begin, I would like to thank our distinguished panel for
joining us this morning. I am eager to hear your testimony
regarding federal financial aid programs.
As we are aware, the Higher Education Act of 1965 made
college more accessible to all students through grants and
loans. We are proud of the federal investments that Congress
has made since 1965 to expand accessibility and affordability
in higher education.
Over the years, landmark investments in federal higher
education programs have improved the lives of low-income and
middle-income students and workers by creating ladders of
educational and economic opportunity. But Democrats believe
that Congress can do much more.
First of all, the purchasing power of the Pell Grant has
eroded over the past several years. While Pell Grants used to
cover three--excuse me--two-thirds of the cost of a 4-year
public institution, Pell Grant awards now cover less than one-
third of the cost, the lowest purchasing power in the history
of the Pell Grant. Bolstering improvements in Pell Grants and
ensuring the program's long-term sustainability is vitally
important to expanding access, affordability, and student
success.
We have worked throughout Congress with colleagues on this
committee to increase and protect investments in the federal
Pell Grant program because Pell Grants are the lifeline for
more than 9 million students. And while we are members of this
chamber we will continue to do so.
I am also concerned that millions of students and families
are being saddled with an inordinate amount of student loan
debt to pay for a college education. Last year the Consumer
Financial Protection Bureau announced that student loan debt
had surpassed $1 trillion, exceeding credit card debt for the
first time. In fact, April 25th marks the first-year
anniversary of student loan debt surpassing $1 trillion.
Due to cuts in state appropriations and skyrocketing
tuition costs, students and families have had to shoulder a
greater share of the cost, resulting in high debt load that
adversely affects their quality of life. To make matters worse,
student loan interest rates are set to double, from 3.4 percent
to 6.8 percent for 8 million students who rely on subsidized
Stafford Loans.
While I commend President Obama for increasing the maximum
Pell Grant award to $5,785, I strongly believe that all federal
student loan programs must ensure that students have affordable
college loans now and into the future.
Our federal loan program was created to provide access to
college and low interest rates to help manage college costs. It
is imperative that we keep this in mind and work to do better
for our students.
Over the next decade, the family sustaining jobs of the
future will require students and workers to have a college
degree or an industry-recognized credential. To remain globally
competitive and prepare a highly-trained workforce, America
must continue to invest in federal financial aid programs that
support student access and success. Every year employers
continue to tell me and my colleagues on this committee that
they have difficulty filling millions of jobs that require
specialized skills or training.
Finally, America is becoming increasingly diverse, and this
committee and this Congress must ensure that all students,
including students of color and immigrants, are able to afford
a college education. By strengthening our federal student aid
programs, Congress can ensure that all students, regardless of
income or racial or ethnic background, have greater access to
the American dream.
In closing, it is my hope that members of Congress from
both sides of the aisle will work together to reauthorize the
Higher Education Act.
With that, I yield back to Chairwoman Foxx.
[The statement of Mr. Hinojosa follows:]
Prepared Statement of Hon. Ruben Hinojosa, Ranking Member,
Subcommittee on Higher Education and Workforce Training
Thank you, Chairwoman Foxx. To begin, I would like to thank our
distinguished panel for joining us this morning! I am eager to hear
your testimony regarding federal financial aid programs. As many of you
are aware, the Higher Education Act of 1965, made college more
accessible to all students through grants and loans.
As Ranking member of this Subcommittee, I am proud of the federal
investments that Congress has made since 1965 to expand accessibility
and affordability in higher education. Over the years, landmark
investments in federal higher education programs have improved the
lives of low-income and middle income students and workers by creating
ladders of educational and economic opportunity. But Democrats believe
that Congress can do much more.
First of all, the purchasing power of the Pell Grant has eroded
over the past several years. While Pell grants used to cover two thirds
of the cost of a four-year public institution, Pell Grant awards only
cover less than one third of the cost, the lowest purchasing power in
the history of the Pell Grant.
In my view, bolstering investments in Pell Grants and ensuring the
program's long-term sustainability is vitally important to expanding
access, affordability, and student success.
During my tenure in Congress, I have worked with my colleagues on
this committee to increase and protect investments in the federal Pell
grant program because Pell Grants are the life line for more than 9
million. While I am a Member of this chamber, I will continue to do so.
I am also concerned that millions of students and families are
being saddled with an inordinate amount of student loan debt to pay for
a college education. Last year, the Consumer Financial Protection
Bureau (CFPB) announced that student loan debt had surpassed $1
trillion, exceeding credit card debt for the first time. In fact, April
25th marks the 1st year anniversary of student loan debt surpassing $1
trillion dollars. Due to cuts in state appropriations and skyrocketing
tuition costs, students and families have had to shoulder a greater
share of the cost, resulting in high debt loads that adversely affect
their quality of life.
To make matters worse, student loan interest rates are set to
double from 3.4 percent to 6.8 percent for 8 million students who rely
on subsidized stafford loans. While I commend President Obama for
increasing the maximum Pell grant award to $5,785, I strongly believe
that all federal student loan programs must ensure that students have
affordable college loans now and into the future. Our federal loan
program was created to provide access to college and low interest rates
to help manage college costs. It is imperative that we keep this in
mind and work to do better for our students.
Over the next decade, the family sustaining jobs of the future will
require students and workers to have a college degree or an industry
recognized credential. To remain globally competitive and prepare a
highly trained workforce, America must continue to invest in federal
financial aid programs that support student access and success.
Every year, employers continue to tell me and my colleagues on this
committee that they have difficulty filling millions of jobs that
require specialized skills or training. Finally, America is also
becoming increasingly diverse, and this committee and this Congress
must ensure that all students, including students of color and
immigrants, are able to afford a college education.
By strengthening our federal student aid programs, Congress can
ensure that all students, regardless of income, or racial or ethnic
background, have greater access to the American Dream.
In closing, it is my hope Members of Congress from both sides of
the aisle will work together to reauthorize the Higher Education Act.
With that, I yield back to Chairwoman Foxx.
______
Chairwoman Foxx. Thank you very much.
Pursuant to committee rule 7(c), all subcommittee members
will be permitted to submit written statements to be included
in the permanent hearing record. And without objection, the
hearing record will remain open for 14 days to allow
statements, questions for the records, and other extraneous
material referenced during the hearing to be submitted in the
official hearing record.
It is now my pleasure to introduce our distinguished panel
of witnesses.
Mr. Terry Hartle is the senior vice president of the
division of government and public affairs for the American
Council on Education. Prior to joining ACE in 1993, Mr. Hartle
served for 6 years as education staff director for the Senate
Committee on Labor and Human Resources, then chaired by Senator
Edward M. Kennedy.
Ms. Patricia M. McGuire has served as president of Trinity
Washington University since 1989. Before coming to trinity Ms.
McGuire was the assistant dean for development and external
affairs for Georgetown University Law Center, where she was
also an adjunct professor of law.
Mr. Dan Madzelan began his federal career with the Office
of Education in 1978 as a program analyst in the campus-based
aid program area. He retired last year as the Senior Director
of the Strategic Planning, Analysis, and Initiatives staff in
the Office of Post-Secondary Education at the Department of
Education.
Ms. Moriah Miles is currently serving as the state chair
for the Minnesota State University Student Association, which
represents over 75,000 students attending Minnesota's seven
state universities. She currently attends Minnesota State
University Mankato, where she is pursuing a bachelor of arts in
international relations.
Before I recognize you to provide your testimony, let me
briefly explain our lighting system. You will have 5 minutes to
present your testimony.
When you begin the light in front of you will turn green;
when 1 minute is left the light will turn yellow; when your
time is expired the light will turn red. At that point I ask
that you wrap up your remarks as best as you are able. After
you have testified, members will each have 5 minutes to ask
questions of the panel.
I now recognize Mr. Terry Hartle for 5 minutes.
STATEMENT OF TERRY W. HARTLE, SENIOR VICE PRESIDENT, DIVISION
OF GOVERNMENT AND PUBLIC AFFAIRS, AMERICAN COUNCIL ON EDUCATION
Mr. Hartle. Thank you very much, Madam Chairman. I greatly
appreciate the opportunity to be here.
I was asked to summarize the history of the Higher
Education Act, and I have done that in my written statement.
This morning I thought I would focus on several observations
about the evolution of federal student aid policy that might be
helpful to the members of the committee.
I think there are three core characteristics that we have
seen in federal student aid policy since the original Higher
Education Act in 1965. First characteristic is that the goal of
federal student aid was access for low-income students and aid
to middle-income families.
The initial formulation was grants for low-income families
and low-interest loans for the middle class. Over time we have
seen some shifts in emphasis and there has occasionally been
tension between these two goals, but this basic theme has been
present from the start.
The second central characteristic of federal student aid
policy is that to promote access, student aid is a voucher
which is given to students and they decide where to spend it.
Harvard, a community college, a for-profit school--where it
gets spent depends on the decision that the student makes. The
money belongs to the student, not the institution.
Third central characteristic is that federal student aid is
designed to serve all students, both traditional and
nontraditional, using the same programs. When the Higher
Education Act was enacted there were 8 million college
students, the vast majority of whom were between the ages of 18
and 22, financially dependent on their families, enrolled full-
time, and residing in campus housing.
Today, just 15 percent of college students meet those
characteristics. Serving both populations equally well with the
same set of programs has become a complex issue of program
design.
Four quick observations for you: One, when the Higher
Education Act was enacted it was built upon the premise that
states would keep tuition affordable at public colleges, which
would free the federal government to help low- and middle-
income families. This is really no longer a good assumption.
Historically, the bulk of funding for public colleges,
which is where more than 80 percent of college students are
enrolled, has come from the state. In the last 40 years state
support has fallen steadily; it has dropped 23 percent in the
last 5 years alone.
Tuitions have increased to make up the difference. Federal
student aid has helped insulate many families from some of
these increases, but I don't think we can any longer count on
the states to perform their historic role.
Second point: The complexity of post-secondary education
has made decisions about institutional eligibility a lot
harder. In 1965 there were about 2,000 institutions of higher
education, most of them traditional 4-year colleges. Today
there are more than 6,000 institutions and they vary
enormously.
From the beginning it was assumed that the states would
ensure that schools would be licensed to operate as educational
entities, the federal government would establish a set of
conditions for institutional eligibility to participate in
student aid programs, and accrediting agencies would attest to
the academic quality of the institution. Unfortunately, the
federal and state roles have never been fully realized, and we
now rely on accreditors to be the primary gatekeepers.
A third: The role of federal regulation has grown
dramatically. Until recently, most federal student aid
regulations were almost entirely designed to ensure that
students--that institutions were good stewards of federal
funds. But in the 1990s the federal government began to impose
regulations on institutions for a variety of purposes that are
totally unrelated to student aid, from the number of fire
alarms in dorms to gifts from foreign countries.
In addition to the costs, campuses cannot be sure that they
are in full compliance with all the rules, the regulations, and
the sub-regulatory guidance issued by the Department of
Education. Unfortunately, the department has never implemented
a provision in the 2008 reauthorization, which required it to
create and publish an annual calendar showing key compliance
dates for institutions. This would at least give every campus a
checklist of their federal regulations.
Finally, simplification has become the holy grail of each
reauthorization of the Higher Education Act for the last 25
years. Unfortunately, the desire to simplify federal student
aid is complicated by two different reasons.
First, simplification can be expensive. We could streamline
the FAFSA dramatically, but this would increase eligibility and
drive up costs.
Second, the desire to simplify often runs headlong into the
goal of creating more options for students and families. The
federal government now gives seven repayment options to
borrowers. This provides more choices for borrowers, but it
dramatically increases the complexity those borrowers face.
This is not to say that simplification is bad. It is a
terrific goal. Rather, it is simply to call your attention to a
real paradox: Simplification in federal student aid policy is a
pretty complex issue.
Madam Chairman, the central point of my testimony is simply
to note that there are a large number of lessons we have
learned over the long history of the Higher Education Act and
that it would behoove us to keep these lessons in mind as we
embark on another--the ninth, I believe--reauthorization of the
Higher Education Act.
Thank you for the opportunity to be here.
[The statement of Mr. Hartle follows:]
Prepared Statement of Terry W. Hartle, Senior Vice President,
American Council on Education
I am Terry W. Hartle, senior vice president at the American Council
on Education, a trade association representing 2,000 public and
private, two-year and four-year colleges and research universities.
Thank you for inviting me here today. I have been asked to provide an
historical overview of federal higher education policy and to draw upon
that history to identify lessons learned as we look forward to the next
reauthorization of the Higher Education Act.
The first significant aid to education, including the Higher
Education Act (HEA), was created in 1965 as part of the Johnson
administration's War on Poverty. The HEA authorized a program of need-
based grants, student support programs (Upward Bound and Talent
Search), and the Guaranteed Student Loan program. In addition, it
incorporated two other programs--the College Work-Study Program, which
had been enacted a year earlier as part of the Economic Opportunity Act
of 1964, and National Defense Student Loans, created in 1958. All of
these programs, although substantially altered, remain part of the
Higher Education Act today.\1\
---------------------------------------------------------------------------
\1\ Collectively, these programs have become the Federal TRIO
Programs, the Federal Work-Study Program, the Perkins Loan Program, the
Federal Direct Student Loan Program and the Federal Pell Grant Program.
---------------------------------------------------------------------------
From the start, the federal government sought to help both low- and
middle-income families consider and finance a college education. The
Defense Loans, Opportunity Grants and Work-Study were designed to help
low-income students while Guaranteed Student Loans were intended to
help middle-income students and families manage college costs through
low-interest loans. Initially, federal funding was modest and
relatively few students took advantage of the programs. In 1970, just
over $1 billion was issued in guaranteed student loans and just $365
million in the Educational Grant and Work-Study Programs.
The architecture of the Higher Education Act as we know it today
was completed during the 1972 reauthorization, when Congress created
the Basic Education Opportunity Grant (BEOG) Program.\2\ This
initiative fundamentally shaped higher education policy because it
awarded the money to students as a voucher they were free to spend at
any eligible school of their choosing. Institutional officials,
including representatives of my organization, argued in favor of giving
money directly to the institutions. The ultimate decision was to move
in favor of direct government aid to students. In retrospect, that was
clearly the right decision and it remains a central and abiding aspect
of federal student aid. In the case of federal loans and Pell Grants,
the money goes to students who are free to spend it at any approved
postsecondary educational institution.\3\
---------------------------------------------------------------------------
\2\ The Basic Education Opportunity Grant program was renamed the
Federal Pell Grant Program in 1980.
\3\ Funds are distributed directly to the institutions. However,
funds are sent in the name of students who then must sign them over to
their institutions.
---------------------------------------------------------------------------
The 1972 reauthorization marked the point when students at for-
profit schools were first made eligible to participate in federal
student aid programs. In a related step, the legislation eliminated the
references to ``higher education'' and replaced them with the term
``postsecondary education'' to signify the act was meant to make a
broader array of training and educational experiences eligible for
federal aid.
The 1972 reauthorization was based on a model that assumed states
were responsible for financing public higher education and would
adequately fund public colleges and universities in order to maintain
the very low tuition that had historically been a key feature of the
sector. But to encourage states to provide need-based student aid,
Congress established the State Student Incentive Grant (SSIG) program
to award federal matching funds to states that created or expanded such
efforts. While all states did eventually put need-based student aid
programs in place, some remained very small. The SSIG program was
rebranded as the Leveraging Educational Assistance Partnership (LEAP)
Program in the 1998 HEA Amendments. It has recently been defunded, and
we are seeing states pull out of need-based student aid as a result.
Throughout the 1970s, Congress was confronted with evidence that
despite the federal guarantee on student loans, many banks were
reluctant to lend money. To address this problem, Congress took several
steps that brought a large number of new actors into the program.
First, in 1972, it established the Student Loan Marketing Association
(Sallie Mae) as a government-sponsored enterprise. Sallie Mae, which
would later be privatized and become a hugely profitable company, was
designed to provide a secondary market that would buy student loans
from banks (thus injecting liquidity into the federal loan program) and
service the loans when the borrowers entered repayment. In 1976,
Congress established the ``special allowance payment'' for lenders,
which was designed to provide a financial incentive to encourage banks
to lend, and authorized the creation of state guarantee agencies to act
as a bridge between lenders, students and institutions. The steps were
well intended and necessary to smooth the functioning of a growing
student loan program. But by creating a large number of new actors,
Congress was adding to the complexity and political immutability of the
student loan program, a development that would complicate federal
efforts to shape policy for many years to come.
The desire to help middle-income families finance a higher
education was also an increasingly central issue for policymakers in
the 1970s. At the request of the Carter administration, Congress
approved the Middle Income Student Assistance Act of 1978 (MISAA) which
let any student or family regardless of income take out a federal
student loan at a very generous interest rate. Not surprisingly,
student loan volume expanded sharply and we soon learned what has
become another enduring lesson of federal education policy: Federal
programs create incentives and individuals respond to them. Indeed, the
expansion of borrowing in the federal student loan program was so
dramatic that Congress terminated most of MISAA in 1981, just three
years later.
Another milestone in federal education policy occurred in 1979,
when, at the request of the Carter administration, Congress approved
legislation to create the Department of Education. The higher education
community generally did not support this legislation because of
widespread concern that such an agency would inevitably begin to
dictate the academic affairs of colleges and universities and come to
regard itself as a federal ministry of education. Given the significant
role that education now plays in national policy discourse, few would
question the wisdom of having a federal agency focused solely on the
important education issues of the day. However, as this Committee
knows, concerns about federal intervention into academic affairs have
only increased in recent years.
Federal student aid expanded slowly in the 1980s--the 1986
reauthorization of the Higher Education Act largely preserved the
status quo. But by the last years of the decade, the cost of the
student aid programs (particularly student loans) began rising
dramatically, in large part as the number of for-profit schools
participating in the program grew. While many of these schools provided
high quality education, others did not and the cost of federal student
loan defaults increased sharply. The default rate peaked at 22 percent
in 1990, and in the same year, if student loan defaults had been given
their own appropriation, it would have been the third largest
expenditure at the Department of Education.
Through successive budget reconciliation bills, Congress imposed
new requirements through the Higher Education Act on institutional
eligibility in an aggressive effort to weed out the ``bad actors.''
Other changes were made to curb defaults and achieve cost savings. A
large number of schools closed and the student loan default rate
dropped sharply from 22 percent in 1990 to 6 percent in 1999.
The surge in institutional participation in the late 1980s was
facilitated by the ease with which schools could become eligible for
the federal student loan program. From the beginning, eligibility
required a school to meet three tests: 1) It had to be accredited by an
accrediting agency recognized by the federal government; 2) It needed
to be authorized to do business by the state in which it was located;
and 3) It had to be judged ``eligible'' by the U.S. Department of
Education. This system was relatively reliable when a small number of
schools participated in student aid programs. However, as the number of
schools and students increased, this eligibility network, called the
triad, proved inadequate to protect students and taxpayers.
Extensive hearings into student loan defaults by the Permanent
Subcommittee on Investigations of the Senate Government Affairs
Committee, then chaired by Senator Sam Nunn (D-GA), demonstrated that
the three-part mechanism designed to ensure that only high quality
schools could participate in federal student aid programs was barely
functional. As a result of extensive investigation, the Committee
concluded that too many ``schools'' were more interested in making
money than in educating students.
The Nunn Committee made 22 recommendations for addressing the
shortcomings and virtually all them were adopted in the 1992
reauthorization. In short, accreditors were given detailed and specific
responsibilities, as was the Department of Education. The states were
handed a broad grant of authority under an initiative called State
Postsecondary Review Entities (known as SPREs) in an effort to increase
state oversight of postsecondary institutions. While Congress wanted
SPREs to focus on problem schools, some states and the Department of
Education saw them as a much broader mechanism to oversee institutional
quality. However, after a series of embarrassing missteps, Congress
quietly killed the program in 1995.
A number of other developments occurred in this ambitious
reauthorization. First, Congress created two new loan programs--the
unsubsidized loan program and the parental loan program (PLUS). These
were designed to be ``loans of convenience'' to help middle-income
families finance higher education. The loans carried a market-based
interest rate and borrowers did not receive the subsidies that were
available under the traditional subsidized loan program.
Second, Congress created a direct loan pilot program. Direct loans
were designed to take banks out of the federal student loan business.
In the traditional student loan model, the federal government paid a
subsidy to banks, banks lent the money to students, borrowers repaid
the banks and, in the case of default, the federal government paid the
bill. Under direct lending, however, the Department of Education made
the loans directly to the students and the borrowers repaid the federal
government. In the event of non-payment, the government would use all
the resources at its disposal to collect.
Finally, for the first time, Congress moved student loans from a
fixed interest rate that had characterized the program since its
creation and adopted a variable interest rate.\4\ Under the new policy,
the interest rates on student loans would be reset every July 1 and
would be based on the 91-day Treasury Bill rate. The interest rate
would reset annually throughout the life of the loan.\5\
---------------------------------------------------------------------------
\4\ The variable interest rates were capped to protect student
borrowers.
\5\ To help students manage differential interest rates, the
federal government created the consolidation loan program to give
student borrowers an opportunity to combine all their student loans so
that they could avoid juggling multiple payments, make one payment each
month and count on a fixed interest rate.
---------------------------------------------------------------------------
The arrival of President Bill Clinton brought more changes in
federal higher education policy. In 1993, the federal government was,
as it is now, plagued by slow economic growth and a large federal
budget deficit. Upon discovering that, under federal budget rules,
direct lending saved money, the administration moved to turn all
federal student loans into direct loans.\6\ Congress was unwilling to
take such a dramatic step and simply made every school eligible to
participate in direct lending, rather than the sharply limited number
of institutions permitted to do so in the direct loan pilot that had
been approved the year before. Importantly, this new policy was largely
driven by the desire to reduce federal spending. The administration and
its congressional allies certainly expected that the plan would be
better for students, but it was actually the prospect of significant
cost savings that led Congress to take this step.
---------------------------------------------------------------------------
\6\ The assumption that direct loans would save money was
vigorously disputed by proponents of bank-based lending and remains a
controversial topic to this day.
---------------------------------------------------------------------------
Second, under the Clinton administration, the federal government
began to make use of the tax code to help students and families finance
a higher education. Prior to 1992, the federal government had few tax
benefits in place to help families finance a college education. In
1993, however, President Clinton recommended Congress establish a
federal program modeled after the Hope Tax Credit Program, established
in Georgia by Governor Zell Miller. It proved impossible to recreate
the Georgia program exactly and as a result Congress established two
separate tax benefits--one aimed at traditional aged students (Hope
Scholarship Credit) and one focused on adults (Lifelong Learning
Credit). In both cases, the federal government sought to help middle-
income families. Indeed, low-income families were largely excluded from
participation because neither credit was refundable.
Once it began to make use of the tax code to help families finance
a college degree, Congress quickly enacted additional benefits. Today,
the tax code authorizes at least nine specific tax benefits to help
families save for college (Section 529 College Savings Plans, Coverdell
Education Savings Accounts, and tax-free status of U.S. Savings Bonds
if used to pay for college), pay for college (American Opportunity Tax
Credit, Hope Scholarship and Lifetime Learning Tax Credits, the ``above
the line'' tuition deduction, Sec. 127 Employer-provided Educational
Assistance, Sec. 117 Qualified Scholarships exemption), and to repay
student loans (Student Loan Interest Deduction).\7\
---------------------------------------------------------------------------
\7\ Several of these were reauthorized on January 1, 2013, in the
American Taxpayer Relief Act of 2012.
---------------------------------------------------------------------------
Legislation governing higher education, and especially student aid,
has increased significantly in the last few years. Beginning with the
College Cost Reduction and Access Act of 2007 (CCRAA), eight major
pieces of legislation affecting student aid have been passed into law.
In just this short period, we have seen major expansions of Pell Grant
funding and eligibility (the College Cost Reduction and Access Act of
2007, the American Recovery and Reinvestment Act of 2009, the Health
Care and Education Reconciliation Act of 2010), and then sizable
reductions in Pell Grant funding and eligibility (the Consolidated
Appropriations Act of 2012). The interest rate on Subsidized Stafford
loans was lowered over time from 6.8 percent to 3.4 percent. Two new
loan repayment programs were created, loan forgiveness options have
been added and expanded, and the in-school interest exemption was
eliminated for graduate and professional students. Two new grant
programs were created, one of which (the TEACH Grant) contains an
unprecedented and controversial feature: If the terms of the grant are
not met, the grant is converted to a loan with interest accruing from
the moment the money was awarded.
Most notably, in the 2010 Affordable Care Act, Congress eliminated
the federal guaranteed student loan program and put every institution
into direct lending. According to the Congressional Budget Office
(CBO), this step saved roughly $60 billion. Most of these funds were
used to pay for the expanded Pell Grant Program and the remainder went
to finance health care reform and reduce the federal budget deficit.
These changes to the federal student aid programs are in addition
to significant changes in tax provisions, including the creation of the
American Opportunity Tax Credit, which has become the single largest
higher education tax benefit.
Frequent changes in complex programs means that even experts have
difficulty keeping track of what has happened. Campus officials are
often hopelessly confused and one can only imagine what student and
parents will make of it. Changes are often made to current law before
there has been sufficient time to fully understand the impact of
previous changes. What's more, many of these changes have occurred not
in legislation originating with the authorizers, but through (often
times fast-tracked) funding legislation, where fiscal matters rather
than best policy are the primary concern.
The Obama administration has also changed the playing field in
higher education policy by increasing regulation of higher education
institutions in new and very complex ways. We now, for example, have a
federal definition of credit hour and, sadly, it's not a very good one.
Aside from our strong belief that the Department of Education should
not be regulating academic standards, the definition is based on time
spent ``in class'' which, in an era when distance education is
expanding very rapidly, means it is obsolete. In addition, the
department has published complex regulations on gainful employment and
state authorization that have created enormous confusion and, at least
temporarily, have been blocked by the courts.
As always happens when the economy slips into a recession, college
enrollments increased in recent years as millions of Americans sought
to improve their education and skills. This, coupled with the increased
eligibility for federal student aid, meant that the cost of the federal
student aid programs has increased sharply. In 2007-08, the cost of the
Pell Grant Program was $14 billion and roughly 6 million Americans
received awards. Three years later, the cost had more than doubled to
$31 billion and 9.6 million individuals benefited. Over that same time
period, total federal lending grew from $75 billion to $110 billion.
The story of federal student aid is obviously long and complex.
This summary just touches on the major developments. But more important
than the history itself perhaps are the lessons and insights that we
can draw from it.
Federal student aid programs have worked remarkably well. But the
world has changed and that change should be acknowledged and
incorporated in the architecture and design of student aid.
For almost 50 years, the central goal of federal student aid was to
increase access to postsecondary education for all students without
regard to income or a family's ability to pay. Universal opportunity
was a uniquely bold and American experiment and it worked. From this
vantage point, taking stock of historical evidence, it is obvious that
the farsighted goals and the design of the core student aid programs
contributed to the success of the programs. However, in this century
and in this year, it is incumbent upon Congress to debate whether this
goal ought to be amended or expanded in ways that acknowledge current
realities and contemporary challenges. Regardless of whether or what
changes or additions to the core federal goal are desirable, it is
important that we maintain the goal of facilitating access to higher
education.
While the higher education policy landscape has changed in many
ways over the last 50 years, there are eight lessons worth noting that
will impact HEA reauthorization discussions:
First, the student population served by the programs has changed
dramatically. When Congress enacted the Higher Education Act in 1965,
the vast majority of nation's 7.4 million students were 18 to 24 years
old, predominantly dependents who attended higher education full time,
lived in campus housing, and were seeking a bachelor's degree. Today,
college students are much more likely to be older and financially
independent. Many of them work part-time and a substantial number of
these students have families of their own. They may be pursuing a four-
year degree or seeking short-term training that leads to a certificate
rather than a degree. They may not even be seeking a credential, just
taking a few specific courses. Today, the traditional students who were
the focus of the original Higher Education Act represent just 15
percent of the nation's 21 million students. It is vitally important to
recognize these differences and to shape federal policy that helps all
students achieve their postsecondary education goals.
Second, there has been a marked shift in the policy arena that
elevates completion above access. Higher education is increasingly
central to economic and social well-being in American society. While
many students start a postsecondary education, a significant number do
not finish. In recent years, numerous observers have suggested that
graduation, or completion, ought to be equally central to federal
policy. Designing policies around a completion metric is complicated,
especially as participation and completion varies considerably by
socio-economic status, because such policies are highly susceptible to
the laws of unintended consequences, and also because they skirt
complex issues regarding the role the student plays in achieving
success versus the role the institution plays. This is not to say that
we should not have a vigorous debate about what we want federal student
aid to accomplish. We must. But we should do so in a way that
compliments, but does not abandon or retreat from, the central purpose
of federal student aid.
Third, federal student aid policy has been built upon the premise
that states would support public higher education and keep tuitions
affordable, freeing the federal government to ensure equal educational
opportunity and a measure of choice in the selection of a college. This
assumption has fallen by the wayside as state governments have slashed
funding for public colleges and universities and sharp tuition
increases have followed.
Since 80 percent of American college students attend public
institutions, this has meant much higher college costs for millions of
families. As partial compensation for this trend, there has been
dramatic growth in the total amount of federal financial aid
expenditures. But even while the federal investment has grown, it has
not been enough to make up for the decrease in support from states for
higher education and unless the trends in state support change, tuition
increases and public concerns about paying for college will continue to
grow. Unfortunately, the federal government has few tools available to
ensure states continue to play their historic role in making higher
education available at a modest price and there is a real question as
to whether the federal government, acting virtually alone in the
student aid policy sphere, has the resources to ensure meaningful
access to college.
Fourth, postsecondary education has become much more complex, and
this has complicated decisions about institutional eligibility. In
1965, there were just over 2,000 colleges and universities in the
United States. The mid-1970s witnessed a rapid increase in the growth
of community colleges throughout the country. Today, there are more
than 6,000 two- and four-year, public and private non-profit colleges,
research universities, for-profit career colleges, and online as well
as brick and mortar schools. All of this poses enormous challenges
regarding decisions about institutional eligibility and the design of
student aid programs.
Fifth, once institutional eligibility is settled, there remains the
issue of oversight. Historically, the HEA has relied on the so-called
``triad'' consisting of states, the federal government and regional
(and national) accrediting agencies to ensure proper stewardship of
federal resources. As I noted earlier, within the triad, roles were
clear: The states were to ensure schools were licensed to operate as
educational entities within their borders and to receive consumer
complaints; the federal government was to ensure institutions met a
clear set of conditions for eligibility to participate in federal
student aid programs and to oversee compliance with those conditions;
and the accrediting agencies were to evaluate and attest to the quality
of the academic programs consistent with the mission of the
institution. Unfortunately, the state and federal roles never have been
fully realized. The states have always had differences among them in
the way they relate to their higher education institutions and many
have been indifferent to their responsibilities under the federal aid
programs. The federal government itself has a spotty record of
oversight. The practical effect of these realities means that over
time, accreditation has become overwhelmed with added, and some would
say inappropriate responsibilities. Instead of being a barrier to
federal regulation, accreditation has become a portal to it.
Sixth, Congress should consider the role federal regulation plays
as a cost-driver in tuition growth. As the size and complexity of
student aid has increased, government regulation of colleges and
universities has grown exponentially and changed considerably. Until
the early 1990s, federal student aid regulations were almost entirely
designed to ensure campuses would be good fiscal stewards of federal
funds. But in the 1990s, Congress began to impose regulations on
institutions for a huge variety of purposes that are totally unrelated
to student aid. At present, for example, colleges and universities must
provide information about salaries of athletic coaches, provide the
Department of Education with an annual list of gifts accepted from
foreign governments and corporations, and conduct activities to
commemorate Constitution Day every September 17th. These are all worthy
things, but they impose compliance costs and someone must pay for them.
Moreover, even the most conscientious campus can never be sure that
it is in full compliance with all the rules, regulations and ``sub-
regulatory guidance'' published by the Department of Education. The
department has a strong bias toward regulation but seems unwilling to
look for the simplest and most direct ways to accomplish its
responsibility to ensure the laws are faithfully executed. Indeed, the
department's reluctance to address the compliance burden created by
government regulations has led it to ignore a specific legislative
requirement in the 2008 reauthorization [HEA Sec. 482 (e)] which
required publication of an annual calendar showing key compliance dates
for institutions.
Seventh, ``simplification'' has been the holy grail of each
successive reauthorization and remains so today. Unfortunately, efforts
to make federal student aid simpler rarely succeed. The reasons are
two-fold. First, simplification can be expensive. It would be easy to
streamline the Free Application of Federal Student Aid (FAFSA) by
simply asking for less information from applicants, but doing so would
inevitably make more individuals eligible for aid and increase the cost
of the federal programs. Second, efforts to simplify the federal
student aid system often run headlong into a desire to create more
options to help students and families. For example, the federal
government now offers student loan borrowers seven different loan
repayment options. Multiple options may well make for more choice for
borrowers, but it significantly increases program complexity. This is
not in any way to suggest that ``simplification'' is undesirable.
Rather, it suggests that genuine simplification in federal student aid
is actually complex.
Eighth and finally, experience has taught us that federal policy
creates incentives and individuals and organizations will respond to
them. In the 2008 reauthorization, to enable students to shorten their
time to a degree, Congress made it possible for students to receive a
Pell Grant to attend school year-round. So many students responded to
this incentive and took advantage of ``summer Pell grants'' that more
than $4 billion per year was added to the cost of the program.
Unfortunately, the sizable cost increase of the program proved
unsustainable, and in 2010, less than two years after approving the
provision, Congress repealed it. Once again, students who wish to study
year-round cannot use Pell grants for that purpose. It is a pattern we
have seen before--public policy creates incentives and people act
accordingly. It's vitally important that we understand those incentives
before changing public policies because we will get what we ask for.
There are many more insights and lessons that flow from the long
and complex history of the Higher Education Act. As this committee
embarks on reauthorization, I hope you will keep this history in mind.
I believe that doing so will improve the design and implementation of
the many changes you will make to this vitally important legislation.
______
Chairwoman Foxx. Thank you very much, Mr. Hartle.
I now recognize Ms. Patricia McGuire for 5 minutes.
STATEMENT OF PATRICIA MCGUIRE, PRESIDENT,
TRINITY WASHINGTON UNIVERSITY
Ms. McGuire. Chairwoman Foxx, thank you so much for
inviting me here to discuss this vitally important topic of
federal financial aid today.
My university, Trinity, in Washington, has been the proud
alma mater of two women members of Congress, a member of the
President's Cabinet, and many public officials over the years.
Today's Trinity women are somewhat different from the mostly
young, middle-class, Catholic women who attended Trinity when I
was a student, and yet, our new populations have every bit as
much ambition, if not more so, to earn their degrees and go on
to great achievements, particularly in service to our nation.
About 90 percent of Trinity's 2,600 students today are
African-American and Latina. Seventy-five percent of our
freshmen receive Pell Grants, and their median family income
this year is just $25,000.
About 50 percent of Trinity students today are residents of
the District of Columbia, most from the eastern half of the
city where poverty rates are high. I am proud of the fact that
Trinity educates more D.C. residents than any private
university in the nation, but these students need a great deal
of support to achieve their dreams.
Trinity operates with great efficiency and effectiveness.
Our full-time undergraduate tuition of $20,550 in 2013 is the
lowest among the private colleges and universities in the
Washington region by far, and Trinity returns an average of 40
percent of that tuition price to our full-time students in the
form of institutional grants based on need.
The characteristics of Trinity's full-time undergraduates
are emblematic of the new populations of students driving the
future of higher education. By 2021, the population of Hispanic
students in college will increase by 42 percent, African-
Americans by 25 percent, Asians by 20 percent, while the more
traditional white population will increase by only 4 percent in
college.
These students will come into higher education with
considerably greater needs than any prior population. Congress
and colleges must work together to find good solutions to
ensure continuing access for talented, low-income students.
Let me mention just five considerations to shape the
reauthorization of federal financial aid. First, do no harm.
Federal financial aid is one of the most reliable, durable
pillars of the framework we create for low-income students who
have few other sources of support to help them leverage their
lives from places of despair to platforms of real success.
We can all agree that the current system can use some
reform to make it better, but the system is hardly broken, as
some critics claim. Rather, it needs updating for the new
population of students who attend schools in ways that are
quite different from the traditional students of the past.
Second, do not impose the wrong measures of success. No one
quarrels with accountability, but some of the notions about
accountability are quite destructive.
Allowing measures of return on investment that rigidly
monetize the value of majors will be harmful to the nation. We
need teachers, counselors, and nonprofit leaders as much as
computer scientists and engineers.
As well, beware of using the current federal graduation
rates as measures of success. The IPEDS graduation rate is
deeply flawed, treating transfers as dropouts and rewarding
seat time in place of real achievement.
Moreover, too much emphasis on the graduation rate could
have the unintended consequence of social promotion, reducing
rigor while raising graduation rates; or alternatively, raising
entrance barriers for more low-income students who are most at
risk of completing in different ways.
Encourage more effective outcomes measures and incentives.
Recognize and support nontraditional learners who are the
majority of undergraduates today. To promote degree attainment,
make financial aid more flexible for the entire calendar year
and support all credit-bearing enrollments.
Incentivize students to focus on completion, such as the
Pell Well concept that the National Association of Student
Financial Aid Counselors is advancing. Incentivize
institutional programs that support at-risk students. Trinity,
and many institutions like mine, have great programs in place
to help students come to completion.
Simplify, simplify, simplify. Everyone involved in
financial aid agrees on one thing: It is too complicated and
too expensive to administer. Reducing complexity, improving
simplicity will achieve great results.
Finally, engage the students and practitioners. If you ask
my students, as I did--and their comments are in my longer
testimony and on our Web site--they would tell you the system
is too complicated, there are too many forms and acronyms, and
they need interest rates that are fair, that are certain, and
that are not collected while they are still in school.
I know how constrained the federal budget is. I live in a
world of highly constrained budgets.
We are very frugal at Trinity. Just this week a dean was
complaining to me that we don't serve cookies at faculty
meetings and I said to the faculty member, ``Who pays for the
cookies? Our students go into debt to be in college. We cannot
be eating their tuition.''
We are very frugal at Trinity. I urge Congress to keep our
national priorities in the right place for low-income students.
Thank you.
[The statement of Ms. McGuire follows:]
Prepared Statement of Patricia McGuire, President,
Trinity Washington University
On the threshold of reauthorization of the Higher Education Act,
Congress has an unparalleled opportunity to ensure fulfillment of
national goals for collegiate degree attainment by making the federal
financial aid system even stronger and more effective in advancing the
educational horizons of new generations of students, particularly those
from low income families and students of color who will be the citizen
leaders of the late 21st and even 22nd centuries.
Trinity in Washington is one of our nation's most effective
universities for the education of low income students who have high
ambition but extremely challenging personal and financial
circumstances. Historically known as Trinity College, now a
comprehensive university, Trinity was founded by the Sisters of Notre
Dame de Namur to educate women who had few other educational options in
the nation's capital in 1897.
About 90% of Trinity's 2,600 students today are African American
and Latina; 64% receive Pell Grants. About 50% are residents of the
District of Columbia, most from the eastern half of the city where
poverty rates are high. (See more on Trinity and our commitment to D.C.
in my extended written testimony.) Trinity educates more D.C. residents
than any private university in the nation.
With an institutional budget of just $34.6 million in Fiscal 2013,
and a small endowment of just $12 million, Trinity operates with a high
degree of efficiency while also delivering highly effective academic
programs and related services. Trinity's full-time undergraduate
tuition of $20,550 in 2013 is the lowest among the private colleges and
universities in the Washington region, and Trinity returns on average
40% of that tuition price to full-time students in the form of
institutional grants based on student need.
Notable characteristics of Trinity's full-time undergraduates
include:
75% of freshman in Fall 2012 received Pell grants;
$25,000 is the median family income for the Fall 2012
freshmen;
Most are daughters of single mothers;
Majority are self-supporting even in their late teens;
15% or more of the freshman class have children of their
own;
40% start college with health issues that might impede
their academic progress.
The characteristics of Trinity's full-time undergraduates are
emblematic of the new populations of students driving future
enrollments in higher education. According to data from the National
Center for Education Statistics (Projections in Education to 2021),
from now to 2021 the population of Hispanic students in college will
increase by 42%, African Americans by 25%, Asians by 20% while the more
traditional White population will increase by only 4%.
These students will come into higher education with considerably
greater needs than any prior population, and they will come in larger
numbers. To achieve national goals for greater degree attainment, even
in this time of considerable fiscal constraint, Congress and colleges
must work together to find good solutions to ensure continuing access
and success for talented low income students. That's why I welcome this
discussion today because we all know that ensuring success for low
income college students will return more to the nation in the future
through improved earnings (hence, an improved tax base), a more capable
workforce for economic growth, and significantly less reliance on
federal and state support for social programs that address the
conditions of poverty.
How will the federal financial aid system ensure that higher
education opportunities remain available for these students in the
future? Five key considerations should shape the reauthorization of the
federal financial aid programs:
1. Do No Harm: Federal financial aid is one of the most reliable,
durable pillars of the framework we create for low income students who
have few other sources of support to help them leverage their lives
from places of despair to platforms of real success. We can all agree
that the current system can use some reform to make it better. But the
system is hardly ``broken'' as some critics claim. Rather, it needs
updating for the new populations of students who attend school in ways
that are quite different from the traditional students of the past.
Accompanying my written testimony are statements from Trinity
students about the value of federal loans and Pell Grants in their
ability to reach their large goals for themselves and their families.
In many different voices, they have one clear message: federal
financial aid is key to ensuring economic stability and success not
only for themselves, but for their children as well.
2. Do not impose the wrong measures of success: No one quarrels
with accountability for the considerable federal investment in higher
education, but some of the notions about what constitutes
accountability are potentially quite destructive.
We are hearing a lot of talk right now about the ``ROI'' for
federal financial aid. Policymakers looking for evidence of the
``return on investment'' should come talk to the young mothers at
Trinity whose decision to enroll is intensely driven by their desire to
make sure their babies have more opportunities and experience fewer of
the consequences of poverty than they knew growing up. For my students,
as for millions of others, the return on investment yields in their
lifelong intellectual fulfillment, improved economic security for their
families, greater opportunities for their children and considerable
professional contributions to their clients, patients, students,
communities and places of work. Such returns go beyond the mere listing
of starting salaries of recent graduates, a trend that warps the values
of higher education in startling ways. Our nation needs teachers and
counselors as much as it needs computer scientists and engineers, but
the rank-ordered listing of jobs and salaries that some proponents of
accountability now favor does great harm to the idea that worthy
employment might be found in the service professions or nonprofit
careers.
Some policy analysts suggest that colleges need a cudgel to force
them to improve graduation rates. These analysts do not know what
they're talking about. The current graduation rate, established in
IPEDS (the federal government's data system for higher education,
formally, the Integrated Postsecondary Education Data System) to
measure the academic performance of athletes, is a measure of brand
loyalty (first-time full-time freshmen staying at the same institution
for 4-6 years) that should not be used to penalize institutions that,
quite willingly, take the risk of educating students whose life
circumstances are different from older norms.
As well, beware the temptation that some schools will feel to
revert to social promotion to improve completion rates! Too much
pressure on improving graduation rates at the expense of rigor and
genuine learning outcomes will have the opposite effect that federal
policy should desire, namely, more people with credentials who have
less knowledge and fewer skills. Be careful what you wish for! K-12 is
paying dearly these days for this very problem.
The other real danger of the inappropriate use of the graduation
rate measure is that some schools will decide to enroll fewer low
income students since those are the students at greatest risk of not
completing on the traditional timetable. Our national goals for
collegiate attainment need more opportunities, not fewer, for low
income students.
3. Encourage More Effective Outcomes Measures and Incentives:
Certainly, colleges want our students to be wildly successful, and we
do want them to finish their degrees. But because students attend in
very different patterns from the way the old measures assume, we have
to develop new ways to measure success.
Recognize and support non-traditional learners: The
majority of undergraduates today have characteristics that are quite
different from the traditional students of yesteryear. But our
financial aid policies still largely focus on traditional students,
discouraging working students, students with their own children,
students who want to or need to attend in different ways, including
summer enrollment. To promote degree attainment, embrace the idea of
new ``non-traditional'' attendance and learning patterns.
Incentivize students to focus on completion: Rather than
penalizing students or institutions for non-traditional attendance
patterns, recognize that modern students will attend and complete on
very different timetables, often through multiple institutions, and
provide incentives to help the student reach degree completion. Remove
barriers like the ban on summer Pell Grants or artificial numbers of
semesters for participation; replace barriers with pro-active
incentives like the ``Pell Well'' concept promoted by NASFAA that
provides each low-income student an amount of Pell Grant to draw down
as they progress toward a degree--whether they attend part-time, during
summers, taking 3 years or 12 years. The same concept could be applied
to student loan programs.
Look at the totality of degrees awarded: more than half of
the students who earn degrees at Trinity transfer into the university
from elsewhere, but they are treated as dropouts in the IPEDS data
system, rather than great success stories. This is simply wrong. Every
student counts, no matter his or her pathway to the degree. Let's
change IPEDS from emphasizing seat time in one place to actual degree
attainment.
Incentivize institutional programs that support at-risk
students: Trinity and many colleges like us have extensive programs to
promote student success. These programs often receive little public
attention, though we are pleased that the U.S. Department of Education
has begun to gather the ``promising practices.'' Incentives to spread
effective academic strategies will do more to encourage national degree
attainment goals than reams of negative reports calling for even more
complicated rules.
4. Simplify, Simplify, Simplify: Everyone involved in federal
financial aid agrees on this one thing: it's too complicated. Every
reauthorization seems to make it worse, not better. For low income
students, often without strong families to help them--and many who do
not speak English at home--the terminology, forms and expectations
about disclosures can be daunting and discouraging. Every new
regulation seems to come with new expectations for measuring, counting
and managing students in the system. The sheer complexity and time-
consuming nature of administering the federal financial aid programs
requires increasingly large campus-based staffs, which drive up college
costs. Reduce complexity, achieve simplicity, promote continuous
enrollment and efficiency in financial aid management.
5. Engage the students and the practitioners: One of the most
notable features of most of the proposals for changing federal
financial aid is that they are devoid of the voices of real students
with real needs. This is why I so appreciate this invitation to testify
today. If you asked my students, they would tell you that the system is
too complicated, that there are too many forms and acronyms, that they
do not attend school in ways that regulators think is the best way to
attend, that seat time is not the best way to learn in college, that
they want more respect for different formats for learning, that they
are suspicious of the manipulation of interest rates, and that the
restoration of the interest rate grace period is essential
My final message is: Thank you! I know how strained the federal
budget is. I also live in a world of highly constrained budgets. Just
this week, a dean complained that the faculty are unhappy that we don't
serve cookies at meetings. ``Who pays for our cookies?'' is a question
I often ask, rhetorically, when we discuss the demand for more
amenities. I point out that every cookie we eat on the school dime
comes at the expense of a student who takes on debt, skips her own
lunch to buy books, cuts costs at every turn to stay in school. Our
students need so much support, we cannot justify eating their tuition.
The faculty must bring their own cookies!
We operate quite frugally at Trinity and we provide a great deal of
aid to our students while keeping our tuition price low, and yet, our
students need even more. I urge Congress to keep our national
priorities in the right place for low income students with great
promise and high need, ensuring strong and durable federal financial
aid programs so that students today and far into the future can
continue to achieve not only degrees, but great returns in their lives
and the life of the nation.
Trinity in Washington is one of the nation's most effective
universities for the education of low income students who have high
ambition but extremely challenging personal and financial
circumstances. Historically known as Trinity College, now a
comprehensive university, Trinity was founded by the Sisters of Notre
Dame de Namur to educate women who had few other educational options in
the nation's capital in 1897. Trinity today continues the women's
college at the heart of the university while also welcoming men as well
as women into adult professional and graduate programs.
About 90% of Trinity's 2,600 students today are African American
and Latina; about 50% are residents of the District of Columbia, most
from the eastern half of the city where poverty rates are high. Another
30% of Trinity's students are from the nearby Maryland suburbs,
particularly Prince Georges County that has characteristics quite
similar to far northeast and southeast D.C. 64% of all Trinity
undergraduates (enrolled full-time and part-time in day, evening and
weekend programs) receive Pell Grants, a marker for a student body with
very high need.
Trinity educates more D.C. residents than any private university in
the nation. (See Trinity and DC: Partnership for Success on Trinity's
website.) About one-third of the 1,300 D.C. residents at Trinity reside
in the wards east of the Anacostia River, a geographic boundary that
also delineates the neighborhoods with the highest rates of poverty,
chronic illness, lowest-performing schools, violent crime and numerous
other social and economic challenges. Trinity is the only university
offering a degree program east of the river. About 60% of Trinity's
full-time undergraduate D.C. residents have zero ``expected family
contribution'' (EFC) in the federal financial aid analysis.
With an institutional budget of just $35 million in Fiscal 2013,
Trinity operates with a high degree of efficiency while also delivering
highly effective academic programs and related services. Trinity's
tuition of $20,550 in 2013 is the lowest among the private colleges and
universities in the Washington region, and Trinity returns on average
40% of that tuition price to full-time students in the form of
institutional grants based on student need. Part-time tuition rates are
also deeply discounted. Trinity's total volume of institutional aid is
more than $8.5 million, almost all of which is simply tuition
forgiveness since Trinity's endowment is quite small, just about $10
million.
Notable characteristics of Trinity's full-time undergraduates
include:
75% of freshman in Fall 2012 received Pell grants;
$25,000 is the median family income for the Fall 2012
freshmen;
Most are daughters of single mothers;
Majority are self-supporting even in their late teens;
15% or more of the freshman class have children of their
own;
40% start college with health issues that might impede
their academic progress.
The characteristics of Trinity's full-time undergraduates are
emblematic of the new populations of students driving future
enrollments in higher education. According to data from the National
Center for Education Statistics (Projections in Education to 2021),
from now to 2021 the population of Hispanic students in college will
increase by 42%, African Americans by 25%, Asians by 20% while the more
traditional White population will increase by only 4%.
Because black and Hispanic children in the United States suffer
more poverty and related social problems, and have more significant
educational challenges because of under-performing K-12 schools in
their impoverished neighborhoods, the rising tide of low income
students of color in college will require creative solutions on the
part of both Congress and colleges to ensure that higher education
remains accessible to them.
The changing demographics of this nation also reshape the
conventional notions of who goes to college and how they attend.
Regardless of age, low income students are more likely to have non-
traditional attendance patterns and completion timetables because of
their work and family responsibilities, health conditions and need for
remediation. Department of Education data reveals that more than 70% of
all college students have at least one ``non-traditional''
characteristic which includes not only age (being 25 or older in
college), but also attending part-time, working full-time, parenthood,
being self-supporting.
Support for non-traditional and adult students is an issue of
special concern for Trinity, since, as a university founded for and
with a still-vibrant mission to women, we know that many women stop out
from the traditional collegiate timetable to care for children, support
spouses in their careers, attend to the needs of elderly parents.
Thousands of older women (and some men--Trinity's student body is about
10% male in adult and graduate programs) have returned to college at
Trinity over the last 30 years to complete long-deferred degrees. These
students, too, need Pell grants and other forms of federal financial
aid.
57% of the full-time and part-time undergraduates in
Trinity's School of Professional Studies (for older working students)
receive Pell Grants;
85% of the students in Trinity's Associate Degree program
at THEARC in D.C.'s Ward 8 receive Pell Grants--Trinity is the only
university offering a degree program ``east of the river'' in
Washington's most impoverished neighborhoods. These students enroll in
Trinity's program to get on track for better employment opportunities,
to secure economic security for their children and to improve the
stability of their homes.
Many of these students have gone on to earn bachelor's and
master's degrees as a result of getting back on track with Trinity's AA
program.
Federal financial aid policies need to be more sensitive to the
attendance patterns and financial realities of the burgeoning
population of students whose characteristics are quite different from
the more traditional student populations of the past. Sadly, recent
changes in federal policies have actually worked against the goal of
helping these students to enroll and complete college degrees. For
example, many students with work and family obligations attend on a
part-time basis but prefer to take classes continuously, including
during the summer months, so they can stay on pace to finish their
degrees as soon as possible. Yet, federal policy has now eliminated
summer Pell Grants, apparently buying into the outmoded agrarian idea
of the summer as a time to stay home on the farm. More students would
complete degrees more quickly if they could get the financial aid they
need to stay enrolled in the summer.
Similarly, last year's change to reduce the number of semesters of
eligibility for Pell grants from 18 to 12 applied retroactively to all
current students means that many of my students who have attended
various colleges over the years, and who now have settled on Trinity
for their Nursing or OTA (Occupational Therapy Assistant) degrees, are
suddenly discovering that they will soon run out of eligibility even
though they are trying to start fresh in their quest to earn degrees in
fields that are direct pipelines to acute workforce needs and
significant starting salaries. Thousands of students who start college
as teenagers stop out for a period of years, and when they return they
have the maturity and intense focus necessary to earn the degrees that
life interrupted. The change in the Pell Grant eligibility rules
assumed the most traditional timetable for completion, abandoning large
numbers of adult students whose contributions to the professional
workforce would be immediate and exceptional if they could only get the
aid they need to finish their long-deferred degrees.
Let's consider why federal financial aid, and particularly the Pell
Grant program, are so vital to our national goals for economic growth.
Federal financial aid has consistently proven to be one of the most
effective federal investments in the long-term economic health and
productivity of our nation. For almost 70 years, since the first G.I.
Bill in 1944, Congress and the president have agreed that the nation's
economic health and long-term social stability depends heavily upon a
well-educated population of citizens and leaders whose contributions to
the workforce, to research and development, to innovation and social
transformation have ensured this nation's economic power, safety and
security.
Now, with the changing demographics of the national population,
sustaining and increasing educational investments is essential to
continue to meet our national goals--not only goals for degree
attainment, but for improved economic conditions among even more
diverse citizens, ensuring a robust workforce equal to the challenges
of rapid innovation, and educating new generations of citizen leaders
for a nation whose characteristics will be increasingly different from
anything we have previously known.
Policymakers looking for evidence of the ``return on investment''
should come talk to the young mothers at Trinity whose decision to
enroll is intensely driven by their desire to make sure their babies
have more opportunities and experience fewer of the consequences of
poverty than they knew growing up.
Hear the pride in the voice of the 40-year-old Pell Grant recipient
in our associate's degree program in Anacostia who was once homeless,
but now, because of her education with Trinity, she is employed and has
her own apartment, and now she's going to finish her baccalaureate
degree and enroll in the master's program. She's seeing to it that her
children are also enrolled in school and making progress toward their
degrees.
Listen to the sheer exhaustion of 20 year-old students who have no
permanent place to call home, who sleep from couch to couch, who dream
of becoming nurses but too often must choose between having dinner or
riding Metro to some friend's house for the night. They stress about
not having textbooks that they can't afford to buy, and sometimes
struggle to find space in the computer lab because these are students
who cannot afford iPads. Hunger, homelessness, teen pregnancy, abysmal
academic preparation in their lower schools, the absence of any
conventional social structure--these are the challenges my students
face every day.
Federal financial aid is one of the reliable, durable pillars of
the framework we create for such students to help them leverage their
lives from places of despair to platforms of real success.
Consider the stories of these students, in their own words, whose
success not only in school but in life became possible because of
federal financial aid: (each student gave permission for the use of her
or his name; more comments are on Trinity's website)
``Because of federal loans I am able to obtain my second-degree in
nursing while juggling the duties of being a mother, wife, student and
employee.'' (Tamina Umana, Second Baccalaureate student in Nursing)
``Because of my federal loans I am able to continue my education as
a single parent. My federal loans have prevented me from becoming a
statistic. My federal loans will allow my child to see a strong,
empowered woman who will one day become an educator.'' (Leontia
Collins, Junior, Education)
``Pell Grants and federal loans give me the opportunity as the
first generation member in my family to attend college. * * * Financial
Aid changed my life because it gives me the opportunity to create,
build, reform and make my dreams come true. If I work hard to make my
dreams come true, then I will become a valuable member to our society.
With my intellectual knowledge and skills I will be able to give back
to my community and to the society * * *'' (Minette Achankeng, Junior,
Political Science)
``Because of my Pell Grant and student loans I am able to finish my
bachelor's degree at the age of 55 after a severe battle with cancer
and other disabling diseases. It gives me the hope as well as the
knowledge to be able to go back to the workforce * * *'' (Rose M.
Zuffi, Freshman, Communications)
For almost all Trinity students, college is only possible with
federal financial aid in the form of Pell Grants and loans, combined
with Trinity's own grants and discounted tuition levels. The chart
below shows the volume of Trinity's three major sources of support for
students during the last four years:
Other sources of financial aid not indicated on the chart include a
small amount for federal work-study grants, and aid to District of
Columbia students through the D.C. Tuition Assistance Program and
private grant programs such as the D.C. College Access Grants and D.C.
Achievers Scholarships.
Several issues are immediately clear from this picture:
Trinity's own grants, which are unfunded discounts on the
tuition price (tuition forgiveness) are growing rapidly in relation to
both enrollment growth as well as declining financial strength in the
student body;
Parent loans, while always few in number and relatively
small in volume, have declined precipitously in the last year, evidence
of the increasing fiscal stress among many families.
The parent loan data is clear evidence that most Trinity students,
even those of traditional-age, are self-supporting and not relying on
parents to help pay for their college education.
Not shown on the chart, but important to note, of Trinity's total
student body of 2,600 students, very few qualify for private loans--
only 65 private loans this year, for a total of about $612,000. Trinity
students by and large do not have the resources to borrow against home
equity or other assets. Federal financial aid, and Trinity grants, are
the pillars of their ability to attend college.
During the four year period depicted on the chart above, Trinity's
student body grew by 31%, from 2034 to 2664. Enrollment in the full-
time undergraduate program (CAS) grew by 28%. Over that same four year
period, Trinity's full-time tuition grew just 6%, from $19,300 to
$20,500. But the volume of Trinity grants, which go mostly to full-
time undergraduates, grew by 42% and the Pell Grant volume grew by 51%,
compared to the federal loan growth of 39%. What this means is that
while Trinity is holding the line on tuition price and continuing to
provide significant discounts, the financial need of the student body
is growing rapidly. Demand for seats at Trinity is high in the full-
time undergraduate program, and particularly in Nursing and programs in
the health professions and related fields.
Yet, despite considerable institutional and public financial aid,
many accepted students are unable to attend, or find that they must
stop out after a semester or two of enrollment. Trinity retains about
70% of full-time freshmen from first to second year; financial barriers
are the single greatest cause of student failure to re-enroll in any
given semester.
If this nation is to meet its oft-stated national goal to achieve a
college degree attainment rate in excess of 50% of the adult
population, then strengthening federal financial aid is essential,
including redirecting more aid to the neediest students.
Trinity students who persist and graduate become great success
stories, alumnae like Maisha Leek, Class of 2005, one of the youngest
chiefs of staff on Capitol Hill with Congressman Chakka Fattah. Maisha
was able to attend Trinity with the help of federal financial aid.
A recent survey of Trinity graduates from 2002 to 2012 shows that
95% are employed or in graduate school, and their median salaries are
in the $50,000-$60,000 range. 60% enrolled in graduate school after
completing Trinity degrees and 30% have already earned advanced degrees
with another group still in graduate school and attending such notable
universities as Georgetown, Howard and American Universities, the
London School of Economics, the University of Pennsylvania and others.
Clearly, the investment of federal financial aid in Trinity
students over the years has resulted in excellent returns for these
students, for their families and communities, and for the corporations
and organizations where they work and have considerable influence.
Congress should make a particular effort to engage students in the
deliberations over the future of federal financial aid. Consider the
voices of Trinity students like these:
``Because of Federal loans I am able to be the first woman in my
family to attend college. Federal loans provide me with the opportunity
to receive not only a Bachelor`s Degree, but continue my education and
pursue my Ph.D in psychology which will enable me to help my
community.'' (Jelisa E. Glanton, Junior, Psychology)
``Federal loans are the only way that I am able to put myself
through school. Without it, I would not be able to serve my country and
its aging population as a young nurse by the year 2014.'' (Marissa Rose
Torres, Junior, Nursing)
``Because of my federal loans I was able to fulfill my dreams by
going off to college and receiving my Bachelor's Degree in Child
Development and Family Studies. I am also able to currently work
towards my MAT in Early Childhood Education.'' (Sharneice Jones, MAT
Program)
``Because of my federal loans, I was able to continue pursuing my
Masters degrees after losing my job. * * * I am able to concentrate on
my education without having to worry how to pay for it right now.''
(Meg Ann Imig MSA Nonprofit Management and Community Health)
``Because of my Pell Grant and loans, I am able to remain in
college, accomplish my dream goals to better assist my community
(District of Columbia) and my family. You see, I come from a low-income
family where none of my parents are high school nor college graduates
due to the poverty they had suffered in their home countries. * * * I
will also be the first in my family seeking and hopefully attaining a
college degree. Thanks to federal aid I am steps closer to those
goals!'' (Diana Contreras, Junior, Human Relations) See Trinity's
website www.trinitydc.edu for the complete set of student comments.
Congress has a remarkable opportunity and awesome responsibility to
be sure that the opportunities this nation has historically ensured for
students to earn college degrees remain strong, not only for the sake
of the students and their families, but also for the sake of the
nation. As Congress prepares to reauthorize the Higher Education Act, I
urge you to consider the points addressed in this testimony:
1. Do no harm to what works best in the current financial aid
system.
2. Do not impose the wrong measures of success.
3. Encourage more effective outcomes measures.
recognize new patterns of attendance and new ways of
learning
incentivize students to focus on completion
recognize the totality of degrees attained
incentivize institutional programs that support at-risk
students
4. Simplify the system.
5. Engage the students and practitioners, those who know how the
system actually must work!
Thank you for inviting me to share thoughts on federal financial
aid on behalf of the thousands of Trinity students and graduates whose
lives are changed so dramatically by the opportunities they discover on
their way to earning degrees.
______
Chairwoman Foxx. Thank you very much.
I now recognize Mr. Dan Madzelan for 5 minutes.
STATEMENT OF DAN MADZELAN, FORMER EMPLOYEE (RETIRED), U.S.
DEPARTMENT OF EDUCATION
Mr. Madzelan. Thank you, Chairwoman Foxx, Ranking Member
Hinojosa, and members of the committee for this opportunity to
share my perspective on the appropriate role of the federal
government as you consider the reauthorization of the Higher
Education Act. I will be brief with my comments, but I have
prepared a longer written testimony that I ask be included in
today's hearing record.
A little more than a year ago I retired from the federal
civil service after more than 33 years at the Department of
Education. My work at the department over the years largely,
though not exclusively, involved issues related to helping
families financially afford the benefits of higher education
for their children. I think my own experience as a first-
generation college student focused me to help these benefits
were made available to all who would pursue them.
Five years ago I thought that my fifth HEA reauthorization
would be my last, but I have found that it is difficult to quit
this line of work cold turkey, and I am honored that I have
been asked to assist in my sixth such effort.
I also worked this past year on Gates Foundation-supported
Reimagining Aid Design and Delivery reports by the National
Association of Student Financial Aid Administrators and HCM
Strategists.
I will briefly describe four ideas that would improve the
federal financial aid system without generating new cost or
increasing burden on students, their families, and
institutions.
First, the financial aid application process can be made
simpler for students and families. I know this firsthand.
Earlier this year I complete my 13th and last Free Application
for Federal Student Aid.
We still ask applicants too many questions that are too
complicated. For example, ``Which federal income tax form could
you have filed?''
I believe we can build on the successful electronic data-
sharing arrangements the department has implemented in recent
years and modify statutory requirements that would further
simplify the aid application process.
Second, we have an immediate opportunity to simplify and
streamline the student loan program. I believe it is time to
end the multiple loan programs with different eligibility
requirements, interest rates, and repayment terms.
I think we should carefully consider an automatic
enrollment of borrowers in a single, improved, income-based
repayment plan. Ideally, this approach would implement real-
time income reporting, perhaps via payroll withholding, rather
than relying on the after-the-fact approach necessitated by
income verification based on previously filed income tax
returns.
Our current system asks young adults--especially low-income
individuals--to manage complicated loan portfolios for no good
reason that I can see other than policymakers continually
responding to near-term budget pressures.
Third, we should have accountability for all federal aid
dollars through a multipronged determination of institutional
eligibility for Title IV financial aid that considers measures
of access and equity, loan repayment, and risk adjusted
completion rates. Institutional and government data systems
continue to improve, so a more balanced set of metrics that
measure access, completion, and value are more feasible than
ever and could help protect students and taxpayers from the
most egregious cases of debt-with-no-degree while also
promoting overall transparency for consumers.
Fourth, we know we face significant challenges in higher
education. None of us has all the answers. I believe we need to
experiment to find the best solutions. Congress has
periodically authorized focused demonstration programs and the
department has ongoing authority to experimental sites to test
and rigorously evaluate new approaches to delivering financial
aid on campus in the most cost-effective manner possible.
The current experimental sites authority provides for
administrative flexibility; it does not authorize funding.
Perhaps the authority could be expanded to allow for additional
experimentation as long as individual students were held
harmless in terms of federal financial support received.
Today, one in three Pell Grant recipients report using
their grant to pay for remedial education. Across the country,
states, colleges, and other educational providers are searching
for more cost-effective ways to customize and accelerate
remedial education. A small-scale experimental site might test
funding for remedial education through Pell Grants while
providing alternative funding for students for their
remediation needs.
In terms of a larger-scale programmatic approach, a modest
level of savings redirected from changes in federal needs
analysis or the loan program could fund the college readiness
demonstration. A limited number of participating states could
enter into performance-based agreements with remedial education
providers. The goal: Serve an agreed upon number of students in
high-poverty schools, do it in a competency-based way, and
evaluate what difference financial incentives make for students
and taxpayers.
Thank you for the opportunity to testify today. I am happy
to answer any questions the members of the committee may have.
[The statement of Mr. Madzelan follows:]
Prepared Statement of Daniel T. Madzelan,
U.S. Department of Education (Retired)
Thank you Chairwoman Foxx, Ranking Member Hinojosa and Members of
the Committee for the opportunity to share my perspective on the
appropriate role of the federal government in higher education. As a
now-retired senior civil servant in the U.S. Department of Education, I
had the privilege to serve nine secretaries of Education and
participate in five reauthorizations of the Higher Education Act.
Over the past year, I have had the opportunity to advise a number
of efforts focused on finding ways to serve more students, and serve
them better, with federal financial aid. These include the American
Dream 2.0 coalition, and Gates Foundation-supported Reimaging Aid
Design and Delivery (RADD) reports produced by the National Association
of Student Financial Aid Administrators and HCM Strategists. Today,
however, I am sharing my own thoughts and ideas on this important
topic.
Why are we hearing so much about financial aid reform and why does
the federal government care? I think the higher education landscape has
changed significantly since the last Higher Education Act (HEA)
reauthorization. The performance of higher education--the outcomes
institutions achieve on behalf of their students--is at the forefront
of the public's mind. According to recent polling conducted by Hart
Research, earning a college degree or credential is very important to
84 percent of engaged voters, 95 percent of African American parents,
and 97 percent of Hispanic parents.
To meet these expectations, the federal government continues to
spend billions of dollars on college aid and the results of our
investments are simply inadequate. If today's economy requires valuable
postsecondary credentials to attain and retain good, middle class jobs,
we can imagine what tomorrow's economy will demand. The high premium on
college completion is remarkably different today compared to nearly 50
years ago when federal college opportunity grants were first created.
Graduation rates are too low and gaps between student who succeed and
those who drop out are profound. More than half of Hispanic students--
our country's fastest growing population--who enter postsecondary
education have not earned any type of credential six years later. Just
one-fourth of young adult Pell Grant recipients ever complete a
bachelor's degree, and even fewer ever complete an associate's or
certificate program. Among adult Pell recipients who complete college,
only three percent earn a bachelor's degree, while nine percent earn an
associate's and 25 percent complete a certificate program.
At the same time, students and families are finding college
necessary but increasingly unaffordable. More students are accruing
education debt but attaining no degree. The student loan default rate
for students who did not attain their credential is four times higher
than that for those with a bachelor's degree. We must ask ourselves--is
this what we intended when we designed the federal financial aid
system?
Financial aid can and I believe should be used more effectively to
improve student success. The federal investment in financial aid is at
an all-time record level. Over the past decade, the number of Pell
Grant recipients has doubled to more than 9 million undergraduate
students--nearly half of all such students. Today, nearly 75 cents of
every financial aid dollar available in this country comes from the
federal government. Revenues from Pell Grants pay an average of nearly
20 cents of every tuition dollar received by a college, university or
other postsecondary institution in this country.
There are a number of excellent ideas percolating that will improve
the federal financial aid system without generating new costs, nor
increasing burden on students, their families, and institutions. I will
briefly describe four such ideas.
First, the financial aid application process can be made simpler
for students and families. For example, why do we ask them to figure
out which federal income tax form they could have filed? And a simpler
system can help us better focus resources on our neediest students. We
can accomplish this with a three-tiered approach to aid application but
simplified through better leveraging of existing technology to enhance
the Department's electronic processes, including FASFA-on-the-Web.
The first tier in this approach would automatically make any
student eligible for a full Pell grant if they, or their family,
participated in another federal need-based program. However, this
``bypass'' approach unequivocally demands reliable, independent third-
party verification of that participation. The second tier, for most
other students, would ask for minimal income information, not unlike
the current simplified needs test, but with all financial data provided
automatically via agency-to-agency arrangement with the Internal
Revenue Service, not unlike the current IRS data retrieval option
available in FAFSA-on-the-Web. The third tier would seek additional
income and asset information (also from the IRS) for families with more
complicated financial circumstances as indicated by their filing of one
or more of the several schedules associated with filing the long-form,
i.e. 1040, tax return. By just simplifying the application process in
this way, the Brookings and Urban Tax Policy Center estimates 10-year
savings of at least $37billion.
Second, Congress faces an immediate opportunity to vastly simplify
the student loan program and spend those federal resources more
efficiently. It is time to end the multiple loan programs, with
different eligibility requirements, interest rates and repayment terms.
There is a growing chorus supporting the automatic enrollment of
borrowers in a single, improved income-based repayment plan. The
current system asks young adults--especially low-income individuals--to
be managers of complicated loan portfolios for no good reason that I
can see, other than policymakers continually responding to near-term
budget pressures.
I ask your indulgence and allow me to digress for a moment. The
1986 HEA Amendments authorized a five-year Income Contingent Loan
demonstration program for ten college and university participants. The
Department ended the demonstration after four years because by that
time we learned one critical piece of information--individuals are
extremely reluctant to disclose their personal income information.
Consequently, several years later when developing the income-contingent
repayment plan for the new direct loan program, the Department required
IRS verification of a borrower's income as a condition of participation
in that repayment plan.
Ideally, then, a single, income-based repayment program would be
implemented in a way that ensures reliable income reporting by
borrowers. One way would be a payroll-based payment system, that is,
employer withholding not unlike federal payroll taxes. This approach
would also have the advantage of ``real time'' income reporting rather
than relying on the after-the-fact approach necessitated by income
verification based on previously filed income tax returns. Loan
payments for borrowers not subject to wage withholding could be tied to
their required quarterly self-employment tax reporting.
The borrower's interest rate for these loans should be market-
based. Many of the reform proposals issued recently recommend
establishing the 10-year Treasury note as the reference rate and then
adding a few percentage points to set the borrower's interest rate.
Congress would set the value of the add-on percentage as a way to
specify the overall level of federal budget support for the student
loan program.
Moving to a market-based rate would save money that could be
invested in Pell Grants. The New America Foundation, using fair value
accounting, estimates this proposal would cost $17 billion in the first
five years, chiefly because the gap between borrower interest and
Treasury borrowing rates is historically wide. This proposal would save
$25 billion over a 10-year budget window because that gap is expected
to narrow considerably in the future, reflecting historic trends. In
2011, CBO estimated that a similar proposal would save $52 billion over
10 years.
Third, there should also be accountability for all federal aid
dollars spent. This can be achieved through a multi-pronged assessment
of institutional eligibility for Title IV financial aid that considers
measures of access and equity, loan repayment, and risk-adjusted
completion rates. Today, the Department essentially uses a check-off
box approach--cohort default rate, financial responsibility, 90-10
rule, and the like--to ensure federal funds are appropriately spent. It
terms of institutional accountability, it simply does not look at
student outcomes.
In the late 1980s when policymakers first advanced the notion of
using student loan default rates as an institutional accountability
measure for federal student loans, institutions objected, largely on
the grounds that the Department did not have reliable school-level
data. But the enacted provision included a transition period, which
allowed most schools to respond positively to the new measure while the
bad actors were removed. Institutional and government data systems
continue to improve, so a more balanced set of metrics that measure
access, completion and value are more feasible than ever. These metrics
can protect the taxpayers and students from the most egregious cases of
debt with no degree while also promoting overall transparency for
consumers.
Fourth, we know we face significant challenges in higher education.
In my view, we need to experiment to find the best solutions. Congress
has periodically authorized focused demonstration programs. The
Department has ongoing authority through experimental sites to test and
rigorously evaluate new approaches to delivering financial aid on
campus in the most cost-effective manner possible. However, this
authority precludes waiving award rules, maximum grant and loan
amounts, and need analysis requirements. I completely agree with this
prohibition. I would never want to see a Pell recipient lose her grant
because the federal government was sponsoring an experiment of some
sort at her school.
The current experimental sites authority provides for waivers--it
does not authorize funding. Perhaps the experimental sites authority
could be expanded to allow for additional waivers as long as individual
students were held harmless in terms of federal financial support
received.
Today, one in three Pell Grant recipients reports using their grant
to pay for remedial education. Across the country, states, colleges and
nontraditional providers like Straighterline are showing us that there
are likely more cost-effective ways to customize and accelerate
remedial education. A small-scale experimental site might test
eliminating funding for remedial education through Pell Grants while
providing alternative funding to students for their remediation needs.
In terms of a larger scale, programmatic approach, a modest level
of savings redirected from changes in federal needs analysis or the
loan program, a college readiness demonstration could be funded.
Perhaps a $100 million investment could finance a limited number of
participating states that would enter into competency-based performance
agreements with remedial education providers and serve an agreed-upon
number of students in high-poverty high schools. These agreements could
also cover young adults just out of high school as well as low-income
working adults returning to college seeking to acquire new job skills.
These agreements would have built-in bonuses for early attainment of
college readiness so we can test and evaluate ways to provide
incentives to students to gain competencies at an accelerated pace.
In closing, I think we are seeing a remarkable convergence. The
general public and employers agree that the most effective jobs program
is one that ensures that more students graduate with a post-secondary
credential--whether a certificate, 2-year or 4-year degree. At the same
time a number of organizations have been thinking creatively about ways
to increase the number of well-educated graduates by improving the way
the federal government spends the dollars it already invests in higher
education.
Thank you for the opportunity to testify today. I am happy to
answer any questions that Members of the Committee may have.
______
Chairwoman Foxx. Thank you very much.
I now recognize Ms. Moriah Miles for 5 minutes.
STATEMENT OF MORIAH MILES, STATE CHAIR,
MINNESOTA STATE UNIVERSITY STUDENT ASSOCIATION
Ms. Miles. Thank you Chairwoman--rookie mistake.
Thank you, Chairwoman Foxx and committee members, for
having me today. I would like to address a few issues with you.
The cost of college in Minnesota and across the country is
rising dramatically. The tuition at the seven Minnesota State
Universities has increased by more than 100 percent in the last
decade. This, coupled with the disinvestment by our state, has
caused student debt to rise to unreasonable amounts.
Approximately 1 year ago the student loan debt in the
United States surpassed credit card debt, now averaging $28,566
per university student. This issue is one of the most important
challenges facing students across the country and we must
address it.
There are many things Congress can do to assist students
and position our generation for success. First, Congress needs
to address the impending doubling of the subsidized Stafford
Loan interest rate.
Students are already delaying purchasing homes, starting
families, and fully contributing to the economy because of the
massive amounts of debt they incur in their efforts to get
ahead. Reducing interest rates now and providing affordable
loans in the future will greatly benefit our country by
allowing these students to contribute more money to the
economy.
I also urge the House to protect the Pell Grant. The Pell
Grant was designed to provide access to a new generation of
low- and middle-income students. While tuition has risen across
the country, the Pell Grant has not kept up.
The most recent Ryan budget proposal would devastate
funding for the students by freezing the maximum Pell Grant for
10 years, eliminating $86 billion in mandatory funding for the
Pell Grants. Millions of students will rely on this funding to
escape poverty and to make better lives for their families.
Disinvestment in this area not only harms students, but will
also hurt the U.S. economy by reducing the workforce.
As Congress works on the proposals to help students, it is
important to remember that reducing the Pell Grant funding is
not the direction we should take. Instead, we must invest in
future generations and provide additional support for low-and
middle-income students. Investment in the Pell Grant is the
most important tool America can use to enhance the workforce of
the future and increase the number of post-secondary graduates.
Many students rely on some form of financial aid, whether
it is loans, scholarships, or grants. Often the amount of
financial aid a student receives can vary from institution to
institution and can impact a student's decision on where they
attend college.
Students and their families report difficulty in
deciphering college financial aid award letters. This is
because colleges write their own letters and use their own
terminology, abbreviations, and acronyms to describe different
types of aid, such as federal student loans.
The terms they use can be so confusing students may not
even know certain forms of financial aid are loans. This makes
it hard for families to compare financial aid offers among
different schools.
Congress and the Department of Education can solve this
problem with a uniform award letter that will provide families
the ability to effectively compare available options.
Another cost that students face--another cost facing
students within our system is under-regulated financial aid
disbursement companies and banks, such as Higher One. These
financial institutions are getting rich off taxpayer dollars
that are intended for students.
These companies disburse billions of dollars of student aid
and leave students to pick up the tab. There needs to be a
serious discussion in Congress and the Department of Education
to ensure our students are protected.
Finally, passing the DREAM Act will allow America to remain
an economic leader. We must encourage the talent already
residing in our country to stay. This is especially true when
it comes to children who have grown up here and benefitted from
a strong K-12 education system.
It is imperative we encourage these students to continue
their education and training at one of America's many fine
higher education institutions. The best way to do this is to
ensure they are not forced to pay higher tuition rate based
solely on where they were born. Congress should pass the DREAM
Act and provide stability to a new generation of leaders.
We have provided additional testimony, information, and
student comments on these issues as well as information about
the effects of sequestration on Minnesota. We are excited to
work with this subcommittee and the full House committee to
ensure students' voices are heard throughout this process.
Again, thank you very much for inviting me today.
[The statement of Ms. Miles follows:]
Prepared Statement of Moriah Miles, State Chair, Minnesota State
University Student Association; Student, Minnesota State University,
Mankato
BACKGROUND
The cost of college in Minnesota and across the country is rising
dramatically. The tuition at the seven Minnesota state universities has
increased by more than 100% in the last decade. During the same period
our state has dramatically cut the appropriation our universities rely
on to keep college accessible and affordable to all students regardless
of income. Meanwhile, student debt has risen dramatically.
Approximately one year ago, the total student loan debt in the United
States surpassed credit card debt, now averaging $28,566 per university
student. Addressing this issue is one of the most important challenges
facing students across the country.
There are many things Congress can do to assist students and
position our generation for success. First, Congress needs to address
the impending doubling of the subsidized Stafford Loan interest rate.
Students are already delaying purchasing homes, starting families
and fully contributing to the economy because of the massive amounts of
debt they incur in their efforts to get ahead. Reducing interest rates
now and providing affordable loans in the future will greatly benefit
our country by allowing these students to contribute more money to the
economy.
I also urge the House to protect the Pell Grant. This program was
designed to provide access to a new generation of low and middle income
students. While tuition has risen across the country, unfortunately the
Pell Grant has not kept up. The most recent ``Ryan'' budget proposal
would devastate funding for students by freezing the maximum Pell grant
for ten years, eliminating $86 billion in mandatory funding for Pell
grants (which will likely result in a substantial cut to the maximum
award), increasing student indebtedness by eliminating the in-school
interest subsidy and allowing interest rates to double for subsidized
student loans, and narrowing eligibility for need-based student aid.
This proposal will hinder student success for years to come. Millions
of students rely on this funding as tool out of poverty and to make
better lives for their families. Disinvestment in this area not only
harms students, but will also hurt employers by diminishing the
workforce.
As Congress works on proposals to help students, it is important to
remember that reducing the Pell Grant funding is not the direction we
should take. Instead, we must invest in future generations, and provide
additional support for low and middle income students. Investment in
the Pell Grant is the most important tool America can use to enhance
the workforce of the future and increase the number of post-secondary
graduates.
Many students rely on some form of financial aid whether it is
loans, scholarships or grants. Often, the amount of financial aid a
student receives can vary from institution to institution and can
impact a student's decision on where to attend college. Students and
their families report difficulty in deciphering college financial aid
award letters. This is because colleges write their own letters and use
their own terminology, abbreviations, and acronyms to describe
different types of aid, such as federal student loans. The terms they
use can be so confusing students may not even know certain forms of
financial aid are loans. This makes it hard for families to compare
financial aid offers among different schools. Congress and the
Department of Education can solve this problem with a uniform award
letter that will provide families the ability to effectively compare
all available options.
Tuition is not the only financial burden students are facing.
Students are continuously concerned with the dramatically increasing
cost of textbooks. In 2012, our association conducted a survey on
textbook costs and the findings were pretty dramatic. Almost 1,500
students responded to the survey and hundreds left comments about their
personal experiences with textbooks. One of the most important things
we found from this survey is that textbook cost is an issue affecting
students across the state. 94% of student respondents indicated the
price of textbooks and course materials impacts their ability to afford
college, with nearly one-third stating that textbook costs greatly
impacted their ability to fund their education. More than half of those
responding said they have simply chosen not to purchase a textbook at
all in order to save money. Congress must work together with all
stakeholders to find creative ways to cut the costs of these materials.
Another cost issue facing students within our system is under
regulated financial aid disbursement companies and banks, such as
Higher One. These financial institutions are getting rich off of
taxpayer dollars that are intended for students, and through unfair
fees, instead end up in the pockets of wealthy investors. There needs
to be a serious discussion in Congress and the Department of Education
to ensure students are not continually taken advantage of.
Passing the DREAM Act will allow America to remain an economic
leader. We must encourage the talent already residing in this country
to stay. This is especially true when it comes to children who have
grown up here and benefited from a strong K-12 education system. It is
imperative we encourage these students to continue their education and
training at one of America's many fine higher education institutions.
The best way to do this is to ensure they are not forced to pay a
higher tuition rate based solely on where they were born. Congress
should pass the DREAM Act and provide stability to a new generation of
leaders.
MSUSA has provided additional written testimony on each of these
issues as well as information on the effects of sequestration in
Minnesota. We have also provided student comments that have been
collected over the last year from student surveys, emails and other
outreach efforts. We are excited to work with this Subcommittee and the
full House Committee to ensure students voices are heard throughout
this process.
Sincerely,
Moriah Miles, State Chair,
Minnesota State University Student Association.
I. Federal Student Loan Programs and Student Debt
Unless Congress acts decisively, the interest rate on new federal
subsidized Stafford student loans will double from 3.4 percent to 6.8
percent on July 1, 2013. A 2007 college affordability plan gradually
reduced the interest rate from 6.8 percent to 3.4 percent through 2012,
when the rate was scheduled to revert to 6.8 percent. Last year, in the
midst of the election cycle, motivated primarily by sluggish economic
conditions, President Obama and Congress led a successful effort to
extend the low 3.4 percent rate for one more year.
Students have already suffered from a variety of aid restrictions
and limitations that have resulted in students contributing $4.6
billion to deficit reduction. Since the federal government makes 36
cents on every dollar loaned, increasing interest rates simply
increases the government's profits from students. We need to overhaul
the student loan system so it is equitable to all borrowers. Such a
comprehensive approach will take time and must provide ample
opportunity for participation by borrowers and the general public.
In Minnesota, state appropriation and federal aid have failed to
keep pace with the rising cost of college. As a result more students
than ever rely on student loans. The Project on Student Debt shows the
average borrower at a MnSCU University graduates with over $28,500 in
student loan debt.
And now, in the midst of more borrowing and continuous increases in
tuition, on July 1st the federal student loan interest rate will
double, from 3.4% to 6.8%, for over 300,000 Minnesota students.
If Congress does not take action, the average subsidized Stafford
loan borrower will have $2,800 in increased student loan debt over a
10-year repayment term. Those who borrow the maximum of $23,000 will
see their interest payments increase approximately $5,000 over a 10-
year repayment period and $11,000 over 20 years. These loans are
provided to almost eight million low and moderate-income students each
year and do not accumulate interest while the borrower is in school.
Heavy student loan debt carries crippling consequences for
students. High debt can affect where graduates live, the kind of
careers they pursue, when they start a family or whether they purchase
a home. We simply cannot afford to balance the budget on the back of
students.
In 2011 MSUSA completed a survey on Financial Literacy. Please view
the results here: http://www.msusa.org/vertical/sites/%7B8F60E86D-EE41-
444E-926B-0493E70B13F9%7D/uploads/Student--Financial--Literacy--
Report--(1).pdf
Also, in 2013 we completed a survey of part-time students at our
universities. Please view the final report here: http://www.msusa.org/
vertical/sites/%7B8F60E86D-EE41-444E-926B-0493E70B13F9%7D/uploads/
Part--Time--Survey--Report--.pdf
Student Comments on Debt
``I have two children currently attending college along with myself
attending part-time. I exhausted the money I had saved for my
children's college in the first two years of their attendance. I was
amazed at how expensive the tuition was and the associated fees. I wish
my paycheck increased at the same rate as the college tuition. * * * We
have given up family vacations, dinners out, and numerous other
activities. I just bought my 15 year old a prom dress at a consignment
store. She loves it * * * I just wish I could buy her a dress that was
new. Don't get me wrong, the sacrifices are worth my children having a
good quality education. I just wish it was not such a financial
struggle.''
Student, St. Cloud State University
``With working full-time and being a part-time student, it makes it
very difficult to pay the amount that I need to when payments are due.
This semester I got a grant for $112--that is nothing when tuition +
fees is $1570. * * * they claim I make enough to pay tuition, yet I do
have other bills to pay--I do have to eat, have a place to live, and I
need a car (and all the things that go with having a car) to get me to
school and work. None of those things are free/cheap * * * I do not
currently take out loan to pay my college expenses, but the first two
years of college I had to. I have gotten two paid off but I have my
largest loan left which is currently sitting at $16,000. I waited until
I was almost 25 to return to college so I could get help, and that
didn't help me! I want to know what it takes to get help for college.''
Student, Winona State University
``The rising cost of higher education has affected me dramatically.
I am a single mother of three children, and I pursued my education to
provide a better life for them. With the debt I accrued being so high,
I have no idea how or if I will ever be able to afford paying it off or
be able to move forward in life.''
Student, Winona State University
``I did not return to college until age 28 for fear of owing on
student loans. After completing three years of schooling from 2004-07 &
receiving my ADN (Associate Degree in Nursing) I was deeply in debt.
Fear of increasing my financial aid total (over $40,000 then)
originally kept me from finishing my BSN when I began pursuing it from
2007-09, and I instead accepted full-time work. After losing my job in
December 2011, I returned to school and am now on my 3rd consecutive
semester & will graduate in May. I want to go to grad school for my DNP
(Doctor's of Nursing Practice) but the cost may be prohibitive, as I
don't qualify for a Minnesota Grant (too old? too many credits? I can't
recall why) and the loans I will take will be unsubsidized. As a single
mother, things are even harder. I will note that grants are slanted
against ``non-traditional'' student like myself, who had some college
earlier in life, and then returned when I actually knew what I wanted
to do, then was turned down due to high credit load.''
Student, Minnesota State University Moorhead
``It's a constant, sickening pressure to know I will be in crushing
debt the rest of my life repaying these loans while I raise my daughter
by myself with very minimal child support. I fear I will have a harder
time in grad school since I'll have to work a lot to support us,
although I know from experience this is hard for me to do. I would do
better in school if I could work part time, but would hate to take out
loans to pay for rent again, as that's how I got in this mess in the
first place. So I will have a poorer academic experience than I would
like because I will be working more than I would like to, so I don't
have to add to my already-crushing student loans.''
Student, Minnesota State University Moorhead
``I have been emotionally distracted at times. I thought about
dropping out several times. It affects my future by maintaining a
steady fear of debt and additional fees, with the worry of never being
able to pay it off or get ahead in life.''
Student, Winona State University
Recommendations on Student Loan Debt and Interest Rates
With such little time left before July 1st, Congress should keep
interest rates low for students now, and during the reauthorization
process take a deeper look into long-term solutions. Keep Debt Low and
Repayment Manageable: Student debt levels are at record highs, as is
the default rate on student loans. High loan debt has serious economic
impacts on a graduate's ability to move forward in life, whether
purchasing a home, starting a family, or continuing their education.
Maintain Low Interest Rates on Student Loans: Unless
Congress and the President act decisively, the interest rate on new
subsidized Stafford student loans will double from 3.4 percent to 6.8
percent on July 1, 2013. That will drive up loan costs by $1,000 per
student, per loan, for over 7 million students
Strengthen Income-Based Repayment: IBR is an important
safety net for borrowers struggling to make their payments.
Unfortunately, far too few distressed borrowers are participating.
Right now, there are only approximately 1.1 million students enrolled
in IBR, while 5.4 million borrowers are currently late on their
payments.
II. Pell Grant
In 2010-11, about 153,000 students attending Minnesota institutions
received $513 million in Pell Grants. The growth of the Pell Grant
program has placed it in the budget crosshairs in Washington, D.C. It's
important to understand that the Pell program is not unsustainable. In
fact, it's doing exactly what it's supposed to do--meet the demand for
higher education. Someone once told me that if the economic slump was a
tornado, the Pell grant would be disaster relief. Eliminating thousands
of Minnesotans from the Pell grant program is yet another disastrous
financial hardship for students already struggling with increased
higher education costs. We need to do better than to give students a
choice between not attending school or assuming even greater debt.
To restore our economic health, Minnesota businesses need a labor
pool of unmatched skill and expertise. This requires a college
education for its citizens. A recent study from Georgetown University
showed that the Minnesota economy will need 70% of its workforce to
hold a post-secondary degree by 2018. Currently fewer than 45% of
Minnesotans hold a post-secondary degree. To remain economically
competitive, we must ensure higher education institutions are
accessible and affordable for the Minnesota workforce.
In 2011 while the US House was debating cuts to the Pell Grant
MSUSA in partnership with the Minnesota State College Student
Association (MSCSA) completed a petition with more than 4,000
signatures in opposition to the cuts. During this process we also
collected many student stories about how the Pell Grant has helped
them. Please view the full petition and comments here: http://
www.msusa.org/vertical/sites/%7B8F60E86D-EE41-444E-926B-
0493E70B13F9%7D/uploads/Pell--Petition--(1).pdf
Pell Grant Student Stories
``My husband and I found out while I was attending SCSU that we
were going to have our first child. As with children one of our
concerns was, how are we going to be able to afford me to go to school.
As the school progressed we were very worried about it and considered
the possibility of not continuing and getting a full time job. The next
time I did our FAFSA, I was surprised to see that we were eligible for
a Pell grant that would pay for my semesters in college. I have
continued my education and will be graduating Fall of 2013 with a
degree in Biology and a Chemistry minor. It has been nothing but
helpful for so many reasons!''
``I am a freshman student at St. Cloud State University, and I
receive no financial aid from my parents. I have to rely only on grants
and scholarships to pay for my college expenses. The Pell Grant is the
single largest source of funds I depend on for financial aid. I
consider it a lifeline because it covers nearly a third of my tuition.
Without the Pell Grant, I probably would not be able to afford college
unless I were to borrow against my future by taking out a loan.
According to my judgment, post-college success is directly connected to
college debt.
``I hope I can depend on the Pell Grant in the future for
supporting me the way it has thus far. By staying at SCSU, I believe I
am using the federal monies more efficiently because the grant can
cover a higher proportion of tuition expenses. Thank you, MSUSA, for
advocating on my behalf.''
Brody Hagemeier, Saint Cloud State University
``My name is Emalee Arends, and it would have been financially
difficult for me to attend college without the funds from the Pell
Grant. A couple years before college, my dad contracted a rare tick
virus that put him in the hospital in critical condition for three
months. My family was swarmed with thousands of dollars in doctor's
bills. With the help of the Pell Grant, we only had to pay around $4000
dollars for my first year of college! Paying for my second year of
college is going to be even more difficult. This past Christmas, we
found out that my dad has bone marrow cancer and kidney failure. He is
going through expensive dialysis and chemo treatment. Once again, my
family is hammered with doctor's bills. Now that I have used all my
scholarships from High School for the 2011-2012 school year, I am going
to have to take out a lot of loans to help cover my sophomore year and
future years of college. I will have little help from my parents
financially. Without help from the Pell Grant, I will be covered in
even more debt and student loans, and it will be extremely difficult to
survive financially while in college. Thank you for listening''
Sincerely, Emalee Arends
``I am in my last semester of my collegiate experience at
Metropolitan State University where I am double majoring in History and
Gender Studies. I also previously attended Winona State University for
about a year and a half before transferring to Metropolitan State
University. For the five years that I have been attending college I
have been receiving the Pell Grant as a part of my financial aid
package. Without the Pell Grant I would have had to taken out bigger
loans while I was attending Winona State University and would have had
to take out loans while attending Metropolitan State University.
``The Pell Grant has been a live saver in not having to rack up
huge student loans as most college students end up with after receiving
their post-secondary education. I believe that it would be huge mistake
to take away the Pell Grant for future post-secondary students that are
just trying to further their education. Everyone should have access to
a post-secondary education regardless of their economic background,
ethnicity, or sexuality. Please keep the Pell Grant!''
Elizabeth Pretzel, Metropolitan State University
``I am a full-time student in Moorhead, MN. I am attending school
to obtain my Bachelor's degree in photography. I am currently finishing
up my fifth year, and will have one more full year and summer semester
before I can graduate. School has been a long journey and very
difficult for me as I have two disabilities that make college harder
for me than the average student. I have been registered with disability
services since I started attending school. The Minnesota Pell-grants I
have received have made a huge impact on my ability to afford school
because I have been in school longer than four years solely because of
my health issues, and college is already very expensive. I am extremely
grateful for any and all pell-grants that have made it possible for me
as a Disabled student to get a four year college degree!''
Angela N. Buchanan, Minnesota State University-Moorhead
``The Pell Grant funded most of my education costs and allowed me
to attend college. It would have been difficult to get through without
it!! I am now a productive member of society, and I get to work in a
professional capacity and make informed decisions for a $200B+
corporation! Thanks!''
Aaron Hall, St.Cloud State University
``I grew up in a single parent home. When I was in sixth grade my
mother was diagnosed with Radiation Cancer from the Gulf War. At this
point in my life I was already thinking about college, however with the
change in my mother's health I started to question if college would be
an option for me. My mother was quick to talk to me about college. She
told me wanted me to go to college and get the degree she was never
able to get. My mother believed that money should never be a reason not
to go to college. She said that she wanted me to reach my potential and
have a chance to follow my dreams. I remember her talking to me about
my dreams to be a leader and helping others.
``Thanks to the Pell Grant I was able to attend college where I not
only excelled in my classes but was able to lead through
extracurricular activities and grow as a leader. Without the Pell Grant
I would have had to work full-time and only been able to go to school
part-time. I would have lost the leadership opportunities that college
has to offer. College offered me the opportunity to have hands on
learning and leadership development. Without these opportunities I
would not be the person I am today. Thank you.''
Sarah Shepard, Bemidji State University
III. Lender and Institution Requirements Relating to Education Loan
Program
Minnesota SELF Loans are better for many students--The Minnesota
SELF Loan annually provides 14,000 students with loans that have a 3.3%
current variable interest rate or a 7.25% fixed rate option. In
contrast, the federal PLUS loan interest rate is 7.9%.
The preferred lender requirement--Since 2010, the Higher Education
Opportunity Act of 2008 (34 CFR 682.212 and 682.401) requires colleges
to use a preferred lender process in order to provide students with
information on any non-federal student loans, including state student
loans. The preferred lender process is essentially a request for
proposals in which lenders submit to the schools information about the
terms and conditions of their loans. Schools that go through the
process have a checklist of several things they have to do in order to
select lenders.
Once a school has gone through the preferred lender process, they
can list lenders on their website and direct students to the list.
However, the list has to have more than one lender on it, even if the
school thinks only one lender has a program they want to recommend. In
addition, the order of lenders on a school's preferred lender list must
be rotated so one lender is not always the first one listed.
Many colleges choose not to go through this process--Many are wary
of the time and administrative costs of complying with these
requirements on an annual basis. As a result, most colleges are
prohibited from telling students about SELF Loans and are only able to
provide information on federal PLUS loans, which currently have a
higher interest rate. Also, only parents of undergraduate students with
good credit can be borrowers of federal PLUS loans. In some cases, a
student may be better equipped to repay the loan than a low-income or
unemployed parent.
Many students are not aware of the Minnesota SELF Loan and other
state education loan programs--Colleges who do not go through the
required process are prohibited from providing guidance and information
on state education loan programs, leaving students and parents to fend
for themselves. Minnesota SELF Loan volume decreased by $42.5 million
from 2009 to 2011 at Minnesota State Grant eligible colleges while
federal PLUS Loan volume increased by $42.4 million.
Minnesota is part of a coalition of state education loan
programs in 16 states with borrower-friendly
terms--
At least 80% of state education loan programs in these states share
the following terms:
interest rates are the same regardless of the type of
college students attend and fixed interest rates are available,
colleges must certify the loans,
applicants are informed about federal and state grants and
federal loans and
Compensation for loan staff is not based on loan volume.
Some states offer loan forgiveness and innovative beneficial
repayment options like:
loan forgiveness for on-time graduation (Texas B-on-Time
Loan and the Georgia Student Access Loan) and
Deferment for active duty military service and modified
payment plans for periods of economic hardship.
The 16 states are--Alaska, Connecticut, Georgia, Iowa, Kentucky,
Maine, Massachusetts, Minnesota, New Jersey, New York, North Carolina,
North Dakota, Rhode Island, South Carolina, Texas and Vermont.
MINNESOTA SELF LOAN--INTEREST RATES 2002 TO 2013
----------------------------------------------------------------------------------------------------------------
Year Quarter 1 Quarter 2 Quarter 3 Quarter 4
----------------------------------------------------------------------------------------------------------------
VARIABLE
2002........................ ................... 4.6% 4.6% 4.5%
2003........................ 4.3% 4.3% 4.2% 4.1%
2004........................ 4.2% 4.4% 4.6% 5.1%
2005........................ 5.6% 6.1% 6.6% 7.1%
2006........................ 7.5% 7.9% 7.9% 8.1%
2007........................ 7.7% 7.4% 7.4% 7.4%
2008........................ 7.0% 6.0% 5.8% 5.9%
2009........................ 5.7% 4.7% 4.3% 3.9%
2010........................ 3.8% 3.8% 3.9% 3.85%
2011........................ 3.8% 3.8% 3.8% 3.8%
2012........................ 4.0% 4.0% 3.5% 3.4%
2013........................ 3.3% ................... ................... ...................
----------------------------------------------------------------------------------------------------------------
FIXED
2010........................ ................... ................... 7.25% 7.25%
2011........................ 7.25% 7.25% 7.25% 7.25%
2012........................ 7.25% 7.25% 7.25% 7.25%
2013........................ 7.25% ................... ................... ...................
----------------------------------------------------------------------------------------------------------------
Recommendation on Lender and Institution Requirements Relating to
Education Loan Program
PUBLIC LAW 110--315
Higher Education Opportunity Act (Draft Revisions)
PART E--LENDER AND INSTITUTION REQUIREMENTS RELATING TO EDUCATION LOANS
[SEC. 151. DEFINITIONS]
------------------------------------------------------------------------
Existing Language Proposed Language
------------------------------------------------------------------------
(8) PREFERRED LENDER (8) PREFERRED LENDER
ARRANGEMENT.--The term ``preferred ARRANGEMENT.--The term ``preferred
lender arrangement''---- lender arrangement''----
(A) means an arrangement or (A) means an arrangement or
agreement between a lender and a agreement between a lender and a
covered institution or an covered institution or an
institution-affiliated institution-affiliated
organization of such covered organization of such covered
institution---- institution----
(i) under which a lender provides (i) under which a lender provides
or otherwise issues education or otherwise issues education
loans to the students attending loans to the students attending
such covered institution or the such covered institution or the
families of such students; and families of such students; and
(ii) that relates to such covered (ii) that relates to such covered
institution or such institution- institution or such institution-
affiliated organization affiliated organization
recommending, promoting, or recommending, promoting, or
endorsing the education loan endorsing the education loan
products of the lender; and products of the lender; and
(B) does not include---- (B) does not include----
(i) arrangements or agreements with (i) arrangements or agreements with
respect to loans under part D of respect to loans under part D of
title IV; or title IV; or
(ii) arrangements or agreements (ii) arrangements or agreements
with respect to loans that with respect to loans that
originate through the auction originate through the auction
pilot program under section pilot program under section
499(b). 499(b).; or
(iii) private education loans made
under a State-Based Loan Program.
(9) PRIVATE EDUCATION LOAN.---- (9) PRIVATE EDUCATION LOAN.----
The term ``private education loan'' The term ``private education loan''
has the meaning given the term in has the meaning given the term in
section 140 of the Truth in section 140 of the Truth in
Lending Act. Lending Act.
(10) STATE-BASED LOAN PROGRAM.--The
term ``State-based Loan Program''--
--
(A) means a private education loan
program that----
(i) is provided by a state agency,
state authority, or not for profit
corporation, separately or
jointly;
(ii) makes loans not funded,
insured or guaranteed by the
federal government; and
(iii) is authorized or established
by state statute and is fully or
partially funded by state funds or
tax-exempt indebtedness issued
pursuant to requirements of the
Internal Revenue Code (Title 26 of
the United States Code).
------------------------------------------------------------------------
IV. Uniform Award Letter
Students seeking to enroll in postsecondary education face a series
of hurdles, chief among them, how to pay for college. Many students
must rely on some form of financial aid whether it is loans,
scholarships, grants or some combination. Often, the amount of
financial aid a student receives can vary from institution to
institution and can impact a student's decision on where to attend
college. Students and their families report difficulty in deciphering
financial aid award letters from colleges because they write their own
letters and use their own terminology, abbreviations, and acronyms to
describe different types of aid, such as federal student loans. The
terms colleges use can be so confusing that students may not even know
that certain forms of financial aid are loans. This makes it hard for
families to compare financial aid offers among schools.
At a time when college costs continue to increase and the average
college senior graduates with $25,250 in student loan debt, we need to
make it easier for students and their families to understand financial
aid offers and exactly how much it will cost to attend college. And we
need to establish an apples-to-apples comparison of college costs so
that students can compare the offers they receive from different
institutions. This legislation would do just that by requiring
institutions to use a uniform financial aid award letter. The
legislation would require the Department of Education to work with
colleges, students, school guidance counselors, and consumer groups to
develop standard definitions that would be used in the award letters.
The legislation would also ensure the letters are useful to students by
requiring the letters to be consumer tested before being put into use.
Specifically, the Understanding the True Cost of College Act would:
Require institutions of higher education to use a uniform
financial aid award letter.
Call on the Department of Education to work with colleges,
consumer groups, students, and school guidance counselors to develop
standard definitions of various financial aid terms for use in the
uniform financial aid award letters.
Establish basic minimums of information that must be
included in the uniform financial aid award letters, such as: cost of
attendance; grant aid; the net amount a student is responsible for
paying after subtracting grant aid; work study assistance; eligible
amounts of federal student loans; expected federal loan monthly
repayment amounts; and disclosures related to private loans, front-
loading of grants, and treatment of scholarships.
Require the Department of Education to establish a process
to consumer test the uniform financial aid award letter and use the
results from the consumer testing in the final development of the
uniform financial aid award letter.
V. Textbooks
Textbook prices are rising four times faster than inflation,
leaving the average student now paying over $1,100 every year for
textbooks. After working to end many tricks the publishing industry
used to increase prices unfairly, MSUSA is fostering real competition
in the textbook market place by promoting more affordable options like
open textbooks and open education resources. In July, 2012 MSUSA
completed a survey of students at its seven universities. Please go to
this link to view the final report: http://www.msusa.org/vertical/
sites/%7B8F60E86D-EE41-444E-926B-0493E70B13F9%7D/uploads/Textbook--
Survey--Report.pdf
Student Comments on Textbooks:
``The cost of certain textbooks has caused me not to take
certain classes even though the material covered was of great interest
to me and would have filled requirements * * *''
``[Textbook cost] has had an impact on the courses I chose
later in my college career. When the classes became more of a choice
rather than required, I would sometimes choose a course over another
because of the cost of the text.''
``I cannot buy all my books at once, and some classes I
end up not buying all the books I need because books are so expensive.
I do not receive enough financial aid to cover textbook costs, so I pay
for my books out-of-pocket.''
``I try and locate and purchase the cheapest textbooks in
good condition. At the end of the semester, I sell my textbooks on eBay
or Amazon for the price I purchased them; this helps me recycle my
money so I can afford textbooks for the upcoming semester.''
``Most classes require purchasing a textbook, and
sometimes more than one. When a student gets deeper into their major,
books tend to be hard cover and cost a lot; hundreds of dollars. And
once the semester is over, one tries to return the book and get some
money back and you usually don't even get half the price you paid for
it.''
``I always end up borrowing extra money for books. If I
didn't have loan eligibility it would be very difficult to afford
books.''
``Textbooks usually influence the amount of credits I take
per semester because I add that into the amount I can afford [every
semester].''
``It would be much more cost effective to use other
resources like Amazon, but I often don't have the money to order them
in advance. I rely on financial aid to pay for these things. That,
coupled with the fact that overage doesn't get sent out until later in
the semester, means that I'm forced to pay the inflated prices at the
campus bookstore.''
``Sometimes I just can't find that extra $500 to buy
books. Most times, I hope the teacher put a book in reserve or
something. I had in the past made copies from other students who had
bought their book already.''
``This semester I chose not to buy two books because I
couldn't afford them. I ended up splitting the costs with a friend
because you need books whether you can afford them or not.''
``I have been in classes where I know of a few other
people in the class. We will sometimes pool our money together and just
buy 1 or 2 books for the group of us to use.''
``I can only afford so many textbooks so I don't buy them
right away and only buy the ones that are absolutely necessary.''
``Coming into my senior year, and the major I am in has
one book that I am supposed to purchase-will cost me over $250.''
``It seems that most instructors are becoming more aware
of how the cost of course materials impacts their students. I've
noticed that some instructors have worked hard to limit these costs.''
VI. Dream Act
The DREAM Act would enable children of undocumented immigrants to
pay resident in-state tuition at Minnesota state universities and
colleges and receive federal and private financial aid. In addition, it
would encourage those students without lawful immigration status to
seek out legal status at the soonest possible convenience.
In order for Minnesota to remain an economic leader, we must
encourage the talent already residing in the state to stay. This is
especially true when it comes to children who have grown up here and
benefited from the state's K-12 education system. It is imperative we
encourage these students to continue their education and training at
one of Minnesota's many fine higher education institutions. The best
way to do this is to ensure they are not forced to pay a higher tuition
rate based solely on where they were born.
This has been an important concern of MSUSA for many years. As you
know, 80% of students who attend a Minnesota State Colleges and
University institution stay in Minnesota to work upon graduation.
Considering this fact, we feel it is vital to encourage the type of
low-income, at-risk students this law would most benefit to stay in
Minnesota for their education. By offering them the same tuition rates
and financial aid opportunities many Minnesotans already receive, it
would ensure a state university or college education would remain
accessible for this important population. This increased accessibility
would translate into a larger, better-educated workforce in this state
for years to come.
While we understand there will be costs associated with the DREAM
Act, we believe they are far outweighed by the benefits. At a time when
Minnesota not only has to compete with other states for talent and
resources, but other countries as well, it is vital we retain our best
and brightest. Many of the students this law would benefit grew up in
the United States and consider this their home. We owe it to them and
the state to give them the same incentives and opportunity as everyone
else.
VII. Sequestration Effects in Minnesota
Federal supplemental grants to students (FSEOG)--In 2010-11, 33,100
undergraduates in Minnesota received $21.2 million in FSEOG awards.
Approximately $15.9 million (75 percent) of the money came from federal
funds and 25 percent came from institution matching funds.
Sequestration would mean fewer students would receive the grants, or
the awards would be smaller. The federal government is estimating 920
fewer students would receive FSEOG grants.
Federal Work-Study--In 2010-11, 15,000 postsecondary students in
Minnesota received $26.3 million in earnings from federal work-study
jobs. Approximately $19.7 million (75 percent) of the money came from
federal funds and 25 percent came from institution matching funds. The
federal government is estimating 500 fewer students would have Federal
Work-Study jobs.
Get Ready--The Office of Higher Education receives $3.1 million a
year in federal funding for the Get Ready/GEAR UP program. The program
works with approximately 4,700 low-income K12 students each year to
prepare them for education after high school. Assuming the reduction
would be about 5.3 percent in the 2013-14 academic year, the agency
would protect direct services to students, so purchases of supplies
would be reduced. The agency also would probably reduce or eliminate
opportunities for science, technology, engineering and math (STEM)
grants to schools that began this year. A 5.3 percent reduction would
be about $164,000.
College Access Challenge Grants--$1.5 million a year in federal
funds are used to foster activities to increase the number of low-
income students prepared for postsecondary success. The activities
include making software available to extend the efforts of high school
counselors at low-income schools and competitive grants to
organizations such as College Possible that work with students to
encourage and support college attendance. A 5.3 percent reduction would
be about $80,000. The agency would reduce expenditures on the
activities.
Improving Teacher Quality Program--$847,000 each year is used for
grants to about 16 institutions of higher education to provide teacher
professional development in core academic areas. The program's funding
was cut two years ago and the Office of Higher Education cut the amount
for each grant at that time. Reducing the amount available a second
time would mean smaller awards for each recipient or a reduction in the
number of recipients. A 5.3 percent reduction would be about $45,000.
BIOGRAPHY: MORIAH MILES, STATE CHAIR,
MINNESOTA STATE UNIVERSITY STUDENT ASSOCIATION
Moriah Miles was raised in Sioux Falls, SD and attended South
Dakota State University and later transferred to Minnesota State
University, Mankato. She is a senior majoring in International
Relations and serves as the State Chair of the Minnesota State
University Student Association (MSUSA). MSUSA is a 501(c)(3)
organization that advocates on behalf of the 75,000 students attending
one of the seven state universities in the Minnesota State Colleges and
University (MnSCU) system. She has previously served as the Vice
President of Minnesota State University, Mankato Student Association
and President of the Model United Nations at MSU-Mankato.
Moriah Miles has been a student leader throughout her time in
college. She lead a group of students on a 90 mile walk from Mankato to
the steps of the Minnesota Capitol in Saint Paul to meet with Governor
Dayton and highlight the importance of higher education funding. She
has testified to the state legislature numerous times as a student
representative on issues ranging from expanding internship
opportunities to increasing state grants for working part-time
students. Moriah also serves as the Chair of the Student Advisory
Council and works with students from all systems in Minnesota to advise
the Director of the Minnesota Office of Higher Education and ensure
student voices are heard at the highest levels of state government.
______
Chairwoman Foxx. Thank you very much.
I appreciate very much all of the comments that the
witnesses have made.
I would now recognize the chairman of the full committee,
Mr. Kline, for 5 minutes for any questions that he has.
Mr. Kline. Thank you, Madam Chair.
And thanks to the witnesses for being here today, and my
colleagues. A busy day here in the Capitol, with hearings
occurring all over the place, so I apologize for missing so
much of the hearing.
I want to thank Ms. Miles for making the trip. I know it
was a hardship to leave that balmy weather in Mankato. I
haven't seen the grass in my front yard since somewhere around
Thanksgiving, and I am sure you are about the same. But we very
much appreciate your testimony and your making the trip here
today.
Ms. McGuire, you mentioned, as others have, the importance
of simplifying federal student aid programs. It is a major goal
of mine--I can say of ours, as we move to reauthorize the
Higher Education Act. Have you got some specific suggestions
for simplifying the current system, and what would that mean to
students and taxpayers?
Ms. McGuire. Thank you so much for asking that question. I
think first of all, for students, as several of the panelists
suggested, simplifying the form itself for the application
would make a great deal of sense. So many students--
particularly low-income students--find the form daunting.
I should also point out that so many students who are from
families where they are the first ever to attend college don't
have any parent in the family who knows how to fill out the
form, and if students don't speak English in their households
the problem is more complex. Similarly, the requirement for
parental tax forms and other kinds of documentation adds to the
burden on students and at some point they just give up or they
don't do it and that is complex.
Secondly, putting a financial aid package together requires
so many different components and so many acronyms and so much
verbiage that it becomes very confusing for students and
families alike, and even for financial aid administrators.
Remember, on top of federal aid we not only have institutional
aid, but frequently a lot of state grants, as well.
Looking at the system in order to decide how to streamline
the processing so the student gets one number or two numbers
and not 10 numbers would enhance the ability of students to
understand both the debt they are taking on, the grants they
are receiving, and the amount they have to pay. Right now it is
an extremely confusing process for most.
Mr. Kline. Yes. Thank you. You make a good point about not
having a parent that has been through the process, but I can
imagine there are many, many, many, many parents who really
can't help the process. It is getting to be like doing your
taxes. You almost have to go have----
Ms. McGuire. That is absolutely true.
Mr. Kline. Thank you, again, very much.
And, Madam Chair, I yield back.
Chairwoman Foxx. Chairman yields back.
I now recognize the ranking member, Mr. Hinojosa, for 5
minutes.
Mr. Hinojosa. Thank you.
Ms. Miles, I was very impressed with your statement----
Ms. Miles. Thank you.
Mr. Hinojosa [continuing]. And I congratulate you for
having such an important position, representing thousands and
thousands of students.
Ms. Miles. Thank you.
Mr. Hinojosa. In your testimony you indicate that the Ryan
budget proposal would devastate funding for students by
freezing the maximum Pell Grant for 10 years, eliminating $86
billion in mandatory funding for Pell Grants, allowing the
interest rates to double on subsidized loans and eliminating
the in-school interest subsidy. How will these proposed cuts to
Pell Grants affect students in your state and across the
country, and how will it affect student debt levels in your
state and across the country?
Ms. Miles. Thank you very much.
The research my organization has done on Pell has shown
that the students that receive Pell rely on that to attend an
institution of higher education. Many of them reported to us
that without the Pell Grant they would not attend higher
education.
And so a cut to the Pell Grant program would be extremely
detrimental to the students that need education. They are the
students that are driven to find a way to make it into college,
and if we don't provide that Pell Grant we open this door to
opportunity where they can go to other private loan options,
which, if you, very well aware of the student debt in our
nation, is not the best option for our students, and frankly,
in my opinion, if the Pell Grant is available they should
receive the Pell Grant.
Mr. Hinojosa. What I hear you say is that affordability and
accessibility would be shut out for many, many students, and
that is exactly what the chancellors and the presidents of
universities told me during the period that I was chairman of
this subcommittee----
Ms. Miles. Yes, sir.
Mr. Hinojosa [continuing]. And I agree with you.
Thus, in your expert testimony you urge Congress to pass
the federal DREAM Act. Can you tell us why you believe it is
vitally important that Congress pass that particular initiative
which is known as the DREAM Act?
Ms. Miles. Yes, sir.
I am sorry, was there a question? I am sorry. I didn't hear
you.
Mr. Hinojosa. Yes, the question was tell my why you believe
it is vitally important.
Ms. Miles. Why it is vitally important? Access and
affordability, again, and I am going to go back to that. We
have students in our state that need this DREAM Act. In fact,
they filled up an entire hearing room a few weeks ago asking
for our state to also find a way to support this.
We need to support the workforce of our future, and this
DREAM Act allows those students that want to be a part of that
to become a part of that and create that opportunity for them.
By not allowing the DREAM Act to go through, I myself have
identified many people that want to be a part of creating a
better economic future for this country but won't be allowed to
take that opportunity.
Mr. Hinojosa. I agree with you.
I want to ask the next question to Terry W. Hartle.
In your expert opinion, what are the student demographics
of our nation's higher education system and how have they
changed since President Lyndon Johnson signed the Higher
Education Act into law?
Mr. Hartle. Thank you for the question, Congressman. The
biggest change, I think, would be that when the Higher
Education Act was created we had a modest enrollment in higher
education--8 million students, most of whom were what we would
call traditional students--18 to 22 years old, financially
dependent on their parents, attending full-time, living in
college housing.
Today, those students are less than 15 percent of all
college and university enrollments. So we have a much more
diverse, much more nontraditional student population.
In addition, the population has gotten much larger. At the
present time we have 21 million students enrolled in higher
education, the highest it has ever been. And that compares
for--just to put it in context, there are only 15 million
students in high school in the United States.
We have 21 million students in college, entirely
attributable to the propensity of adults to seek further post-
secondary education and training. And designing programs that
meets the need of the huge array of students attending that
vast number of institutions is an increasingly complicated
task.
Mr. Hinojosa. In your statement you pointed out that the
federal government has few tools available to ensure states
continue to play their historic role in making higher ed
available at a modest price. And you also said that there is a
real question as to whether the federal government, acting
virtually alone in the student aid policy sphere, has the
resources to ensure meaningful access to college.
So in your opinion, what can the federal government do to
ensure that the states do their part?
Mr. Hartle. I think that is a very challenging question
because federal student aid funds--the beauty of them is they
go directly to the students and let the students decide where
to spend them. The drawback is they do not go through state
governments so you find it very difficult to condition what
state governments have to do for their citizens to get those
funds.
I think the strength of student aid, the fact that it goes
directly to the students and it is so strong on student choice,
undermines the ability to hold the fire--the feet--states' feet
to the fire on this particular issue. I think the increases in
federal student aid that Congress has provided in the last 5
years have helped insulate many students and families from
these huge tuition increases, but the chance to really force
the states to recognize and to honor the obligations they have
is very limited from the federal policy direction.
Mr. Hinojosa. We will take your considerations and your
statement into consideration as we are working on this
reauthorization.
Thank you.
Chairwoman Foxx. Thank you, Mr. Hinojosa.
Mr. Walberg, you are recognized for 5 minutes.
Mr. Walberg. Thank you, Madam Chairman.
Let me just ask a question directly that may be strange in
this setting, but do too many students go to college or
university right now? And maybe added to that, should we set
higher entrance requirements? What are your thoughts briefly on
that?
Ms. McGuire. If I may answer that?
Mr. Walberg. Sure.
Ms. McGuire. First of all, I think it is imperative in the
knowledge economy this nation has to make sure that every
student who wants to and is able to go to college really can.
Most of the jobs that are begging right now are jobs that do
require post-secondary education, if not a baccalaureate or
even an advanced degree.
So in order for this nation to remain productive, to
support innovation, to support the future goals that we have,
the idea of college access that must not be repressed. There
are not too many students going to college; there are a lot of
students who need a great deal of support.
Mr. Walberg. Let me ask, at Trinity what is your
remediation rate for freshmen entering students?
Ms. McGuire. What is our remediation?
Mr. Walberg. Remediation.
Ms. McGuire. Well, we don't call it remediation; we call it
education.
Mr. Walberg. Well, whatever you call it.
Ms. McGuire. And our students come in at varying education
levels and our----
Mr. Walberg. Why?
Ms. McGuire [continuing]. Goal is to bring them up to----
Mr. Walberg. Why?
Ms. McGuire [continuing]. The ability to do--pardon me?
Mr. Walberg. Why?
Ms. McGuire. Well, because half of them come from public
schools that are not up to snuff, and that is----
Mr. Walberg. Okay.
Ms. McGuire [continuing]. Another whole discussion, so----
Mr. Walberg. Let me go on with my next----
Ms. McGuire. But our goal is to educate them and to----
Mr. Walberg. Right.
Ms. McGuire [continuing]. Have them achieve college.
Mr. Walberg. I appreciate that and it is a great work you
do.
I am concerned about the fact that there is so much
remediation that goes on at our colleges, universities, our
community colleges. We push kids to dream about education in
the long run. That is great.
But let's make sure that we have the students pushed in
understanding that it takes academic qualifications and it
takes excellence to continue on this world, and let's not just
manufacture students. Let me go on.
Last week I was fortunate enough to host Chairwoman Foxx at
a field hearing in Monroe, Michigan in my district in which we
highlighted how partnerships with employers and educational
entities are making significant positive result impacts in
getting education and ultimately jobs for students in all
different fields.
One of the witnesses was Mr. Douglas Levy, who is the
director of financial aid at Macomb Community College. He
commented on the need to address fraud in the Pell Grant
system.
In the 2007-2008 academic year the cost of the Pell Grant
program was roughly $14 billion and used by 6 million
Americans. Just 3 years later that program has swelled to $31
billion and used by 9.6 billion.
Many of these students need this funding, granted. However,
I have numerous examples of these funds by misspent on areas
other than educational expenses, including keeping foreclosures
from happening.
My first question would be to Mr. Madzelan: How can we
ensure that we keep this vital program strong and healthy and
intact for those who use it for its intended purpose, and
beyond that, how do we do that while reducing intentional fraud
or misuse of the program?
Mr. Madzelan. Well, I think one of the beauties of the
federal financial aid programs, as Terry Hartle mentioned about
providing the assistance, the vouchers directly to students,
but coupled that with there is always a financial aid
administrator between the federal government and the student's
money. So we do have, you know, internal controls, if you will,
built in.
I think where challenges are coming forward in the near
term is around distance education, which I think we are all
supportive of, be we tend to kind of move away from that
notion, with respect to federal aid, of having, you know, a
real person standing between the federal government's dollar
and the individual students.
I know just before I left the department our inspector
general became very concerned about that. The department
indicated it would be working on some--perhaps pursuing some
regulatory solutions. I would be, you know, interested hearing
what, you know, those ideas are, but I really don't have, you
know, a solution right now how to better protect the integrity
of the program.
Mr. Walberg. Mr. Hartle?
Mr. Hartle. Let me simply begin by saying fraud has
absolutely no place in federal student aid programs, and where
there are examples of it we need to identify what the systemic
problems are and to root them out. One of the challenges
institutions face in federal student aid policy is that federal
student aid is an entitlement right to the student, and we have
very limited authority to deny those rights to students because
the money goes to the student.
I know of many institutions, including, particularly,
community colleges, that would prefer that their students not
borrow money to finance their education because they are afraid
that the students won't complete the education, the students
will get in over their head with debt and will end up with an
obligation they might not be able to repay. But institutional
authority to deny students the right to borrow is very limited.
So that is sort of the tradeoff that I think the committee
will have to wrestle with is how much authority you would like
to put in the hands of people like the financial aid
administrator at Macomb to interfere or to limit student
entitlement rights that Congress has established.
Personally, I think it would be a very good idea if
institutions had some discretionary authority to deny
certification for loan eligibility to broad groups of students.
Not talking here about by race, or sex, or gender, or anything
like that; simply talking about broad groups of students--
perhaps students in certain programs that are not likely to
result in high earnings, perhaps students that need a
substantial amount of developmental or remedial education
before they will be ready to do college-level work. Those sorts
of situations.
Mr. Walberg. That would be super----
Chairwoman Foxx. Thank----
Mr. Walberg. Correct.
Thank you, Madam Chairman.
Chairwoman Foxx. Thank you both.
Ms. Bonamici?
Ms. Bonamici. Thank you very much, Chair Foxx and Ranking
Member Hinojosa, for holding this important hearing, and to the
panel, especially Ms. Miles, for bringing that very important
student voice to the conversation.
President McGuire, thank you so much for raising the issue
of how we measure success. I share your concern about assessing
a return on investment by looking at the salaries of graduates.
As you rightly point out, worthwhile employment is often found
in the service or nonprofit or public sectors.
So if, as you suggest, assessing the return on investment
based on salaries is inappropriate, how should we be
determining which colleges and universities offer a good
investment, or is that the wrong question?
Ms. McGuire. I don't think that is the wrong question at
all, but I think the criteria must be broader than what the
starting salaries are of recent graduates.
At Trinity, 95 percent of our graduates from the last 10
years are employed or have gone on to graduate school. Many
recent graduates go on and don't work for quite some time or
work in part-time jobs because they are earning master's
degrees, or law degrees, or other advanced degrees. And they
will eventually, in fact, return much higher salaries.
I represent an institution that is a historic women's
college, and we know that many women have to interrupt their
careers in order to raise families and care for children. They
should not be penalized, nor should institutions with large
populations of female students be penalized, both because of
the kinds of careers they choose or the fact that they stop out
to care for families. Women are also caught in the middle,
frequently, with caring for elder parents, as well as children,
and so forth.
I think each institution that is credible does, in fact, a
good deal of research on satisfaction of graduates,
satisfaction of current students. There is a tremendous amount
of data that we already collect and that we already use
internally, and I think to be able to educate both policymakers
and others about how we know the success of our students and
how we, in fact, represent that to the public is something that
we should share.
Ms. Bonamici. Terrific. Thank you very much. We need to
keep that in mind as we go forward.
I happen to be a graduate of a community college. Went to
community college for many reasons. Had a great program I was
interested in, and of course, affordable tuition--I was working
my way through. So I was fortunate enough to be able to
transfer most of my credits to the university and finish in 4
years, and that experience really helped me understand that
community colleges play a critical role.
I am very concerned, Mr. Madzelan, in your testimony you
state that only one-quarter of Pell Grant recipients complete a
bachelor's degree, and the numbers for completion of an
associate's or certificate program are even lower.
And, Dr. Hartle, you testified that 85 percent of students
today could be considered nontraditional, and many of those
students earn their degrees at community colleges.
So I am concerned--of course access is critical, but also
about completion. How much of the completion issue is
attributable to financial aid and tuition challenges? Is that
the main reason for non-completion?
And I will start maybe with Mr. Hartle and Mr. Madzelan but
also want to ask the other two witnesses, as well.
Mr. Hartle. Well, thank you for the question.
The goals of federal higher education policy have shifted.
For most of the last 50 years the principal goal has been
access. In the last couple of years there have been a number of
calls to make completion or graduation or attainment a coequal
goal of federal higher education policy.
That is a very desirable goal. We want people to finish
with their degrees, or certificates, or whatever it is they
started out to achieve--to realize. It is a complicated issue
for multiple reasons.
As President McGuire indicated, the first reason is simply
that the federal government can't accurately count graduates.
If one of her students transfers, say, to Georgetown or G.W.,
not that they would ever want to do that, but if they did they
would be counted as a dropout to Trinity University. If one of
her graduates, as many do, takes longer than 6 years to finish
their degree they are immediately counted as a dropout.
So I think one thing that would be very helpful would be if
we could figure out a way to count accurately completion rates.
I think completion is complicated for a second reason,
because there is clearly an institutional responsibility and
clearly a student responsibility. Everyone knows people who
went to college or graduate school and didn't finish because
they couldn't or wouldn't do the work.
There are also questions where individuals go to college
and the institution doesn't provide the courses for them in a
timely fashion and inadvertently puts up roadblocks to their
finishing their education. And we need to address both sides of
that equation.
Ms. Bonamici. Right. Right. And because my time is about to
expire, what I am interested in is how many of the non-
completion is attributable to the cost or because of those
other factors that you mentioned.
Anybody else in the----
Mr. Madzelan. Well, I think it is very difficult to figure
out why someone has failed to complete. We do have data
limitations at the department. The numbers that I referenced in
my testimony are based on survey information that is conducted
by the department's National Center for Education Statistics,
and that is by, you know, design and budget, just periodic
surveys of individual students.
I think if there is a way to begin to, and I think there
is, I think the department has begun moving in this direction,
to begin to collect some completions information through
program administration records. For example, the Pell Grant
program, to have colleges tell the department when a student is
no longer a Pell recipient. Why? Did they complete the program?
Did they just leave? And once we begin to get more census
rather than survey data I think we can move in that direction.
Ms. McGuire. May I just say, we track every student who
stops out, and money is the number one reason why students must
stop out. Eventually they come back.
Ms. Bonamici. Thank you. My time is----
Ms. Miles. I agree with that.
Ms. Bonamici. Thank you.
Chairwoman Foxx. Thank you all.
I now recognize Mr. Petri, for 5 minutes.
Mr. Petri. Madam Chairman, thank you very much for holding
this important hearing.
And thank the witnesses, I would like to thank the
witnesses.
I would make a small statement and then a question, if I
could. One point that was mentioned repeatedly in the
witnesses' testimony is the importance of simplicity. As
everyone knows and as Mr. Hartle highlighted very well in his
testimony, our financial aid system has evolved over the years,
often with very good intentions, into something that is
extraordinarily complicated for students and even for
administrators to negotiate.
Regarding student loans in particular, despite all of the
repayment options, deferments, forbearances, and other
protections we have put in place over time, over 13 percent of
students will default on their federal student loans within 3
years of entering repayment, often unmanageable amounts of
debt. This is often financially ruinous for those students and
is costly for the government.
While certainly not a solution to all of the problems we
face with student loans, I have always felt that simple,
universal, income-based repayment has the potential to
accomplish the goals of the various protections we have
created, but in a way that is intuitive and automatic for
borrowers and that doesn't force them to navigate our current
labyrinth of paperwork and bureaucracy. Many students will fail
to navigate our current bureaucracy and will fall to default
despite the fact that they could have repaid their loans under
a system that was more responsive.
So, Mr. Hartle, your testimony provided a helpful history
of the federal financial aid programs based on your extensive
experience in this area. Recognizing, as you mentioned in your
testimony, that simplification is always more complicated than
it seems, I was hoping you could share your thoughts on the
potential of universal, income-based repayment, paid through
the employer withholding system, to simplify and improve our
student repayment system, as is currently done in Great
Britain, Australia, and New Zealand.
Mr. Hartle. Thank you for the question, Congressman.
Full disclosure, the American Council on Education a couple
weeks ago held a meeting, basically, a conference to talk about
Congressman Petri's proposal for universal, income-based
repayment with a wage withholding done by employers as a way to
facilitate student loan repayment. We brought several observers
from other countries who had firsthand experience in designing
and implementing income-based repayment plans and their opinion
seemed to be that the proposal you have put forward is the most
complete and thoughtful plan that they have seen.
And certainly we would hope that the committee would look
very, very carefully at the ideas you have put forward. You
have obviously been working on income-contingent repayment for
25 years, and I think, frankly, we have made progress, we have
put it in place, but this is the most complete and thorough
proposal we will ever have.
Two points: One, it very much does move in the direction of
simplification because it puts students in one repayment plan;
it limits the explanations that students have to receive. It is
a very big step in the direction of simplification.
On the other hand, it means that a number of repayment
options that students currently have would disappear. So it
would reduce student choice, but it would greatly simplify
their repayment process at least in part because they would no
longer have to write checks to the Department of Education
every month.
Second, I think there are three central issues that need to
be addressed with federal student loans: the over-borrowing by
some students, the extent to which future earnings are burdened
by student loans, and defaults.
I think your proposal fixes the issues related to defaults
and burden. Those issues go away, largely, under your proposal.
On the other hand, your proposal could become an incentive to
over-borrowing.
And so we could fix two problems and make one problem
worse. No one wants to do that.
I think given the issues related to unintended consequences
we need to be very mindful of what those might be, but yours is
a very thoughtful proposal, and I look forward, as does my
staff and the other higher education organizations, of working
with you to continue to refine this going forward.
Chairwoman Foxx. Thank you.
Mr. Holt, you are recognized for 5 minutes.
Mr. Holt. I thank the chair.
I think I have heard some people say in effect this morning
that one of the problems with the student loan program is that
too many people might use it. I go back to why we have it,
which is to encourage more students to get higher education for
the sake of our society at large, as well as for their
individual sakes.
Mr. Hartle, I thought you said that simplifying FAFSA would
encourage more people--would bring more people into the student
loan programs. Did I hear you say that? And then I think you
said further, ``and that might be a problem.''
Mr. Hartle. If we eliminate questions from the FAFSA we
undoubtedly make more people eligible to receive financial aid,
so you run the possibility that by asking fewer questions you
simply increase eligibility. That could have significant cost
implications depending on what questions you eliminated.
Also, from a complexity point of view, if you----
Mr. Holt. Well, let me actually pursue that, then. Have we
as a society reached the point where each additional student
does not contribute more to the economy and society than she or
he takes from the economy? In other words, have we reached the
ceiling at which we want students in higher education?
Mr. Hartle. Absolutely not. As President McGuire said, we
want to do everything we can to encourage that----
Mr. Holt. And let me ask President McGuire to address that
same point, please.
Ms. McGuire. Yes. I would like to address that.
In fact, we could have as many as 20 or 30 million more
students if we look to achieve the national goal to have 60
percent degree attainment by the year 2020. Now, that is
probably an impossible number, but the fact of the matter is
that for the needs of this nation in terms of the kind of work
that we expect people to do now and in the future and the ways
we expect them to participate in our community and economy, we
need as many people educated in post-secondary programs as
possible.
And let me just point out one career field for example:
health care. Health care reform is going to put 30 million more
people in the system. We need millions more health care workers
educated and they come from our colleges and universities.
Mr. Holt. So are you saying that the expenses of a program
such as this are outweighed by the economic benefits that we
get of higher education?
Ms. McGuire. Well, sure, because you will improve the
earning power, and therefore the tax returns that the
government----
Mr. Holt. So our goal should not be somehow to tighten
things up. Obviously there is no room for fraud. It is
unadvisable to entice students to get in over their head. But
our goal here should not be to try to somehow shrink or
constrain the----
Ms. McGuire. Absolutely not.
Mr. Holt. Well, thank you.
Ms. Miles. Representative Holt, if I may?
Mr. Holt. Yes, Ms. Miles. And I would like to join the
others in commending you, President McGuire, and the other
witnesses for some really articulate, persuasive testimony this
morning. Yes, please.
Ms. Miles. Great. Thank you.
Yes, and I would also like to comment that our schools
aren't manufacturing students; we are graduating global
citizens. And we have done studies within Minnesota with our
communities and one of our community colleges actually found
for every dollar that they put into their students they had
nearly $14 come back to them, and that return was unbelievable.
We are building communities, not just graduating students with
debt.
Mr. Holt. Thank you.
We have often talked about something called an academic
year, which is, you know, maybe September to May. Does that
have any meaning, President McGuire, does that have any meaning
anymore? And I ask with a particular piece of legislation in
mind. I have had legislation to reinstate the year-round Pell
Grants----
Ms. McGuire. Thank you.
Mr. Holt [continuing]. Year-round meaning it would be
available in the summer as well as during the so-called
academic year.
Ms. McGuire. I have students right now who need to be
enrolled full-time this summer in our occupational therapy
assistant program and they can't have Pell Grants. We are going
to pick up the cost of their staying in school for the summer
but we can't do that indefinitely.
Most of my students are nontraditional by one definition or
another. They would complete their degrees more quickly and
enter their workforce more quickly if they could be funded for
12 months. We operate year-round. We do not take the summer
off.
Mr. Holt. Okay. You spoke a few moments ago about health
care as an area of need. I would say that teachers of science,
and foreign language, and so forth are also areas of need.
We have had a program known as the TEACH Grants to help
with tuition for students. Is it appropriate to use federal
grants and federal student loans to direct students, to
encourage students into areas of general societal need?
Ms. McGuire. Oh, absolutely. I think it is very appropriate
for Congress and the White House and colleges to work together
to identify what are the workforce areas that we really do need
students to enter, and that benefits everybody. That helps
students make good choices also.
Mr. Holt. Ms. Miles----
Chairwoman Foxx. Thank you.
Mr. Holt. Oh, I can see my time is up. I----
Chairwoman Foxx. Thank you, Mr. Holt.
I now recognize Mrs. Brooks, for 5 minutes.
Mrs. Brooks. Thank you, Madam Chairman.
I am a--and I apologize that I wasn't here earlier, but I
am a former senior administrator at Ivy Tech Community College
and was general counsel for the college. But many, many years
ago worked as a Work-Study student in a student financial aid
office and know the tremendous burdens that a lot of student
financial aid offices are under in processing student loans and
then advising student--those needing student loans.
And I am going to shift perspectives a bit from what I
think has been talked about. You know, the rising cost of
college tuition, I think, is also a huge reason why we have
such a tremendous need for greater student loans.
And I am curious as to what your perspectives are on how
colleges can begin to really, you know, at least, you know,
level off the rising costs of college tuition. College tuition
rates and the expenses have just skyrocketed, which I think is
causing part of the student loan problem, as well. And so I am
curious what the panel's thoughts are on how we can begin to
reduce college costs.
Ms. McGuire. I will start by addressing that, and let me
point out that at Trinity, where our tuition is $20,500, which
is about $10,000 less than the next private university in D.C.,
we discount tuition by 40 percent for most students. And in
fact, being our own grant provider also helps us repress
tuition because we understand that if we grow tuition too much
we just have to return more.
I think it is very possible to have very sensible tuition.
We do, however, have to fund certain things. We have to fund
technology; we have to fund infrastructure; we have to fund the
cost of regulation, which is considerable; and we have to be
able to continue to fund the financial aid obligations we have
to students. In fact, financial aid obligations are a big part
of our rising costs, so it is a chicken and egg problem.
Having said that, I think incentives for institutions to
find ways to reduce costs for some of the operating costs like
infrastructure, like technology are ways to work on this
problem.
Mrs. Brooks. Thank you.
Ms. Miles. Congresswoman, if I may, for us it is been a
disinvestment by our state. For the past 10 years consecutively
we have been slashed. Our higher ed funding has been slashed
consecutively for the past decade. That is the number one
clearly attributed issue.
Aside from that, we do need federal regulation in specific
areas to help keep down other costs. It is often forgotten that
the cost of higher education is just not our tuition and fees.
It is our textbooks; it is our cost of living; it is the
interest that we will accrue after we graduate, and many other
things.
Mrs. Brooks. Thank you.
Mr. Hartle. Thank you for the question.
I think the issue of the price of higher education--what
students actually pay--is a complex, multifaceted issue that we
have been wrestling with for a long time. The biggest
consideration for most students and families is the question of
state support for public higher education. When states decide
to cut funding for higher education they often decide to let
tuition go up simply as a revenue replacement measure for the
institution.
Most public colleges and universities don't set their own
tuition. It is set by a state board of higher education or by
the state legislature. So the tuition is--the control of the
budget is oftentimes the public institutions, not in the hands
of the institution.
Institutions like Trinity University Washington, President
McGuire's institution, are extraordinarily frugal. My guess is
that President McGuire would be prepared to tell you where
every single dollar in her budget goes right now because they
have to meet a payroll every month, they have to balance their
books every month, they have to maintain their buildings, and
they can only do that by getting students to enroll and
students who are willing to pay what they are charging.
We may be seeing a surge in technology that will provide
ways to reduce the cost of post-secondary education for many
students. There has been a great deal of talk about the new
learning modalities that are coming online and that are being
explored. These may well open up the doors to students to
pursue post-secondary education at less cost.
There is a great deal of interest in prior learning
assessment--giving students academic credit for education,
training, and skills that they have picked up outside the
classroom setting. And this, too, holds some possibility for
minimizing tuition increases.
But I think the single biggest thing that we could do to
help students and families finance higher education is simply
to encourage states to play the role that they have always
played of adequately supporting public colleges and
universities, including such places as Ivy Tech, which is an
extraordinarily distinguished 2-year institution in Indiana.
Mrs. Brooks. Well, thank you very much. I see that my time
is up.
Thank you.
Chairwoman Foxx. Thank you very much.
I now would recognize Mrs. Davis, for 5 minutes.
Mrs. Davis. Thank you. Thank you, Madam Chair.
And thank you to all of you for being here. I know that you
have already addressed the issue that is certainly of great
concern to all of us, that it is one thing to get students
enrolled in the university; it is another to have them leave
with a diploma in their hand. And you have addressed the issue
of how do we count, and how do we really evaluate the students
who aren't able to finish, particularly those students who have
Pell Grants?
Do you think there is any role that the federal government
might have in trying to either focus better on those students
who do go to school with Pell Grants, or that the information
students receive in terms of completion rates at school,
particularly around Pell Grants, should be more apparent? I
understand what you were saying, it is hard to count them. So
how do you provide that information if, in fact, it may be that
it is great and maybe sound more transparent, but in the end it
really doesn't provide the kind of information that students
need.
Is there a federal role in here?
Ms. McGuire. If I may answer that, first of all, don't ever
come up with a solution when you don't understand what the real
nature of the problem is. A lot of people have studied the
issue of completion rates for low-income students. As a
practitioner of this at Trinity with a very high-need, low-
income population, I can tell you that money is the number one
reason, and we studied the students who receive more financial
support--they tend to do better; they tend to complete more on
time.
Students do swirl in higher education today, which means
they attend multiple institutions and they don't necessarily
think about the federal timetable of 4-to 6-year completion. We
have many young mothers who start at age 18 or 19 with several
children of their own, they might stop out in their early 20s
to go to work to take care of their kids and come back when
they are 29 or 30 or 35 to continue their education. They are
swirling through college all the time.
We have students who are enrolled at Trinity and also
enrolled at public institutions nearby so they can amass
credits more quickly, so they are actually enrolling at
multiple institutions at the same time. This is not unusual.
Family issues, medical issues--with low-income students we
see tremendous medical and health care issues. The college
health center is the first time many of my students have had
primary care on a routine basis, and health issues can impede
their time to completion.
So there are a lot of things that can be done. I am not
sure that it is a federal role.
What I would urge is that the federal government not step
in to impose measures that would be inappropriate and would add
to the burden of the students, who already have so many burdens
on their way to completing their degrees.
Mr. Hartle. If I may pick up on President McGuire's point,
I would simply mention that there is a pretty clear
relationship between the extent to which students are prepared
for college and their likelihood of completing. There are an
awful lot of students who are sort of on the bubble and who may
complete and who may not complete, and the question is the sort
of services and assistance that they get or don't get that
helps them get through that door.
Institutions like President McGuire's are involved in a lot
of labor-intensive activities to help students and they have
evolved pretty good ways to do this, and I would think that the
committee might benefit from talking to a number of campuses
like President McGuire's to find out the lessons that they
would have based on the success that they have experienced.
Mrs. Davis. Yes, I appreciate that. And that is certainly
why you are here. And I greatly appreciate what you are saying
about that.
But I also wondered, I guess, shifting to the kinds of
information that students receive as they are beginning to look
at colleges and institutions across the country. Stanford had a
study recently that indicated that providing students with
more--and--better-organized information was helpful to students
who ordinarily might not even aspire to particular schools
because they just haven't been able to get that information in
a clear and concise way. And I know there is really no totally
concise way to do this, but they actually felt in their study
that it made a difference and it wasn't a huge cost to
providing information in that way, and they did a control
group.
Ms. Miles, are you aware of that study at Stanford, and any
other thoughts that you might have?
Ms. Miles. I am not aware of that specific study, no,
ma'am. But the idea that comes to mind is something that was
included in my testimony, and that is the financial aid award
letter.
I can use myself as an example. I had no idea where to
start with financial aid, and I grew up in Sioux Falls, South
Dakota. Many of my friends were going to South Dakota State
University so I just went there.
When I found out that wasn't the correct fit for my
academic needs I found other programs online and found
Minnesota State Mankato. I had this illusion in my mind that if
I left my state, if I left that institution, anywhere else
would be more expensive, and that was not the--that is not what
happened.
And so I could have gone to a cheaper institution that
better fit my needs and my academic interests if I would have
known.
Mrs. Davis. Yes. And you went online and you were able to
get that information.
I mean, there are tools available--College Navigator,
Tuition Calculator. Is there anything else you would suggest
that we might focus on that would be a role to make sure that
that kind of information is out there? So, just throwing it out
for you. Thank you.
Mr. Hartle. Well, I think the point that Ms. Miles made----
Chairwoman Foxx. Mr. Hartle, I am sorry.
Mr. Hartle. Sorry.
Chairwoman Foxx. Mrs. Davis' time is up. Thank you. I
appreciate it. But please submit any responses that you have
for the record. We would appreciate it very much.
I am now going to recognize myself for 5 minutes, and I
realize--first of all, I want to say--and I will say this again
in my closing remarks--I really do appreciate the panel and all
the great information that you have shared with us today. I
think this has been very, very useful to us.
Ms. McGuire, you have talked a lot and I particularly
appreciate your talking about be careful we know what the
problem is before we decide what the solution is. But if you
would fairly quickly, talk a little bit about some of the
things that you do that you might not have mentioned already in
terms of promoting successful outcomes for your students.
How closely do you look at completion rates, job placement
rates? What kind of support services are you providing on
campus?
And I do have one other question I would like to ask, so if
you could be succinct----
Ms. McGuire. Sure.
Chairwoman Foxx [continuing]. I would appreciate it.
Ms. McGuire. Very quickly, we provide intensive first-year
experience with learning communities for every student,
evaluation of what are the right math and writing courses they
need to take, and also a full range of academic support
services--tutoring and academic counseling as well as the
health services I mentioned.
We also recognize student success every semester. We have
dean's list receptions and other kinds of moments to celebrate
the students who do achieve and that makes the others jealous
so they want to achieve.
There is a lot more and I could go into detail, and it is
on our website.
Chairwoman Foxx. That is wonderful. Thank you very much. I
think those things are helpful to hear.
Mr. Madzelan, we have to ensure taxpayer dollars are being
spent appropriately, and as others have said in their comments,
we want to be careful about whether we entrench the federal
government on campuses more than it already is. Could you talk
a little bit more about improving accountability for taxpayer
dollars without the federal government infringing on academic
affairs and without our collecting more information than we
ought to be collecting?
Mr. Madzelan. Certainly. I think the, you know, what we
have now in terms of institutional accountability is really a
ham-handed approach--you know, cohort default rates, financial
responsibility, 90-10 rules for for-profit institutions. They
are really just check-off boxes of have you been able to
accomplish this, and it really doesn't look at student
outcomes.
And that is a difficult issue. I mean, we want--I think we
all want to see completion rates increase but we also don't
want to see institutions stop taking chances on students. I
mean, back at the department years ago when we were
implementing the cohort default rate we kind of joked that,
``Gee, if you are a school with a zero cohort default rate you
are probably not doing something right, you know? You are not
taking chances on risky students or high-risk students.''
So I think that if we can come up with a set of measures
that--and I am not supportive of a return on investment that
tries to find something around salaries of graduates. I think
colleges and universities have enough trouble trying to contact
with their former graduates in the--sort of the alumni affairs
context. But that seems to be sort of a data collection that is
not needed.
But something that does look at some measure of, perhaps, a
former borrower's, ability to repay their student loans. Not
necessarily a default rate, maybe something that is--you know,
default is kind of a negative consequence. If we could think of
positive things, like yes, you are paying back your student
loan, that kind of approach, then maybe, you know, that would
be something that we could use as a proxy for, you know, a
post-secondary education resulting in better economic
opportunities than that individual would otherwise have faced.
Chairwoman Foxx. Thank you very much.
And now, Mr. Tierney, I recognize you for 5 minutes.
Mr. Tierney. Thank you very much.
First, Madam Chairwoman, I want to thank you and my
colleagues. I wasn't here; I was at another meeting--another
committee, but I want to thank you for recognizing the tragedy
in Boston yesterday, and our thoughts obviously go out to all
of the victims there, and I am very much appreciative of
everybody's comments and recognition of that here.
I was going to start with Mr. Hartle if I could, just to
talk a little bit about student loans. You indicated that you
thought federal loans were intended to help middle-income and
low-income students manage costs with low interest rates,
right?
Mr. Hartle. Yes, sir.
Mr. Tierney. Okay. So assuming that if we make rates
variable then there are some times when that may be beneficial
to the students and some times when it may drive those costs up
to a certain degree and make it less manageable for them. Will
that be true as well?
Mr. Hartle. Yes. Well--sorry.
Mr. Tierney. So my thought here is that to the extent that
we lend money to students and then cover the principal and the
administrative cost and the default rate on that, anything
above that sort of tends to make it less manageable for them to
afford college; anything that comes off that number itself
makes it easier for them to manage. Is that right?
Mr. Hartle. Yes, sir.
Mr. Tierney. Okay. And I think that helps us decide how we
want to structure a loan on that basis and whether we want to
cap it or just let it go on ad infinitum on that, and that
could be a problem. So I appreciate your comments there.
Well, I am going to talk generally, Mr. Madzelan and Mr.
Hartle could probably answer this one. The state--we put a
maintenance of effort provision into the last Higher Education
reauthorization, and I sort of wanted to move in that direction
because I agree with what Ms. Miles made very clear and all of
you have indicated: the states have really retreated from their
obligations under this act.
The problem was that when we put the maintenance of effort
in there we got severe resistance from governors and
legislators who, of course, want to have the option to do just
that--to take the retreat. But we also found it very difficult
to enforce. What is going to be the stick, so to speak, if
schools don't--states don't maintain their effort?
Does anybody have any thoughts of how we might implement a
provision so that the federal aid doesn't just go on ad
infinitum upward and the states take a hasty retreat, using
that federal money to supplant what used to be their
obligation?
Mr. Madzelan. I think that some of the efforts in the past
in this area have been focused on sort of the smaller federal
programs, like, you know, leveraging, educational assistant
partnership, those kinds of things. So it has been as if, you
know, the federal government is kind of nibbling at the edges
of that.
I think, with respect to states and, you know, sort of
pulling back on their own assistance over the years, it is--and
I think that in my view, at any rate, it is been this kind of a
stepping more toward, you know, higher education as a private
good, away from it being a public good. And, you know, I think
it is----
Mr. Tierney. Pretty tough when you figure 80 to 90 percent
of our students are going for the public good.
Mr. Madzelan. Yes. But I mean in terms of the outcomes.
And so if it is being viewed more as a private individual
good, well then the private individual ought to pay more for
it. I mean, I----
Mr. Tierney. My businesses don't see it that way. You know,
my businesses see it very clearly as a public good that is
helping them find really good innovators, and creators, and
workforce people, and anything like that. So I don't know who
is thinking it is only an individual benefit, but----
Mr. Madzelan. Yes, but again, I think that is when you
think about why have states pulled back in recent years----
Mr. Tierney. I get what all their excuses--I heard them all
when I went to put the effort in, and I heard them all through
all the people in the Senate who wanted to champion the
governors and the legislators and give them a path of retreat.
But frankly, does anybody have any ideas on how we might put a
maintenance of effort in that has some teeth that would also be
fair to the institutions and the states and the students?
Mr. Madzelan. I think that, you know, if you are talking
about teeth then you are talking about some of the larger
federal aid programs.
Mr. Tierney. Mr. Madzelan, while we are talking to you, you
mentioned in your remarks about having one form of income-based
repayment program. Were you suggesting that as a replacement
for student loans?
Mr. Madzelan. I think that ultimately, possibly. I think
what we need to do is examine carefully the issue, and I say
this because I am trying to figure out how worried I am about,
you know, difficulty of students repaying their loans in the
context of--I mean, we saw a report about 2 months ago out of
the New York Federal Reserve by one of the analysts saying
that, you know, a third of the student loans in repayment are
90 days or more past due. And I am--excuse me--and I am
thinking to myself, you know, really, how can that be, because
federal loans--we really never make you choose between paying
your loan and, like, eating because we do have deferments,
forbearances are easy to come by. If you are, you know, in a
rough patch, call your lender, he will call the servicer, can I
get a break for a couple of months? Yes, you can.
But that is a very administrative and bureaucratic approach
and I think maybe with some kind of income-based repayment that
is more based on sort of real-time income, you know, that kind
of takes care of itself. I mean, you don't then worry about,
you know delinquencies that--and then how does the Federal
Reserve know about this? Because they are reported under
federal regulations to the credit bureaus.
And so again, I think it is--I haven't figured out just how
worried I am about this yet, but when I see that a third of
student loan borrowers in repayment are 90 days delinquent on
federal student loans I start to worry about that.
Mr. Tierney. Thank you. I was just curious of whether that
was a more developed idea or just a thought that you had down,
and so far it is just a thought and you are fleshing it out?
Mr. Madzelan. Yes, and along with Mr. Petri's legislation
and others that, you know, I worked on in the past when I was
in the Education Department.
Mr. Tierney. Thank you.
Thank you all for testifying.
I yield back.
Chairwoman Foxx. Thank you, Mr. Tierney.
Mr. Messer, you are recognized for 5 minutes.
Mr. Messer. Thank you, Madam Chairman. I have prepared a
formal question, but with your permission I would submit that
for the record and then try to get to the essence of my
question in the interest of time.
Thank you all for being here today to talk about this very
important issue. It is certainly an important issue in my life.
I was raised in a working-class family in Greensburg, Indiana,
and frankly, would not have been able to go to school without
the benefits that came with Pell Grants and the like, and so I
think it is important we maintain these programs.
With that said, there is a very real recognition that we
have inflationary pressures in the area of higher education.
The numbers I have seen is between 2000 and 2012 federal
financial aid in constant dollars has increased by 140 percent;
however, over the same period, published tuition and fees for
in-state students at 4-year colleges have increased by 5.6
percent faster than the rate of inflation.
There is bipartisan recognition of this problem. In last
year's State of the Union Address the President said, ``We
can't just keep subsidizing skyrocketing tuition. We will run
out of money.'' This year the President said, ``Taxpayers
cannot continue to subsidize the soaring cost of higher
education.''
Forgive me for the--I was here and then I had to run back
to the--to give a speech on the House floor and came back, so
if this has been addressed before I certainly would just love
to hear a summary of those comments, but do you believe that
our current rate of tuition inflation is driven in part by the
federal education subsidies we have there? And if so, what can
we do to try to ratchet back the rising cost of education?
Mr. Hartle. The increasing price of higher education is a
complex, multifaceted problem. I think the biggest reason for
higher tuition bills facing student and families is because
states have been cutting support for higher education for the
last 40 years.
Particularly in response to the most recent economic
crisis, I think I mentioned a short while ago, state
appropriations for higher education fell by 23 percent in the
last 5 years. Most states set tuition for public colleges and
universities at the state level, and therefore, the decision
about what the tuition is is actually not in the hands of many
public college and university presidents.
Does federal student aid influence tuition? No. The issue
is----
Mr. Messer. You really believe no?
Mr. Hartle. Pardon?
Mr. Messer. You really believe no?
Mr. Hartle. Absolutely. The issue has been examined
exhaustively, including a study by the Department of Education
that concluded the only thing that they related--they could
relate to changes in public--in college and university tuition
were changes in state appropriations, and it was an inverse
relationship. When state appropriations went down, tuition went
up.
When you look at the effect of one thing on another in
social science research you either have a clear, consistent
relationship or you do not. We do not have such a relationship
with respect to federal student aid. Indeed, Dan Madzelan
worked on that study at the Department of Education when he was
there and could actually talk about it.
Mr. Messer. And do you have a consistent--I have a second
question, so if you have a consistent answer that is great,
but----
Mr. Madzelan. Yes. We did look at, as President McGuire
mentioned, you know, the price of technology, the, you know
price of instruction, price--labor costs, and really it was--
the only thing that we and our statisticians could make a case
for was the level of state--direct state support for higher
education.
Mr. Messer. Very much appreciate that.
And I direct my next question to Mr. Madzelan.
You mentioned--I think you used the phrase ``debt with no
degree,'' and, you know, one of the social dynamics that have
changed in the last several decades is it used to be that some
college meant you had a higher income path through your
lifetime, and that has really changed to the point where some
college makes very little difference on your income path but a
degree, particularly in a subject matter that has economic
value, can make a difference. And I would ask you just to
comment a little further.
You know, we are on a path now--the second dynamic that has
changed is the cost of education has gone up so high that
someone can compile tens of thousands of dollars of debt and
not have a degree that helps their economic future.
Mr. Madzelan. Again, I think the, you know, the beauty of
the federal aid programs is that they are voucher programs,
where the money is made available to individuals as soon as
they choose what to do with that, which, of course, a study to
pursue at which institution. It is also, they get to decide,
basically, when they have acquired enough education and
training. So I think it is a--and we don't condition, at the
federal level, next year's aid on receipt of last year's aid. I
mean, we do it a year at a time.
Mr. Messer. My question, would we--would any of you have
federal policy recommendations that could help get at the heart
of this dilemma? Because I think in fairness, we are incenting
folks to make this decision. We are incenting them to give it a
try. And we may well be incenting them into positions where
they acquire tens of thousands of dollars of debt and some real
challenges in their life.
Ms. Miles. Sorry, Mr. Congressman, if I may, I don't think
federal financial aid is incentivizing them. It is at least--I
go to a state school--it is potential recruiters for for-
profits that aren't as honest as other for-profits, and they
are the ones incentivizing because they are the ones that are--
there is proof out there from U.S. PIRG and from other
organizations that they are illegally incentivizing students
and their parents that, ``Oh, yes, we have tons of recruiters
that will come in and we will have you a job before you
graduate.'' Those are lies. That is the incentivizing fancy
pictures, it is not the aid.
Chairwoman Foxx. The gentleman's time is expired.
Mr. Bishop, you are recognized for 5 minutes.
Mr. Bishop. Thank you madam Chairwoman, and I apologize for
arriving so late. I was in another hearing.
Let me pick up on where Mr. Messer left off, because this
was an area that I wanted to pursue as well. There is a man
named Richard Vedder who is a higher ed economist who has
postulated the theory that it is the very existence of student
financial aid programs that are giving college administrators
license to raise costs greater than they would ordinarily do
and that therefore higher ed expenditures are being driven by
federal policy.
This is a view that has great currency among a great many
of my colleagues, to the point where the House budget
resolution that recently passed the House makes specific
reference to the work of Mr. Vedder and says that higher ed
financing is being driven primarily by the federal government's
policies.
Now, I think it is important--Mr. Hartle, you just
emphatically rejected that school of thought. Is that correct?
Mr. Hartle. I did.
Mr. Bishop. Okay, and this subcommittee had a hearing on
this subject I believe a year-and-a-half ago and we had a panel
of expert witnesses testifying on why costs were rising at the
rate that they were, and the consensus opinion was, without any
question, that it is primarily the retreat from support of
higher education on the part of the states. Now, that is a view
that--I am sorry to get here so late, but that is a view that
the panel pretty much holds?
Mr. Hartle. Yes.
Mr. Bishop. Okay. Thank you.
I think it is just important because it is skewing the
conversation, and I think if we all start the conversation with
the same set of facts and the same understanding of what is
driving behavior, I think we maybe will arrive at a more
rational policy going forward. So I hope that this is
information that we can continue to share among our colleagues
and we can continue to disabuse our colleagues of this very
flawed conclusion.
President McGuire, I want to ask you, I am very concerned
about the future of the campus-based programs. Under current
law the Perkins Student Loan program goes away as of September
2015. The House budget resolution that passed would cut
domestic discretionary spending, which is where the other Title
IV programs are, by about a third over 10 years. So I am
worried that what we are going to wind up with is a Title IV
program that consists of a significantly diminished Pell, no
Perkins, perhaps we will have Work-Study, and no SEOG because a
lot of my colleagues view that as duplicative of Pell.
So my question is, what role does the campus-based programs
play in terms of assisting the students at your university to
attend? And I would ask the same question of Ms. Miles with
respect to her peers.
Ms. McGuire. Well, Mr. Bishop, thank you for asking that.
And first of all, let me say, every single dollar that supports
my very needy students is important, and if we lose those
dollars we have to find other sources of support.
And to go back to your other issue, as one of those campus
administrators that seems to be maligned by experts who don't
know what they are talking about, in fact, when my tuition goes
up by a modest 1 or 2 percent in any given year, it is mostly
because the need of my students is accelerating faster than
federal aid or state aid or any aid can accommodate. And in
fact, recently in the District of Columbia we lost the LEAP
Program, for example, so we had to pick up several hundred
thousand dollars worth of that through our own budget to keep
subsidizing those students.
The D.C. Tuition Assistance grant program was threatened
this year and we had to keep paying--subsidizing that grant
program. It was finally restored, thank heavens, but in fact,
we are always trying to pick up need-based aid.
Federal Work-Study is a very small part of our tuition
support program because, in fact, it is normed according to
prior statistics from prior years and not the current year, so
our students never have as much because our enrollment is
increasing faster than the federal aid through the campus-based
programs can.
I think if the programs go away the question is what
replaces those? And I have to ask, how much more can we put in
through Trinity grants when it is already 40 cents on every
tuition dollar that we are putting in, and at some point it
means that some low-income students are not going to have the
option to stay in school, and that would be a great tragedy.
Mr. Bishop. Okay. Thank you.
Ms. Miles?
Ms. Miles. I am sorry, can you repeat the specific
question?
Mr. Bishop. Question has to do with the existence of the
campus-based student financial aid programs--Perkins Loan,
College Work-Study, and Supplemental Educational Opportunity
Grant. My fear is that I see those programs as imperiled.
I am sorry, Madam Chair, if you would just allow Ms. Miles
to answer.
Chairwoman Foxx. A very quick response.
Ms. Miles. I have a Perkins Loan. Without that Perkins Loan
I would have had to take out a private loan.
The students that we serve need these financial aid
opportunities. We don't pride ourselves on the students we
don't allow in; we pride ourselves on the success of our
graduates. Our graduates need that financial aid to have that
success.
Mr. Bishop. Amen. I yield back the balance of my time.
Chairwoman Foxx. Thank you, Mr. Bishop.
I want to thank our witnesses again--our distinguished
panel of witnesses--for taking the time to testify before the
subcommittee today.
Mr. Hinojosa, do you have closing remarks?
Mr. Hinojosa. Yes. Thank you.
Madam Chair, I want to thank our witnesses for sharing
their thoughts and recommendations on the important role of the
federal financial aid programs. And I know that on both sides
of the aisle we have many first-term and a few second-term
members of Congress and our hopes are that these hearings will
quickly help them go through a fast learning curve and thus be
able to make good policies and good regulations that will help
us on this very important issue.
So I want to just add to the record that in my 16 years in
Congress I couldn't help but listen very attentively to
everybody's statements and questions. And I look back to the
beginning of my first year in 1997 to the year 2010, which
equals 13 years that legislatures started cutting back
significantly, causing the problem, as was pointed out to Mr.
Bishop. And along with that came the direct loans going with
interest rates up to 10 and 12 percent interest rate.
So it is interesting that by the year 2010, when we were
able to make direct student loans, that the amount that was
lent on direct loans by Citigroup banks, by Sallie Mae and
other private loans, was a staggering amount, which if you add
from 2010 to 2013 now exceeds $1.1 trillion of student loans,
but much of that is interest that has accumulated, much of it
at a very high interest rate--8, 10, 12 percent.
I am a businessman and I can tell you that we cannot blame
the start of federal student loans that we suddenly hit $1
trillion. No, it was a cumulative period of time.
So I think that on both sides of the aisle members should
be looking at waste and fraud, because our chair said we as
congressmen must watch that tax dollars are spent
appropriately. And several others talked about, what about the
waste and fraud in Pell grants? Well, let me just say that from
my point of view I think there was a lot of wasted money that
was paid to banks who were borrowing the money at 3 percent on
Wall Street and lending it out at 10 percent with the federal
government guaranteeing 97 percent of that loan. Now that,
nobody questioned on either side of the aisle.
That has to go into the record so that it doesn't happen
again.
So again, I am going to close by saying that as we work to
strengthen the federal financial aid and student loan repayment
programs through this year's reauthorization of the Higher Ed
Act, I agree, Congress must take into consideration the types
of challenges that the majority of today's college students are
facing. As ranking member of this subcommittee I intend to
continue to work with my colleagues on both sides of the aisle
to expand college affordability and accessibility and build on
the strength of federal financial aid programs.
And above all, federal student aid programs must support
student success.
I look forward to working with my colleagues in a
bipartisan manner to achieve these goals and the
reauthorization of Higher Ed.
With that, I yield back my time.
Chairwoman Foxx. Thank you, Mr. Hinojosa.
I would like to take a personal point of privilege and
recognize two guests that I have here today. They are not in my
district; they actually live in Mr. Pittenger's district. But I
want to commend them for sitting through a hearing they didn't
need to sit through. Deedee Pavlic and Diane Umberger have--
Autenbarger have come here to visit Washington and they are
true patriots. They want to learn all they can about the
process. And they sat through the hearing today, and I want to
recognize them for doing that.
I again want to thank the panel for their comments.
I just make a few remarks in response to your comments, and
I am sure we may have some questions we will ask for some other
information. But some things that didn't get picked up on by my
colleagues that I would like to point out: Number one, I have
been very interested in the comment that over and over we hear,
now only 15 percent of the students in colleges and
universities are what we call ``traditional students.'' I am
searching for a better term. If only 15 percent of the students
are ``traditional,'' we need a different name. Eighty-five
percent--well, it seems to me we need to reverse those terms.
What is a traditional student anymore?
So I think I am going to put out a prize for somebody to
come up with a term that better fits the students who are
coming into colleges and universities these days.
I appreciate--I think Mr. Madzelan used the terms
``education,'' ``training,'' and ``skills.'' I am not sure who
used those phrases but I want to commend the person who did
that because I do think we are talking about all three of those
things, and as the staff knows, I am very concerned about the
use of one of these terms when I think we are doing education
most of the time, but skills are certainly very important to
us.
President McGuire, I love the term ``swirling'' that you
used. I have never heard that one before. People are swirling
through education.
I suspect some of the students probably had the same
experience that I had: you felt like you were swirling with
weights on your feet, though. I am not sure exactly how that
goes.
Another comment that I heard, I think correctly, Mr.
Madzelan, that you said out of the Pell money one-third of that
is going into remediation. If I didn't hear that correctly we
will get a clarification from you on it, but that is certainly
a concern that I have in terms of what we are talking about in
terms of accessibility.
And I also heard somebody say what is so important in terms
of success is the preparation for college that the students
bring when they come into an institution of higher education,
and yet we have not had very much focus on that issue in all of
the discussion that we have.
So I am very pleased, again, with the testimony that we
have had here today, and I thank you for helping us move along
the path that we are going to have to move along as we consider
the reauthorization of Higher Education and as we look at the
important issue of student loan interest rates. We are sort of
getting a two-for out of today's hearing, I think.
So I thank you all very much.
I thank the members of the committee for being here.
There being no further business, the subcommittee stands
adjourned.
[A submission by Hon. Lou Barletta, a Representative in
Congress from the State of Pennsylvania, follows:]
Prepared Statement of the Pennsylvania Association of
Private School Administrators (PAPSA)
The Pennsylvania Association of Private School Administrators
represents the more than 300 for-profit career schools, colleges and
universities in the Commonwealth.
Like the rest of the country, PAPSA is deeply concerned about
student debt. What schools in Pennsylvania have found is that over
borrowing is a big part of the loan debt problem, especially among
unsophisticated borrowers. And it is increasing despite aggressive loan
counseling.
For years, schools have been reporting stories of students asking
for all the financial aid they are entitled to, paying their tuition
and then walking away with thousands of dollars which ends up paying
for a newer car, Christmas presents, plastic surgery, bail money or big
parties which the school usually ends up hearing about. These cash
stipends can be, in one case, as high as $24,000 for an associate
degree. Despite the best efforts of schools to curb overborrowing, the
U.S. Department of Education mandates that schools must disclose to
students all the loan money they are entitled to borrow. How can
schools be responsible for repayment when the US Department of
Education encourages irresponsible overborrowing?
Overborrowing is defined in three ways by our schools:
Students transfer or move from school to school and
continue to mount debt which goes into deferment while they are
attending another college or school.
Commuter students, living at home, borrow available funds
in excess of direct school costs (tuition, fees, books) without regard
to debt consequences. While these dollars make sense for traditional
college students, they are not appropriate for commuter students. Since
schools must disclose all the loan money available to these students,
they often access these significant additional dollars with no thought
to the future.
Students also overborrow when they receive an unexpected
increase in PELL, OVR, state grant, public assistance or WIA funding.
As a result, more grant money is received than students originally
planned. But when the school counsels and encourages them to return the
excess loan money, the students almost always decline the request and
keep the extra loan amount.
PAPSA collected data from our schools over 3 years (2007-08-09 data
available upon request) and the three year trend appears clear. While
there were minor tuition increases, no change in student demographics
and stable or moderate enrollment increases due to some new campuses,
only over borrowing, as was defined earlier, increased exponentially.
The problems PAPSA sees now with overborrowing will only be
exacerbated in the future. If career schools are going to continue to
be penalized for high debt, as they are currently under cohort default
limit requirements, debt problems should be addressed at the front-end
of the loan as well by curbing over borrowing and considering other
front-end approaches.
PAPSA would like to see Congress or the U.S. Department of
Education consider additional methods beyond counseling for limiting
student borrowing. We propose Federal changes to allow an institution
to use professional judgment to decrease the loan amount approved for a
student based on the appropriateness of the budgeted items and
Satisfactory Academic Progress (SAP), as long as the loan amount fully
covers the cost of attendance (COA), as we understand COA to be
defined, and there are no other government programs that contribute to
the COA. We would be happy to provide legislative language if
requested.
Thank you.
______
[Questions submitted for the record and their responses
follow:]
U.S. Congress,
Washington, DC, May 8, 2013.
Mr. Terry W. Hartle, Senior Vice President,
Division of Government and Public Affairs, American Council on
Education, One Dupont Circle NW, Washington, DC 20036.
Dear Mr. Hartle: Thank you for testifying before the Subcommittee
on Higher Education and Workforce Training at the hearing entitled,
``Keeping College within Reach: The Role of Federal Student Aid
Programs,'' on Tuesday, April 16, 2013. I appreciate your
participation.
Enclosed are additional questions submitted by members of the
subcommittee after the hearing. Please provide written responses no
later than May 22, 2013 for inclusion in the final hearing record.
Responses should be sent to Amy Jones, Brian Melnyk or Emily Slack of
the committee staff who can be contacted at (202) 225-6558.
Thank you again for your important contribution to the work of the
committee.
Sincerely,
Virginia Foxx, Chairwoman,
Subcommittee on Higher Education and Workforce Training.
CHAIRWOMAN VIRGINIA FOXX (R-NC)
1. How can we improve the ``triad'' to ensure accrediting agencies
aren't asked to do too much, but also prevent the federal government
from overreaching into traditionally academic affairs? Also, what can
states do to hold up their end of the bargain?
CHAIRMAN JOHN KLINE (R-MN)
1. How do you think the shift from access to completion will affect
students? Are there ways to incorporate both concepts without limiting
a student's choice to attend the institution that meets his or her
needs and budget?
REPRESENTATIVE RICHARD HUDSON (R-NC)
1. What do you see as the appropriate federal role in higher
education? Has that role expanded too much or not enough with each
reauthorization of the Higher Education Act?
2. As the committee begins to reauthorize the Higher Education Act,
what are some key principles that should guide how we review and reform
federal student aid programs?
REPRESENTATIVE LUKE MESSER (R-IN)
As a member of both the Education and the Workforce Committee and
the Budget Committee, I am especially interested in slowing the rapidly
rising cost of higher education. College costs too much. Parents are
scrimping and saving and spending their nest eggs to pay for their
children's education while trying to make ends meet in this sluggish
economy.
Between 2001 and 2012, federal financial aid in constant dollars
increased 140 percent. However, over the same period, published tuition
and fees for in-state students at public four-year colleges increased
by an average of 5.6 percent faster than the rate of inflation. In last
year's State of the Union address, the President said ``we can't just
keep subsidizing skyrocketing tuition; we'll run out of money.'' This
year, the President said ``taxpayers cannot continue to subsidize the
soaring cost of higher education.''
I am concerned that well-intentioned federal education subsidies
are hyper-inflating the cost of higher education, leading to more
borrowing, higher interest payments, and less disposable income,
essentially creating an ``education bubble'' not dissimilar to the
housing bubble that nearly crippled the economy several years ago.
I have several questions on this topic:
1. Do you believe the current rate of tuition inflation is driven
in part by federal education subsidies?
2. Might rising college costs be constrained by more carefully
targeting and measuring the effectiveness of federal education
assistance?
3. What role has federal education assistance like Pell Grants
played in subsidizing rising tuitions?
4. CBO's February baseline shows the Pell Grant program facing a
funding cliff in Fiscal Year 2015 and annual shortfalls in subsequent
years through the budget window. Do you believe the current structure
of this important program is sustainable?
5. Are the costs of the Pell Grant program affordable without
regular infusions of mandatory funds?
______
Mr. Hartle's Response to Questions Submitted for the Record
CHAIRWOMAN VIRGINIA FOXX (R-NC)
1. This is a very important question, but one for which there are
no perfect answers. Presenting you with options for reauthorization is
a high priority for us, and we have begun working to develop
recommendations. That said, I think a key to solving this problem lies
squarely with the Department of Education (ED), which, arguably, has
proven to be the weakest link in the TRIAD. The boundary between
evaluating academic quality (the primary role of accrediting agencies),
and monitoring compliance with federal mandates (the primary role of
the Department) has been breached. Over time, ED has increasingly
shifted its oversight obligations onto the accreditors. In order to
reverse this trend, the Department needs to make a real investment in
the development of guidelines for its program reviews and compliance
and financial audits that guarantee uniformity, fairness, and, except
when sensitive institutional information is involved, transparency. It
also needs to make a real investment in training Department staff
associated with these processes and better designing the training
materials they utilize.
We do not yet have suggestions regarding the states. The recent
ill-considered regulations concerning state authorization suggest this
is an area where policymakers need to tread carefully in order not to
trigger the law of unintended consequences.
CHAIRMAN JOHN KLINE (R-MN)
1. Respectfully, I do not support a shift from access to
completion. Completion is a concept better suited to the K-12 education
arena, where: 1) compulsory attendance laws are in place: 2) a
presumption exists that the government will assume the full cost of
making education free; and 3) students are viewed as children, not
adults. None of these conditions holds true for postsecondary
education.
However, I do not think the goals of access and completion are
mutually exclusive in the postsecondary realm, and I do think
institutions should be challenged and, in some instances, even required
to do more to promote completion. Targeted strategies such as better
counseling, prior to as well as during college; using diagnostic
metrics (like those employed by Arizona State University and others) to
make timely interventions when a student appears to be going off track;
and other focused tools should be aggressively employed.
As to the second part of your question, I think narrowing the
options and choices that students have would erode the real value of
college as a place where second chances can put a life or a career back
on track.
REPRESENTATIVE RICHARD HUDSON (R-NC)
1. In my opinion, the primary federal role in higher education
remains ensuring that students are not denied the opportunity to pursue
postsecondary education because they or their families lack the
resources. One of the main points I attempted to convey in my testimony
is that the particular direct-to-students mechanism (effectively a
``voucher'' which the student can take to any eligible institution) for
federal grants and loans was a truly inspired approach. When states
were meeting their part of the bargain--supporting public colleges and
universities with state budget allocations sufficient to prevent large
hikes in tuition--federal government resources created opportunities
for students with limited funds to pursue a college education. This
approach, uniquely American in its egalitarian roots, is as valuable
today as it was decades ago.
What has changed and has consequently increased the federal
financial burden is that the states have abdicated their role of
keeping tuitions affordable. What has expanded in successive years is
the amount of federal micromanagement, presumably driven in part by the
federal government's increased fiscal role in helping to make college
possible.
2. Thank you for this question. There are several principles I
think are important to honor. One is that because college is one of the
main passports to economic opportunity, access remains a critical
principle in the design of federal student aid, especially in light of
disturbing data about growing income stratification among Americans. A
corollary is that for our democracy and economic system to thrive in
its own right as well as against global competition, a vibrant and
growing middle class is critical. Helping those who need help to pursue
their college goals should not be reduced to a calculation about
individual benefit but should always be viewed through the prism of
national interest.
REPRESENTATIVE LUKE MESSER (R-IN)
1. I have not seen any reputable study that has demonstrated that
federal subsidies drive tuition inflation. In fact, two economists from
the College of William and Mary, Robert Archibald and David Feldman,
have found that contrary to the belief that the availability of federal
aid gives colleges room to raise prices, ``increased federal support is
indeed causally related to tuition, but not in the direction predicted.
We found that increases in the maximum Pell Grant caused private four-
year institutions to decrease tuition.'' (See Why Does College Cost So
Much? [2011]).
While federal student aid is not among them, there are many drivers
of tuition inflation that are unique to higher education. At the top
are costs associated with being a labor-intensive enterprise and having
expensive related benefit costs. Another powerful cost driver is the
extraordinarily high cost associated with the imperative to keep
abreast of technological change, whether the expense derives from
updating costly research laboratory equipment, from the need to acquire
state-of-the-art technologies to educate and train students, or from
purchasing more efficient software for administrative operations like
billing and accounting. A third category of institutional costs stems
from the high software and personnel costs of keeping abreast of ever-
changing and ever-expanding federal regulations (and in the case of
public institutions, state regulations as well). These are only a few
of cost pressures colleges routinely face.
2. Over the past decade, trends clearly show that while public and
private non-profit college tuitions have continued to rise at rates
that surpass CPI, the trends also show that private college tuitions
hover close to inflation, while public college tuitions have
mushroomed. This correlates to the fact that general operational and
administrative funds from state appropriations to public colleges and
universities have been declining year-to-year and now stand at an
historic 25-year low. Because public higher education support is
discretionary, it has been eclipsed in the budgets of virtually all
states by funding for prisons, Medicare, and other mandatory
obligations. Tuition increases have become the relief valve utilized by
state legislatures to meet statutory requirements to balance their
budgets. In many cases, the decisions to raise tuition at public
institutions are made by legislatures and not by public colleges. Would
states be able to continue this practice without an expectation that
federal student aid would help to fill the gap? Who can say for sure,
since the stakes are too important to leave to chance. But it is much
more difficult to address the question of what the appropriate federal
role is without relying on states to uphold their part of the equation.
3. Because of congressional interest in understanding whether a
relationship exists between increases in Pell Grant funding and
increases in tuition levels, ACE engaged Donald E. Heller, dean of the
College of Education at Michigan State University and a respected
higher education policy analyst, to explore this topic. Dr. Heller's
paper is entitled, ``Does Federal Financial Aid Drive Up College
Prices.'' I am happy to submit it for the hearing record.
The paper concludes that, ``There is little compelling evidence
that it (the hypothesis attributed to former Secretary of Education
William Bennett that holds that increases in financial aid have enabled
colleges and universities to increase tuition) holds true with respect
to the price-setting behavior of colleges and universities in the
United States. This complex process involves far too many variables for
it to be essentially explained by the simplistic notion that tuition--
setting boards sit around and say, `Well, Pell grants are going up $200
next year, so we can raise tuition $100.' While any change in federal
aid may be a very small piece of the puzzle that leads to year-to-year
tuition increases, there is scant evidence that it is a major
contributing factor.''
4. My colleagues and I are very concerned about the long-term
fiscal health of the Pell Grant program, which, as you note, faces a
looming fiscal cliff in 2014. Figuring out how to put the program on
secure footing will be a top priority in the reauthorization
discussions, and we believe that reauthorization is the proper forum
for addressing the problem.
Throughout its history, the growth curve for the Pell Grant program
has been slow and gradual. Commonly, when the annual Pell Grant maximum
award was increased, it grew by only $100. A $200 annual increase was
rare. The number of eligible students was also fairly stable, going up
gradually as slight upticks in high school graduation rates or adults
returning to school increased the pool of students hoping to pursue
postsecondary education.
The program has never witnessed the kind of dramatic annual maximum
award increases that have occurred through the sizable infusion of
mandatory funds authorized by the 2007 College Cost Reduction and
Access Act. Larger grants and a dismal economy have made thousands more
students eligible for the grant. However, even without this unusual set
of circumstances, the Pell Grant program has always been
countercyclical to economic trends; that is to say, demand rises during
an economic downturn. For example, when a parent loses her job, the
loss of household income may make her daughter eligible for Pell. In
addition, the mother herself (or other working adults) may return to
college to secure new employment skills. If these factors are present
during normal economic cycles, they have been greatly magnified during
the past several years of flat economic growth and spiraling
unemployment. Compounding these added pressures on student aid,
families who had been covering college costs by refinancing their homes
saw this option evaporate as the mortgage industry collapsed and the
housing market flat-lined.
Going forward, if historical trends hold true, an improving economy
will greatly lessen the demand for Pell Grant assistance, reducing the
cost of the program. According to both the Office of Management and
Budget and the Congressional Budget Office, this has already begun and
should give us a more realistic starting point for considering what
changes--if any--may be needed to avoid the Pell fiscal cliff.
5. The costs of the Pell Grant program are entirely manageable
without regular infusions of mandatory funds, although like all
discretionary programs, it will have to withstand the ebbs and flows of
available federal funding within the annual budget parameters. As much
as students and the higher education advocacy community were happy to
have a year-to-year jump in the maximum award and predictable annual
increases thereafter, my colleagues and I are not enthusiastic about
the practice of transferring funds from one group of students (those
who rely on federal student loans) to help send to college another
group of students (those who depend on Pell Grants). For a substantial
number of students, those with incomes so low as to qualify (and need)
both a Pell Grant and loans, this amounts to transferring money from
one pocket to another.
______
U.S. Congress,
Washington, DC, May 8, 2013.
Mr. Dan Madzelan, U.S. Department of Education (Retired),
6517 40th Avenue, University Park, MD 20782.
Dear Mr. Madzelan: Thank you for testifying before the Subcommittee
on Higher Education and Workforce Training at the hearing entitled,
``Keeping College within Reach: The Role of Federal Student Aid
Programs,'' on Tuesday, April 16, 2013. I appreciate your
participation.
Enclosed are additional questions submitted by members of the
subcommittee after the hearing. Please provide written responses no
later than May 22, 2013 for inclusion in the final hearing record.
Responses should be sent to Amy Jones, Brian Melnyk or Emily Slack of
the committee staff who can be contacted at (202) 225-6558.
Thank you again for your important contribution to the work of the
committee.
Sincerely,
Virginia Foxx, Chairwoman,
Subcommittee on Higher Education and Workforce Training.
CHAIRWOMAN VIRGINIA FOXX (R-NC)
1. What are some of the benefits of shifting the conversation from
student access to outcome measures? What are the harmful effects of
maintaining the current financial aid system?
CHAIRMAN JOHN KLINE (R-MN)
1. In your testimony, you mentioned that the federal government
does not currently look at student outcomes. As you know the Higher
Education Act requires institutions to report on graduation rates and
other metrics, and limits the amount of time that students can access
Pell Grants and (recently) subsidized Stafford loans. What other
outcome measures do you think are the most important for us to examine
during the reauthorization process?
REPRESENTATIVE LUKE MESSER (R-IN)
As a member of both the Education and the Workforce Committee and
the Budget Committee, I am especially interested in slowing the rapidly
rising cost of higher education. College costs too much. Parents are
scrimping and saving and spending their nest eggs to pay for their
children's education while trying to make ends meet in this sluggish
economy.
Between 2001 and 2012, federal financial aid in constant dollars
increased 140 percent. However, over the same period, published tuition
and fees for in-state students at public four-year colleges increased
by an average of 5.6 percent faster than the rate of inflation. In last
year's State of the Union address, the President said ``we can't just
keep subsidizing skyrocketing tuition; we'll run out of money.'' This
year, the President said ``taxpayers cannot continue to subsidize the
soaring cost of higher education.''
I am concerned that well-intentioned federal education subsidies
are hyper-inflating the cost of higher education, leading to more
borrowing, higher interest payments, and less disposable income,
essentially creating an ``education bubble'' not dissimilar to the
housing bubble that nearly crippled the economy several years ago.
I have several questions on this topic:
1. Do you believe the current rate of tuition inflation is driven
in part by federal education subsidies?
2. Might rising college costs be constrained by more carefully
targeting and measuring the effectiveness of federal education
assistance?
3. What role has federal education assistance like Pell Grants
played in subsidizing rising tuitions?
4. CBO's February baseline shows the Pell Grant program facing a
funding cliff in Fiscal Year 2015 and annual shortfalls in subsequent
years through the budget window. Do you believe the current structure
of this important program is sustainable?
5. Are the costs of the Pell Grant program affordable without
regular infusions of mandatory funds?
______
Mr. Madzelan's Response to Questions Submitted for the Record
CHAIRWOMAN VIRGINIA FOXX (R-NC)
1. What are some of the benefits of shifting the conversation from
student access to outcome measures? What are the harmful effects of
maintaining the current financial aid system?
Answer: I am not yet ready to say that we have solved the problem
of higher education access for students from lower-income families in
this country. However, when the number of Pell grant recipients is
nearly one-half of the number of enrolled undergraduates, I do think we
are getting very close. Thus, I also think that it is appropriate to
begin thinking more about student outcome measures for the Title IV
student aid programs.
We should expand the criteria for determining institutional
eligibility to participate in the Title IV student aid programs.
Participating schools must be held accountable for meeting certain
thresholds for performance against a set of access and completion
metrics. It is important to implement an access measure otherwise
institutions may be incentivized to move to more selective admissions
policies in order to improve their completion rates. Such a measure
could be based on Title IV aid recipients, especially Pell grants.
Similarly, institutional completion rates should be risk-adjusted, that
is, special consideration should be given to an institution's mission
and enrollment of low-income individuals, to account for institutional
diversity. Completion rates must also better account for the behavior
of transfer students. It is difficult for institutions to gather post-
graduation information and labor market outcomes for their former
students. Thus, I think it is appropriate to include a student loan
repayment rate calculation, in addition to the existing cohort default
rate calculation, as an institutional Title IV eligibility criterion. I
think the Department had the right idea regarding a repayment rate
calculation they proposed in the gainful employment regulation two
years ago. Of course, the specifics of that calculation can be debated,
but I think the overall concept is sound.
There is an old adage, ``If you always do what you've always done,
you'll always get what you've always got.'' If we as a Nation are
serious about improving our postsecondary education completion rate for
degrees, certificates and industry-recognized credentials, then we must
modify out policies in ways that emphasize pathways to improved student
outcomes. Otherwise we will have changed nothing.
CHAIRMAN JOHN KLINE (R-MN)
1. In your testimony, you mentioned that the federal government
does not currently look at student outcomes. As you know the Higher
Education Act requires institutions to report on graduation rates and
other metrics, and limits the amount of time that students can access
Pell Grants and (recently) subsidized Stafford loans. What other
outcome measures do you think are the most important for us to examine
during the reauthorization process?
Answer: I think several of the more recently enacted student-based
measures are a good start. While I agree with the imposition of
``lifetime'' limits for Pell grant recipients, this program feature
helps safeguard program integrity rather than provide a meaningful
outcome measure, although it could become an incentive for students to
reduce their time to degree. Limiting access to subsidized Stafford
loans seems to have been more about finding budget savings than
measuring student outcomes. Conversely, graduation rates are an
important and critical outcome measure, but the current approach
remains flawed inasmuch as it does not appropriately account for the
outcomes of transfer students.
I am a proponent of an institution-specific student loan repayment
rate calculation, not unlike the approach the Department developed for
its gainful employment regulation. If the purpose of the Title IV
student aid programs is to make the benefits of higher education
available to individuals irrespective of their families' financial
circumstances, then one of those benefits is certainly better
employment prospects for aided students. Consequently, it is reasonable
to require that some percentage of an institution's borrowers have
improved their financial circumstances as result of the education or
training provided as evidenced by the fact that borrowers are able not
only to make payments on their loans but also reduce their outstanding
loan principal in the short term. The repayment rate model should be
simple: ``X percent of a school's borrowers have reduced the
outstanding principal balance of their loans by Y dollars (or percent)
within Z years of entering repayment.'' I do not know what the
appropriate parameters--X, Y and Z in this model--for a loan repayment
rate measure should be. It seems that initial values could be specified
and then reevaluated after several years and modified as necessary.
REPRESENTATIVE LUKE MESSER (R-IN)
As a member of both the Education and the Workforce Committee and
the Budget Committee, I am especially interested in slowing the rapidly
rising cost of higher education. College costs too much. Parents are
scrimping and saving and spending their nest eggs to pay for their
children's education while trying to make ends meet in this sluggish
economy.
Between 2001 and 2012, federal financial aid in constant dollars
increased 140 percent. However, over the same period, published tuition
and fees for in-state students at public four-year colleges increased
by an average of 5.6 percent faster than the rate of inflation. In last
year's State of the Union address, the President said ``we can't just
keep subsidizing skyrocketing tuition; we'll run out of money.'' This
year, the President said ``taxpayers cannot continue to subsidize the
soaring cost of higher education.''
I am concerned that well-intentioned federal education subsidies
are hyper-inflating the cost of higher education, leading to more
borrowing, higher interest payments, and less disposable income,
essentially creating an ``education bubble'' not dissimilar to the
housing bubble that nearly crippled the economy several years ago.
I have several questions on this topic:
1. Do you believe the current rate of tuition inflation is driven
in part by federal education subsidies?
Answer: I do not believe that federal higher education subsidies,
especially the Title IV student aid programs, contribute to rising
tuition prices.
In the 1998 amendments to the Higher Education Act, Congress
directed the Department of Education to study college costs paid by
institutions and tuition prices paid by students. The National Center
of Education Statistics (NCES), the Department's operating component
tasked with completing the Congressionally Mandated Studies of College
Costs and Prices, found that for public four-year institutions,
declining state appropriations was the single factor associated with
tuition increases. For private not-for-profit colleges, NCES found no
single overriding factor consistently related to tuition increases.
Additionally, the principal Title IV programs are completely (Pell
grants) or largely (Stafford loans) insensitive to tuition prices. The
amount of a student's Pell grant is determined based solely on his or
her family income and household circumstances. A low-income student
receives the maximum Pell grant whether attending a community college
or high-priced private university. Similarly, Stafford loan borrowers,
most of whom are first- or second-year undergraduates, have relatively
modest annual borrowing limits.
So, tuition price insensitivity (Pell grants) and limited annual
Stafford borrowing means that increasing tuition prices will not
generate significantly more institutional revenue from current students
from these two federal student aid programs. The way for institutions
to increase revenues from these two federal student aid programs is to
enroll more low- and moderate-income students.
2. Might rising college costs be constrained by more carefully
targeting and measuring the effectiveness of federal education
assistance?
Answer: I think that targeting and measuring the effectiveness of
federal student aid can help achieve program goals--including improved
completion rates--articulated by federal policymakers. I think the
utility of such efforts with respect to constraining tuition prices
would be largely non-existent. The calculation of student Title IV aid
award amounts is simply insufficiently sensitive to the price of
tuition to be an effective cost containment tool.
3. What role has federal education assistance like Pell Grants
played in subsidizing rising tuitions?
Answer: The amount of a student's Pell grant is determined based
solely on his or her family income and household circumstances. A low-
income student receives the maximum Pell grant whether attending a
community college or high-priced private university. This insensitivity
to tuition prices means that a college cannot generate more revenue
from a Pell grant recipient by increasing tuition.
That said, I do I think that the Pell Grant program has had a
positive role in protecting low-income students from rising tuition
prices. The Department reported in the Congressionally Mandated Studies
of College Costs and Prices that grant aid in general, but largely Pell
grants, was sufficient to offset tuition price increases for low-income
students during the period beginning in 1992 and ending in 2000. Said a
bit differently, net tuition prices, that is, ``out-of-pocket''
expenses, for low-income students did not increase during the time
period of the study.
4. CBO's February baseline shows the Pell Grant program facing a
funding cliff in Fiscal Year 2015 and annual shortfalls in subsequent
years through the budget window. Do you believe the current structure
of this important program is sustainable?
Answer: Both CBO and the Department excel at forecasting near-term
Pell grant program costs. However, external variables that are harder
to predict in the longer term lead to significant variation in out-year
forecasts. When I was with the Department in the early 1990s, the Pell
grant program--when annual spending was less than $6 billion--faced an
estimated $2.1 billion shortfall. Congress funded about half of that
shortfall through special and supplemental appropriations. The other
half never materialized. CBO and Departmental forecasting did not
accurately predict program demand several years out, which declined
largely due to a generally improving economy. Thus while I think
concern regarding the financial sustainability of the program is
appropriate, it is important to remember that student demand for Pell
grants is generally countercyclical--demand subsides as general
economic conditions improve.
5. Are the costs of the Pell Grant program affordable without
regular infusions of mandatory funds?
Answer: I think Pell grant program costs are affordable. Student
demand for Pell grants is countercyclical--demand subsides as general
economic conditions improve. In the history of the program, funding
shortfalls have coincided with periods of economic recessions. The CBO
and Administration budget estimates indicate ordinary year-to-year
increases (around one percent) in demand going forward. So, maintaining
current service expenditures for Pell grants should be affordable over
the next ten years.
______
U.S. Congress,
Washington, DC, May 8, 2013.
Ms. Patricia McGuire, President,
Trinity Washington University, 125 Michigan Avenue, NE, Washington, DC
20017.
Dear Ms. McGuire: Thank you for testifying before the Subcommittee
on Higher Education and Workforce Training at the hearing entitled,
``Keeping College within Reach: The Role of Federal Student Aid
Programs,'' on Tuesday, April 16, 2013. I appreciate your
participation.
Enclosed are additional questions submitted by members of the
subcommittee after the hearing. Please provide written responses no
later than May 22, 2013 for inclusion in the final hearing record.
Responses should be sent to Amy Jones, Brian Melnyk or Emily Slack of
the committee staff who can be contacted at (202) 225-6558.
Thank you again for your important contribution to the work of the
committee.
Sincerely,
Virginia Foxx, Chairwoman,
Subcommittee on Higher Education and Workforce Training.
CHAIRWOMAN VIRGINIA FOXX (R-NC)
1. Your testimony recognizes the importance of accountability for
federal student aid dollars. How can we ensure that taxpayer dollars
are spent effectively, without impinging on student choice or limiting
access for the lowest income students and families?
CHAIRMAN JOHN KLINE (R-MN)
1. How are federal regulations and reporting requirements affecting
the recent spike in college tuition? Is the federal government putting
too large of a burden on colleges and universities?
REPRESENTATIVE RICHARD HUDSON (R-NC)
1. What are the biggest problems facing the existing federal
financial aid system and what suggestions do you have for improving the
system?
REPRESENTATIVE LUKE MESSER (R-IN)
As a member of both the Education and the Workforce Committee and
the Budget Committee, I am especially interested in slowing the rapidly
rising cost of higher education. College costs too much. Parents are
scrimping and saving and spending their nest eggs to pay for their
children's education while trying to make ends meet in this sluggish
economy.
Between 2001 and 2012, federal financial aid in constant dollars
increased 140 percent. However, over the same period, published tuition
and fees for in-state students at public four-year colleges increased
by an average of 5.6 percent faster than the rate of inflation. In last
year's State of the Union address, the President said ``we can't just
keep subsidizing skyrocketing tuition; we'll run out of money.'' This
year, the President said ``taxpayers cannot continue to subsidize the
soaring cost of higher education.''
I am concerned that well-intentioned federal education subsidies
are hyper-inflating the cost of higher education, leading to more
borrowing, higher interest payments, and less disposable income,
essentially creating an ``education bubble'' not dissimilar to the
housing bubble that nearly crippled the economy several years ago.
I have several questions on this topic:
1. Do you believe the current rate of tuition inflation is driven
in part by federal education subsidies?
2. Might rising college costs be constrained by more carefully
targeting and measuring the effectiveness of federal education
assistance?
3. What role has federal education assistance like Pell Grants
played in subsidizing rising tuitions?
4. CBO's February baseline shows the Pell Grant program facing a
funding cliff in Fiscal Year 2015 and annual shortfalls in subsequent
years through the budget window. Do you believe the current structure
of this important program is sustainable?
5. Are the costs of the Pell Grant program affordable without
regular infusions of mandatory funds?
______
Ms. McGuire's Response to Questions Submitted for the Record
QUESTIONS FROM CHAIRWOMAN VIRGINIA FOXX (R-NC)
1. Your testimony recognizes the importance of accountability for
federal student aid dollars. How can we ensure that taxpayer dollars
are spent effectively, without impinging on student choice or limiting
access for the lowest income students and families?
Effective stewardship of federal student aid dollars is a vitally
important obligation of colleges and universities as well as the U.S.
Department of Education. We are all partners in working toward national
policy goals to ensure broad access to college as a means to improve
the long-term educational and economic outcomes for the nation. To
achieve the goals that we all share, we need a regulatory system that
focuses on the right issues to protect the federal investment from
fraud and abuse, but that does not discourage institutions that choose
to serve low income students, or that adds cost burdens with no clear
gain in producing effective results.
Institutions of higher education already must meet high standards
to guard against fraud and abuse in the management of federal student
aid programs, and the Department of Education should have all the
support it needs to guarantee effective oversight of these protections.
The regulatory system also needs to recognize that a ``one size
fits all'' approach to academic oversight will be very harmful to low
income at-risk students and the institutions that serve them very well.
Low income students move through college in many non-traditional ways--
often attending multiple institutions, taking credits in different
configurations, quite often completing degrees well after the standard
4-to-6 year completion clock has tolled. Financial aid policies need to
be more flexible, not less, to encourage non-traditional students to
complete degrees in the ways that make sense for them, which are not
necessarily the ways that worked for traditional students half a
century ago. Financial aid policies should robustly support summer
semester enrollments, part-time enrollments below half-time credits,
and resumption of academic coursework after years spent raising
families. Recent changes to the Pell Grant eligibility rules--
elimination of summer Pell, reduction in semesters of
eligibility--are a serious blow to institutional ability to encourage
non-traditional students to complete degrees.
Finally, the most effective way to assure that students are getting
a quality education for the funds expended by the federal government is
through a strong and independent accreditation system that can focus on
the academic issues it is intended to address. There has been an
alarming trend in which the Department of Education increasingly
expects accreditors to use rigid checklists and measure institutional
compliance with regulations that are unrelated to academic quality.
Private voluntary accreditation--both by the comprehensive regional
accrediting agencies as well as by the specialized disciplinary
accrediting bodies--probes deeply into the quality of general
education, major programs, graduate and professional programs, student
outcomes assessment, faculty quality, student support services,
governance and the systems and services necessary to ensure overall
student success. The accreditation system is the most effective means
available to ensure quality in the federal investment while also
guarding against the harmful tendency of ``one size fits all''
approaches to academic regulation.
QUESTIONS FROM CHAIRMAN JOHN KLINE (R-MN)
1. How are federal regulations and reporting requirements affecting
the recent spike in college tuition? Is the federal government putting
too large of a burden on colleges and universities?
Yes, the regulatory burden is adding to overall college costs. The
last reauthorization of the Higher Education Act brought with it
numerous new requirements without--to my knowledge--removing any of the
existing ones. In addition to the regulations issued to implement these
requirements, the Department of Education also issued an extensive
package of program integrity regulations, is about to issue new
requirements related to teacher preparation programs, and is planning a
new negotiated rulemaking session for this fall.
At Trinity, we have to keep adding staff and acquiring more and
more software to keep track of all of the different reporting
requirements, few of which relate directly to the quality of our
academic programs. We are a relatively small institution with a strong
reputation for managing our costs effectively. But in the last few
years, we've had to add an in-house general counsel's office at more
than twice the cost of our previous retainer with an outside law firm
just to help us with compliance.
We maintain a robust list of policies and procedures on our
website, all designed to keep up with compliance demands--I've seen
that list double in the last few years, and even now, we're working on
even more policy statements to supplement existing policy statements.
We engage in extensive training with all of our faculty and staff, and
yet, counsel now advises we must spend even more time on training,
which is time taken away from students.
We spent almost $1.5 million on campus security, which is a big
chunk of our $35 million operating budget--more than four times what we
spend on our library--and yet, the security chief now tells me we have
to make the budget even bigger to get some new software for new and
different reporting mandates. Reporting and compliance considerations
almost seem to crowd-out the real work, which is to ensure student
welfare, safety and success.
We've just added yet another vice president, this time in student
affairs, to help us keep up with the increasingly complicated
regulations about the management of student issues. Yet, most of the
issues we see do not fall within the areas of regulatory concern, so
while we collect and report voluminous data and strive for excellence
in compliance, the real work of the university sometimes seems to be
running on a parallel track.
Keeping track of all of the myriad ways we must report data is
demanding on the staff at my small institution--not only in terms of
the time they spend but also in the lost opportunity costs of time they
could have spent assisting students. On more than one occasion, I've
pitched in myself to get it all done. I spent one weekend, for example,
calculating detailed percentage break-downs of all forms of comparative
expenditures on men's and women's sports--and this at school where 95%
of the students are women. Next year we'll be adding more staff yet
again, this time in institutional research, to augment our ability to
do all of the data reporting. Once again, another administrative
position added to our roster that does not go directly to the education
of our students!
QUESTIONS FROM REP. RICHARD HUDSON (R-NC)
What are the biggest problems facing the existing federal financial
aid system and what suggestions do you have for improving the system?
Funding and Flexibility Funding
Over the last five years, the federal investment in Pell Grants and
student loans has grown exponentially. While this has happened during a
particularly difficult budget period, in many ways it shows the
programs are doing what they were designed to do. There are two
particular trends causing program costs to rise: an increase in the
number of children in poverty in this country, and the tendency of
Americans who lose jobs to go back to school to retrain so they can
reenter the workforce. The rate of children from poverty who aspire to
a college education will continue to grow so funding pressures will
continue.
For both of these populations, the cost of the federal investment
in higher education is worth it. While I think the greatest value is on
the human side, it also makes financial sense for the federal
government. When a student from a low-income family graduates from
Trinity, not only will her life be changed, but so will the life of her
children. Studies show three things: 1) that she will more than payback
the cost of her Pell Grant through increased lifetime earnings, 2) that
her children are unlikely to qualify for Pell Grants or numerous other
federal aid programs, and 3) the government will make a profit on her
student loans that will also cover much of the Pell Grant costs.
The federal student financial aid system works--it helps millions
of students have access to postsecondary education and complete college
degrees every year. And it works the way it was designed to work by
combining basic federal assistance for the poorest students (Pell
Grants) with incentives for self-help (Work Study and Loans),
institutional partnerships (Campus-based Aid Programs) and state
partnerships (SSIG/LEAP), to ensure a capable low-income student had
the same college opportunity as a better-off peer.
Flexibility
We need to ensure that student aid program rules keep up with the
changing characteristics of American students and the changing ways we
are teaching. It is not flexible enough.
In my formal written testimony I said that the characteristics of
Trinity's full-time undergraduates are emblematic of the new
populations of students driving future enrollments in higher education.
According to data from the National Center for Education Statistics
(Projections in Education to 2021), from now to 2021 the population of
Hispanic students in college will increase by 42%, African Americans by
25%, Asians by 20% while the more traditional White population will
increase by only 4%.
Because black and Hispanic children in the United States suffer
more poverty and related social problems, and have more significant
educational challenges because of under-performing K-12 schools in
their impoverished neighborhoods, the rising tide of low income
students of color in college will require creative solutions on the
part of both Congress and colleges to ensure that higher education
remains accessible to them.
The changing demographics of this nation also reshape the
conventional notions of who goes to college and how they attend.
Regardless of age, low income students are more likely to have non-
traditional attendance patterns and completion timetables because of
their work and family responsibilities, health conditions and need for
remediation. Department of Education data reveals that more than 70% of
all college students have at least one ``non-traditional''
characteristic which includes not only age (being 25 or older in
college), but also attending part-time, working full-time, parenthood,
being self-supporting.
Institutions are responding with flexible programs so our students
take classes and work towards their degrees year-round and seven days a
week. Our institutions are flexible, but the federal student aid system
is not. Reinstating the ``summer Pell'' or some other Pell Grant
delivery system (like the Pell Well concept from NASFAA) that would
make grant aid available year-round would really help determined low-
income students reach their completion and employment goals.
QUESTIONS FROM REP. LUKE MESSER (R-IN)
Do you believe the current rate of tuition inflation is driven in
part by federal education subsidies?
No, this is simply untrue. In fact, quite the opposite, federal
student aid helps to restrain tuition growth. Almost no student in any
kind of college or university pays the total actual cost of education;
virtually all tuition prices are subsidized to some extent by state
subsidies in public institutions, by charitable gifts and grants in
private institutions. Among state institutions, we are seeing a
dramatic rise in tuition prices precisely because the states are
rapidly dis-investing in public higher education--that is the single
biggest reason why headlines blare about ``skyrocketing tuition.''
State universities are scrambling to cover the actual costs of
operations as state legislatures slash budgets.
Among private institutions, charitable gifts and other non-tuition
revenues help to offset some of the costs of operations, but those
costs keep rising in large part because of consumer demand and
regulatory burdens.
Students want more technology, more amenities like recreation
centers, more choices whether in the dining hall or the curriculum,
more elaborate residential facilities, more time and attention in
advising, counseling and health services. Meanwhile, federal, state and
local regulators impose more demanding rules requiring more data
production, more software systems, enhanced compliance activities,
increased staffing to produce regulatory reports. In the last ten
years, even at a small university like Trinity, our costs for
technology have increased dramatically. The safe management of
facilities, including addressing ancient infrastructures that require
modernization to comply with the ADA, for example, or environmental and
life safety improvements, all require considerably more investment.
Another substantial factor driving tuition prices is the
expectation of accessibility for more and more low income students
whose needs go far beyond the subsidies that Pell grants provide. At
Trinity, where we educate a remarkably low income population of
students from the District of Columbia, we keep our tuition affordable
through low rates of increase (just about 2% annually) and strong
discounting practices that return an average grant of about $8,000, or
40% of our tuition price ($20,550 in 2012-2013) to almost all full-time
students. Coming from difficult urban schools, these students also need
significant academic assistance, health services, counseling services
and a range of other supports to ensure academic success. As increasing
numbers of low income students enter the nation's colleges and
universities, they will also need greater investment to ensure
retention and completion.
Federal student aid helps to mitigate the potential for even higher
prices by filling in some of the gaps in the cost-price equation. Since
the original financial aid program in the G.I. Bill of 1944, this
nation has promoted the value of supporting higher education as a top
priority in public policy as a way to ensure a strong workforce and
great economic returns for the nation.
What is more, leading higher education economists, as well as
federal studies conducted under the Clinton, Bush and Obama
presidencies, have found no causal relationship between increases in
federal student aid and tuition.
(For further reference see: ``Why student aid is NOT driving up
college costs,'' Washington Post, Jun 1, 2012; Government
Accountability Office, ``Federal Student Loans: Patterns in Tuition,
Enrollment, and Federal Stafford Loan Borrowing Up to the 2007-08 Loan
Limit Increase,'' May 2011; U.S. Department of Education, National
Center for Education Statistics, ``Study of College Costs and Prices
1988-89 to 1997-98, Vol. 1,''December 2001; National Commission on the
Cost of Higher Education, ``Straight Talk about College Costs
&Prices,'' February 1998.)
Might rising college costs be constrained by more carefully
targeting and measuring the effectiveness of federal education
assistance?
No. Cuts to federal student aid will not help lower costs. In fact,
as stated above, cuts to federal student aid could have the opposite
effect of increasing prices.
What role has federal education assistance like Pell Grants played
in subsidizing rising tuition?
None.
CBO baseline shows Pell funding cliff in FY 2015--do you believe
the current structure of this important program is sustainable? Are the
costs of the Pell Grant program affordable without regular infusions of
mandatory funds?
Yes, if Congress makes funding the program a priority. The Pell
Grant program has had strong bipartisan, bicameral and public support
since its creation in 1972. The maximum grant was set and funded solely
by the appropriations committees until 2007, when additional funds were
made available from the education committees through budget
reconciliation for the first time. Maintaining the maximum grant and
helping students get into and through college are the aspects of the
program that must be sustained and strengthened. How the program is
paid for is up to Congress. For the sake of low-income students, and
those of us who serve them, it should be predictable.
______
[Whereupon, at 12:54 p.m., the subcommittee was adjourned.]