[House Hearing, 118 Congress]
[From the U.S. Government Publishing Office]


                  BREAKING THE SYSTEM: EXAMINING THE 
    IMPLICATIONS OF BIDEN'S STUDENT LOAN POLICIES FOR STUDENTS AND 
                               TAXPAYERS

=======================================================================

                                HEARING

                               BEFORE THE

                            SUBCOMMITTEE ON
                          HIGHER EDUCATION AND
                         WORKFORCE DEVELOPMENT

                                 OF THE

                      COMMITTEE ON EDUCATION AND 
                             THE WORKFORCE
                     U.S. HOUSE OF REPRESENTATIVES

                    ONE HUNDRED EIGHTEENTH CONGRESS

                             FIRST SESSION
                               __________

             HEARING HELD IN WASHINGTON, DC, MARCH 23, 2023
                               __________

                            Serial No. 118-2
                               __________

  Printed for the use of the Committee on Education and the Workforce

                                     
                  [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

                                     
        Available via: edworkforce.house.gov or www.govinfo.gov
        
                               __________

                    U.S. GOVERNMENT PUBLISHING OFFICE
                    
51-624 PDF                 WASHINGTON : 2023           
        
        
        

                COMMITTEE ON EDUCATION AND THE WORKFORCE

               VIRGINIA FOXX, North Carolina, Chairwoman

JOE WILSON, South Carolina           ROBERT C. ``BOBBY'' SCOTT, 
GLENN THOMPSON, Pennsylvania             Virginia,
TIM WALBERG, Michigan                  Ranking Member
GLENN GROTHMAN, Wisconsin            RAUL M. GRIJALVA, Arizona
ELISE M. STEFANIK, New York          JOE COURTNEY, Connecticut
RICK W. ALLEN, Georgia               GREGORIO KILILI CAMACHO SABLAN,
JIM BANKS, Indiana                     Northern Mariana Islands
JAMES COMER, Kentucky                FREDERICA S. WILSON, Florida
LLOYD SMUCKER, Pennsylvania          SUZANNE BONAMICI, Oregon
BURGESS OWENS, Utah                  MARK TAKANO, California
BOB GOOD, Virginia                   ALMA S. ADAMS, North Carolina
LISA McCLAIN, Michigan               MARK DeSAULNIER, California
MARY MILLER, Illinois                DONALD NORCROSS, New Jersey
MICHELLE STEEL, California           PRAMILA JAYAPAL, Washington
RON ESTES, Kansas                    SUSAN WILD, Pennsylvania
JULIA LETLOW, Louisiana              LUCY McBATH, Georgia
KEVIN KILEY, California              JAHANA HAYES, Connecticut
AARON BEAN, Florida                  ILHAN OMAR, Minnesota
ERIC BURLISON, Missouri              HALEY M. STEVENS, Michigan
NATHANIEL MORAN, Texas               TERESA LEGER FERNANDEZ, New Mexico
JOHN JAMES, Michigan                 FRANK J. MRVAN, Indiana
LORI CHAVEZ-DeREMER, Oregon          JAMAAL BOWMAN, New York
BRANDON WILLIAMS, New York
ERIN HOUCHIN, Indiana

                       Cyrus Artz, Staff Director
              Veronique Pluviose, Minority Staff Director
                                 ------                                

       SUBCOMMITTEE ON HIGHER EDUCATION AND WORKFORCE DEVELOPMENT

                     BURGESS OWENS, Utah, Chairman

GLENN THOMPSON, Pennsylvania         FREDERICA S. WILSON, Florida
GLENN GROTHMAN, Wisconsin              Ranking Member
ELISE M. STEFANIK, New York          MARK TAKANO, California
JIM BANKS, Indiana                   PRAMILA JAYAPAL, Washington
LLOYD SMUCKER, Pennsylvania          TERESA LEGER FERNANDEZ, New Mexico
BOB GOOD, Virginia                   KATHY E. MANNING, North Carolina
NATHANIEL MORAN, Texas               LUCY McBATH, Georgia
JOHN JAMES, Michigan                 RAUL M. GRIJALVA, Arizona
LORI CHAVEZ-DeREMER, Oregon          JOE COURTNEY, Connecticut
ERIN HOUCHIN, Indiana                GREGORIO KILILI CAMACHO SABLAN,
BRANDON WILLIAMS, New York             Northern Mariana Islands
VIRGINIA FOXX, North Carolina        SUZANNE BONAMICI, Oregon
                                     ALMA S. ADAMS, North Carolina
                                     ROBERT C. ``BOBBY'' SCOTT, 
                                         Virginia
                                       (ex officio)

                            C O N T E N T S

                              ----------                              
                                                                   Page

Hearing held on March 23, 2023...................................     1

Statement of Members:
    Owens, Hon. Burgess, Chairman, Subcommittee on Higher 
      Education and Workforce Development........................     1
        Prepared statement of....................................     3
    Wilson, Hon. Frederica S., Ranking Member, Subcommittee on 
      Higher 
      Education and Workforce Development........................     4
        Prepared statement of....................................     6

Statement of Witnesses:
    Gadkaree, Sameer, President, The Institute for College Access 
      & Success..................................................    28
        Prepared statement of....................................    30
    Goldwein, Marc, Senior Vice President and Senior Policy 
      Director, Committee for a Responsible Federal Budget.......     8
        Prepared statement of....................................    10
    Looney, Adam, Director, Marriner S. Eccles Institute for 
      Economics and Quantitative Analysis, University of Utah....    18
        Prepared statement of....................................    20
    Salerno, Carlo, Economist and Financial Aid Expert...........    34
        Prepared statement of....................................    36

Additional Submissions:
    Ranking Member Wilson:
        Letter dated March 23, 2023 from the CRL.................    69
    Bonamici, Hon. Suzanne, a Representative in Congress from the 
      State of Oregon:
        Letter dated March 23, 2023 from the NEA.................    72
    Jayapal, Hon. Pramila, a Representative in Congress from the 
      State of Washington:
        College tuition comparison...............................    74
    Questions submitted for the record by:
        Omar, Hon. Ilhan, a Representative in Congress from the 
          State of 
          Minnesota..............................................    78
    Response to question submitted for the record by:
        Mr. Gadkaree.............................................    78

 
                   BREAKING THE SYSTEM: EXAMINING THE
    IMPLICATIONS OF BIDEN'S STUDENT LOAN POLICIES FOR STUDENTS AND 
                               TAXPAYERS

                              ----------                              


                        Thursday, March 23, 2023

                  House of Representatives,
                   Subcommittee on Higher Education
                         and Workforce Development,
                  Committee on Education and the Workforce,
                                                    Washington, DC.
    The Subcommittee met, pursuant to notice, at 10:17 a.m., in 
room 2175, Rayburn House Office Building, Hon. Burgess Owens 
(Chairman of the Subcommittee) presiding.
    Present: Representatives Foxx, Thompson, Grothman, 
Stefanik, Owens, Good, Houchin, Wilson, Scott (ex officio), 
Courtney, Sablan, Bonamici, Takano, Adams, Jayapal, McBath, 
Omar, and Manning.
    Staff present: Cyrus Artz, Staff Director; Nick Barley, 
Deputy Communications Director; Jackson Berryman, Speechwriter; 
Hans Bjontegard, Legislative Assistant; Solomon Chen, 
Professional Staff Member; Christina Delmont-Small, 
Investigator; Tyler Dufrene, Research Assistant; Cate Dillon, 
Director of Operations; Daniel Fuenzalida, Staff Assistant; 
Sheila Havenner, Director of Information Technology; Amy Raaf 
Jones, Director of Education and Human Resources Policy; Alex 
Knorr, Staff Assistant; Andrew Kuzy, Press Assistant; John 
Martin, Deputy Director of Workforce Policy/Counsel; Hannah 
Matesic, Director of Member Services and Coalitions; Audra 
McGeorge, Communications Director; Ethan Pann, Press Assistant; 
Gabriella Pistone, Legislative Assistant Oversight; Mary 
Christina Riley, Professional Staff Member; Chance Russell, 
Professional Staff Member; Kent Talbert, Investigative Counsel; 
Brad Thomas, Senior Education Policy Advisor; Brittany Alston, 
Minority Operations Assistant; Amaris Benavidez, Minority 
Professional Staff Member; Daniel Foster, Minority Health and 
Labor Counsel; Rashage Green, Minority Director of Education 
Policy; Christian Haines, Minority General Counsel; Rasheedah 
Hasan, Minority Clerk and Member Services; Stephanie Lalle, 
Minority Communications Director; Kota Mizutani, Minority 
Deputy Communication Director; Veronique Pluviose, Minority 
Staff Director; Banyon Vassar, Minority IT Administrator; Sam 
Varie, Minority Press Secretary.
    Chairman Owens. The Subcommittee on Higher Education 
Workforce Development will come to order. I'll note there is a 
quorum that's present. Without objection, the Chair is 
authorized to call a recess at any time. The Subcommittee is 
meeting today to hear the testimony of the Implications of 
President Biden's Student Loan Policies for Students and 
Taxpayers.
    Good morning, everyone, and welcome to today's hearing. 
Thank you everyone for your attendance, and for your witnesses, 
and for our witnesses taking time out of your busy schedules to 
be here. This hearing is titled Breaking the System, Examining 
the Implications of Biden's Student Loan Policies for Students 
and Taxpayers, addresses what I believe is one of the greatest 
concerns pressing American's education and our economic 
competitiveness.
    The purpose of this hearing is to examine the impact of the 
President's radical agenda to push its free college through the 
Federal student loan program at the expense of students, 
institutions and taxpayers. Hopefully, our efforts will help 
shine a light for the American public on the failures of this 
administration and present an alternate vision of what would 
lower college costs, limit excessive borrowing, and ensure 
students and taxpayers get a return on their investment in 
postsecondary education.
    Many people in this room probably have student loans. The 
blanket bailouts that turn loans into target grants and saddle 
future generations with someone else's debt is not a solution. 
It has been the American way, from our beginning, to leave a 
legacy to our children of more opportunities, not less, 
particularly when it comes to their limits are due to our 
short-sighted, self-centered, and intergenerational debt.
    The Biden administration's proposal is a patchwork attempt 
to fix a structural problem that will only make worse the 
issues of rising prices, and low-quality education. It is one 
that leaves students worse than if they had never enrolled in 
the first place. Four-in-ten students leave college with debt 
and no degree.
    This has left millions of Americans with student debt that 
far exceeds the financial value of their degree, and with 
taxpayers forced to cover the bill. It is thus unsurprising 
that a direct loan program has resulted in 200 billion dollars 
in losses prior to the President's student loan schemes.
    Yet rather than work with the Congress to fix our financial 
system, the Biden administration has taken the go it alone 
approach at the expense of students and taxpayers. The non-
partisan Congressional Budget Office calculated that the 
blanket debt cancellation will cost the American taxpayers 400 
billion dollars.
    However, this hearing will take a look at the totality of 
the administration's actions, which will cost upwards to one 
trillion dollars, with a laser focus on inflationary spending, 
the Biden administration has all but ignored the challenges 
their actions have created for their partners and their 
borrowers that they serve.
    Just yesterday we learned that one of the services was 
being forced to layoff half of their staff at one time, at a 
time when the customer service is needed more than ever. It's 
impossible for the typical American to make the financing plans 
where they have no idea when, and if, they have to pay back the 
loan.
    It's also impossible for servicers and institutions to give 
guidance when the Department of Education refuses to provide 
it. Bipartisan legislation, like the FAFSA Simplification Act, 
and ensuring borrowers have the resources needed to return to 
repayment are an aftermath from this administration, and so too 
is the good stewardship of taxpayer dollars.
    Indeed the analysis in their proposed income driven 
repayment plan the Department's cost estimate was ridiculously 
out of touch with the reality in about half of what the CBO put 
forward last week. So, I ask my colleagues, is all this chaos 
and confusion worth it?
    An even better question, is all this chaos and confusion on 
purpose? What is the end game of an administration that sprints 
away from common sense? The strategy of purposeful chaos is not 
new. It was first imposed in 1966, by two Marxists, Richard 
Coward and a college professor, and Frances Fox Piven, an 
activist. The Coward Piven strategy was based on the idea that 
orchestrating a crisis that only the government could solve, 
could purposely create enough misery and hopelessness among the 
populous, that their only recourse is relief from D.C. 
bureaucrats, their taxpayer dollar providing saviors.
    The question we need to ask ourselves, and the purpose of 
this hearing is the chaos and destruction of our present 
student loan system worth degrading our systems of checks and 
balances? Is it worth the economic hardship placed on taxpayers 
forced to pay a loan they never asked for, or received, and is 
it immoral to do something that no previous generation has ever 
done, to mortgage our children's future with additional 
trillion dollars added to our out of control 31 trillion-dollar 
national debt?
    All because President Biden made a campaign promise he had 
no right or standing to make. I for one say no. Enough is 
enough. It's time we face our soaring college prices head on, 
not to kick the can down the road for another day. With that I 
look forward to the expert testimony today. With that I yield 
to Ranking Member Wilson for her opening remarks.
    [The statement of Chairman Owens follows:]

      Statement of Hon. Burgess Owens, Chairman, Subcommittee on 
               Higher Education and Workforce Development

    Thank you to everyone in attendance and to our witnesses for taking 
time out of their busy schedules to be here.
    This hearing titled, ``Breaking the System: Examining the 
Implications of Biden's Student Loan Policies for Students and 
Taxpayers,'' addresses what I believe is one of the greatest concerns 
pressing American education and our economic competitiveness.
    The purpose of this hearing is to examine the impact of the 
President's radical agenda to push his free college through the Federal 
student loan program at the expense of students, institutions, and 
taxpayers. Hopefully, our efforts will help shine a light for the 
American public on the failures of this administration and present an 
alternative vision that will lower college costs, limit excessive 
borrowing, and ensure students and taxpayers get a return on their 
investment in postsecondary education.
    Many people in this room probably have student loans. However, 
blanket bailouts that turn loans into targeted grants and saddle future 
generations with someone else's debt is not a solution. It has been the 
American Way from our beginning to leave a legacy to our children of 
more opportunities-not less. Particularly when their limits are due to 
our short sighted, self-centered, and intergenerational debt. The Biden 
administration proposal is a patchwork attempt to fix a structural 
problem that will only make worse the issues of rising prices and low-
quality educations-it is one that leaves students worse than if they 
had never enrolled in the first place.
    Four in ten students leave college with debt and no degree. This 
has left millions of Americans with student debt that far exceed the 
financial value of their degree-and with taxpayers forced to cover the 
bill. It is thus unsurprising that the Direct Loan program has resulted 
in $200 billion in losses prior to the President's student loan 
schemes.
    Yet, rather work with Congress to fix our financing system, the 
Biden administration has taken the `go at it alone' approach at the 
expense of students and taxpayers. The non-partisan Congressional 
Budget Office calculated that blanket debt cancellation would cost the 
American taxpayer $400 billion. However, this hearing will look at the 
totality of the administration's actions which will cost upwards of $1 
trillion.
    With a laser-focus on inflationary spending, the Biden 
administration has all but ignored the challenges their actions have 
created for their partners and the borrowers they serve.
    It's impossible for the typical American to make their financing 
plans when they have no idea when and if they will have to pay back 
their loan. It is also impossible for servicers or institutions to give 
them guidance when the Department of Education refuses to provide it.
    Bipartisan legislation like the FAFSA Simplification Act and 
ensuring borrowers have the resources needed to return to repayment are 
an afterthought for this administration. And so, too is good 
stewardship of taxpayer dollars. Indeed, in announcing their proposed 
income-driven repayment plan, the Department's cost estimate was 
ridiculously out of touch with reality and about half of what the CBO 
put forward last week.
    So, I ask of my colleagues, is all this chaos and confusion worth 
it? An even better question-Is this chaos and confusion on purpose? 
What is the endgame of an Administration that SPRINTS away from Common 
Sense?
    This strategy of purposeful chaos is not new. It was first proposed 
in 1966 by two Marxists, Richard Cloward, a college professor and 
Frances Fox Piven, an activist. The Cloward/Piven Strategy was based on 
the idea of orchestrating crises that only the government can solve. To 
purposely create enough misery and hopelessness among the populace, 
that their only recourse is relief from DC Bureaucrats-their taxpayer 
dollar-providing saviors.
    The question we need to ask ourselves-and the purpose of the 
hearing-is the chaos and destruction of our present student loan system 
worth degrading our system of checks and balances? Is it worth the 
economic hardship placed on taxpayers, forced to pay a loan they never 
asked for or received and is it fair, or moral, to do something no 
previous generation has done-to mortgage our own children's future with 
an additional Trillion dollars added to our out of controlled $31 
Trillion dollar national debt? All because President Biden made a 
campaign promise he had no right or standing to make?
    I for one say no. Enough is enough. It's time we face soaring 
college prices head on, not kick the can down the road for another day.
    With that, I look forward to the expert testimony today.
                                 ______
                                 
    Ms. Wilson. Good morning. It is a pleasure to welcome our 
witnesses and Members for our first Higher Education and 
Workforce Development Subcommittee Hearing of this Congress. I 
also want to welcome the students who are in the room, and 
those that are watching online. The work we do here today has 
direct consequences on your lives, and futures. I hope all of 
my colleagues will keep today's hearing grounded in our most 
important priorities, supporting your success and pursuit of 
the American dream.
    We all know that a college degree is the surest pathway to 
economic mobility. When I speak, I speak from the prism of a 
young teacher, my very first job in life. It was good. I had no 
loans. I bought a car, married, bought a home, raised children, 
never struggled. My daddy paid for my college monthly like a 
mortgage, no loans.
    As the economy slowed, and college costs rose, we ushered 
in student loans for some. Then in 1973, because the loans were 
overwhelming, Pell Grants were born. But the Pell Grant could 
not keep up with the cost of college. So, through the years of 
student debt crisis grew, and now the crisis has turned into a 
catastrophe--a life altering catastrophe that is about to 
cancel lives and must be addressed and rectified now.
    There are people in their 60's and 70's still paying 
student debt, and in some instances the principal has not 
changed. There are families who are on the brink of disaster 
because of the toll to parent plus loans, and life altering 
decisions had to be delayed. Some have lost their homes. The 
cost of college keeps rising out of control.
    So, President Biden said erase student loans up to 
$20,000.00 for some, and $10,000.00 for most, and the 
republicans are whining. They bailed out American Airlines, 
bailed out the automobile industry, especially in Detroit. 
General Motors became known as Government Motors.
    State governments balance their budget because of Federal 
money during the pandemic, and local governments got tons of 
money. Members of Congress got their loans forgiven, and nobody 
said a word. A little bad press here and there, but when we 
decided to bail out the children, the students, the hard-
working want to be somebody college graduates, who will 
contribute to the economy, all hell breaks loose.
    And the whining turns to outrage. Where were you when we 
bailed out the airlines, the automobiles, the State 
governments, the local governments, your republican colleagues 
and the billionaire farmers every season? In fact, a high-
ranking Member of this Committee filed for bankruptcy 
forgiveness five times.
    When republicans controlled both chambers and the White 
House in 2017, they gave billionaires 1.7 trillion with a T and 
tax breaks, but today they've come here to lecture this 
Committee on the implications of giving everyday Americans 1.7 
trillion in student loan forgiveness, a double standard, which 
speaks volumes to our values.
    Let us help our children. Let us help the hard-working 
people who are making a difference, and who deserve our 
support, and who will help our economy, and our economy will 
prosper. But despite these challenges, Congress still has a 
responsibility to solve the underlying problems that caused 
student debt crisis in the first place.
    So, what do we do about it? What about the class of 2024? 
How do we prepare them for college while addressing the student 
debt crisis? Ranking Member Scott and I recently reintroduced 
The Lowering Obstacles to Achieve Now Act, or the LOAN Act. 
This bill would double the Pell Grant, improve the public 
service loan forgiveness programs, cap interest rates on new 
loans at 5 percent and make other critical reforms to make our 
student loan system work for students.
    The LOAN Act will help improve the lives of student loan 
borrowers, both now and in the future by making loans cheaper 
to take out, and easier to pay off. To the students in the 
room, and tuning in, please note that your advocacy sends the 
clear message that reforming our student loan system is a sound 
investment for students, for workers and for our economy.
    So I look forward to our discussion, and the work we have 
ahead. Thank you, Mr. Chair.
    [The statement of Ranking Member Wilson follows:]

Statement of Hon. Frederica S. Wilson, Ranking Member, Subcommittee on 
               Higher Education and Workforce Development

    Good morning. It is a pleasure to welcome our witnesses and Members 
for our first Higher Education and Workforce Development Subcommittee 
hearing of this Congress.
    I also want to welcome the students who are in the room and 
watching online. The work we do here today has direct consequences on 
your lives and futures. I hope all my colleagues will keep today's 
hearing grounded in our most important priority: supporting your 
success and pursuit of the American Dream.
    We all know that a college degree is the surest pathway to economic 
mobility.
    When I speak . . . I speak from the prism of a young teacher. my 
very first job in life. It was good. I had no loans, I married, bought 
a car, bought a home, raised children, struggled. My daddy paid for my 
college monthly like a mortgage. no loans.
    As the economy slowed and college costs rose, we ushered in student 
loans for some. Then in 1973 loans for some. Then in 1973 because the 
loans were overwhelming Pell Grants were born. But the Pell Grant could 
not keep up with the cost of college. So, through the years the student 
debt crisis grew. And now the crisis has turned into a catastrophe. 
Life-altering catastrophe that is out of control and must be addressed 
and rectified now!
    Some families are people in their 60's and 70's still paying 
student debt and in some instances, the principal has not changed.
    Some families are on the brink of disaster because of the toll of 
parents plus loans. And many have lost their homes or delayed purchases 
as the cost of college keeps rising out of control. So, President Biden 
said to erase student loans up to $20,000 for some and $10,000 for most 
and the republicans are whining.
    Bailed out the Airlines. Bailed out the automobile industry, 
especially in Detroit. General Motors became known as government 
motors.
    State governments balanced their budgets because of Federal money. 
And local governments got tons of money.
    Members of Congress got their loans forgiven and nobody said a 
word. A little bad press here and there. But when we decide to Bail out 
the children, the students, and the college graduates who will 
contribute to the economy. All hell breaks loose. And the whining turns 
to outrage.
    Where were you when we had bailed out the airlines, the 
automobiles, the State governments, the local governments, your 
republican colleagues, and the billionaire farmers every season? A 
high-ranking member of this committee filed for bankruptcy forgiveness 
five times.
    When Republicans controlled both chambers and the White House in 
2017, they gave billionaires $1.7 Trillion with tax breaks. But today 
they've come here to lecture this committee on the implications of 
giving everyday Americans $1.7 Trillion in student loan forgiveness.
    A double standard that speaks volumes to our values. Let's help our 
children. Let's help the hardworking people
    who are making a difference and who deserve our support and our 
country and our economy will prosper.
    So, what do we do about it? What about the class of 2024? How do we 
prepare them for college while addressing the student debt crisis?
    Traditionally, Republicans have once again put big banks and hedge 
fund owners over everyday Americans.
    Meanwhile, the average American can't get a bailout and as a 
result, they are robbing Peter to pay Paul to cover
    student loans on a degree that we told them would ensure economic 
prosperity.
    The cost of attending college today is more than triple what it 
cost to attend college in 1980.
    The declining value of the Pell Grant-the bedrock of our financial 
aid system-has also increased the burden for students and families. In 
1975, the Pell Grant covered nearly 80 percent of the average cost of 
tuition, room, and board at a public 4-year university. Now, it covers 
just less than a third of the average cost, leaving far too many low-
income students and families with unmet needs.
    As a result, many students are saddled with a lifetime of student 
loans.
    I am particularly troubled by the number of students who have been 
left behind with not only significant student loans but also no 
meaningful degree.
    In the last decade, at least five large for-profit college chains 
have collapsed overnight, leaving tens of thousands of students with 
debt and often without degrees. These school closures can be 
devastating for students, plunging them into financial and emotional 
despair while robbing them of the education and opportunities they 
deserve.
    Regrettably, taxpayers also bare the cost. As of 2022, the non-
partisan Government Accountability Office reported that low-quality 
for-profit institutions have cost taxpayers $8.2 billion.
    Thankfully, in response, the Biden-Harris administration has taken 
historic steps to provide borrowers with a clear pathway to repayment 
and protect students, families, and taxpayers.
    The administration has forgiven more than $24 billion in student 
loan debt for more than 1 million borrowers who were defrauded by their 
institution or have a total and permanent disability.
    Since the beginning of the pandemic, we have ensured that borrowers 
of federally held student loans were spared from making payments on 
their loans and accruing interest on them.
    The Administration has also streamlined the income-driven repayment 
program to make paying back loans more affordable.
    And finally, President Biden has forgiven more than $25 billion for 
more than 370,000 public servants by making time-limit improvements to 
the Public Service Loan Forgiveness program.
    Even in the face of Republican opposition, the Biden-Harris 
administration has taken these historic steps to get us back on track. 
However, we know there is more work that still needs to be done.
    That's why President Biden announced a plan to forgive up to 
$20,000 in outstanding Federal student loan debt. This plan would 
provide debt relief for 43 million current borrowers-some of whom are 
in this room-and clear the remaining debt of roughly half of those 
borrowers.
    Unfortunately, Republican politicians are denying students-
including an estimated 114,000 borrowers in my district-the relief they 
need to make ends meet.
    Despite these challenges, Congress still has a responsibility to 
solve the underlying problems that caused the student debt crisis in 
the first place, such as the declining value of the Pell Grant and our 
flawed student loan system.
    To that end, Ranking Member Scott and I recently reintroduced the 
Lowering Obstacles to Achievement Now Act-or LOAN Act.
    This bill would:

   Double the Pell Grant;

   Improve the Public Service Loan Forgiveness program;

   Cap interest rates on new loans at 5 percent; and,

   Make other critical reforms to make our student loan system 
        work for students.

    The LOAN Act will help improve the lives of student loan borrowers-
both now and in the future-by making loans cheaper to take out and 
easier to pay off.
    To the students in the room and tuning in, please know that your 
advocacy sends the clear message that reforming our student loan system 
is a sound investment for students, workers, and our economy.
    I look forward to our discussion and the work we have ahead.
                                 ______
                                 
    Chairman Owens. Thank you, Ranking Member Wilson. Pursuant 
to Committee Rule 8(c), all Members who wish to insert written 
statements to the record may do so by submitting them to the 
Committee Clerk electronically in Microsoft Word format by 5 
p.m., fourteen days after the date of this hearing, which is 
April 6, 2023, and without objections the hearing record will 
remain open 14 days to allow such statements and other 
extraneous material reference during the hearing to be 
submitted to the official hearing record.
    I would now like to turn the introduction to our 
distinguished witnesses. Mr. Marc Goldwein, a Senior Vice 
President and Senior Policy Director for the Committee for the 
Responsible Federal Budget, a non-partisan, non-profit 
organization committed to educating the public on issues with 
significant fiscal policy impact.
    Mr. Adam Looney is Executive Director of Marriner S. Eccles 
Institute for Economics and Quantitative Analysis at the 
University of Utah. He previously served as Deputy Assistant 
Secretary for Tax Analysis for the U.S. Department at the 
Treasury during the Obama administration.
    Mr. Sameer Gadkaree, President of The Institute for College 
Access and Success, an organization dedicated to research and 
design and advocacy of student-centered higher education 
policies.
    And Carlos Salerno, is an Economist and Financial Aid 
Expert, two-time entrepreneur with over two decades of 
experiencing conducting research for both the public and 
private sector and building first to market solutions to help 
students and families help finance a college education.
    We want to thank all the witnesses for being here today and 
look forward to your testimony. I would like to remind the 
witnesses that we have read your written statements, and they 
will appear in full in the hearing record.
    Pursuant to the Committee Rule 8(b) the Committee practice, 
I would like to ask that each of you limit your oral 
presentation to a five-minute summary of your written 
statement. I would also like to remind the witnesses to be 
aware of their responsibility to provide accurate information 
to the Subcommittee. Before you begin your testimony, please 
remember to press the button on the microphone in front of you, 
so it will be turned on and Members can hear you.
    As you begin to speak the light in front of you will turn 
green. After 4 minutes the light will turn yellow to signal 
that it's 1 minute remaining. When the light turns red your 
five minutes have expired. We ask you to please wrap up at that 
time. Also, as a long-standing Committee practice, we will let 
the entire panel make their presentations before we move to 
Member questions.
    When answering a question please remember to once again 
turn your microphone on, and then off when finished. I first 
would like to recognize Mr. Goldwein for your testimony.

 STATEMENT OF MARC GOLDWEIN, SENIOR VICE PRESIDENT AND SENIOR 
               POLICY DIRECTOR, COMMITTEE FOR A 
           RESPONSIBLE FEDERAL BUDGET, WASHINGTON, DC

    Mr. Goldwein. Thank you so much. Chairman Owens,
    Ranking Member Wilson, and Members of the Subcommittee. 
Thank you again so much for inviting me today to speak on the 
implications of our current student debt policies. I am Marc 
Goldwein. I'm the Vice President, Senior Vice President, and 
Senior Policy Director at the Committee for Responsible Federal 
Budget.
    We're a non-partisan, non-profit think tank here in 
Washington, DC. focused on fiscal policy issues. There is no 
question that we need to reform America's higher education 
system. Costs are too high, outcomes are too variable, 
accountability is mostly lacking, and many borrowers are 
feeling burdened by high levels of student debt.
    And as we consider reforms to higher education, we should 
focus on policies that are fiscally responsible for the 
taxpayer, that are justified on economic and financial grounds, 
that are targeted to those that are most in need, and that 
improve the quality and affordability of education--of higher 
education, in particular.
    Unfortunately, the administration's approach, in 
particular, the ongoing debt pause, the blanket debt 
cancellation, and the reforms to the income driven repayment 
program do not meet these criteria. At best, in my view, they 
will serve as a temporary band-aid, and more likely they're 
actually going to worsen many of the structural problems in the 
current system.
    Taken together, we estimate that policies enacted since the 
pandemic have cost 970 billion dollars over a decade, over 900 
billion of that is executive actions under the current 
administration. To put that in context, that is more than we've 
spent on higher education in the Nation's entire history. Let 
me say that again. The 970 billion dollar cost of higher 
education actions since the pandemic is more than every dollar 
the Federal Government has spent on higher education in its 
entire pre-pandemic history.
    It's about three times the cost of the Pell Grants program 
over the next decade. It's 11 times the cost of the President's 
plan for free community college. It is extremely expensive. And 
this spending is coming at a time when inflation is surging, 
national debt is approaching record levels.
    We're on course to borrow another 20 trillion dollars over 
the next decade, and interest costs are exploding. It's not 
clear that this massive amount of spending can be justified on 
economic or financial grounds. Yes, the pause made sense in 
March 2020. Back then the unemployment rate was headed toward 
15 percent, and we were at risk of falling into an economic 
depression.
    The pause at that point strengthened household balance 
sheets. It's propped up the macro economy, and there was a 
reasonable case for putting into effect because it can go a lot 
more quickly than say unemployment benefits or checks. But 
eight extensions later that justification has long since 
disappeared. The overall unemployment rate today is about the 
lowest it's been in 50 years, and among college graduates, only 
2 percent are jobless.
    The administration itself has bragged that ``household 
finances are stronger than pre-pandemic.'' That's from the 
administration. Rather than support economic growth, as this 
policy would have done early in the pandemic, now it's stoking 
inflation, and increasing our risk of recession. We've 
estimated that the pause has added about 20 basis points to the 
inflation rate, and that the President's cancellation policy 
would add about 25 basis points.
    The Federal Reserve, of course, is going to respond to that 
inflation, and is with tighter monetary policy and high rates. 
But we've seen the consequences of those actions. Those rate 
increases lead to financial turmoil, such as the recent banking 
crisis, the problems with the housing sector, and could put us 
into a recession.
    At the same time these student debt policies mean higher 
costs and higher recession risks for everyday Americans. They 
disproportionately benefit high-income households. Only 13 
percent of Americans hold student debt, and the largest 
balances are owned by doctors, lawyers, and other high-income 
professionals. It's not clear we should be providing them such 
a large financial windfall.
    Finally, I'm concerned the recent student debt policies 
will actually worsen the very outcomes they're trying to 
improve. I have no doubt that many supporters of these policies 
have good intentions, but we're not focused on the unintended 
consequences. If the court's allow the President's unilateral 
debt cancellation to continue, the student debt program will 
become more like tuition roulette.
    Some people won't end up having to pay anything back. Some 
will pay some back, and people won't really know in advance 
because of the arbitrary nature of this forgiveness. As a 
result, I expect borrowing to rise, tuitions to grow, and a 
huge expansion of low-quality programs that are going to hurt 
overall education outcomes. It's not too late to turn this 
around. It's not too late for Congress to act to do its job to 
truly reform our student loan program for the sake of borrowers 
and the taxpayers. Thank you.
    [The prepared statement of Mr. Goldwein follows:]

                  Prepared Statement of Marc Goldwein

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    Chairman Owens. Thank you, Mr. Goldwein. Appreciate that. I 
recognize Dr. Looney. Would you mind also bringing that 
microphone a little bit closer to you to make sure we can hear 
you, if you can do that, if possible.
    Mr. Looney. OK.
    Chairman Looney. OK. All right. Thank you so much.

  STATEMENT OF DR. ADAM LOONEY, DIRECTOR, MARRINER S. ECCLES 
 INSTITUTE FOR ECONOMICS AND QUANTITATIVE ANALYSIS, UNIVERSITY 
                  OF UTAH, SALT LAKE CITY, UT

    Mr. Looney. Thank you. Chairman Owens, Ranking Member 
Wilson, and Members of the Committee, thank you for the 
opportunity to testify today.
    Our system of higher education financing is in crisis. Too 
many students enroll in programs that are too expensive, or 
that don't lead to good jobs, that leaves them saddled with 
debt they can't afford, and taxpayers on the hook. However, 
recent executive actions are poorly targeted to help struggling 
borrowers, that benefit highly educated and well-off students. 
They are costly to taxpayers, and they will increase tuition 
charged by institutions borrowing by students and enrollment at 
poor quality institutions.
    The cumulative executive actions are expected to cost close 
to a trillion dollars, making these new student loan subsidies 
among the largest transfer programs in American history, 
exceeding the amounts of that will be spent on the earned 
income tax credit, or on food stamps, for example, over the 
next decade.
    Taxpayers will now spend almost twice as much supporting 
student loan borrowers than it has ever spent on Pell Grant 
recipients, in the history of the Pell Grant Program. In 
contrast to those programs, however, student loans are not 
means tested, and eligibility is based on whether you go to 
college, how long you enrolled, and whether you go to graduate 
school.
    That explains why student borrowers are better educated, 
why they earn higher incomes, grew up in more affluent 
families, than other Americans, particularly those who are 
served by means tested transfer programs. Next year for 
example, 70 percent of debt is expected to be owed by students 
who have gone to graduate school, and 39 percent by graduate 
students who will earn more than $100,000.00 per year over 
their careers.
    That's also why expansive debt relief policies are 
regressive unless they are well targeted. In the case of the 
Department's proposed forgiveness program, for example, by 
forgiving debts of students who never received a Pell Grant, 
about a third of the 400 billion cost will go to a group of 
students who are well educated, mostly white, and 
disproportionately from high income families. The proposed 
changes to IDR plans are also elected to have significant 
unintended effects on students and educational institutions.
    Students will borrow more. Borrowing has historically been 
a more expensive way to pay for college, but under the IDR 
proposal students will be expected to repay only a fraction of 
the amounts that they borrow, making student loans the cheapest 
way to pay.
    The Congressional Budget Office projects that student loan 
borrowing may increase by roughly 100 billion dollars over the 
next decade as a result. Institutions are likely to respond to 
the new IDR rules by raising tuition and reducing institutional 
aid. For example, the elimination of loan limits for graduate 
students under the Grad Plus Program increased the amounts that 
students borrowed, increased tuition prices, but did not 
increase access to graduate study among historically 
underrepresented groups.
    Likewise, under IDR, programs and institutions with the 
worst outcomes and highest debts will accrue the largest 
subsidies, and students who can't repay their loans will be 
automatically enrolled in IDR before they default, subverting 
the cohort default rate rules, which prohibit institutions with 
poor borrower outcomes from receiving Federal aid.
    Historically, when the Federal loan program increased 
subsidies for low-quality institutions, and weakened 
accountability rules. That increased enrollment at low-quality 
programs, increased the amounts that students borrowed, and 
worsened borrower outcomes.
    I don't doubt that cleaning up our student loan mess will 
require some degree of loan forgiveness for those who were 
harmed by bad government practices, and through IDR plans for 
borrowers who made good educational choices, but who fell on 
hard times.
    But for many borrowers, their loans have helped them 
achieve economic success, and repaying them is a way to pay it 
forward to future generations of students. Looking ahead at the 
fundamental problems that caused the student loan crisis, 
useless degree programs and exorbitant costs can't be solved by 
encouraging students to take up bigger loans and promising to 
forgive them later.
    Instead, Congress should decide which institutions and 
degreed programs taxpayers should pay for, which students are 
wealthy, or well-educated enough to pay their own way, and how 
to ream in incentives for institutions to raise their prices. 
Thanks. That concludes my prepared remarks.
    [The prepared statement of Mr. Looney follows:]

                   Prepared Statement of Adam Looney

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    Chairman Owens. Thank you, Dr. Looney. I now recognize Mr. 
Gadkaree for your testimony.

         STATEMENT OF MR. SAMEER GADKAREE, PRESIDENT, 
          THE INSTITUTE FOR COLLEGE ACCESS & SUCCESS, 
                        LOS ANGELES, CA

    Mr. Gadkaree. Chairman Owens, Ranking Member Wilson, and 
Members of the Subcommittee. Thank you for the opportunity to 
speak with you today. I'm Sameer Gadkaree, President of the 
Institute for College Access and Success or TICAS.
    TICAS is a non-profit, non-partisan organization that 
advocates for increasing college affordability, improving 
college access and completion, protecting students and 
taxpayers from fraud, waste and abuse, and increasing economic 
and racial equity in higher education.
    A college degree remains a strong investment for most 
Americans. College graduates earn a substantial wage premium, 
and are much less likely to experience poverty, or 
unemployment, than people without a credential or degree.
    However, even after Federal, State and college grant aid, 
college costs remain high enough that most students cannot 
enroll without taking on debt.
    To cover the average cost of attending a 4-year public 
college, students from families making $30,000.00 or less, 
would need to spend 93 percent, nearly all of their total 
family income. To cover the cost of a 2-year college, these 
students would need to spend nearly two-thirds of their total 
family income. Why? For decades State funding has declined for 
public colleges and universities, and colleges have turned to 
tuition and fees to make up the gap.
    Meanwhile, grant aid, including the Federal Pell Grant has 
not kept up with rising costs. The current maximum Pell award 
covers the lowest share of college costs in the program's more 
than 50-year history. Taken together, these trends mean that 
the average debt held by bachelor's degree recipients grew by 
56 percent over a 15-year period, while outpacing inflation.
    Even before the pandemic, too many Federal student loan 
borrowers were struggling. By the end of 2019, 25 percent of 
our all direct loan borrowers were either delinquent or in 
default, with over 1 million borrowers entering default in 2019 
alone. Because of the racial wealth gap, along with persistent 
employment and wage discrimination, black students are more 
likely to borrow for college and have worse loan outcomes.
    To help families during the pandemic in 2020, the Trump 
administration implemented a pause on payments, interest and 
collections from most Federal student loan borrowers, which the 
Biden administration has continued during ongoing public health 
and economic uncertainty.
    The Biden administration acted to help low-and moderate-
income families via its targeted one-time debt relief program. 
It sought to address the striking growth in college costs, the 
vulnerable students who have accrued some college debt, but 
don't have a degree, and the unique economic challenges created 
by the pandemic.
    A third of the relief would go to borrowers over 40 years 
old, and the administration noted that the effort would reduce 
the racial wealth gap. A political analysis found that 98 
percent of debt relief applications came from zip codes where 
the average annual income is under $75,000.00.
    Meanwhile, as the administration transitions borrowers back 
into repayment, it is taking long overdue steps to reform the 
repayment system, and the insured borrowers can access existing 
relief programs, including the public service loan forgiveness 
program, and borrower defense to repayment.
    Alongside these efforts, the administration is 
strengthening and simplifying the repayment system by 
implementing and improved income driven repayment plan. It ends 
ballooning balances and ensures students good stay in good 
standing with affordable payments.
    The Biden administration's student debt actions have helped 
address some of the most serious consequences of rising student 
debt, which affects not only young Americans, but increasingly 
those approaching and in retirement.
    The administration is taking targeted and common sense 
steps to address a growing problem affecting 44 million 
Americans, making existing relief programs function as 
intended. It's charging debt for borrowers who are deceived by 
their schools, offering those in default a fresh start, 
addressing poor loan servicing, and revising the income driven 
repayment system.
    While these actions are a critical lifeline for millions of 
families, we must stop the debt pile up and address the root 
causes of this crisis. Policymakers can start by investing in 
the Pell Grant Program, which goes overwhelmingly to students 
from families with incomes below $40,000.00. They should work 
with states to drive down student costs and reduce reliance on 
debt.
    They should support efforts to hold the worst-performing 
career education programs accountable for creating outsized 
debts with little earnings gain, and they should require 
colleges to provide students with clear, transparent, and 
comparable information about college costs, and the financial 
aid options available to cover them.
    To truly drive economic growth, and help families recover 
from the pandemic, we must make college more affordable, hold 
colleges accountable for keeping costs down and providing a 
quality education, and ensure that student debt does not hold 
families back from prosperity. Thank you for the opportunity to 
provide these remarks. I look forward to answering your 
questions.
    [The prepared statement of Mr. Gadkaree follows]

                 Prepared Statement of Sameer Gadkaree

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    Chairman Owens. Thank you, Mr. Gadkaree. Thank you so much. 
And last, but not least, I'd like to recognize Dr. Salerno for 
your testimony.

  STATEMENT OF DR. CARLO SALERNO, ECONOMIST AND FINANCIAL AID 
                    EXPERT, LOS ANGELES, CA

    Mr. Salerno. Chairman Owens, Ranking Member Wilson, Members 
of the Subcommittee. Thank you for inviting me here today to 
share my observations. The combined public and private 
investment in college access and affordability today is in the 
hundreds of billions of dollars annually, and you have roughly 
four in ten Federal loan borrowers in repayment, pre-pandemic, 
a debt but no degree.
    The challenges borrowers must hurdle to finance a degree 
are well documented. They are also shaped by policymaker's 
promises and actions. In the President's loan forgiveness 
proposal to the rewrite of income driven repayment to repairing 
poorly designed PSLF Program, this administration has signaled 
its priority is to provide debt relief, but to defer and delay 
action on things that actually prevent the need for debt relief 
to begin with.
    A strategy of mopping the floor while letting the faucet 
continue to run will not solve the college debt crisis. Without 
meaningful program reform from Congress, loan balances, 
delinquencies, and defaults will almost certainly continue to 
grow over time. What message does our government send when it 
insists on debt relief for former borrowers, but pushes the 
same, supposedly toxic loans on millions of current and future 
borrowers?
    We know pre-pandemic borrowers entering repayment typically 
got a 6-month grace period. They gave loan servicers sufficient 
time to establish communication, provide repayment guidance, 
and process paperwork. What message is sent to borrowers and 
servicers about planning for repayment when pause extensions 
are announced only a few months, and in one case, literally 
just in days before a repayment is supposed to restart.
    We know borrowers who can't be contacted can't be helped. 
What message does a perennially stalled next gen servicing 
platform send to the majority of defaulted borrowers who are 
unlikely to be skip traced in time to take advantage of fresh 
start eligibility?
    What message is sent to a college financial aid community 
that's regarded by most as the gatekeeper of timely, 
authoritative aid advice, when the FAFSA Simplification Act, 
its implementation has already been pushed back once, finds 
itself yet on another delayed timetable.
    Again, the student loan debt crisis cannot be mopped away. 
It can, however, be wrenched closed with solutions to keep 
college affordability and borrowing low, while simultaneously 
keeping degree completion and loan repayment high. Today's 
student's and taxpayers almost exclusively shoulder loan 
financing risk, even though we know the quality of programs 
colleges offer directly affects repayment success.
    One way to provide more and better accountability, is have 
colleges partly share the repayment risk by cosigning the 
Federal loans they expect their students to take. Institutions 
would be incentivized to help more students complete more 
quickly. Taxpayers would see fewer write-offs, and academic 
programs would become more tightly aligned to labor market 
needs.
    In return, we should also give institutions additional 
operating flexibility to, for example, raise or lower borrowing 
limits, and we should also consider making them eligible for 
additional financial grants where they exceed expectations. 
Another option Congress could consider is limiting borrower's 
repayment options to just the standard plan and an IDR plan, it 
could also consider providing whatever relief it does want to 
offer in the form of monthly payment to principal matches, 
rather than lump sums.
    This would help keep negatively amortizing loan balances in 
check, and better target relief for the borrowers who need it 
most. PSLF could be sunset in favor of a new and better 
solution that offers micro loan forgiveness, and returns for 
micro acts of service. Doing it in this way better aligns 
outcomes with rewards. It also better targets relief toward 
those we know struggle most to repay the unemployed, and those 
with debt and no degree.
    Finally, borrowing uncertainty gets reduced when consumers 
have access to the right data. Institutions could be required 
to publicly share and be financially held accountable for 
program level ROI metrics. They could also be encouraged to 
separate the processes of buying tuition from buying indirect 
support, like room and board, that not every student may need 
or want.
    The Federal student loan system is a cornerstone of the 
public commitment to the United States economic well-being. I 
commend your efforts to consider more than just fixing policies 
of the past. Thank you for the opportunity to offer testimony 
today, and I look forward to answering your questions.
    [The prepared statement of Mr. Salerno follows:]

                  Prepared Statement of Carlo Salerno

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    Chairman Owens. Thank you, Dr. Salerno. I appreciate that. 
Under Committee Rule 9(a), we will now question witnesses under 
the five-minute rule. Without objection, Representative Omar 
will be permitted to question witnesses after all regular 
Members of the Subcommittee have had their opportunity to ask 
questions under the five-minute rule. I will now recognize 
myself for the purpose of asking questions.
    Dr. Looney, I think almost everyone in this room agrees 
that borrowers should have access to affordable repayment 
options when they fall on hard times. But what the 
administration has put forth would put a safety net for 
borrowers into a financial distress, and a financial distress 
into an unsustainable drain on taxpayer support.
    What recommendations do you have for Congress when it comes 
to designing and effective income-driven repayment plan to 
protect students from unmanageable payment burdens, at the same 
time protecting taxpayers from excessive subsidy costs?
    Mr. Looney. Thank you, Ranking Member, or sorry, thank you 
Chairman Owens. So, I think that most of the problems that 
borrowers face are entirely predictable based on the 
institutions and programs they attend. So a lot of the problems 
that borrowers face with repayment default, struggling with 
debts that are too high, arise because they enroll in a program 
where the tuition is too high, or where students systematically 
leave those institutions without a degree, or with a degree 
that doesn't lead to a good job.
    So, I think in order to have a coherent income-based 
repayment system, or a repayment system in which students are 
expected to repay their loans, you have to have a front end 
that has some underwriting, or accountability for the 
institutions that insures that taxpayer money flows to those 
institutions that provide a good quality degree.
    And likewise, I think you need to have policies that put 
downward pressure on tuition and borrowing, things like 
restoring limits on graduate debt that used to exist, that 
insure that borrowers didn't take on debt that was too high 
relative to the programs that they enrolled in.
    Chairman Owens. Thank you. Dr. Salerno, in your testimony 
you propose a solution that would allow institutions the 
flexibility to control borrowing, and return to having schools 
cosign their students loan. Can you describe how your proposal 
would benefit students, taxpayers and institutions?
    Mr. Salerno. Chairperson Owens thanks for the question. 
Yes. Students benefit from risk sharing because institutions 
that are held financially liable for their students success 
will put more effort into getting those students through the 
system faster and more cheaply. They will be economically 
incentivized to get graduates done in the shortest amount of 
time, and they will be incentivized to help those graduates 
find good payment repayment afterwards, or good-paying jobs 
afterwards.
    Because if they don't, they will be held financially 
liable. Taxpayers benefit because again part of the risk of 
loss gets covered by an entity that does not have to be skip-
traced and compelled to repay. These institutions have 
financial resources and have different solutions available to 
them to help recover losses on defaults. That alleviates the 
taxpayer investment, which is as important as protecting 
students in this case.
    And finally, institutions, while being subject to more 
accountability, are--benefit from having greater flexible, 
autonomy. And by that I mean and greater control over how they 
conduct their business, and by giving them greater control, 
more flexibility to operate on a day to day basis. They benefit 
as well.
    Chairman Owens. Thank you. You also indicate in your 
testimony that accountability is more than just sanctioning and 
should include financially worthy institutions that keep costs 
low, and to serve at risk students success with. Can you 
elaborate a little on that.
    Mr. Salerno. Sure. I think again, any system of 
accountability should not be built just on sticks, it needs to 
be built on carrots and sticks, and so if we're going to ask 
more of institutions, we should give more to the institutions 
who exceed expectations and do well.
    One of the big challenges that we know with enrolling low 
income and at-risk students, for example, is that while Pell 
Grants level the funding playing field, we know that these 
students need more resources than the typical R word, the 
typical student that enrolls.
    It's harder for them to complete. They need more 
institutional resources to succeed. By giving institutions who 
perform well more of those resources up front it only better 
positions them to continue to provide additional resources for 
those students.
    Chairman Owens. Thank you. I yield back my time. I now 
recognize Ranking Member Jayapal for the purpose of questioning 
the witnesses.
    Ms. Jayapal. Thank you so much Mr. Chairman and thank you 
to Ms. Wilson for allowing me to go first, so that I can get my 
questions in before I have to leave. President Biden made the 
historic choice to propose canceling debt for 16 million low-
and middle-income borrowers.
    Unfortunately, many of the Congress Members opposing 
cancellation actually represent districts with the most low-and 
middle-class borrowers that stand to benefit. Six of the top 
ten congressional Districts that have the most approved 
cancellation applications are actually represented by my 
republican colleagues.
    In this Subcommittee, three of the top five are also 
republican. So instead of attacking this restorative action, I 
wish that this Committee was focusing on the reasons why low-
and middle-class borrowers have such high levels of student 
debt to start with, and that's what my questions will be about.
    Mr. Gadkaree, four decades ago the Pell Grant was able to 
cover more than 75 percent of the cost of attendance at a 
public 4-year college, which enroll 81 percent of black, 
Latino, and Native American students. What does the maximum 
Pell cover now at the public 4 years?
    Mr. Gadkaree. Representative, about one-quarter of the 
total cost of attendance.
    Ms. Jayapal. 25 percent. One-quarter of the total cost. And 
as Federal investment and affordable higher education has 
dropped off, have the states begun funding more? What has 
happened to State funding for higher education?
    Mr. Gadkaree. Unfortunately, State funding has declined, 
and colleges, especially public colleges have had to turn to 
tuition and fees to make up the difference.
    Ms. Jayapal. So, State funding has also declined, and at 
the same time costs of higher education have gone up. What does 
a 2-year, or a 4-year public college cost today, compared to 
say 20 years ago?
    Mr. Gadkaree. The average cost of college has more than 
doubled in the 21st Century, with an annual growth rate of 7 
percent.
    Ms. Jayapal. More than doubled. And in fact, the Student 
Borrower Protection Center analyzed the costs of public 
universities that republican Members of this Committee went to, 
and the cost of those very institutions have doubled and 
tripled in the last few decades, while by the way, Federal 
minimum wage has stagnated since 2009. And so, Mr. Chairman, I 
ask unanimous consent to enter into the record the Student 
Borrower Protection Center document that analyzes each of the 
Committee Members that went to a public college on this 
Committee on the republican side.
    And actually, says what the cost of college was when those 
Members graduated, and what it costs today.
    Chairman Owens. Without objection.
    Ms. Jayapal. Thank you. Given these high costs, isn't it 
true that higher education is not paying off for everyone, even 
though the need for higher education to get a job is still very 
real?
    Mr. Gadkaree. Well Representative, the good news is that 
the return on investment continues to go up on average, but 
it's important to address the many student loan borrowers, 
about a third, who have debt but no degree.
    Ms. Jayapal. So let's talk about that third. I appreciate 
that clarification to the question. Let's talk about who in 
particular is hurt by the high cost of higher education, and 
the Federal Government's disinvestment. What racial, geographic 
and gender gaps are getting exacerbated by the current system?
    Mr. Gadkaree. Well unfortunately, what we see, and we see 
this pre-pandemic, and I suspect we will see it when payments 
resume, is that the students who come from the most 
economically disadvantaged backgrounds are the ones who 
struggle the most. So, pre-pandemic there was a study in 2017 
that showed that 87 percent of defaulters were former Pell 
Grant recipients.
    Again, these are people whose family incomes are less than 
$40,000.00. Those are the people who are struggling most with 
debt and default. There was also a study that showed that the 
median black borrower owed more than they borrowed 12 years 
after entering repayment, and so those are some of the 
borrowers who we see struggling the most with repayment, 
unfortunately.
    Ms. Jayapal. Thank you. And actually, I think there's also 
a statistic that I saw among rural Americans, that 6.5 million 
owe an average of 35,000, and 21 percent of blue-collar workers 
in production, repair and agriculture have debt. So, it's a 
really interesting, diverse, and specific population. So, would 
you say that President Biden's debt cancellation plan, and 
other measures to ease student debt will benefit the most 
vulnerable, the most needy?
    Mr. Gadkaree. Yes Representative, thankfully in the debt 
cancellation plan 60 percent of the borrowers had a Pell Grant, 
which again is associated with a low family income, and they're 
twice as likely to be black. So, the administration noted that 
their action would have the tendency to close the racial wealth 
divide.
    Ms. Jayapal. Students turn to college for long-term 
economic success, not debt. This crisis is the result of 
decades of disinvestment, and I'm so glad that President Biden 
is making it easier for low-income borrowers struggling with 
student debt, and has also endorsed my College for All Act, 
which I hope will move forward. Thank you so much, and I yield 
back Mr. Chairman.
    Chairman Owens. Thank you. I now recognize for five 
minutes, Ms. Stefanik.
    Ms. Stefanik. Thank you. The American people are rightly 
concerned about just how fundamentally unfair and unjust the 
Biden administration's trillion-dollar student loan bailout and 
policies are for hard-working American families. Those hard-
working American families who may have chosen not to go to 
college, or perhaps could not afford it, or worked 
responsibility to pay off their loans.
    But yet, they're going to foot the bill for this trillion-
dollar bailout, and they'll also feel the effects or more and 
more painful Biden inflation. Mr. Goldwein, in your testimony 
you mentioned the Biden Plan would increase inflation by 15 to 
27 points, while lining the pockets of the wealthy, and those 
with advanced degrees.
    For the folks on the panel, just so you know, in my 
district in Upstate New York in the north country, 
approximately three-quarters of constituents that I represent 
do not hold a bachelor's degree or higher. That includes my 
immediate family members, who are very successful, community 
leaders, who are very successful, local elected officials, 
CEO's of successful manufacturers and small businesses.
    What sorts of negative impacts will nearly those three-
quarters of my constituents see as a result of Joe Biden's 
painful policy proposal? That question is for you Mr. Goldwein, 
and for you, Mr. Looney.
    Mr. Goldwein. Well, anybody that's not benefiting directly 
from the debt forgiveness is going to be hurt indirectly by the 
higher inflation it causes. As you mentioned, we estimate about 
a quarter point increase in inflation. That means higher prices 
at the grocery store, higher rents, higher prices at gas pumps, 
you name it.
    But the real risk is if that higher inflation pushes us 
into a recession. As the Federal Reserve responds by raising 
rates, we saw just these last couple weeks what that can do to 
destabilize the banking sector, the housing sector. And if 
there's a big spike in unemployment, it's those without college 
degrees that are going to be hurt the most.
    Ms. Stefanik. Mr. Looney?
    Mr. Looney. Thank you. Well you know, one of the most 
important divisions in our country is between those who have a 
college degree and those that don't in terms of how much they 
earn, and the quality of jobs they have. You know, whether 
they're married or divorced, you know, whether they die of 
debts of despair.
    And so, you know, college graduates tend to be better off 
on average, and so the policies that transfer income to those 
advantaged groups, and paid for it effectively among those that 
don't, you know, increase in equality rather than reduce it.
    Ms. Stefanik. Dr. Salerno, shifting gears here. The 
Department has traditionally relied on debt to earnings measure 
for assessing whether programs led to gainful employment for 
their graduate, but that doesn't consider the 30 billion 
dollars in Pell Grants we disburse every year, that may be 
paying for programs that provide a negative return on 
investment.
    The Promoting Employment and Lifelong Learning Act, or the 
PELL Act, that I introduced along with the Chair of this 
Committee, Dr. Foxx, and other Members of this Committee, 
propose strong accountability guardrails, including measuring 
whether the program's price is aligned with the earning's boost 
graduates receive 3 years after obtaining their credential. Is 
this metric something that could be applied to all programs at 
all institutions receiving Federal student aid dollars if 
Congress were to rewrite gainful employment in statute?
    Mr. Salerno. Congresswoman, thank you for the question. I 
think the answer is yes it would. A 3-year metric has a value 
in the sense that it gives enough runway for students to get 
into their career earnings, but it also limits the time of 
exposure to a point where we can no longer attribute their 
gains to something other than college, so I think it's 
valuable.
    I think it's also easy to understand. I think we understand 
the concept of ROI. We understand it in different capacities in 
our lives. The fact that it could be used here not for just one 
class of institutions, but for all institutions, again improves 
transparency and reduces uncertainty, and improves 
comparability.
    Ms. Stefanik. Thank you. I yield back.
    Chairman Owens. Thank you. I now recognize Ranking Member 
Miss Wilson.
    Ms. Wilson. Thank you, Mr. Chair. I have a letter that I'd 
like to submit for the record on behalf of the Center for 
Responsible Lending.
    Chairman Owens. Without objection.
    Ms. Wilson. The cost of attending college today has more 
than tripled what it cost to attend college in 1980. The 
declining value of the Pell Grant, the bedrock of our financial 
aid system, has also increased the burden for students and 
families. In 1975, the Pell Grant covered nearly 80 percent of 
the average cost of tuition room and board at a public 4 year 
university.
    Now it covers just less than a third of the average cost, 
leaving far too many low-income students and families with 
unmet needs. As a result, many students are saddled with 
lifetime of student loans. Mr. Gadkaree, recent students have 
shown that disparities and student loan debt are deeply rooted 
in racial wealth disparities, according to data collected by 
the National Center for Education Statistics.
    Black college graduates owe an average of $25,000.00 more 
in student loan debt than white college graduates. Some of my 
colleagues across the aisle have framed these disparities as 
simply a result of unnecessary borrowing, and a lack of limits 
on borrowing. While black, Latino, and low-income students 
often lack the resources to pay for college courses mean that 
these students need to borrow more to access higher education.
    How can Congress and the Department work to address racial 
and socioeconomic disparities and student loan use, and student 
loan default?
    Mr. Gadkaree. Ranking Member Wilson, thank you so much for 
the question. We need comprehensive reform in higher education, 
and that needs to have multiple components. The first one is 
greater affordability, including increasing the value of the 
Pell Grant, or doubling the Pell Grant, as well as creating a 
Federal State partnership to create a more affordable system 
that drives costs down.
    We need accountability for a career education programs that 
generate a lot of debt, but don't generate an increase in 
earnings. We need to promote college completion with evidence-
based reforms. We need to fix the student loan servicing 
system, including through many of the targeted fixes that we're 
talking about during this hearing today.
    And we need to make sure that student have consistent and 
clear information about the grants, loans, and student aid 
options that are available to them.
    Ms. Wilson. Mr. Goldwein stated in May 2022 that canceling 
student debt would mostly provide financial relief to current 
borrowers, mostly in the upper middle class. He stated that it 
would mostly provide a windfall for those at the top of the 
income spectrum. Mr. Gadkaree, how do you respond to his 
argument, and the argument that even high earners with student 
loan debt may be struggling to make ends meet due to burdens of 
their debt.
    Mr. Gadkaree. Ranking Member Wilson, the administration's 
estimate was that 90 percent of the dollars would go to 
individuals earning less than $75,000.00. That a political 
analysis found that those who applied 98 percent of them came 
from zip codes with an average income below $75,000.00. And the 
double relief for Pell Grant borrowers who come from families 
making less than $40,000.00 means that those individuals would 
see more relief.
    Ms. Wilson. I yield back. Thank you.
    Chairman Owens. Thank you. I recognize for five minutes 
Chairwoman of the full Committee, Miss Foxx.
    Mrs. Foxx. Thank you very much Mr. Chairman. I want to 
thank our witnesses for being here today, and say that I read 
your written testimony, and very pleased to have a lot of the 
information that you've provided there. I regret to say that 
the title of this hearing could not be more fitting.
    Rather than work with Congress to fix our student loan 
system, this administration is intentionally attempting to 
break it regardless of who's harmed along the way. The now 3-
year repayment policies meant that over 40 million borrowers 
have been completely disconnected from the loan system, while 
servicers have been forced to cut their staffs by hundreds of 
employees because the administration continues to play 
political games with people's lives.
    And now we hear that because they have decided to throw 
around taxpayer dollars like Monopoly money to please their 
progressive base, they'll need to reduce services, resources, 
even further, which will inevitably mean more staffing cuts.
    Dr. Salerno, as both an economist and someone who has 
worked on the ground with servicers, what will be the 
implications of these layoffs for the millions of borrowers who 
are expected to resume repayment in just a few short months?
    Mr. Salerno. Chairwoman Foxx, thank you for the question. I 
think any time you remove resources that are designed to assist 
borrowers, you create an environment that will adversely affect 
those borrowers. Right now, layoffs in the servicing industry, 
reductions in staff force in the industry, either means 
servicers who still are there are going to have to work longer 
hours.
    They are going to be stretched thin. That means fewer 
opportunities to engage with struggling borrowers. In the end, 
I think these things all collectively work together to limit 
borrower's access to good information, and to make timely 
decisions. That's going to translate into difficulties getting 
back into successful repayment, and so in all likelihood, we 
will probably see more delinquencies, and eventually more 
defaults as a result of stretching thin the resources that 
borrowers need to succeed.
    Mrs. Foxx. Thank you. Dr. Looney, I thought there was 
bipartisan consensus that tuitions should be lower, the quality 
of education should be higher, and students should not be 
forced to borrow excessively to obtain a college degree. Yet 
you, and countless other experts have concluded that the 
administration's income driven repayment proposal would achieve 
the very opposite.
    If finalized in its current form, what will this plan mean 
for college cost, student borrowing, and the higher education 
marketplace?
    Mr. Looney. Chairwoman Foxx, thanks for that question. 
What's clear under the proposed IDR rules that many, if not 
most borrowers will repay only a fraction of the amounts that 
they borrow, and so what that means is that students will want 
to borrow more. They'll want to pay for tuition by borrowing, 
rather than out of pocket, or other ways.
    They will be less sensitive to the cost of the institutions 
they attend because they won't have to pay for them. And so, 
the CBO says that the increase in borrowing might be 100 
billion dollars over the next decade. Likewise, it will 
encourage institutions to raise their tuitions, knowing that 
some of those costs will be shifted on to taxpayers, rather 
than borne by the students themselves.
    And furthermore, the proposal subverts important elements 
of our accountability system that are effective in at least 
screening out the worst actors and institutions through the 
core default rate rules. And so, you know, our experience with 
when we weaken accountability rules is that students borrow 
more. They attend lower quality institutions, and student 
outcomes get worse.
    Mrs. Foxx. Thank you very much. Mr. Goldwein, has there 
ever been an executive action or regulation costing as much as 
the administration's IDR in debt relief proposals?
    Mr. Goldwein. The debt relief alone is 400 billion. I'm not 
aware of any executive order that costs even half that much.
    Mrs. Foxx. Thank you. What do you recommend Congress and 
the administration consider with this in mind as we approach 
the debt limit, in such a few short months?
    Mr. Goldwein. Well first, thank you for the question, 
Chairwoman Foxx. First of all, we need to raise the debt limit 
no matter what. We can't play chicken with a full faith in 
credit of the U.S. Government, but we should withdraw, the 
administration should withdraw both the IDR rule and debt 
cancellation.
    I'd encourage the Subcommittee to work on a new more 
comprehensive reform.
    Mrs. Foxx. Thank you very much. Mr. Chairman I yield back.
    Chairman Owens. Thank you. I recognize for five minutes Mr. 
Courtney.
    Mr. Courtney. Thank you. Mr. Chairman thank you. To the 
witnesses for being here today, and so I just want to begin by 
saying to Mr. Goldwein, thank you, for foot stomping the need 
for Congress to do its--in my opinion, duty, in terms of 
protecting the currency and the full faith and credit of our 
government by re-increasing the debt limit.
    We did it three times during the Trump administration to 
the tune of 8 trillion dollars. Some people like me weren't 
thrilled about voting for that because it was a way of covering 
the deficit that the Trump tax cut created, but again, our duty 
is to protect the currency in the full faith and credit of our 
country, and not use that lever as a way to create budgets. 
That is a totally separate and distinct process for Congress to 
engage in.
    I'd like to talk a little bit, and I will get off my soap 
box. Talk for a minute about ways that the Biden administration 
is actually fixing the student loan system, and I want to use 
two specific examples. The first is the public service loan 
forgiveness program.
    I was here in 2007, when Congress, by a bipartisan large 
majority passed the public service loan forgiveness program as 
part of the College Class Reduction Act, that was signed into 
law by a republican President, George W. Bush. Again, it said 
that people who serve in our military, who are police officers, 
teachers, nurses in non-profit hospitals who pay and stay 
current for 10 years in their student loans, should be eligible 
for discharge.
    Fast forward to 2017, the DeVos Department of Education 
utterly butchered that program by creating totally gratuitous 
bottlenecks and barriers for people who had again, followed the 
rules for 10 years, and submitted their applications for 
discharge. Again, I'd like to ask Mr. Gadkaree, the reforms 
that Secretary Cardona has put into place, which is to 
basically untangle again for borrowers, the ability to count 
those 10 years of current activity has in fact finally started 
to get those discharges that people earned, and relied on, in 
terms of career choices to actually take place, and I was 
wondering if you could comment on that.
    Mr. Gadkaree. Well Representative, what we see happening 
right now is that as the administration prepares to transition 
us back into student loan repayment, it's been important to 
make targeted fixes to a number of these programs that have 
been plagued by servicing inconsistencies, for five, ten, 15 
years, that are all reflected in the stock of student debt.
    And so, with PSLF, we saw the administration ask to address 
some of those past servicing errors to give students the credit 
they deserve as they begin to prepare to transition us back 
into repayment.
    Mr. Courtney. And one example of that because I represent a 
district with a military base, 10,000 sailors up in Groton, 
Connecticut. What the Biden administration did was allow, again 
our service members who are deployed and out of country to 
account those months of deployment toward their discharge, 
again which the prior administration, the prior Department of 
Education, refused to do for people who are wearing the uniform 
of our country.
    Again, the latest statistics in terms of what the Biden 
reforms have accomplished, is that 450,000 borrowers have had 
their loans properly discharged according to law, and it has 
resulted in savings of 31 billion dollars. And as we deal with 
workforce issues in critical parts of public service, getting 
that credibility back in this program I think is going to help 
our military, our police departments, our education systems.
    The other is the IDR Program that I wanted to talk about, 
income driven repayment. Getting rid of the negative 
amortization, which is really the monster in our student loan 
system where you end up with more interest than what you 
started out with. Again, maybe you could talk again about the 
benefits of the Biden rule to avoid again, that interest sort 
of metamorphosis or mushrooming on borrowers.
    Mr. Gadkaree. Thank you Representative. One of the aspects 
of the IDR Plan that's really important to highlight is the end 
of the ballooning balances, but our colleagues at the Education 
Trust called ``Jim Crow Debt'' because the black borrowers who 
had it could never see the end of it. It's important to know 
with IDR that it's still the case, that those who make more pay 
more, but it's an important safety net for borrowers, who 
otherwise wouldn't have affordable payments.
    Mr. Courtney. Thank you. And again, the IDR Program was 
also part of the bipartisan College Cost Reduction Act. I yield 
back.
    Chairman Owens. Thank you. I know recognize for five 
minutes Mr. Thompson.
    Mr. Thompson. Mr. Chairman. Thank you so much. Chairman, 
and Ranking Member, thank you for hosting this hearing. To all 
of our witnesses, thank you for coming in this very timely and 
important discussion that we're having. Mr. Goldwein, your 
testimony states that if the President's one time debt 
cancellation goes through, student loan debt will return to 1.6 
trillion dollars in just five and a half years.
    So, what you're saying is that not only is the President 
spending 400 billion on this reckless, and blatantly political 
bailout, in less than a decade taxpayers could very well expect 
to hear the same calls from the left to do it again.
    Mr. Goldwein. Thank you for that question, Congressman. At 
best, this is a band-aid that's going to buy us five and a half 
years. But that doesn't even account for the behavioral 
effects, the reality as some of my colleagues here have 
mentioned is that there's going to be more borrowing as a 
result of this cancellation in IDR, and so I would expect we'll 
be right back to where we started even faster than that five 
and half years as we estimate it.
    Mr. Thompson. And we really, you know, we've heard a little 
bit on the root causes of student debt in that discussion, in 
terms of what universities do whenever there's--what do you 
think the result will be on tuition going forward with this 
debt relief? And I know it's a projection, it's a guess, but 
you know, some behaviors are predictable, and what are your 
thoughts on where tuition and universities and colleges go 
should this debt forgiveness go through?
    Mr. Goldwein. So I expect the President's policies will 
drive up tuition, especially graduate tuition. Maybe even more 
concerning, they're going to drive down the value of the 
programs. We're going to see a lot more low-quality programs 
that are high cost, and not giving much in return.
    Mr. Thompson. It's fair to say that at the end of the day 
this for the next generation of learners is going to make 
education either impossible, or quite frankly, provide them 
with such a watered down education that it really doesn't have 
value in terms of earning possibilities.
    Mr. Goldwein. I don't know about impossible, but this is 
going to make overall outcomes worse, not better going forward.
    Mr. Thompson. OK. Thank you. Dr. Salerno, the Government 
Accounting Office recently uncovered that the vast majority of 
institutions are at best misstating the actual price of their 
degree programs, and at worst, intentionally concealing them. 
Now if we want to solve the problem of excessive borrowing, and 
financing for degrees that simply don't pay off, it is critical 
that students have maximum transparency when it comes to the 
costs and the value of an institution's program offerings.
    Given your expertise and knowledge about the shortcomings 
of the college financing process, and challenges it creates for 
students and families, what would maximum transparency look 
like from your perspective?
    Mr. Salerno. Congressman, thank you for the question. I can 
give you two things in particular, that I think would improve 
the situation greatly. The first would be to present data in a 
more clear and transparent way to students as consumers. Right 
now, we give students information on annual costs, and we give 
them information on annual salaries, but people don't think in 
terms of annual costs and annual salaries. We live our lives 
monthly. We earn our income monthly. We pay our bills monthly.
    So, one very quick and easy improvement would be to just 
simply repackage the data that we give the consumers, into 
numbers that they understand, and that they're comfortable with 
in every other aspect of their financing life. A second thing 
that we can do also related to this, would be to alter the 
kinds of information we give institutions who are shopping.
    We care about graduates, we care about debt ratios, but we 
also care about things like when the campus is open, and we 
care about childcare access, and we care about night and 
weekend resources. There's lots of other information that we 
can provide consumers to make them better shoppers, and last, 
we can present that information in a better way.
    Right now, we package financial aid award letters to cover 
the cost of attendance, but as I said in my oral testimony, we 
don't always need to cover indirect costs. There are some 
students who only want to borrow for tuition and fees. It would 
be sensible for Congress to consider ways to split out award 
letters, or sequentially drive them in a way, so that if I 
don't want to cover additional costs, I'm not presented with 
the option to.
    That alone would reduce borrowing for a sizable percentage 
of borrowers who may never want it but feel compelled to borrow 
it because of the way it's presented currently.
    Mr. Thompson. Thank you. I think that's consistent with 
what many of us have worked on, and we will continue to work on 
in terms of increased financial literacy. I mean I'm a big 
supporter of year-round Pell, which encourages on time 
graduation at 3 and a half, 4 years, which saves significant 
additional costs.
    And quite frankly, I love universities. I like giving them 
competition, and that's why I'm a huge proponent with a number 
of my colleagues across the aisle, we are on career and 
technical education, creating other pathways to success. Thank 
you.
    Chairman Owens. Thank you. I recognize now for five minutes 
Miss Bonamici.
    Ms. Bonamici. Thank you so much Chair Owens, and Ranking 
Member Wilson. When I learned that this Subcommittee was 
holding this hearing today, I was excited. Maybe we would 
engage in a substantive discussion with our colleagues on the 
other side of the aisle about how we can work together to fix 
the student loan system that doesn't work for millions of 
borrowers.
    Could we advance legislation that makes college more 
affordable and accessible. But unfortunately, we're hearing too 
many partisan attacks on the President's historic actions to 
support some of our Nation's most vulnerable borrowers. In 
reality, the administration's recent actions have empowered 
borrowers, enabled families to contribute to the economy and 
cleared a path to reduce the cost of college.
    I wish we were working on a bipartisan basis on this. In 
Oregon, the Department of Education's limited public service 
loan forgiveness waiver would help more than 2,000 public 
servants, and I've spoken with many of them, who are holding 
120 million in Federal student loans.
    Regulations that eliminate interest capitalization and 
allow the Department of Education to cover unpaid interest 
balances will significantly lower monthly payments for 
borrowers, increase their financial flexibility and give them 
more peace of mind. And I want to note when we have this 
conversation about the importance of programs that lead 
students to a well-paying career, there are many jobs that 
don't pay well that are still really important.
    I know somebody who teaches at an alternative high school. 
He doesn't make very much money, but that's a really important 
job. So, we have programs like the Public Service Loan 
Forgiveness Program for that very reason. Mr. Gadkaree, I 
introduced bipartisan legislation called the Streamlining 
Income Driven Manageable Payments On Loans for Education, or 
SIMPLE Act, to streamline income-driven repayment.
    And Ranking Members Wilson and Scott introduced the 
Lowering Obstacles to Achievement Now Act, to provide a 
comprehensive approach to reduce the cost of college capped 
spiraling interest rates, improve the PSLF Program, and create 
a safety net for vulnerable borrowers.
    And it's evident that many of us have substantive, workable 
ideas, and we need to work together to get them across the 
finish line. How can Congress build on President Biden's 
proposed changes to the income driven repayment plans to 
further improve the student loan system for current and future 
borrowers?
    Mr. Gadkaree. Thank you Representative, for the question. 
We need to increase college affordability by increasing the 
value of the Pell Grant, and by creating a system, a Federal 
State partnership that drives down college costs, and 
encourages State investment, and affordability in public 
colleges.
    On the loan repayment system, we see the administration 
making targeted fixes that build on the SIMPLE Act, some of the 
ideas contained there to IDR. And one of the things that's 
really important to highlight about the IDR Program is that it 
helps limit material hardships for borrowers.
    So, for those who are making between 200 and 300 percent of 
the Federal poverty line, 40 percent of those borrowers report 
material hardship, a challenge making rent, paying for food, 
paying for healthcare, and as a result this IDR Plan increases 
the income exclusion, the income that is not part of the 
repayment.
    So, I think that those are some of the ideas that are 
compelling in some of the actions that they've taken. I think 
it would be important for the administration and Congress to 
work together to also hold low performing programs accountable. 
When they generate a lot of debt, and limited gain inference.
    Ms. Bonamici. Absolutely. Yes, we've worked on that too, 
especially with the for-profit institutions. I want to follow-
up on some of the questions that have been asked about the 
Public Service Loan Forgiveness Program. The so-called Real 
Reforms Act from my republican colleagues includes an alarming 
proposal to eliminate the Public Service Loan Forgiveness 
Program.
    And we know it's a powerful tool to recruit and retain 
public service workers. I urge all of my colleagues on both 
sides of the aisle to recognize the value of supporting 
educators, firefighters, nurses, and others who choose to serve 
our communities. And yes, we need to work upstream and overall 
make the costs less, but for people who do go into these public 
service jobs we need to have a path for them.
    So, Mr. Gadkaree, why is the PSLF Program important, and 
how can it incentivize students, including those from low-
income families, to pursue a career in public service?
    Mr. Gadkaree. Well, the PSLF Program, which the 
administration has worked to fix, and make consistent with 
congressional intent, is intended to support public service, 
whether as in a non-profit and military, for police officers, 
it helps to address the pay disparities that people in public 
service may face.
    Ms. Bonamici. Thank you so much. And Mr. Chairman, before I 
yield back, I would like to introduce into the record a letter 
from the National Education Association submitting their 
comments on the implications of President Biden's student loan 
policies.
    Chairman Owens. Without objection.
    Ms. Bonamici. Thank you very much Mr. Chairman, and I yield 
back the balance of my time.
    Chairman Owens. Thank you. And I now recognize for five 
minutes Mr. Sablan.
    Mr. Sablan. Thank you very much Mr. Chairman, and good 
morning, everyone. I'm going to indulge, please indulge with me 
for just a bit. This says, good morning, Congressman, I wanted 
to reach out to you about what benefits we can receive for 
employing individuals.
    You see, I work and earn above the minimum wage. More than 
$7.25 less than $75,000.00 average. However, the more I earn, 
the more taxes they would pull plus I am not eligible for 
health and dental insurance for myself and my family, Medicaid, 
so she makes a lot more.
    I have to pay a higher premium on the family plan to my 
employer, and with this deduction my take home pay is literally 
for bills, car payment, for which is a necessity for 
transportation to and from work and schools for kids, utility 
bills, school loans that I need to pay.
    Thankfully, I was given time before I can restart paying 
back. The only positive thing in this really long email I'll 
tell you was thankfully I got that, the pause. And so, you 
know, Mr. Gadkaree, so you know, the global pandemic and yes, 
it's global. It affected everyone, including my district which 
is 15 time zones ahead of us, caused both an immediate and 
lasting impact on students and families across the country.
    In response, the Trump administration instituted a pause on 
the payment of Federal student loans and extended the pause in 
response to continued economic concerns during the pandemic. 
The Biden administration subsequently continued to extend the 
payment pause, acknowledging the ongoing struggles of many 
families across the country.
    Mr. Gadkaree, can you speak more about the direct impact 
the payment pause has had on borrowers who are facing serious 
economic challenges before the pandemic, and probably after the 
pandemic as this person has.
    Mr. Gadkaree. Yes. Representative, thank you for the 
question. There was a Philadelphia Federal Reserve study that 
showed that half of student loan borrowers had faced an 
employment or wage disruption in the year prior to the study, 
and so those are the people who were helped with their student 
loan payments through the pause.
    My understanding is that the pandemic emergency will end in 
May.
    Mr. Sablan. Yes. And on the IDR Rule, in January the Biden 
administration released a proposed rule on changes to improve 
the income driven repayment program, including amending terms 
of the repay plan, the revised pay as you earn, and 
streamlining the IDR Program in general. That's very important, 
I think.
    So, from your view what are some of the most promising 
components of this proposed rule?
    Mr. Gadkaree. Thank you Representative. So, I'll highlight 
a few things about the IDR proposal, and IDR in general. The 
first one, which I mentioned earlier, it's important to note 
that under the new IDR Plan, the proposed new IDR Plan, people 
who earn more would still pay more. The second thing that is 
very important, I've touched on a couple times is ending the 
ballooning balances.
    People having to pay back many times what they borrowed. A 
third attribute of the proposed IDR plan is increasing the 
amount of income that's excluded from repayment. And that's 
important because there are many people, and we've talked about 
non-completers of college who hold debt, but don't have a 
degree. They are able to not be driven further into poverty or 
driven closer to poverty by earnings that are relatively close 
to the poverty line.
    So those are some of the important elements.
    Mr. Sablan. A good plan I would say. Let me just ask do we 
have an agreement? I see this pandemic, I mean this you know, 
loan, well a loan program as something that happened in an 
emergency. We all agreed that there were an emergency during 
the pandemic, right. Do we have an agreement, the four of us, 
five of us at least? Yes? Mr. Looney yes? No? OK.
    And so, this is a program Secretary Cardona has the 
authority to develop and propose this program during an 
emergency. Of course, there's some questions about it. That's 
before the Supreme Court now, we'll have to wait, I guess. But 
when there's a, say, a disaster in a part of the country, and 
emergency funds are sent there, including usually Congress will 
come up, pass supplemental bills, and you know, those 
emergencies are helping those people in the affected areas, not 
the rest of the country. We're not complaining. This is the 
same situation except that it's broad and I know I haven't 
asked my question 'he's already nodding. You're not agree with 
me sir, but that's a point of view I take, unless you disagree 
that we provide disaster supplemental appropriations, this is a 
situation where it's the same thing.
    The Secretary had authority. He used it. It's a good 
program, including 15 time zones ahead of us. Thank you. I 
yield back Chairman.
    Chairman Owens. Thank you. I now recognize for five minutes 
Mr. Grothman.
    Mr. Grothman. Thank you. A couple questions. We'll go for 
either Mr. Goldwein or Looney or Salerno here. If we forgive 
these debts, do you think it's going to have an impact on the 
amount of loans students take out after their forgiven? I mean 
and also delaying payments and that sort of thing. Does this 
create an expectation for people to over borrow in the future 
because they think this is something the government is just 
going to do from time to time?
    Mr. Looney. Thanks Representative. I mean yes, I think that 
under the proposed regulations students are going to want to 
borrow more. CPOs have said that borrowers might borrow an 
additional 100 billion dollars over the next decade. They'll 
carry those balances longer because they'll make fewer 
payments, and so they will have those balances for 20 or 25 
years. So, the amount of debt is going to go up.
    Mr. Grothman. One of the things I'd like to have done, and 
I wonder if it's part of the proposal. Right now, I heard from 
some of the responsible colleges, which are the minority, 
responsible colleges that they have examples of kids taking out 
loans that are bigger than they should be.
    Maybe they're bigger and they should be given their major. 
Maybe they're bigger than they should be because they're using 
it to fund a lifestyle. Right now, as I understand it, 
universities cannot discourage people from taking out loans. Is 
that right? And is that something that should be changed 
immediately?
    Mr. Salerno. Thank you for the question. Today students are 
allowed to finance their education by borrowing up to costs.
    Mr. Grothman. Yes, the question is if I'm a university, and 
I think given this kid's major, or given this kid's lifestyle, 
that he should not be taking out a loan for $8,000.00 this 
year. As I understand it right now, under the Federal program 
universities are forbidden to say Johnny, don't take out that 
loan. It's foolish?
    Mr. Salerno. Correct.
    Mr. Grothman. Shouldn't that be changed immediately? I mean 
I have such sympathy for the good universities who see Johnny 
making a mistake, and the Federal Government tells the 
universities you cannot tell Johnny, you know, find somewhere 
with less rent, or get a job otherwise, or get a better major. 
Shouldn't that be changed?
    Mr. Salerno. I think it should, and I think if we impose 
accountability standards, or risk sharing on institutions, we 
give them the opportunity to put those kinds of controls in 
place.
    Mr. Grothman. Absolutely that should be a priority. Next 
question. I hear complaints from--and this kind of gets to the 
Pell Grants. I hear complaints from the responsible middle 
class of my district, that if they have a sibling who's got 
kids, and that person has been living on public benefits their 
whole life, their kid gets the Pell Grant.
    But damn it, if they work for a living, if both husband and 
wife are working for a living, all of a sudden, they're not 
eligible for Pell Grants. What would you tell someone in that 
position? If their kids got to take out loans, and their 
sibling's kid because they're on the, you know, on the 
government, they get the Pell Grants. How do you justify that?
    Will you guys ever hear anybody justify that? Is there any 
way to justify this program, which is really just a slap in the 
face to the middle class American? You can take a stab at it. 
Nobody will even take a stab at it. Well, that's right, it's 
inexcusable. Does somebody want to take a stab at it?
    Mr. Gadkaree. Well certainly, I'll say that I think there's 
a great virtue to expanding the Pell Grant, and I know that 
right now it's targeted at families with incomes below 
$40,000.00. I think that's one of the things that makes----
    Mr. Grothman. So, you can't justify it. All you can do is 
say we've got to add more people to the program. OK. Next 
question. Is it fair, this program, is it fair to people who 
either are not going to college, or more frequently are going 
to a low-cost, technical school? They're not leaving their 
parent's house; they're being really frugal about it.
    Either they didn't take out loans, or have very small 
loans. Is it fair to these people to throw the cost of the 
student loans on people who are, you know, going to a much more 
high cost program maybe than medical school, or whatever. Is it 
fair to the frugal student, sometimes the wiser students if 
he's going to a trade school? If he is not going to college at 
all and is being trained by his employer for skills?
    Is it fair to these people that they're going to have to in 
essence burden the debt of their peer group who doesn't do 
this?
    Mr. Goldwein. I mean at least 70 percent of the cost 
benefit is going to the top half of the income spectrum. No. I 
don't think it's fair that for a family of doctors and lawyers.
    Mr. Grothman. Yes, just really a kick in the teeth to the 
people who don't take out loans in the first place maybe 
because they stay at home. Maybe because they go to a trade 
school. OK. Thank you very much.
    Chairman Owens. Thank you. I recognize now for five minutes 
Miss Adams.
    Ms. Adams. Thank you very much Mr. Chairman, and I also 
wanted to thank the Ranking Member for this hearing. It's quite 
vital. I'm still paying taxes for education. I've been out for 
a while. Life is just not fair about all things, but I think 
when you have a need, I think if we can support that we need to 
do it.
    But let me just thank you very much for your testimony. And 
my first question is to Dr. Gadkaree. Reportedly, as recently 
as 2021, and dating back to 2010, employment rates among people 
aged 25 to 34 was higher for those with greater levels of 
education. Further data from studies like those conducted by 
Georgetown University Center on Education and Workforce, found 
that in many workforces, adults with bachelor's degrees earned 
a million dollars more than the median for workers with just 
high school degrees.
    In other words, students and their families for decades 
entrusted the higher education system as a means of economic 
mobility and career advancement. And having spent over 40 years 
as a college professor, it's safe to say that I have interfaced 
directly with hundreds of student loan borrowers from different 
walks of life, varying levels of education, and different 
economic backgrounds.
    On average, North Carolinians reportedly graduate with over 
$37,000.00 for the 7.9 percent of North Carolina's borrowers 
owe over six figures of loan debt. For millions of students, 
college education still proves to be one of the strongest 
pathways to the middle class. However, for many, the only way 
to move forward on the pathway that's been with the assistance 
of Federal student loan debt.
    So, in the 115th Congress we passed the bipartisan 
Fostering Education Talent by Unlocking Resources to Education, 
the Future Act, that I was proud to lead with the support of 
many of the Members on this very Committee. This law was signed 
into law by President Trump, which allows for the IRS to share 
certain tax information to the Department of Education.
    Well, we know that this is important, an important 
provision will allow for borrowers to transfer their income 
data more easily between the agencies. The Biden administration 
is currently in the process of implementing the FUTURE Act, so 
can you talk a little bit about how the implementation of this 
bill will make the FAFSA process, and student loan program 
easier for students and borrowers to navigate?
    Mr. Gadkaree. Representative, thank you for the question. 
Yes. Sharing that information will make it much easier to 
streamline the servicing system. And it's important to give the 
Office of Federal Student Aid the resources that it needs to 
make improvements like that to the servicing system, as we 
prepare to transition borrowers back into repayment.
    Ms. Adams. Well thank you for speaking on this important 
program, and to our students, and their families. I have an 
additional question. In April of last year, the Biden 
administration announced Operation Fresh Start, which allows 
borrowers in default prior to the pandemic loan repayment 
pause, to reenter payment in good standing, and provide 
benefits such as stock collections and credit report 
adjustments.
    And although many of my colleagues across the aisle view 
this as irresponsible, I believe this temporary program will 
drastically benefit struggling borrowers, and to ground us, can 
you share information about how borrowers end up in default, 
why it's harmful for their financial outlook, and why is 
Operation Fresh Start an important step in addressing the needs 
and realities of defaulted borrowers?
    Mr. Gadkaree. Thank you Representative. We see default as 
an unfortunately self-defeating system, one in which borrowers 
are losing anti-poverty programs, and access to anti-poverty 
programs, including social security, the earned income tax 
credit and the child tax credit.
    And on top of that we see that those are borrowers who are 
not in good standing and have trouble moving on with their 
financial lives. So, the Operation Fresh Start allows borrowers 
to apply to be part of a program, where they will be out of 
default and back in good standing. It applies to the 7.5 
million borrowers who were in default as of the start of the 
pandemic.
    Ms. Adams. Great. Well thank you very much. Mr. Chairman 
I've got some time left. I'll yield back.
    Chairman Owens. Thank you. I now recognize for five minutes 
Mr. Banks.
    Mr. Banks. Thank you, Mr. Chairman. Dr. Salerno, there's 
been a lot of focus today on the borrower, the student, but it 
occurs to me that erasing student loan debt also rewards bad 
activities, bad precedents from the universities. I mean over 
the just in the last 20 years the average tuition at a private 
university has grown from 19,000 to 44,000 dollars in just 20 
years.
    So can you unpack that a little bit for us, the bad--
rewarding bad actions by universities, and what this will mean 
to--will the average cost of education continue to rise, or 
will erasing student loan debt do anything at all to lower the 
cost of a college education?
    Mr. Salerno. Thank you for the question, Congressman. I 
think the best answer to that question is that we don't know, 
but in all likelihood there's no reason to believe the costs 
will not continue to rise without guardrails or checks on 
accountability. If we don't provide institutions with again a 
balanced system of carrots and sticks, if left to their own 
devices, is there any reason to believe that loan forgiveness 
will not just be fully absorbed on the promise that just more 
loans will be made available in the future.
    So again, I think, unless you create a system of checks and 
balances that creates accountability for these institutions, 
you will be left with a system where loan forgiveness will just 
continue to make those costs grow, and at the same time the 
borrower's balances as well.
    Mr. Banks. Dr. Looney or Dr. Salerno, can you talk about 
what are the biggest drivers of the increased costs of a 
college education? And what are colleges doing that is growing 
their bureaucracy so much that it costs so much more to get a 
college degree?
    Mr. Looney. Well, I mean to give you some facts. I mean so 
a lot of the increase in the cost of college is actually 
graduate school, particularly when it comes to borrowing, so a 
lot of the increase in student debt over time is owed by 
students who have gone to graduate school, and particularly 
medical school.
    That's because graduate students have long educational 
careers, and because they can borrow up to the cost of 
attendance, unlike undergraduate students who face limits and 
can only borrow for a few years. And so, you know, a lot of the 
fundamental increases in debt in particular are associated with 
those kinds of degrees.
    An extra 70 percent of debt is going to be owed by students 
who have gone to graduate school.
    Mr. Banks. Would you agree though, it's bureaucratic? I 
mean the budgets of these colleges are being grown through more 
administration, more bureaucracy, and less direct in the 
classroom teaching of students?
    Mr. Looney. I mean I'm a college professor, so I don't want 
to talk my book too much, but I mean I think there are a lot 
of----
    Mr. Banks. It's got to be though. It's common sense, right? 
It's obvious. Dr. Salerno?
    Mr. Salerno. Yes. I would support the idea that a lot of 
the investment in education that drives up these costs in 
recent years has been in wraparound services. We are helping 
provide a safer learning environment. We're providing more 
ancillary services, we provide more counselors, we provide 
better services to help students enjoy the larger learning 
experience.
    We also constantly have to upgrade our facilities if we're 
an institution because we're competing for a limited pool of 
high-quality students, and high-quality faculty members. And 
so, if we don't improve our residence halls, and we don't 
improve our libraries and our IT infrastructure, we risk 
falling behind.
    So, there's a constant pressure on universities to continue 
to spend as much as possible on a lot of things that may not 
directly relate to learning, but probably shape the learning 
experience in general.
    Mr. Banks. Yes. One study for 2021 says that the average 
university has 45 staff members, who are tasked with promoting 
diversity, equity and inclusion, and some schools have a lot 
more than that. Have either one of you looked at how much that 
would cost to administering a university?
    Mr. Salerno. I have not. No.
    Mr. Banks. Yes. I'd be curious. Hopefully, a study comes 
out soon that would talk about the overall cost of implementing 
left wing political agendas that some of these programs are. 45 
staff members seems like that would be significant. Mr. 
Goldwein, can you talk about what it would do to add just 
another trillion dollars to the national debt, how that would 
impact students whose student loans are being canceled today, 
but what that trillion dollars more in a national debt will do 
to American's livelihood in the future?
    Mr. Goldwein. Thank you for that question. It's important 
to put this in context. Our debt is just 5 years from reaching 
World War II levels, as a share of the economy. So, we're 
already at record debt almost, and projected to rise another 20 
trillion over the next decade. That means slower wage growth, 
higher interest rates, more risks of inflation, less ability to 
respond to the next crisis or recession.
    And ultimately, it's unsustainable, which means in the 
future spending cuts and tax increases are coming.
    Mr. Banks. My time has expired.
    Chairman Owens. Thank you. I now recognize for five minutes 
Miss Manning.
    Ms. Manning. Thank you, Mr. Chair. Thank you to our 
witnesses for being here today. While it is important to 
discuss student loan issues, I'm concerned about the fact that 
our students are having to take out so many loans because not 
only the cost of education has increased so dramatically, but 
the investment in education by our states, and also the 
applicability, or the usefulness of Pell Grants has declined in 
terms of what it covers for costs.
    So, I'd like to start Mr. Gadkaree, you noted in your 
testimony the declining value of Pell Grants for students, and 
I believe in 1978, a student attending a public 4-year 
university could have had about 70 to 80 percent of their costs 
covered--with their Pell Grant.
    And today, that same Pell Grant only covers about 30 
percent of their cost. So that is one reason why our students 
are having to take out so much more in student loans. Can you 
tell us what has driven this devaluation over the years, and 
how can Congress responsibly ensure that over the long-term 
Pell Grants keep pace with inflation, with the rising costs of 
college so that our students don't have to take out 
overwhelming student debt?
    Mr. Gadkaree. Representative, thank you for the question. I 
first want to note that there would be great value in indexing 
the Pell Grant, so that it goes up and keeps pace with college 
costs. I also want to note that my organization, alongside 100 
others, call for doubling the Pell Grant.
    And I think those are important steps that we can take to 
increase affordability, and reduce the reliance on debt.
    Ms. Manning. Thank you for that. I believe we had a 
proposal out to double the Pell Grant, and last term the Pell 
Grant was increased by about $500.00, which doesn't do a lot 
more to cover the cost of education for our students. I want to 
move on to, I am hearing over and over from my constituents 
that they are having trouble attracting people into the fields 
of teaching, into the fields of nursing, into fields that are 
critically important, but are not high pay areas.
    And one of the ways that we can be incentivizing people to 
go into those important areas is to help them with their 
student loans. And I know that Congress created the Public 
Student Loan Forgiveness Program to help encourage students to 
do exactly that, to enter public service fields.
    But over the last few years as people had paid in their 10 
years thinking that they would get forgiveness for their loans, 
it turned out that that program was not as effective as it was 
supposed to be. We know now that that field that the Public 
Service Loan Forgiveness Program needs significant reform so 
that people who should be getting their loans forgiven, are 
having their loans forgiven.
    And I'm hearing that from advocates across a wide variety 
of fields. So how can--what can we be doing to make sure that 
those types of loans are forgiven appropriately, and how can 
Congress ensure that loans servicers are accountable for 
spreading accurate information about the PSLF?
    Mr. Gadkaree. Yes. So, on the first question on PSLF, I'll 
note that the administration worked and one of its targeted 
fixes to the servicing system was to address some of the 
inconsistencies in terms of what payments were applied to PSLF 
historically, and that's why they created this PSLF waiver, and 
they've created a new rule to be more consistent going forward 
around PSLF forgiveness.
    On the second question I would particularly note the need 
for resources for the Office of Federal Student Aid, which 
handles all of the servicing as a way to support the resources 
that are needed to create consistency in servicing and 
servicing oversight.
    Ms. Manning. Thank you. Let me go back to some work that 
your organization has done in the accountability space, and the 
negative impact of low-quality for-profit institutions on both 
students and taxpayers. I'd love to hear more about the need 
for increased accountability of low-quality institutions.
    Can you tell us how Congress and the administration can 
continue to hold these institutions accountable for their 
predatory and harmful practices?
    Mr. Gadkaree. Yes. First, and most important thing is 
reinstating the gainful employment rule, which created a 
measure of debt to earnings, and cutoff those programs that 
created a lot of debt for limited earnings gains. When that 
rule was in place, 98 percent of the programs that failed were 
at for-profit colleges, although there were more programs that 
were captured under the agents of the rule in other sectors.
    And I would note that for-profit colleges accounted for 50 
percent of loan defaults, although they are only 10 percent of 
the enrollment.
    Ms. Manning. Thank you very much. My time has expired. I 
yield back.
    Chairman Owens. Thank you. I now recognize for five minutes 
Mr. Good.
    Mr. Good. Thank you, Mr., Chairman, and thank you to our 
witnesses for being with us here today. My questions to start 
with will be for Dr. Looney. Dr. Looney, the administration 
doesn't seem to understand some of these most basic terms. Is 
it possible for a student loan to actually be forgiven?
    Mr. Looney. Thanks Representative. I mean it's forgiven to 
the student, but obviously someone else will pay.
    Mr. Good. Yes. I call it the student loan transfer scheme. 
Like you said, it maybe transferring that debt from the 
borrower to those who did not borrow it. In your testimony you 
highlight that under the Biden administration's new income 
driven repayment plan, borrowers will only pay 63 cents for 
every dollar that they borrow. Would you classify that as a 
repayment plan?
    Mr. Looney. Well clearly under that policy many borrowers 
will not repay their loans.
    Mr. Good. Yes. I worked in the lending industry for 17 
years, before coming to Congress, and 63 cents on the dollar 
would not be a repayment plan. So how would you characterize 
that instead of a repayment plan when they're only paying 63 
cents on average on the dollar?
    Mr. Looney. It is more like a grant program, but a grant 
program that's not based on income, or program, but basically 
how much you borrow.
    Mr. Good. Talk about a failed business model. Any private 
lender would go out of business very quickly if they extended 
loans with the expectation that you'd only collect 63 cents 
back on the dollar, that would be a terrible, unprecedented 
default rate.
    The administration also doesn't seem to understand the term 
emergency, since the authority that they're claiming, the legal 
authority they're claiming to transfer the student loan debt to 
non-borrowers, is from the National Emergency Status of COVID-
19, and the Higher Education Relief Opportunities for Students 
Act of 2003, which was meant to provide, as you know, temporary 
leave to military members during the deployment following 911.
    I know you're not an attorney, but how do you think--I'm 
sorry, do you think the administration has any real legal 
grounds for doing this under these so-called emergency 
provisions?
    Mr. Looney. You're asking me if I think that I mean----
    Mr. Good. If you think they have any legal authority to do 
this under these two pretenses.
    Mr. Looney. I'm going to leave that to the Supreme Court to 
decide.
    Mr. Good. Well, I'm going to tell you they certainly don't 
have that legal authority. I certainly believe the Supreme 
Court will overturn it. So, who is benefiting most from the so-
called forgiveness, which is really again the student loan 
transfer scheme. Who is benefiting from that?
    Mr. Looney. Well, it's good that the beneficiaries of the 
program are well-education, they're individuals who have had 
the opportunity to go to college. That's typically individuals 
who have, you know, come from more affluent backgrounds. They 
go on to have, you know, well-paying careers on average.
    And because the program is virtually untargeted, the 
benefits are widely spread across borrowers.
    Mr. Good. Yes. The student loan transfer scheme, or the 
vote buying scheme you might say, because it was announced 
right before the last election, is disproportionately 
affecting--impacting, I should say, positively impacting higher 
income individuals, graduate degree recipients. But what is the 
impact on those who did not go to college, or worked their way 
through college, or already paid off their student loans. What 
is the impact on them? The taxpayers across the country who fit 
into one of those categories I should say.
    Mr. Looney. Well, I mean this has--this will cost, you 
know, close to a trillion dollars, and so obviously that will 
increase the national debt. Marc Goldwein just testified that 
it will increase inflation, and increase interest rates, and so 
those costs are imposed on all Americans.
    Mr. Good. What do you think about the administration 
continuing to extend student loans, even while they're trying 
to excuse big borrowers from paying existing student loans?
    Mr. Looney. Well, I mean clearly, it's a policy that has 
encourage students to take out more loans, and to repay them 
more slowly, and so that has increased, and will increase the 
amount that students owe.
    Mr. Good. You can understand why an ambitious well-intended 
productive citizen who is trying to pay off their student loans 
early, or beyond the amount that they're required to pay, might 
think they might be a chump for paying off their student loans 
if the administration is going to continue to transfer or 
follow-through with their scheme to transfer that debt to those 
who didn't borrow it.
    Since you mentioned Mr. Goldwein, Mr. Goldwein in your 
testimony you said no President should distribute upwards of a 
trillion dollars without explicit congressional approval, 
excuse me, authorization input. Can you help explain to our 
constituents, my constituents in Virginia, how unprecedented 
this executive action is, and help put that number in context, 
a trillion dollars.
    Mr. Goldwein. Well, the largest executive action I'm aware 
of to date cost 200 billion dollars.
    Mr. Good. Wow.
    Mr. Goldwein. So, we're talking about across all these 
executive actions it's close to 900 billion just under this 
administration.
    Mr. Good. Incredible. So that one trillion, or 900 billion 
is approximately $3,000.00 per U.S. citizens, or a family for 
four $12,000.00 per household with 300 million, a little more 
than that Americans. How many Americans in a survey would vote 
to support them incurring personally a share of $3,000.00 per 
citizen, or $12,000.00 for a family of four do you think?
    Mr. Goldwein. I don't know, but they are incurring the cost 
because this benefits 13 percent of Americans. The other 87 
percent are paying higher prices at the grocery store for their 
rent, and they're going to be paying higher mortgages, higher 
car loans, and being at risk for recession.
    Mr. Good. Yes. Well said. You know, I think there's a 
failure on my friends on the other side to understand the 
consequences of our day, ignoring the debt, pretending that it 
doesn't exist, and leaving this legacy of debt. Not just the 
inflation that it's causing today, as you've referenced, but 
what it will cost our children and our grandchildren in the 
future, and I yield back Mr. Chairman.
    Chairman Owens. Thank you. I'd like to now recognize for 
five minutes Mr. Takano.
    Mr. Takano. OK. Thank you, Mr. Chairman. Mr. Gadkaree, I 
wonder if you would be able to comment on say the impact of the 
GI Bill after World War II, even as the Nation was in debt 
quite a bit from the war, we embarked on the GI Bill. Was the 
emphasis on loans, or was it on outright grants to soldiers?
    Mr. Gadkaree. It was on grants.
    Mr. Takano. And we embarked on this massive, massive 
education program for our veterans, large in numbers, right? We 
did this even as the country was so in debt. What was the 
impact of that investment?
    Mr. Gadkaree. An unprecedented growth in college access.
    Mr. Takano. Pardon me?
    Mr. Gadkaree. An unprecedented growth in college access.
    Mr. Takano. What was the impact to the national economy, 
10, 20, 30 years because of that investment?
    Mr. Gadkaree. It generated prosperity.
    Mr. Takano. It generated huge prosperity. And I just want 
to point that out, even as the country was hugely in debt for 
paying for World War II, the country also embarked not on a 
loan program for veterans, but an outright grant to go to 
school. You know, can you just tell us, you know, just why it 
is important for the Federal Government to address issues of 
affordability, and prioritize targeted relief in higher 
education?
    Mr. Gadkaree. We need to create a system of economic 
mobility. It's increasingly the case that a college degree, 
even an occupational college program will lead someone to a 
good job, and we need to have equitable access to the education 
that allows people to access those occupations and jobs.
    Mr. Takano. And what is the public benefit--what public 
benefit does higher education provide to American society and 
the economy?
    Mr. Gadkaree. It gives us the nurses we need, the x-ray 
technicians, the teachers, the early childhood educators, the 
plumbers, the police officers, teachers, and so on.
    Mr. Takano. Well, you know, it seems to me that my 
republican colleagues want to demonize public higher education, 
higher education in general in this country, and it is a false 
sense of I don't know what kind of virtue signaling to an 
extreme base. Let me switch topics a little bit, but not 
completely.
    This has to do with the consequences of students, for 
students who are defrauded by their school, for-profit schools, 
and misled about their career prospects. Can you--what are the 
consequences of that?
    Mr. Gadkaree. Well unfortunately, there have been far too 
many students who have been saddled with debts that they can't 
repay, and one of the things the administration has done is 
work on a strong borrower defense through repayment rule and 
letting 800,000 borrowers who had been deceived by their 
schools, letting them off of their loans following 
congressional intent from rules that go back as far as 1992.
    Mr. Takano. Yes. We've established that predatory 
recruiting practices by schools is terribly destructive for 
students. What is the impact of the Biden administration's 
reinstating of the borrower defense rule?
    Mr. Gadkaree. Well, I think there's two things that are 
very important to note about it. The first one is that it helps 
hold students harmless when they've been defrauded, and through 
no fault of their own. The second is that it's created a 
process for recouping those funds from those who defrauded 
those students in the first place.
    Mr. Takano. Can we just explain what borrow defense is? 
What is that idea?
    Mr. Gadkaree. Yes. The idea is that if a student was 
deceived, defrauded by their institution, they were made false 
promises about the jobs they might get, about the education 
they were going to receive, about the occupations they'd be 
qualified for. The rule allows borrowers to show that to and be 
off the hook for those loans that they were made under false 
pretenses.
    Mr. Takano. Well, you know, so that's would you say that 
this is one of President Biden's policies that was very 
beneficial for students?
    Mr. Gadkaree. Absolutely.
    Mr. Takano. Now, with regard to, you know, the targeted 
relief that he has for student borrowers in general, the 
contested relief that's in the Supreme Court, we're not talking 
about necessarily defrauded students, but what is the intention 
there behind this policy?
    Mr. Gadkaree. We've transferred enormous risk onto students 
and families by making college so unaffordable, and this helps 
to address that risk at a time of pandemic emergency.
    Mr. Takano. And would you say that today's students in 
general, let's just talk about public higher education, has 
that become less affordable for students of this generation 
than it was say, for the World War II, or the 1960's 
generation?
    Mr. Gadkaree. Absolutely. The average cost of college has 
more than doubled in the 21st Century.
    Mr. Takano. And then that's in real dollars, real 
comparisons, right? And so, the burden on the cost on students 
and their families of this generation is much, much higher than 
previous generations.
    Mr. Gadkaree. It's no longer possible to attend a 4-year 
public college for a family whose income is below $30,000.00 
without taking on debt. They have to pay on average 93 percent 
of their total family income.
    Mr. Takano. Well so this is not about addressing defrauded 
students, this is about a generation that has been dealt an 
unjust hand because of the times they were born in. They can't 
be blamed for the fact that states don't support public higher 
education to the degree they used to 20-30 years ago. Is that 
right?
    Mr. Gadkaree. Yes.
    Mr. Takano. Thank you. I yield back.
    Chairman Owens. Thank you. I now recognize for five minutes 
Miss McBath.
    Mrs. McBath. Thank you, Chairman Owens and Ranking Member 
Wilson, for holding this really important hearing today, and 
thank you to each and every one of the individuals that are 
testifying today. I have read your testimonies. As much as 
republicans want to say otherwise, President Biden, and 
Secretary Cardona are not breaking the system. They're taking 
tangible steps to improve the system and make it more 
accessible for low-income people, working families, and all of 
those who have been left behind by a higher education system 
that has historically been pay-to-play.
    I'm very proud of the efforts that have been taken by 
Secretary Cardona and President Biden, to even the odds that 
are facing our working families today. From taking tangible 
steps to fix what was a completely broken, and neglected public 
service loan forgiveness program under President Trump, to 
increasing the Pell Grant, as opposed to trying to cut it. It 
is obvious to those that are paying attention who really has 
our students? best interest at heart. President Biden has 
successfully passed two different increases to the Pell Grant 
into law, raising the maximum award from $6,495.00 in 2021, to 
$7,395.00 today, almost a 15 percent increase from when he took 
office.
    While these changes are exciting, yes, they are very 
exciting, we still have a lot of work to do to ensure that 
every child, regardless of their socioeconomic background and 
standing, or their zip code, or where they were born into, can 
live up to their full potential.
    As Mr. Gadkaree mentioned in his written testimony, the 
current maximum Pell award covers the lowest share of college 
costs in this country's history. That I find is a problem Mr. 
Chairman. If a college degree our credential continues to be 
the surest path to economic mobility in our society as we say 
all the time, a college degree is the best way to be 
successful, we need to make sure that every student has the 
resources that they need to make their own path.
    And I am proud to say that Gwinnett Technical College in my 
district in Georgia, is one of many institutions in Georgia 
that is making an effort to narrow the funding gap for low-
income and first-time students, and to ensure that they are 
getting the most out of higher education.
    At Gwinnett Tech, 59 percent of full-time, first-time 
students take advantage of the Pell Grant Program. Without 
Pell, students in Georgia would not be able to take advantage 
of the truly life-changing opportunities that come with getting 
a degree, or credential at Gwinnett Tech, or any of the other 
incredible institutions, colleges and universities in Georgia.
    We cannot expect greater returns in our society unless we 
are willing to invest more in our schools, and the future of 
our country, which is our students. In her opening statement, 
Ranking Member Wilson also highlighted the declining value of 
the Pell Grant, which is a serious concern of mine, and working 
families, and students across the country who wish to improve 
their lives through education.
    I was proud to be an original cosponsor of the Pell Grant 
Preservation and Expansion Act last Congress, it would you 
know, basically gradually double the Pell Grant from the 
maximum award of $6,495.00 in 2021, to $13,000.00. My question 
for you Mr. Gadkaree is can you discuss why the Pell Grant is 
viewed as the cornerstone of Federal student aid, and what 
doubling Pell Grants would mean for college students all across 
this country?
    Mr. Gadkaree. Yes. The Pell Grant is used by families whose 
family income is below $40,000.00. 60 percent of black students 
who attend college do so using a Pell Grant. About half of 
Latino students who attend college do so using a Pell Grant. 75 
percent of HBCU students use a Pell Grant.
    So, a Pell Grant expansion helps those students afford 
college, helps them close the unmet need gap that they 
otherwise would face in affording college, and helps them 
reduce their need for borrowing.
    Mrs. McBath. Thank you so much. And in response to that in 
the last district that I represented, there was a for-profit 
institution that actually closed their doors, Argosy 
International. And I cannot tell you the consternation and the 
havoc that it wreaked on all those students that were not able 
to get their certification, their licensing, or their you know, 
degree, certificates.
    And that should not be what we allow in this country. Every 
student deserves to be educated as well as they can be. That is 
their right, and I yield back.
    Chairman Owens. Thank you. Once again, I want to thank 
everyone. I would like to thank my witnesses for taking the 
time to testify before this Committee today and would like to 
recognize Ranking Member Wilson for any closing remarks she 
might have.
    Ms. Wilson. Thank you, Mr. Chair. Thank you for co-hosting 
this important hearing today. And I just wanted to say that I'm 
particularly troubled by the number of students who have been 
left behind with not only significant student loans, but also 
no meaningful degree.
    In the last decade at least five large for-profit college 
chains have collapsed overnight, leaving tens of thousands of 
students with debt, and often without degrees. These school 
closures can be devastating for students, plunging them into 
financial and emotional despair, while robbing them of the 
education opportunities they deserve.
    Regrettably, taxpayers also bear the costs. As of 2022, the 
non-partisan government accountability office reported that 
low-quality for-profit institutions have cost taxpayers 8.2 
billion with a B. Thankfully, in response, the Biden Harris 
administration has taken historic steps to provide borrowers 
with a clear path to repayment, and protect students, families 
and taxpayers.
    The administration has forgiven more than 24 billion in 
student loan debt for more than 1 million borrowers who were 
defrauded by their institution or have a total and permanent 
disability.
    Since the beginning of the pandemic, we have ensured that 
borrowers of federally held student loans were spared from 
making payments on their loans and employing interest on them. 
We are just beginning. And finally, President Biden has 
forgiven more than 25 billion dollars for more than 370,000 
public servants by making time limit improvements to the public 
service loan forgiveness.
    Mr. Chair, I look forward to working with you as we move to 
help our children. Thank you.
    Chairman Owens. Thank you so much for that Ranking Member. 
The questions asked earlier who benefits from this debacle of 
debt that we've come through the last decades. The only one 
that I see reaping benefits are these colleges who have on 
risks, no skin in the game.
    They're paid regardless of whatever happens. They push out 
programs that mean absolutely nothing for their children that 
come through. They come out not only in debt, hating their 
country, not understanding free market system, and not loving 
the process that gave them the opportunities they had.
    We've heard a lot of attacks on for-profits. It's not for-
profits that got us into this problem we have today. We need to 
have solutions. We're at a point now where we need innovative 
disruption. The system we have had now for the last 150 years 
is not working for our kids today.
    There's no way we should have the lack of education, the 
lack of opportunities in the greatest country in the history of 
America, and it falls so much shorter, this is only through by 
the way from K through 12, to higher ed. Our education is a 
mess. And it's now time for us to address that. I'm so thankful 
for this opportunity for experts like yourself, to come and 
educate the American people.
    There is no better time where more Americans are truly 
trying to find answers. The upside of COVID, as bad as it was, 
is the curtains were pulled back. Americans are now asking the 
questions why are my kids going to school and coming back 
hating what we do and who we are?
    Why are they coming back with debt they'll never be able to 
pay off, and why do we not hold our four-year school systems, 
colleges, accountable for what they do? So, we're going to 
start addressing that. I'm thankful again for this opportunity, 
and this is just the beginning of a bipartisan approach to 
understand what our problems are.
    You know, get us back on track, and again I want to thank 
you all for being here today. And without objections, and with 
no further business, this Subcommittee stands adjourned.
    [Additional submission by Ranking Member Wilson follows:]

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    [Additional submission by Ms. Bonamici follows:]

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    [Additional submission by Ms. Jayapal follows:]

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    [Questions submitted for the record and the responses by 
Mr. Gadkaree follow:]

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    [Whereupon, at 12:16 p.m., the Committee adjourned.]

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