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


                LOWERING COSTS AND INCREASING VALUE FOR
                 STUDENTS, INSTITUTIONS, 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, JULY 27, 2023
                               __________

                           Serial No. 118-20
                               __________

  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
                    
55-701 PDF                   WASHINGTON : 2024   


                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                 KATHY E. MANNING, North Carolina
LORI CHAVEZ-DeREMER, Oregon          FRANK J. MRVAN, Indiana
BRANDON WILLIAMS, New York           JAMAAL BOWMAN, 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 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 ADAMS, North Carolina


                         C  O  N  T  E  N  T  S

                              ----------                              
                                                                   Page

Hearing held on July 27, 2023....................................     1

                           OPENING STATEMENTS

    Owens, Hon. Burgess, Chairman, Subcommittee on Higher 
      Education and Workforce Development........................     1
        Prepared statement of....................................     4
    Wilson, Hon. Frederica, Ranking Member, Subcommittee on 
      Higher Education and Workforce Development.................     6
        Prepared statement of....................................     8

                               WITNESSES

    Horn, Michael, Author, Co-Founder of the Clayton Christensen 
      Institute for Disruptive Innovation........................     9
        Prepared statement of....................................    12
    Leschly, Stig, President and Founder, Postsecondary 
      Commission.................................................    15
        Prepared statement of....................................    17
    Cellini, Dr. Stephanie, Professor of Public Policy and Public 
      Administration, and of Economics, George Washington 
      University.................................................    20
        Prepared statement of....................................    22
    Gillen, Dr. Andrew, Senior Policy Analyst, Texas Public 
      Policy Foundation..........................................    31
        Prepared statement of....................................    33

                         ADDITIONAL SUBMISSIONS

    Foxx, Hon. Virginia, a Representative in Congress from the 
      State of North Carolina:
        Letter from the University of Dayton.....................    52
        Testimony dated July 26, 2023 from Lenoir-Rhyne 
          University.............................................    54
        Essay dated March 2023 by Jason Cohn.....................    58
    Jayapal, Hon. Pramila, a Representative in Congress from the 
      State of Washington:
        Article dated July 25, 2023 from PoliticoPro.............    74
    Banks, Hon. Jim, a Representative in Congress from the State 
      of Indiana:
        Backgrounder dated July 27, 2021 from The Heritage 
          Foundation.............................................    77
    Courtney, Hon. Joe, a Representative in Congress from the 
      State of Connecticut:
        Article from USA Today...................................   100

 
                  LOWERING COSTS AND INCREASING VALUE
                      FOR STUDENTS, INSTITUTIONS,
                             AND TAXPAYERS

                              ----------                              


                        Thursday, July 27, 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 10:18 a.m., 
2175 Rayburn House Office Building, Hon. Burgess Owens 
[Chairman of the Subcommittee] presiding.
    Present: Representatives Owens, Grothman, Banks, Good, 
Moran, Chavez-DeRemer, Houchin, Foxx, Wilson, Takano, Jayapal, 
Manning, McBath, Courtney, Sablan, Bonamici, and Scott.
    Staff present: Cyrus Artz, Staff Director; Nick Barley, 
Deputy Communications Director; Mindy Barry, General Counsel; 
Hans Bjontegard, Legislative Assistant; Solomon Chen, 
Professional Staff Member; Isabel Foster, Press Assistant; 
Daniel Fuenzalida, Staff Assistant; Sheila Havenner, Director 
of Information Technology; Meghan Heckelman, Intern; Claire 
Houchin, Intern; Amy Raaf Jones, Director of Education and 
Human Services Policy; Alex Knorr, Staff Assistant; Georgie 
Littlefair, Clerk; Hannah Matesic, Director of Member Services 
and Coalitions; Audra McGeorge, Communications Director; 
Gabriella Pistone, Legislative Assistant Oversight; Rebecca 
Powell, Staff Assistant; Mary Christina Riley, Professional 
Staff Member; Chance Russell, Professional Staff Member; Kent 
Talbert, Investigative Counsel; Maura Williams, Director of 
Operations; Amaris Benavidez, Minority Professional Staff; 
Nekea Brown, Minority Director of Operations; Ilana Brunner, 
Minority General Counsel; Rashage Green, Minority Director of 
Education Policy & Counsel; Christian Haines, Minority General 
Counsel; Emanual Kimble, Minority Fellow; Stephanie Lalle, 
Minority Communications Director; Madelyn Lucas, Minority 
Intern; Raiyana Malone, Minority Press Secretary; Kota 
Mizutani, Minority Deputy Communication Director; Veronique 
Pluviose, Minority Staff Director; Dhrtvan Sherman, Minority 
Staff Assistant; Banyon Vassar, Minority IT Administrator.
    Chairman Owens. The Subcommittee on Higher Education and 
Workforce Development will come to order. I note that a quorum 
is present, without objection, the Chair is recognized to call 
a recess at any time.
    Deeply embedded in the American psyche is the idea that 
colleges and universities provide valuable education that 
offers the best pathway to realizing the American Dream. That 
in order to unlock a successful career, you must spend at least 
4 years chasing a college career.
    Historically, a college career was sought by aspiring 
professionals who needed a specialized education to enter 
fields like medicine, law, and the clergy. The expansion of the 
college programs has meant that some degrees inevitably have 
misaligned with professional opportunities, leaving graduates 
underprepared to enter the workforce.
    Before college became a universal mandate thrust upon 
unwitting 17 year-olds, this idea was perhaps accurate. College 
was cheap, jobs were being filled, and students and taxpayers 
were all but guaranteed a return on investment.
    That is not the case today. Outdated measures of quality, 
coupled with virtually zero transparency of value, have 
distorted the post-secondary educational market. The results? 
Families are forced to choose a college without knowing the 
full price, and the government peddles loans without regard to 
a student's ability to repay the principal or the predatory 
interest. Students and taxpayers are left to navigate making an 
expensive gamble with zero assurance that their bet will pay 
off.
    Central to this market is a question of whether colleges 
can continue to provide value. For decades, we relied on 
accreditors to provide quality assurance by sending the public 
a signal of which institutions are high-quality. Similarly, the 
Federal Government has relied on metrics, such as the cohort 
default rate, to protect taxpayers' interests, while the states 
have been tagged to review colleges from a consumer protection 
lens.
    Due to the ineffectiveness of these measures, one third of 
colleges now leaves students worse off than if they had never 
enrolled in the first place. Additionally, taxpayers are asked 
to write off hundreds of billions of dollars on loans for 
individuals who make approximately 1 million more than their 
non-college going peers.
    The purpose of college remains--still remains. Like every 
voluntary exchange in a free market system, its purpose is to 
provide value to the consumer. Students pay for tuition, room, 
and board because they believe the cost today will be offset by 
a better job and higher salaries down the road.
    The Federal Government then subsidizes the students' 
expectations. Unfortunately, the results of this investment 
have not, for decades, lived up to the expected returns. This 
generation is being overwhelmed by the economic and social 
realities of a college degree. The free market did not fail 
them. Overregulation of input and under delivery of outcome 
did.
    This hearing today seeks to explain why 4-year college is 
increasingly no longer being viewed as the gateway to the 
American dream for so many students. This Committee will also 
explore solutions for which we recognize is a systemic issue.
    We need to understand that the devaluation of 4-year 
college experience is only exacerbated by blanket Federal 
bailouts, one-size-fits-all debt relief schemes, and 
overburdensome regulations. Restoring the value of a college 
education requires a thoughtful, structural reform of the 
Higher Education Act.
    I believe that there is an opportunity for a bipartisan 
discussion today. For far too long the Federal Government has 
doled out hundreds of billions of dollars to colleges without 
any sense of accountability. Presently, public funding and 
profit is based on the number of seats colleges fill, not on 
the students' performance or success. This has been a recipe 
for more students with more debt and worse outcomes.
    This antiquated financial structure needs to be realigned 
so that the college success is linked directly to the student 
success. This will involve innovation. Funding based on 
outcomes, not inputs. It means skin in the game for colleges 
whose students take out loans. It should be a financial benefit 
to aiding in the graduate's educational success, building a 
career, and repaying their loan.
    It also should be financial accountability when 
institutions do not live up to their promise to graduates. 
Presently, the burden of a student's debt is almost entirely 
shouldered by the taxpayer and the borrowers. It is time to 
think of colleges as stakeholders in their students' success, 
versus observers.
    With a fresh, innovative mindset and a willingness for 
accountability, we can ensure that both students and taxpayers 
will receive a positive return on investment for their college. 
It is time America takes its place on an international stage of 
the greatest, post-secondary educational system in the world. 
With that, I look forward to the hearing today, and yield to 
the Ranking Member for an opening statement.
    [The prepared statement of Chairman Owens follows:]

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    Ms. Wilson. Thank you, Chairman Owens, and thank you to the 
witnesses for being here today, and thank you to all of the 
students, especially, in the audience and welcome to the 
Education Committee.
    Let us be crystal clear; the evidence is everywhere in 
every segment of society that a college degree is the surest 
path to the American dream. This is especially true for 
students from disadvantaged backgrounds, like first generation 
college students who have not had the luxury of guidance from 
parents or family members that have attended college.
    Students with bachelor's degrees earn nearly 1 million more 
over the course of their careers than those with only a high 
school diploma. To ensure students have access to the promise 
of higher education, the Department of Education must hold bad 
actors in higher education accountable for student success. 
Stronger accountability regulations in higher education saves 
students money and prevents them from wasting money on 
worthless degrees.
    Under President Biden's leadership, the Education 
Department has done just that. In June, the Department put 
forth the strongest gainful employment rule ever. This rule 
ensures that institutions truly prepare students for success in 
the workforce, protecting them from low-quality job training 
programs. The Defense Department has also worked to enforce 
borrower defense regulations, providing debt relief for 
borrowers defrauded by the institution.
    As a result, the Biden administration has forgiven more 
than 13.3 billion for one million borrowers. Let us compare 
this to the work of the previous administration, who worked 
every day to repeal important accountability measures that were 
meant to protect students originally put in place by Democrats.
    Stronger accountability regulations in higher education 
also saves taxpayers money and prevents Federal aid from going 
to predatory programs. Far too many tax dollars have gone to 
dishonest for-profit colleges that heavily rely on Federal 
student aid funding, and then they target underrepresented 
students, foolishly advocating for a free market approach to 
college accountability only lines the pockets of for-profit 
companies and CEOs.
    The Biden administration's effort to safeguard students 
from sub-par institutions are saving taxpayers money. As we 
open up this hearing, I hope our colleagues from across the 
aisle will take accountability seriously, and work with 
congressional Democrats to protect students and improve college 
accessibility.
    Taxpayers, students, and the economy as a whole stand to 
gain when improved accountability measures are put in place in 
higher education. With that, Mr. Chair, I yield back, and I 
look forward to a productive discussion. Thank you.
    [The prepared statement of Ranking Member Wilson follows:]

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    Chairman Owens. Thank you. Pursuant to Committee Rule 8(c), 
all members who wish to insert written statements into the 
record may do so by submitting them to the Committee Clerk 
electronically in Microsoft Word format by 5 p.m., 14 days 
after the date of this hearing, which is August 10, 2023.
    Without objection, the hearing record will remain open 14 
days to allow such statements and other material referenced 
during the hearing to be submitted for the official hearing 
record. I will now turn to an introduction of the four 
distinguished witnesses.
    The first witness is Mr. Michael B. Horn, who is an Author 
and Co-Founder of the Clayton Christensen Institute for 
Disruptive Innovation in Boston, Massachusetts, and an adjunct 
lecturer at Harvard Graduate School.
    Our second witness is Mr. Stig Leschly, who is President 
and Founder of the Postsecondary Commission, and is located in 
Boston, Massachusetts. Next, our third witness is Dr. Stephanie 
Cellini, who is Professor of Public Policy and Public 
Administration and Economics at George Washington University in 
Washington, DC.
    Our final witness is Dr. Andrew Gillen, who is Senior 
Policy Analyst at the Texas Public Policy Foundation, located 
in Austin, Texas.
    We thank the witnesses for being here today and look 
forward to their testimony. Pursuant to Committee Rules, I 
would ask that you each limit your oral presentation to a 5-
minute summary of your witness statement. I also would like to 
remind the witnesses to be accurate, to be aware of their 
responsibility to provide accurate information to the 
Subcommittee.
    I first would like to recognize Mr. Horn.

  STATEMENT OF MR. MICHAEL HORN, AUTHOR AND CO-FOUNDER OF THE 
   CLAYTON CHRISTENSEN INSTITUTE FOR DISRUPTIVE INNOVATION, 
                    LEXINGTON, MASSACHUSETTS

    Mr. Horn. Thank you and good morning, Chairman Owens, 
Ranking Member Wilson, and distinguished members of the 
Committee. Thank you for giving me the opportunity to speak on 
this important topic. My name is Michael Horn. I am the co-
author, or co-editor of six books on education, and I teach at 
the Harvard Graduate School of Education.
    In our current system of higher education, we pay for what 
we get. The government underwrites significant portions of the 
higher education system, it means that students and families 
are not the only customers of colleges and universities, 
taxpayers are as well.
    There is a saying in efficient markets, the customer is 
always right. What they demand is ultimately met. In higher 
education what the government, and therefore the taxpayers are 
currently paying for, is enrollment of students. Not 
employment, not learning, not life outcomes.
    Now combine that with four realities. One, higher education 
is an experienced good. It is hard to understand its value or 
utility until after it has been used. Two, the price of 
colleges and universities for individual students is opaque, as 
the actual price is often not revealed until after admission.
    Once more, the price charged often changes from year to 
year. Three, the money from the Federal Government often has 
the feeling of being free to the student. Four, according to 
the data we collected for our book Choosing College, students 
attend college for a variety of nuanced reasons, many of which 
do not pertain directly to economic return.
    The result of all these dynamics is that higher education 
has long been on an unsustainable cost trajectory. Since 1970, 
spending by public colleges and universities rose from nearly 
104 billion in today's dollars, to 420 billion by 2020. 
Altogether postsecondary institutions now spend more than 670 
billion per year, and for what? Completion rates remain poor, 
with nearly 40 percent of students failing to graduate from 4-
year institutions within 6 years.
    Nearly one-third of all institutions leave their students 
with zero economic return, after accounting for the cost of 
attendance. The Federal Government's answer to this quandary 
since 1965 has been accreditors, agencies that now play the 
role of gatekeeper to Federal financial aid.
    Accreditors were not built to play a quality assurance 
role. They were designed originally as peer review 
organizations to determine what is a college, and to help 
institutions improve. They may do that well, but they are not 
good at focusing on student outcomes, nor does Federal policy 
incentivize them to do so.
    According to a report from the postsecondary Commission, my 
colleague Stig here, low graduation rates, high loan default 
rates, and low median student earnings did not increase the 
likelihood that an accreditor would take disciplinary action 
toward a college.
    Accreditation is an all or nothing game, once accredited, 
you get access to Federal dollars. Once you have access to 
Federal dollars, you can enroll students, and make them feel 
like the education is subsidized and significantly less 
expensive than it ultimately is. Indeed, the instinct to create 
regulations focused on how a college or university operates 
through mechanisms like regulating a school's contracts with 
third-party entities, instead of its outcomes, only exacerbates 
this problem.
    The regulation of inputs how a college does its work, only 
locks institutions into set ways of doing things. It encourages 
compliance, not value, and colleges pass the cost of compliance 
onto students in the form of higher tuition. The strategy has 
not worked. Policies should instead focus on student outcomes, 
and empower--yes, free up, schools to figure out the best ways 
to deliver value for students and taxpayers.
    What would a better market look like? For starters, upfront 
price transparency so students knew what they would pay on the 
front end, and not have any surprises. What would better 
incentives look like? Congress could pass a policy to require 
that colleges share in the risk when student borrowers do not 
repay what they take out in loans.
    That will result in schools and programs like Western 
Governor's University, EYU Idaho, and Georgia Tech's online 
Master of Computer Science program that are innovative, meaning 
lower costs and better economic returns to the student. To be 
clear, the taxpayer customers of higher education should not 
tolerate bad college programs be they online or brick and 
mortar, that offer miserable returns on investment for 
students.
    This should be in the interests of traditional colleges and 
universities. At a time when their enrollments and reputations 
are both declining, they should want to do these things. 
Witness how traditional liberal arts colleges like DePaul 
University in Ohio, and Colby College in Maine have created 
what amount to employment guarantees.
    The road ahead can be bright for students, schools, and 
American society, with a focus on outcomes and value, not 
inputs and empty promises. Thank you for your time today.
    [The prepared statement of Mr. Horn follows:]

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    Chairman Owens. Thank you. We would now like to recognize 
Mr. Leschly.

     STATEMENT OF MR. STIG LESCHLY, PRESIDENT AND FOUNDER, 
        POSTSECONDARY COMMISSION, BOSTON, MASSACHUSETTS

    Mr. Leschly. Chairman Owens, Ranking Member Wilson, and 
members of the Subcommittee. Good morning and thank you for 
having me here. My name is Stig Leschly. I am the President and 
Founder of the Postsecondary Commission, and I teach 
entrepreneurship at Harvard Business School.
    The Postsecondary Commission is an aspiring accreditor, 
seeking recognition from the Department of Education. We are 
governed by a bipartisan board. Our priorities as an accreditor 
are to hold institutions accountable for generating strong 
economic returns for their students, and for acting with 
transparency toward them.
    If they do this, we will endorse them for access to Title 
IV aid, and grant them wide discretion to operate an innovate 
as they see fit. In my testimony today, I will describe four 
characteristics of our proposed model of accreditation. First, 
economic return. We are adamant that institutions should 
deliver strong, economic returns to their students.
    Overwhelming majority of students in the U.S. describe a 
better job, a viable career, and higher wages, as their top 
motivations for investing in higher education. When measuring 
economic returns to higher education, we calculate the wage 
gains for the value-added earnings that institutions generate 
for their students.
    We do this by comparing the actual wages that students earn 
after the exit an institution with an estimate of the wages of 
what they would have earned if never enrolled in the first 
place. When holding institutions accountable for these wage 
gains, we make sure they are large enough to compensate 
students in a reasonable timeframe for their costs of 
attendance.
    This approach creates incentives for institutions to both 
lower costs, and to raise wages. We also insist on assessing 
institutions for the wage gains of all their entering students, 
whether they graduate or not, so that institutions have 
incentives to maintain high graduation rates.
    Our approach to measuring wage gains controls importantly, 
for whether institutions enroll high need, or low need 
students. Student outcomes of any kind mean almost nothing 
until they are adjusted for the demographics and circumstances 
of the students in question.
    Second, transparency. In addition to being almost fanatical 
about measuring precisely and evaluating fairly the wage gains 
that institutions produce for students, we provide 
transparency. We are unwavering in our demand that institutions 
reveal fully and proactively to students their outcomes, their 
prices and their designs.
    Students and their families crave and deserve good 
information as they make lifechanging decisions about higher 
education. Third, accountability. When institutions fail to 
deliver adequate economic returns, or when they dodge 
transparency, we will intervene.
    We will do it sensibly, and collaboratively, but pointedly. 
Fourth and last, innovation. Our sector of education needs 
innovation. It needs clever institutions, both existing ones 
and new ones that can search out new groundbreaking models of 
higher education that costs less and produce more.
    Our model enables this kind of searching innovation. We 
have clear and fair standards for economic returns and 
transparency. We intervene when needed. Then we give 
institutions in good standing wide discretion to operate, to 
experiment and to specialize.
    We think this approach to accreditation, one that is tight 
on outcomes, and loose on means, enables and justifies 
innovation. In closing, I will observe again that our 
priorities as a new and aspiring accreditor, strong economic 
returns, full transparency, real accountability.
    Responsible, well-monitored innovation are also the 
priorities of this Committee, and of a bipartisan movement in 
this capitol and in most states, toward better economic 
outcomes, and more innovation in U.S. higher education. Thank 
you.
    [The prepared statement of Mr. Leschly follows:]

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    Chairman Owens. Thank you. I will now recognize Dr. 
Cellini. Did I pronounce that correctly?

STATEMENT OF DR. STEPHANIE CELLINI, PROFESSOR OF PUBLIC POLICY 
  AND PUBLIC ADMINISTRATION, AND ECONOMICS, GEORGE WASHINGTON 
                  UNIVERSITY, WASHINGTON, D.C.

    Ms. Cellini. Chairman Owens, Ranking Member Wilson, and 
members of the Committee. Thank you for the opportunity to 
testify today. For most students, getting a college education 
is one of the best investments they can make. Over a lifetime, 
the benefits of a college education typically far exceed the 
cost to students and taxpayers.
    For some students, the costs may exceed the benefits, 
especially if they do not complete their degree, or if they 
attend programs that do not provide them with skills that are 
valued in the labor market. If higher education was a well-
functioning, competitive market, poor performing programs would 
be forced to close as students realize the program's low value.
    The reality is that the market for higher education does 
not operate like other markets. It exhibits several types of 
market failure that make government intervention imperative for 
protecting students and taxpayers. Among the most important 
market failures, and the one I will focus on today, is 
imperfect information.
    Institutions have more information on school quality, costs 
and outcomes than prospective students. This imbalance is 
compounded by the fact that students have little way of knowing 
how well a program will meet their needs until after they have 
enrolled, and after they have taken on debt to attend.
    Unlike most other products, the benefits of higher 
education accrue far into the future, making them difficult for 
students to predict. Prospective students face an array of 
complex choices, and these choices may be particularly 
challenging to navigate for students without a tradition of 
college going in their community.
    Research shows that even very high achieving low-income 
students find it difficult to digest the mountain of complex 
information on colleges to find the best match. Since most 
students pick a college only once or twice in their lives, they 
have few opportunities to practice, and very little room for a 
mistake.
    One market-based approach to solving problems of imperfect 
information is to simply provide more information to students. 
This approach is a necessary first step in addressing 
information issues, and efforts to enhance data availability 
like the college scorecard, and the College Transparency Act, 
are critically important.
    A growing body of literature shows that information 
provision alone is not sufficient to protect students and 
taxpayers. As I document in my written testimony, past releases 
of government provided information, like the scorecard, have 
had little or no impact on the choices of the students who need 
it most, nor have they reduced college costs.
    To ensure value for students and taxpayers, institutions 
must be held accountable for student outcomes with meaningful 
consequences for poor performing programs. In contrast to other 
markets, the Federal Government has access to excellent data on 
student outcomes by which to measure value.
    It has more expertise to interpret performance than the 
average student. It also has the two rules authority, an 
obligation to set a minimum standard of value for taxpayer 
financed programs.
    Legislators can address these market failures. First and 
foremost, the Department of Education's proposed gainful 
employment regulations must be implemented. GE is critically 
important for improving accountability and fulfilling a higher 
education act is imperative to ensure that career training 
programs lead to gainful employment.
    The proposed GE rule is well targeted to hold accountable 
the programs that the data show are the most likely to leave 
students with heavy debt burdens and low earnings.
    Nearly one-third of for-profit certificate programs would 
fail GE measures, compared to just 1 percent of programs in 
community colleges. For-profit institutions enroll 
disproportionate shares of low-income students, students of 
color, veterans, working students and single parents, while 
typically charging higher tuition, relying more heavily on 
Federal student aid, and generating worse outcomes for students 
than other sectors.
    On average, earnings are lower, and debt is higher in the 
for-profit sector than in others. It is not surprising that 
over half of for-profit borrowers default on their loans over 
12 years. New research shows that accountability systems like 
GE, that sanction or close poor performing, for-profit 
colleges, do not reduce college access, but instead cause 
students to attend colleges with better outcomes.
    Although poor student outcomes are concentrated in the for-
profit sector, they are not confined to it. Accountability 
policies should be appropriately designed to address the risks 
of different types of programs.
    Should Congress move to expand Pell Grant eligibility to 
very short-term programs, any legislation must ensure that only 
the highest performing programs are eligible to participate in 
this critical taxpayer funded program.
    Over the last two decades, a growing body of economic and 
policy research has generated new evidence of value in the 
market for higher education. Research has shown where the 
problems are concentrated, how students and institutions may be 
affected by various policy options, and which metrics might be 
most effective in measuring value?
    I am grateful for the opportunity to share this research 
with you, and I hope it will help in your efforts to ensure 
value in higher education for students and taxpayers. Thank 
you.
    [The prepared statement of Ms. Cellini follows:]

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    Chairman Owens. Thank you. Last, but not least, I would 
like to recognize Dr. Gillen.

 STATEMENT OF DR. ANDREW GILLEN, SENIOR POLICY ANALYST, TEXAS 
            PUBLIC POLICY FOUNDATION, AUSTIN, TEXAS

    Mr. Gillen. Chairman Owens, Ranking Member Wilson, and 
esteemed members of the Subcommittee, I would like to thank you 
for giving me the opportunity to testify on this important 
topic. The value of higher education is being viewed more 
skeptically right now than at any other time in my life.
    I think there is a very good reason for that. In addition 
to all the categories of students Dr. Cellini just mentioned, 
if you just take the typical student, the benefits have been 
stagnant, the wage premium for going to college has not 
increased in 16 years, and prices on the other hand have 
increased pretty substantially.
    The combination of these two trends of stagnant benefits, 
and rising prices, has slowly eroded the value of higher 
education. How can we increase the value? I see two promising 
paths. One is to encourage lower prices. That can be 
accomplished in a few ways, so one has already been mentioned, 
which is price transparency.
    There is a recent Government Accountability Office report 
that found that about 91 percent of colleges obscure or mislead 
their students about the price of attending college. A new law 
that increased price transparency would increase student and 
parent awareness of the costs of college, and their increased 
resistance to paying those high costs would enforce a market 
discipline on the colleges.
    Another method of lowering prices involves combating the 
Bennett Hypothesis, which is the tendency of colleges to 
increase their prices in response to financial aid.
    As more and higher quality information on costs and 
quality, such as value-added learnings outcomes, and earnings 
outcomes are available, they will shift the nature of 
competition from reputation-based competition, which we have 
right now, which drives up costs, to value-based competition, 
which will drive down costs.
    When determining a student's aid eligibility, we could also 
use the median cost of college. Right now, we use the cost of 
attendance, which the college is allowed to set by itself. The 
median cost of college would just be the median among the costs 
of attendance figures.
    This would help sever the link between an increase in 
prices and an increase in aid eligibility, which would help 
defeat the Bennett Hypothesis. A second promising path to 
increase value is improving accountability. Historically we 
have tried several accountability mechanisms, such as cohort 
default rates, the 90 -10 rule, and gainful employment.
    These have not worked very well. There are some market and 
outcomes driven performance accountability metrics that could 
accomplish much more. Two types of metrics have significant 
potential to improve accountability in higher education, and 
those are risk sharing, and the return on investment.
    For risk sharing right now, if a student does not repay 
their loans, the taxpayer suffers huge losses, but the school 
gets to keep all of the money that they were paid upfront. Risk 
sharing would change that by requiring the schools to reimburse 
taxpayers for any losses that they incur as a result of the 
education that they provided to their students.
    The simplest version of risk sharing is to just have the 
college cosign the loan, so that when the student is unable to 
repay the college then gets a bill for it. Some colleges are 
already using a version of this, called loan repayment 
assistance program. Another way to implement risk sharing is to 
have the college reimburse the taxpayers for any realized 
losses.
    The Congressional Budget Office currently estimates that 
the subsidy rate on student loans is about 18 percent. What 
that means is that for every dollar that the government lends 
out, they are losing--taxpayers are losing about 18 cents. The 
risk sharing would basically require the colleges to pay that 
18 cents back.
    The amount of reimbursements required of the colleges vary 
dramatically based on the outcomes for their students. If you 
look at the typical computer science, or the typical registered 
nursing degree, their earnings are high enough that they are 
able to repay their loans without imposing any losses on the 
taxpayers, so those colleges will not have to reimburse 
anything for those students.
    If you look at the other end of the spectrum, a field like 
fine arts degree, the subsidiary rate for that discipline is 
about 69 percent. Colleges would be required to reimburse about 
69 percent on average for those students.
    In terms of return on investment, another sort of potential 
accountability metrics would be--return on investment would 
track basically benefits relative to costs. By taking account 
of both benefits and costs, ROI metrics get a much more 
comprehensive assessment of the value of the education.
    For example, one of your certificate program that increases 
earnings by $2,000.00 would have a very high ROI if it only 
costs $1,000.00, but a very low, or even innate of ROI if it 
costs $100,000.00. ROI metrics can be used to supply carrots 
and sticks to colleges, for example colleges offering high 
value programs can be given performance bonuses.
    In contrast, low value programs could pay sanctions, 
including losing access to Federal financial aid programs. 
Thank you for giving me the opportunity to testify, and I look 
forward to answering any questions you have.
    [The prepared statement of Dr. Gillen follows:]

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    Chairman Owens. Thank you. Under Committee Rule 9, we will 
now question witnesses under the 5-minute rule. I will begin 
the process. Dr. Gillen, you noted in your testimony that when 
a loan is made colleges receiving financial benefit up front, 
zero downside risk, while students and taxpayers face the 
consequences when the education does not live up to its 
promise.
    How would a market-based approach to accountability, like 
risk sharing, reverse this backward incident structure?
    Mr. Gillen. Yes. As an economist, the skewed incentives 
that we see under the current financing model is very 
disturbing. You could have a program that does not deliver a 
very good education, or it is just not well compensated in the 
labor market. The student loses out because they are 
financially devastated.
    The taxpayers lose out because they have never repaid the 
loans, but the school still profits. To me, one of the great 
things about these market driven and outcome based 
accountability mechanisms, is that you can align those 
incentives so that the school only profits when the school--or 
when the student and the taxpayers do as well.
    Chairman Owens. Very good. Thank you. Mr. Horn, most 
students go to college to move up the economic ladder, yet when 
an accreditor is reviewing the quality of a college, the review 
is not focused on the student outcomes. This is partly because 
the Higher Education Act requires accreditors to evaluate 
students' access based on college inputs, such as facilities, 
equipment, supplies of the college.
    However, we have seen accreditors set additional standards 
based on other inputs that they desire programs and 
institutions to pursue. This can include requiring an 
institution to prioritize political practices, or a litmus 
test, such as reading, diversity, equity and inclusive 
practices.
    If accreditors set standards focused on student outcomes, 
instead of a variety of inputs, how would the colleges respond?
    Mr. Horn. Yes, I think that you would see a clear focus on 
value for students, and you would see a lot more innovation. As 
Stig was speaking about, and as they set up an accreditor 
focused on outcomes, it would encourage institutions to try an 
array of ways to support students in different circumstances, 
to focus on what they do best, and not have the accreditors 
micro manage the missions of the institutions themselves, but 
instead free them up to serve the students along the dimensions 
that they most care about.
    Chairman Owens. Thank you. By the way, this is why I 
introduced recently an accreditation for college act called 
Act, ACE Act, which will prohibit accreditors from requiring 
colleges to accredit to meet any political litmus test, such as 
requiring adherence to DEI standards as a condition of 
accreditation.
    Mr. Horn, earlier this year the Department of Education 
shocked most everyone in a postsecondary community, when it 
expanded the definition of a third-party service. As you know, 
colleges and universities of every type, partner with 
technology and instituting experts to develop course work 
outlined educational platforms, or provide retention and 
student success activities.
    These partners are by no means financial aid services. 
Because of this vast criticism, the Department pulled back its 
guidance. Why are the Department actions regulating third party 
services--just one example of the misalignment focused on 
institutional inputs rather than outcomes?
    Mr. Horn. Yes. It is a classic case of being overly broad 
and one might say creative, and changing the English language 
to expand the definition of the entities that the statute was 
meant to regulate, and the effect I think is pretty clear. It 
is going to crowd out innovative startups that might support 
colleges in better serving students.
    It favors status quo incumbents. It creates more compliance 
costs that will actually raise, not lower the price of higher 
education, and it distracts from the ultimate thing that we 
need to be focusing on, which is a better framework for policy 
focused on outcomes and value for students and taxpayers.
    Chairman Owens. Thank you so much for that. Right now, I 
would like to recognize the Ranking Member, Ms. Wilson.
    Ms. Wilson. Thank you. Thank you, Mr. Chair. Dr. Cellini, 
the Federal Government is uniquely equipped to provide 
oversight of institutions to ensure that they are not harming 
students or wasting taxpayer money. While it may not be the 
Federal Government's role to tell students where to enroll, it 
is essential that the government help to determine where not to 
go based on how institutions support their students.
    Tell us why must the Federal Government, and not individual 
students take the onus of identifying low-quality institutions, 
and how does Federal accountability protect our taxpayers?
    Ms. Cellini. Thank you. Well as I mentioned, imperfect 
information is a problem in this market. Choosing a college is 
very complex, there is a lot of information out there. We know 
that just providing information may not get to the students who 
need it most. There is research on the College Scorecard, and 
other types of lists that identify high-cost programs that have 
not made a difference for students.
    They have not reached students who might need that 
information the most. There are lots of taxpayer dollars at 
stake, billions of dollars, and we need to make sure that 
students at least know which programs have value. They should 
not have to take it on themselves to go through the mountain of 
information, complex information on college costs and 
attributes to decide for themselves which programs have value.
    The Federal Government has data that it can use on student 
outcomes, and can at least ensure a minimum bar, so that 
students are assured that programs that they enter into will 
have value in the long run.
    Gainful employment and other accountability metrics provide 
some of this assurance for students, to make sure that low 
performing programs cannot access Federal student aid.
    Ms. Wilson. Thank you. Mr. Horn, the current cost of higher 
education puts a college degree out of reach for many. You 
mentioned in your written testimony the promise of loan risk 
sharing to address college affordability and accountability. 
However, some experts, including the Brookings Institution, 
have warned that if not crafted properly, risk sharing could 
harm disadvantaged students' access to higher education.
    How can you promote this policy without adequately 
explaining how this policy could, if designed poorly, 
disincentivize enrollment of students deemed at risk?
    Mr. Horn. Yes. I appreciate the question, and I think there 
are two sides that are important to balance here. One is the 
importance of accessibility for the socio-economic gains that 
you mentioned in the beginning in your remarks about the 
benefits that can construe to successful graduation, and 
placement into jobs.
    When you craft these policies, obviously making sure you 
ensure the upside is critically important. The second thing 
that I would say is that Dr. Gillen, and their institute, have 
done a significant amount of work in thinking about the right 
way to structure these programs to balance the concerns of poor 
outcomes, the upside of really good outcomes that actually 
reset what the taxpayer is paying for around value for 
students, and the importance of focusing on that ultimate 
value.
    Ms. Wilson. Okay. Dr. Gillen, if we are serious about 
promoting equality, accountability in higher education, we 
should focus on holding for-profit institutions accountable for 
pushing the false promise of a quality education. The National 
Center for Education Statistics reported that in a 6-year 
period only 29 percent of students at for-profits successfully 
completed their degree.
    How can we promote for-profit institution places in higher 
education landscape when they continuously fail, continuously.
    Mr. Gillen. Low value education is a concern regardless of 
where it occurs. It occurs in the for-profit sector, it occurs 
in the public and non-profit sector too. I think that our role 
should be to identify where low value education is occurring, 
and stamp it out wherever it occurs, including the for-profits, 
including the publics, including the non-profits.
    Ms. Wilson. I think I am out of time. I yield back.
    Chairman Owens. Thank you. I now recognize Mr. Moran.
    Mr. Moran. Thank you, Mr. Chairman. I appreciate each one 
of you talking about this very important subject today. Dr. 
Gillen, I want to talk to you a little bit about Texas State 
Technical College if you don't mind. You mentioned performance-
based funding as a way to provide incentives for colleges to 
give high value education to students.
    You point to the funding structure used by TSTC as a 
potential model for policymakers to follow if performance 
funding were to be incorporated into the Higher Education Act. 
Can you discuss a little bit more about how this model works in 
Texas, and what lessons this Subcommittee can learn from that 
model?
    Mr. Gillen. Yes, absolutely. The Texas State Technical 
College, it is a public college primarily vocational, and 
unlike almost all other public universities and colleges in the 
country, it does not receive appropriations upfront, so it does 
not get a check from the State government.
    Instead, what the State does is it tracks all of Texas 
State Technical College students for several years after they 
graduate. It then calculates the value-added earnings, so the 
difference between what they think those students would have 
earned before attending the college, and what they earn 
afterwards.
    It then calculates the increase in tax revenue for the 
State of Texas, and then it shares a portion of that tax 
revenue with the school. That is how Texas State Technical 
College is funded. It educates students. Those students then 
generate more tax revenue, and some of that tax revenue is 
given to the State, almost as like a performance bonus, in lieu 
of State appropriations.
    This is a very innovative and great model. It has led to 
really great changes within Texas State Technical College and 
the State. Everybody in Texas is very, very pleased with this. 
The cities that do not have a campus want one. The cities that 
do have a campus are thrilled to have one.
    This is a great model, and it also changed the culture of 
the administration of the university. Whenever you think about 
the traditional college, one of the hardest things to do is get 
rid of a department, right? Get rid of a major, get rid of a 
certificate program because it creates a lot of controversy.
    That is not the case at Texas State Technical College 
because they are looking at the data for the earnings outcomes 
of their students, and if that data is not sufficient to 
justify the program, they just quietly close the program, and 
redirect those resources elsewhere.
    That cultural shift is just a huge, huge benefit, I think.
    Mr. Moran. It sounds like part of that culture is really a 
culture of internalizing this notion of accountability. Self-
accountability, both at the professor and administration level, 
and also at the departmental level. Would you agree with that?
    Mr. Gillen. Yes. Absolutely. I mean Texas State Technical 
College is definitely held accountable. If their students do 
not get good jobs, they do not get paid, which is completely 
the opposite way that we fund most colleges in this country.
    Mr. Moran. Yes. We spend a lot of time on this Committee 
talking about the substance of policies, or substance of things 
we do not like being taught in either early education, or 
institutions of higher education, but in truth, the proof is in 
the pudding.
    Ultimately, we are developing individuals to go out in the 
workplace and to be beneficial parts of the workplace, and so 
this kind of model reinforces that, that hey look, let us see 
what kind of teaching leads to what kind of outcomes. Do you 
see any other institutions of higher learning that are using 
this kind of model?
    Mr. Gillen. There is a lot of tinkering I would say. I am 
only aware of Texas State Technical College using this exact 
model. There are a lot of performance-based funding programs 
throughout the country that sort of mimic this structure. The 
difference is this is all of Texas State Technical College's 
funding, whereas these performance base fundings it is 
typically a rounding error, so there is a hint of this model 
spreading, but it has not really spread.
    Mr. Moran. I want to switch gears and ask Mr. Horn really 
quick about a different topic because I am a father of four. I 
have got two seniors in high school that are looking to go to 
college, so we are looking at a whole lot of finances, and a 
whole lot of costs of colleges. I know firsthand how difficult 
the college shopping process could be.
    How come colleges are not--how come we are not viewing it 
as a long-term investment, and we are not pricing it that way, 
and we are not holding our colleges and universities 
accountable for the transparency for the cost of certain 
programs, compared to their return on their investment. Can you 
speak to that?
    Mr. Horn. Sure. First, good luck as you go through the 
process. Second, opacity right works in favor of the colleges 
in many cases. It obscures, it creates a social or emotional 
feeling of oh, I got a scholarship when in fact they are net 
tuition discounting as they try to maximize the revenue in 
their class, and things of that nature.
    I would argue it is a short-sighted part of the model as 
well because it is undermined trust in the institutions as the 
price tag has gone up over time.
    Mr. Moran. Yes. I appreciate that. Thank you all for your 
information today. I yield back.
    Chairman Owens. Thank you. I would now like to recognize 
Mr. Takano. I am sorry, Mr. Scott.
    Mr. Scott. Thank you, Mr. Chairman. Dr. Cellini, when 
President Johnson signed the Higher Education Act, he said that 
it meant that a high school senior anywhere in this great land 
of ours can apply to any college, or any university, in any of 
the 50 states, and not be turned away because his family is 
poor.
    He backed up that promise with the Higher Education Act, 
where the Pell Grant at that time covered about 80 percent of 
the cost of attending a State college. The other 20 percent 
could be made up with part-time jobs, summer jobs, and that 
kind of thing.
    Is it still important for our democracy that all students 
have access to higher education?
    Ms. Cellini. Yes. Higher education is incredibly important. 
It has benefits not only to students, but also to society more 
broadly in the form of things like increased civic 
participation, increased productivity, reduced crime. Access to 
education is incredibly important for society. The Pell Grant 
is incredibly important for making college affordable for 
millions of students.
    About 7 million students every year get the Pell Grant, and 
we know from the research that it is not only important for 
enrollment in college, but also for completion and in fact, it 
can even raise earnings of students. Some researchers have 
found that earnings effects alone from the Pell Grant make it 
pay for itself many times over. The Pell Grant is incredibly 
important.
    Mr. Scott. Thank you. We have heard a lot about economic 
return on the investment. Is there inherent value in a 4-year 
on campus liberal arts degree that cannot be monetized?
    Ms. Cellini. Of course there is many benefits to a college 
education, some that can be monetized, some that cannot. As 
kind of a minimum bar to look at accountability and what 
students expect to receive is at least a small boost in 
earnings, in addition to some of those other non-pecuniary 
benefits.
    Mr. Scott. If some degrees are easier to monetize than 
others because you have got readily identifiable job skills, 
others you just have a good education, and should Federal 
financial aid be limited to courses where a financial monetized 
financial return can be calculated? Or should financial aid be 
available to all college courses?
    Ms. Cellini. I think we need different types of 
accountability for different types of programs. The 
accountability needs to be appropriate for the risks of those 
programs. We know that many of the problems of value are 
concentrated in the for-profit sector, and things like gainful 
employment do take a look at those programs, and career 
programs are mentioned in the HEA.
    Mr. Scott. Well in those programs the promise is that you 
take the course to get a specific job, and you are talking 
about consumer protection, and you have been given a promise. 
If you are really not going to get a good job, you have been 
defrauded.
    When the promise is that you will get a good education, 
that is kind of hard to monetize frequently, and the question 
is whether the Federal Government should be--Federal financial 
aid should be available for college courses, history, English 
or other things where you may not be able to monetize it.
    Ms. Cellini. Well, on average we see that students in 4 
year college programs, at most institutions, as I mentioned for 
most students college does pay off in 4 year programs. We see 
that often in liberal arts for example, that students may not 
make quite as many earnings right out of the gate, but those 
earnings may increase over time, and they may also of course 
have non-pecuniary benefits of the education as well.
    Mr. Scott. That is why we have to be careful about sticking 
just to being able to monetize the particular degree, but there 
is inherent value in a good education. One of the things that 
we have not discussed is why it costs so much to go to college. 
Where can colleges actually cut costs, or is providing an 
education just inherently expensive?
    Ms. Cellini. I think there are a lot of reasons why college 
costs have increased. I think there has been State 
disinvestment in higher education, and as a result, sometimes 
budgets are balanced on the backs of students at the State 
level, and tuition rises.
    I think there are things that colleges can do to help 
students. Colleges can invest in institutional grants, or lower 
tuition to ensure that students do not take on huge amounts of 
debt.
    Mr. Scott. Well, the fact is that states have traditionally 
several decades ago, paid two-thirds of the costs to the State 
college, now it is on average less than one-third. That burden 
has gone on the students. We are trying to get the costs of 
running a college down has been challenging. Thank you, Mr. 
Chairman.
    Chairman Owens. Thank you. I would now like to recognize 
the Chair of the full Committee, Dr. Foxx.
    Mrs. Foxx. Thank you, Mr. Chairman, and I am interested in 
hearing what the Ranking Member has to say and finding that 
there really is a different world view as far as education is 
concerned. I thank our witnesses. Mr. Horn, in any well-
functioning market, which education is, the price you see 
reflects the quality of the product being sold and is the 
actual price you will pay.
    Unsurprisingly, that is not the case in our poorly 
functioning postsecondary education market. The rise of 
strategic tuition discounting has completely distorted the 
connection between price and quality, and the result in two 
identical students paying widely different prices simply 
because one indicated an interest in more than one school on 
his or her FAFSA.
    In your testimony you highlight several colleges that have 
moved away from the opaque pricing scheme and toward models 
that are transparent for students and families. Can you 
elaborate on these alternative pricing models, including how 
they benefit students and institutions?
    Mr. Horn. Certainly. We have seen four I would say, 
innovations in transparency and pricing. One is to move to a 
subscription model, so like Western Governor's University, 
which now serves some 160,000 or so students with competency 
based online education. We have seen institutions move to 
guarantee a 4-year pricing model upfront, so that there is no 
surprise from year to year in what will change.
    This was first popularized with scholarships and athletics. 
It has moved to the actual price tag itself. A third one has 
been tuition resets, so moving away from the net tuition 
discounting model that you mentioned, to say hey, let us 
actually move down to the actual price itself.
    Then fourth, I will mention, is also a work college model, 
where you are partnering with employers so that students as 
they are working and gaining educational credit for that work 
are also getting wages that pay for the tuition, like Paul 
Quinn College.
    Mrs. Foxx. Thank you. If we can learn anything from this 
hearing, it is that institutions can change for the betterment 
of themselves, students, and taxpayers. With that, I request 
unanimous consent to submit for the record testimony from the 
University of Dayton, which has been a leader in offering 
upfront guaranteed prices to students resulting in lower debt 
and increases in retention conflation and enrollment.
    I ask unanimous consent to submit testimony from Lenoir-
Rhyne University in North Carolina, which has committed itself 
to transparent pricing, and recently underwent a tuition reset. 
I commend President Fred Whitt, of Lenoir-Rhyne University, for 
his leadership in implementing transparent tuition prices.
    Mrs. Foxx. Mr. Chairman.
    Chairman Owens. No objection.
    [The information of Mrs. Foxx follows:]

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    Mrs. Foxx. Mr. Leschly, at the beginning of this Congress 
several Committee Republicans introduced the Pell Act. The bill 
extends Pell Grants to high-quality, short-term workforce 
programs. Do you have any feedback for this Committee on 
whether or not the Pell Act to earnings metrics serves as a 
strong measure of the program's effectiveness?
    Mr. Leschly. Thank you. It is a very thoughtful, appealing 
piece of work, this earnings metric that has been drafted into 
the Pell Act. It looks at the actual wages that students 
experience and compares them to a baseline. In this case, it is 
a multiplier of the poverty line, but it essentially gets at 
initially this thing we have been talking about, value added 
earnings, and measures whether students do better economically 
because they go to college.
    Then very importantly, it compares that wage gain to the 
price that students pay to go, and it polices underperformance 
on that metric, and very importantly sets incentives for 
institutions to both lower costs, and to drive up wages.
    Mrs. Foxx. Thank you. I would like to highlight an analysis 
by the non-partisan Urban Institute that found that, ``The Pell 
Act's economic value test would be a substantially higher bar 
for programs to clear than the draft GE rule.'' If my 
colleagues are serious about accountability, the Pell Act 
provides a stronger metric that can be applied to all programs.
    I request unanimous consent to submit this analysis into 
the record also.
    Chairman Owens. No objection.

    [The information of Mrs. Foxx follows:]

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    Mrs. Foxx. Dr. Gillen, under the Department's proposed 
gainful employment rule, a hypothetical career education where 
graduates earn $35,000.00 and owe $110.00 per month on their 
loans would be considered to have affordable debt and receive a 
pass under the Biden administration's own GE rule.
    Under the new income driven repayment plan, the $35,000.00 
in loans is somehow now unaffordable debt that needs to be 
canceled. The new IDR plan would allow some borrowers to pay 
just $9.00 per month, and ultimately get his or her loans 
canceled. Do you think these rules are inconsistent?
    Mr. Gillen. Yes. I think that is an accurate assessment. 
The problem is that they are using different poverty line 
cutoffs, so the new student loan repayment plan uses a cutoff 
of 225 percent of poverty line, whereas gainful employment is 
likely going to be using 150 in the final version.
    They are trying to measure the same thing, affordable debt, 
and so having two different baselines is illogical.
    Mrs. Foxx. Thank you. I yield back, Mr. Chairman.
    Chairman Owens. Thank you. I now recognize Mr. Takano.
    Mr. Takano. Thank you, Mr. Chairman. My Republican 
colleagues claim that they want to lower costs and increase 
value for students and institutions in higher education, yet 
those same colleagues vehemently opposed President Biden's 
proposal for free universal community college under his 
America's College Promise Act.
    If we are serious about lowering costs for students, 
universal free community college would have lowered costs for 
students across the board. In my own home State of California, 
community college fees are essentially free for low-income 
students.
    I want to remind folks that community colleges are not just 
entities that serve as steppingstones to 4-year institutions 
and transfer education, many students complete their associate 
degrees, or even shorter-term certificates, say in culinary 
arts, for a fraction of the cost that that same culinary arts 
program might cost at a for-profit institution.
    I know because I had a student that tragically was saddled 
with tens of thousands of dollars in debt when he could have 
done that probably for free at the community college with his 
Pell Grant. Given the fact that free community college was 
stripped from the reconciliation package, we have to look at 
other ways to address costs for students and institutions.
    The average debt for a college graduate from my public 
university is roughly $32,000.00 nationally. The average amount 
of debt for a graduate of a for-profit college is roughly 
$60,000.00. Now Dr. Cellini, at the Cal State San Bernardino, a 
public college from the Cal State system in my own home State, 
is making strides to ensure that students are graduating with 
manageable debt.
    Does it surprise you that the average undergraduate debt 
load for a CSUSB student that receives Pell is roughly 
$10,000.00?
    Ms. Cellini. It does not surprise me that public 
institutions, particularly in California, are doing a good job 
of keeping costs down for students. That sounds like pretty low 
debt for a public 4-year degree for a bachelor's recipient 
overall. We know that in other sectors it's much higher as you 
mentioned.
    Mr. Takano. I mean obviously the California taxpayers 
support and subsidize this education, but it is possible to I 
think produce an affordable undergraduate experience. Can you 
share the highlights of your research regarding the Bennett 
Hypothesis?
    Ms. Cellini. Sure. I have looked at the Bennett Hypothesis 
in the for-profit sector in particular, and that is where we 
see most of the evidence to be strongest on the Bennett 
Hypothesis. My research with Claudia Golden looked at non-Title 
IV programs, and Title IV programs.
    We looked at similar programs, similar length, as apples to 
apples as we could get, programs that have Title IV and 
programs that did not have Title IV, both for-profit sector 
programs. The ones that got Title IV had tuition that was about 
80 percent higher than the ones that did not participate in 
Title IV programs.
    We see it in the for-profit sector. In other sectors my 
reading of the research is that it is more mixed. One study 
recently by Luca, in fact, found that in the for-profit sector, 
the tuition increase and its response to Federal student aid in 
cost was four times higher in the for-profit sector than in the 
public sector. I think that is where I see the research that it 
is just much stronger in the for-profit sector than others.
    Mr. Takano. It is important to understand that the 
Hypothesis, the Bennett Hypothesis really provides us with a 
stark insight into the for-profit sector. It is a bit more 
questionable when we apply it to other sectors of higher ed.
    Ms. Cellini. Yes.
    Mr. Takano. I am committed to strengthening the 
accountability for this for-profit sector, and providing strong 
data on student outcomes to prevent unrepresented students from 
being targeted by this unscrupulous sector. Now my Republicans 
colleagues often decry that focused oversight of the for-profit 
sector as a witch hunt.
    However, the research shows, and your research shows why we 
need to be concerned. The for-profit programs are often 
significantly more expensive, as you said, what was it? Four 
times as much? Four times as much than similar programs offered 
at public schools, and my experience with that culinary program 
at the community college level is that the case in point.
    College completion rates for for-profits are consistently 
lower than those in lower sectors. I have got to tell you. It 
just really broke my heart when my student told me how much 
debt he was in because he comes from a low-income family, and 
we could have provided that same training, that same experience 
at a community college for just a fraction of that cost, and 
maybe even free. Madam Chair, or Mr. Chair, I yield back.
    Mrs. Foxx. Thank you, Mr. Takano. I would like to welcome a 
group of very young learners who have joined us today. Would 
you all stand up so we could see you and applaud you for 
joining.
    [Applause]
    Mrs. Foxx. We are so pleased to have you here, and we will 
be on our P's and Q's to make sure we behave. Mr. Grothman, you 
are recognized for 5 minutes.
    Mr. Grothman. Yes. We will start off with Dr. Gillen. A 
common argument we hear with regard to rising prices is because 
of State disinvestment in postsecondary education. You 
mentioned in your testimony how State funding has actually gone 
up over time. Can you elaborate on this, and in fact as I 
understand it states have increased this funding, so who is the 
culprit when it comes to tuition and inflation we have seen 
over the last few decades?
    Mr. Gillen. Yes. A lot of people, when you focus on public 
universities, will argue that tuition has to go up to make up 
for cuts in State funding. If you adjust for inflation, State 
funding has actually gone up. There is a very influential 
report out that that does not adjust for inflation. Everybody 
sort of cites that.
    Mr. Grothman. Over what period of time?
    Mr. Gillen. This is from 1980 to today, so four plus 
decades. Once you adjust for inflation using any of the kind of 
standard metrics, it is either flat or up, so State 
disinvestment is not a cause of rising prices, which raises the 
question what is.
    All of my research is pointing me to what is called Bowen's 
Laws. I mentioned them in the written testimony, but the cliff 
notes version of it is colleges will raise and spend as much 
money as they can because they have got a never ending goal to 
pursue educational excellence, prestige, influence.
    As a result of that, whatever revenue source they can grab 
revenue from they are going to, whether that be tuition, 
whether it be State funding, whether it be research dollars, 
whether it be commercialization, whether it be athletics. They 
are going to try to maximize revenue from any given revenue 
stream they have regardless of what is going on with the 
others.
    Mr. Grothman. In other words, if they have access to money 
they will spend it?
    Mr. Gillen. Yes.
    Mr. Grothman. Okay. Just a general question. This even goes 
back to when I was in college. It seems to me that a relatively 
high percentage of people who work for colleges, and I am 
talking the white-collar jobs, not maintenance and that sort of 
thing, are what I call non-teaching personnel.
    Could you comment on what is going on over time there, and 
the percentage of people we have working in colleges, not doing 
research either, other source of advising sort of jobs, that 
sort of thing?
    Mr. Gillen. Yes. There has been a bit of a brewing 
rebellion over what is called the administrative bloat over 
precisely this issue. It has been a problem for a very long 
time, and I think it is very real. There is actually some 
evidence the number of non-teaching staff on university now 
outnumbers the number of teaching staff, which is bizarre for 
an educational institution to have that kind of staff ratio.
    Mr. Grothman. Right.
    Mr. Gillen. Yes, I think it is definitely concerning.
    Mr. Grothman. Could you repeat that? Just you are saying 
that there are some studies who have shown that in some 
universities the number of non-teaching personnel outnumber the 
number of teaching personnel. I will believe that. I just want 
you to repeat it.
    Mr. Gillen. Yes. Yes. That is correct.
    Mr. Grothman. Okay. I will now ask Mr. Horn. One of the 
biggest problems that students face today when they decide to 
go to college or not, is they do not fully understand the 
financial responsibility they are embarking on. You mentioned 
how students can use student loans as free money, and quite 
frankly at least some college advisers encourage that.
    Free money instead of something needing to be repaid. 
Before committing to a student loan, students must see the 
whole picture on how much money an average graduate from the 
school must pay back, and how much money they are likely to 
earn in the future. What could be done to give students the 
opportunity to make sure that borrowing choices are the right 
ones for them academically and financially?
    Mr. Horn. Yes. There are two components of this, right? One 
is on the student side, and there is lots of documented 
evidence that colleges mislead students with a variety of 
linguistics on admission's letters to confuse them around the 
actual price that they will be paying, and the obligation.
    One is sorting that out. Second, frankly colleges, as Dr. 
Cellini was saying, have a much more macro view of the future 
of students in many cases. They can see things and have more 
perspective than students coming into higher education often 
do. Having colleges sign up for risk sharing on those loans as 
Dr. Gillen has laid out, would make a lot of sense because it 
would align incentives so that they are working with students 
and taxpayers on this, and not misleading them.
    Mr. Grothman. I have talked to, in my district, leaders in 
the field, and do you find any effort being made by the 
colleges to discourage students from taking out any more debt, 
or are they even legally able to do that?
    Mr. Horn. Colleges often talk about how students take out 
more debt than they wish that they would, but they do not 
actively take a role in helping them think through those--what 
those commitments will mean in the future.
    Mr. Grothman. Okay. Thank you.
    Mrs. Foxx. Thank you, Mr. Grothman. Ms. Jayapal, you are 
recognized for 5 minutes.
    Ms. Jayapal. Thank you, Madam Chair, and thank you to our 
witnesses for being here today. A degree can be the key to 
economic mobility for low-and middle-income families, but years 
of systemic discrimination has made it harder for black and 
Latino students to afford tuition, which is why 90 percent of 
black and 72 percent of Latino students take out student loans.
    For a whole host of reasons, these communities struggle to 
repay, with black borrowers being five times more likely to 
default than white borrowers. All students, including black and 
Latino, could realize the full benefits of a degree if we 
eliminate cost barriers for all of those who want to go to 
trade school or college.
    To fully address those disparities, Congress should take 
steps to ensure that postsecondary programs do not leave 
students in a worse economic position. Dr. Cellini, I was moved 
by the testimony that you submitted, including in the need for 
accountability where you focus on for-profit colleges, in 
particular, for-profit schools.
    For-profit schools are notorious for abusing taxpayer funds 
and peddling ineffective degree programs. We can learn a lot 
about a program's effectiveness by looking at default rates for 
socially disadvantaged students. How likely is a black or a 
Latino student to default at a 4-year for-profit college?
    Ms. Cellini. Well, some of the best data on default rates 
by race and institution type is done by Judith Scott-Clayton. 
She looks at data on student default over 12 to 20 years, so 
long-term patterns that other data cannot get at. She finds 
that about 58 percent of black students, whoever attended a 
for-profit college defaulted on their loans within 12 years.
    Then that number was 41 percent of Hispanic students were 
defaulting on their loans within 12 years.
    Ms. Jayapal. Wow. Now we have to compare those default 
rates to default rates for black and Latino students who have 
never attended a for-profit, and how they fare at other 4-year 
colleges. Do you know what those rates are?
    Ms. Cellini. Yes. From her paper, what I am remembering is 
that the rate for black students in the never for-profit 
category, who had not attended then, that rate was cut about in 
half, about 28 percent. For Hispanic students that went way 
down to about 11 percent, about a quarter.
    Ms. Jayapal. That is really remarkable data. It is deeply 
concerning that there is a real risk for black and Latino 
borrowers at for-profit colleges to default, more than any 
other sector. I also find it alarming considering that for-
profit colleges enroll nearly twice as many black students as 
public colleges, and a disproportionate share of Latino 
students, despite being more like to have them default.
    Why are students of color overrepresented at for-profit 
colleges?
    Ms. Cellini. Well one big reason is that for-profits can 
spend a lot of money on advertising and recruiting. They spend 
about $400.00 per student on advertising, compared to about 
$14.00 per student in the public sector, and this does not even 
include a lot of social media advertising, and internet 
advertising.
    I also have some research with Latika Chaudhary that shows 
that for-profits disproportionately tend to spend this 
advertising money in local areas with higher shares of black 
and Hispanic students.
    There is less data on recruiting numbers, but some evidence 
suggests that for-profits may spend around $4,000.00 per 
student on them. We also know that these institutions tend to 
locate in higher poverty areas, where students are more 
eligible for aid.
    Ms. Jayapal. For-profit colleges are aggressively marketing 
specifically to low-income black and Latino students, and on 
average for-profits spend $400.00 per student on commercials 
compared to public colleges spending just $14.00 per student. 
You talked, you mentioned aggressively recruiting and there 
being less data, but there is some data to suggest that they 
are aggressively recruiting these low-income students as well.
    For-profits are clearly aware that their programs fail low-
income black and Latino students, but they are aggressively 
marketing to them because they want the Federal student aid 
dollars, which is really disturbing. I am glad that the 
Department of Education finalized the gainful employment rule 
to ensure that students are better off than having a high 
school diploma.
    What can Congress do to better protect students from 
predatory recruitment and economic devastation?
    Ms. Cellini. Well one thing that I think that Congress 
could do is to really require disclosure of things like 
advertising, recruiting, marketing and lobbying expenditures of 
institutions. Make that separate from student services in data 
sources like the IPEDS, so that we can actually take a look at 
what colleges are spending.
    They might also consider restrictions on the use of Title 
IV funds for those types of activities, but really, I think the 
new GE proposal is incredibly important. I would also think 
about if Congress is thinking about expanding the Pell Grant 
program, to really make sure that that is not extended to very 
low value, short-term programs, potentially in the for-profit 
sector, so to be careful of the risk.
    Ms. Jayapal. Thank you so much. I think it is important to 
protect students and taxpayers, and Madam Chair, I ask 
unanimous consent to enter into the record this article called 
The Biden Administration Wipes Out 130 Million Dollars of Debt 
for Students Misled by Colorado Career College.
    I think this is really important in terms of where students 
are, and how we repair some of the damage that has been done.
    Mrs. Foxx. Without objection.
    [The information of Ms. Jayapal follows:]

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    Ms. Jayapal. Thank you, Madam Chair. I yield back.
    Mrs. Foxx. Thank you. Mr. Banks, you are recognized for 5 
minutes.
    Mr. Banks. The average cost of a 4-year degree has tripled 
over the last four decades. Meanwhile, in 2021 Harvard 
University grew its endowment by 10 billion dollars. Dr. 
Gillen, why have not schools flush with cash like Harvard, used 
a small piece of their profits to lower tuition cost?
    Mr. Gillen. I think it fundamentally has to do with the 
nature of composition in higher education, and we have got two 
Harvard teachers right here, very distinguished ones I might 
add. The way you become Harvard is you accumulate a massive 
endowment, and the goal is to create the perception and 
hopefully the reality of high academic excellence in every 
field.
    The way you do that you accumulate the endowment. You do 
not spend, or you do not admit everybody. You are very 
selective about who you let into the college, and so you 
combine this, and you have got basically a very rich 
institution that is kind of cream skimming the best students, 
and then we all kind of agree that it is a great school because 
of that. No offense to you guys, but that might not be the 
case. There might be a community house out there.
    Mr. Banks. 53.2-billion-dollar endowment. I mean is that 
absurd? I mean.
    Mr. Gillen. Yes, there is----
    Mr. Banks. I am baffled by it. Why could not that money be 
used to lower tuition costs?
    Mr. Gillen. Harvard absolutely could just waive tuition for 
all their students if they wanted to. They could probably waive 
tuition for all students in Boston if they wanted to.
    Mr. Banks. Maybe throughout the entire United States of 
America, 53.2 billion dollars, so why should Harvard be 
entirely exempt from paying any Federal income taxes on that 
53-billion-dollar endowment?
    Mr. Gillen. That is a great question. I do not know. There 
was a small change to an endowment tax essentially, on the 
return on investment. I think it is 1.4 percent that applies to 
some endowments. I do not know if Harvard is caught up in that 
or not, but that law could be updated.
    Mr. Banks. Really crazy. Relatedly a 2021 Heritage 
Foundation report found that the average U.S. university has 45 
full-time staff dedicated to DEI. Some schools pay full-time 
salaries to over 150 DEI staff, meanwhile the average cost of a 
4-year degree has tripled over the last four decades. That is 
even accounting for inflation.
    Mr. Horn, how can policymakers make sure that universities 
use Federal funds to prepare their students for the workforce 
instead of wasting tax dollars on DEI offices.
    Mr. Horn. Well, the increase in DE and I offices is really 
part of a larger trend, right? Of the administrative overhead 
that Dr. Gillen spoke to earlier. Administrative costs as 
complexity, and trying to be all things to all people, and all 
priorities, and so forth have caused colleges and universities 
to accumulate costs and spending.
    If we had a more coherent policy framework on the front end 
that prioritized outcomes and value for students and taxpayers, 
then colleges and universities would prioritize investments 
that focused on those things, and I think we would see some 
real gains in terms of student outcomes and value over time.
    Mr. Banks. According to the same report, universities now 
have 1.4 times more DEI personnel than tenured or tenured track 
history professors. Are academic departments today forced to 
compete with DEI offices for resources?
    Mr. Horn. As a history major, I do not know the answer 
directly, but I think there is no question again that the 
support structures and administrative accumulation around 
colleges and universities has just driven up the spending 
problem. It is very popular to talk about tuition pricing and 
costs onto the student, but that is fundamentally a symptom of 
costs at the university, and a spending addiction that 
continues to snowball.
    Mr. Banks. Yes. I think the answer is obviously yes. Dr. 
Gillen, you mentioned how schools see virtually no limit to the 
amount of money they spend on this kind of stuff. Non-teaching, 
administrative, DEI staff have especially benefited with many 
of them making over $300,000.00 annually before bonuses.
    Why do colleges feel justified in tacking on these kinds of 
programs when they are not tied to measurable learning 
outcomes?
    Mr. Gillen. Well, I think that the last part is the key, is 
that we do not know the quality of colleges in most instances. 
As a result, whatever faction is most powerful on any given 
campus, is going to have an advantage when it comes to divvying 
up the resources, so on some campuses it is going to be the DEI 
offices.
    On some campuses it is going to be the football team, and 
so whichever faction is most powerful gets the biggest slice of 
the pie.
    Mr. Banks. At least the football team is bringing revenue 
in for the school. With that, Madam Chair, I would like to 
enter this report from the Heritage Foundation titled Diversity 
University DEI Bloat in the Academy from July 27, 2021, into 
the record.
    Mrs. Foxx. Without objection.
    Mr. Banks. My time has expired.
    [The information of Mr. Banks follows:]

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    Mrs. Foxx. Thank you. Ms. Manning, you are recognized for 5 
minutes.
    Ms. Manning. Thank you, Madam Chair. I would like to 
address the idea that Congress should impede students from 
accessing fields of education that some may deem unprofitable. 
An idea that has been raised both at this hearing, and during 
other hearings held by this Committee.
    In fact, the proposed Responsible Borrowing Act for 
example, would allow colleges to limit the amount of Federal 
loans a student can borrow based on factors like the average 
salaries for program completers, and what programs students 
choose.
    There has been an enormous emphasis from some on this 
Committee that taxpayer dollars should only be used for 
students to attend programs that give them tangible job skills 
to make sure they are employable after they graduate.
    I am concerned that this attitude supports the devaluation 
of a liberal arts education. Mr. Horn, what kind of 
undergraduate degree did you get?
    Mr. Horn. I received a history major.
    Ms. Manning. An undergraduate history degree from Yale I 
believe, and you seem to be gainfully employed. Did that 
liberal arts degree give you tangible job skills?
    Mr. Horn. You bet, and this is why I think that liberal 
arts frankly we have over indexed at colleges, in having 
students opt not for the liberal arts in many cases.
    Ms. Manning. Mr. Leschly, what kind of undergraduate degree 
did you get?
    Mr. Leschly. Comparative literature degree from Princeton.
    Ms. Manning. A BA in competitive literature from Princeton. 
Did that give you tangible job skills?
    Mr. Leschly. Maybe.
    Ms. Manning. Did it help you get your J.D. and your MBA 
from Harvard?
    Mr. Leschly. Maybe.
    Ms. Manning. At least it got you accepted there, did it 
not?
    Mr. Leschly. Fair enough, yes.
    Ms. Manning. Okay. Dr. Cellini, what kind of undergraduate 
degree did you get?
    Ms. Cellini. A public policy degree.
    Ms. Manning. A BA in public policy from Stanford, and did 
that give you tangible job skills?
    Ms. Cellini. Yes, it did.
    Ms. Manning. Thank you. Dr. Gillen, now you have got a 
degree that some people might assume gave you tangible job 
skills because you have got a BBA in business. Is that true?
    Mr. Gillen. That is correct.
    Ms. Manning. Even though it was from the Ohio State 
University.
    Mr. Gillen. Yes, ``The.''
    Ms. Manning. Okay. I think we have at least three, maybe 
four examples of people who got liberal arts degrees that stood 
them in good State, and you all seem to be gainfully employed.
    Do we not want good students from poor families to have 
some of the same fulsome liberal arts education that each of 
you got? Dr. Cellini, would you agree with that?
    Ms. Cellini. Yes. I would agree with that.
    Ms. Manning. Okay.
    Ms. Cellini. The access to high-quality programs is very 
important.
    Ms. Manning. Right. Now Pell Grants, when they were first 
enacted, covered 70 to 80 percent of the cost of college, yet 
today Pell Grants cover only around 30 percent of the cost of 
college. This means that students on Pell Grants today have to 
piece together a variety of loans, some subsidized, some non-
subsidized.
    They often have to work sometimes 20 hours a week to afford 
college. That can certainly impact the student's ability to 
take a full course load and graduate in anything close to 4 
years. Dr. Cellini, would increasing the Pell Grant to keep 
pace with inflation, or even doubling it, would that be an 
effective way of helping students who have no family financial 
support succeed in college, or perhaps even graduate in 4 
years?
    Ms. Cellini. I think expansions of the Pell Grant to keep 
pace with inflation and costs of tuition would be really 
important for students to be able to access high-quality 
education.
    Ms. Manning. I want to take a moment to highlight the 
proposed budget cuts being made by my colleagues on the other 
side of the aisle, which have historically served to address 
skyrocketing costs of education were discussing cutting--fully 
eliminating the Federal work study program, Federal 
supplemental educational opportunity grants, childcare access 
means parents in school program grants.
    The current budget proposal would slash funding for the 
Office of Federal Student Aid, and of course it goes without 
saying it would not double, or help the Pell Grant keep pace 
with inflation. Dr. Cellini, do you think that cutting these 
programs would make it more difficult for students with no 
family financial assistance to graduate from college?
    Ms. Cellini. Yes. It would make it much more difficult for 
students to afford college.
    Ms. Manning. Now we have heard a suggestion that we could 
impose a system of risk sharing on colleges. I am wondering 
what changes you would expect a college to make if they were 
going to share the risk of a student graduating and getting a 
good job. Would you expect, for example, colleges and Dr. 
Cellini, I will stick with you.
    Would you expect colleges to implement a better and more 
accountable counseling program for students?
    Ms. Cellini. I am not entirely sure how risk sharing would 
change their behavior, but I do not think taxpayers should fund 
low performing programs, even if there is risk sharing.
    Ms. Manning. Dr. Gillen, what kind of--I think you are the 
one who mentioned risk sharing. What kinds of changes would you 
expect a high-quality college to make if they were to take on 
this risk sharing opportunity?
    Mr. Gillen. I think the best example of the behavior that 
we would see from colleges is what happened at Texas State 
Technical College, which is they focused very clearly on 
whether or not the programs that they are offering provides 
students with valuable careers. So----
    Ms. Manning. You do not think that a lot of students could 
benefit from things like better counseling?
    Mrs. Foxx. Ms. Manning, Ms. Manning your time is up, and 
you keep asking questions.
    Ms. Manning. I apologize. I yield back, and I would love to 
get answers to that question, perhaps in writing. I yield back. 
Thank you, Madam Chair.
    Mrs. Foxx. Thank you. Mr. Good, you are recognized for 5 
minutes.
    Mr. Good. Thank you, Madam Chairman. Mr. Leschly, our 
office has received examples of accreditors cracking down on 
the sincerely held religious beliefs of higher education 
institutions who are going through the accreditation process.
    I am sure know, the President of Sachs, the accreditor for 
schools like UNC, North Carolina, announced the desire to 
investigate that school for its decision to create the School 
of Civic Life and Leadership, which had been unanimously 
supported by their board of trustees for its emphasis on free 
expression.
    Just last year, the ABA adopted a new standard for 
accreditation that requires law schools to provide curriculum 
on bias, cross cultural competency racism education. They also 
adopted a non-discriminatory policy that includes gender 
identity and sexual orientation.
    Then the Liaison Committee on Medical Education, which 
accredits medical schools as you know, has DEI requirements in 
place, and faculty and institutions, if they are in danger if 
the program is failing to meet accreditation requirements if 
they object to these.
    Do you think it is proper for an accreditor to threaten 
institutions seeking to operate according to their sincerely 
held religious beliefs by forcing political litmus tests on 
them through DEI requirements, gender identity, non-
discrimination requirements, things like that?
    Mr. Leschly. Accreditors should not run colleges. They 
should regulate the outcomes of colleges fairly and precisely. 
I talked about that in my testimony. Accreditors, and I think 
all regulators at the State and Federal level should be very 
precise and very determined to make sure that institutions 
produce the outcomes that matter most.
    Then after that, they should leave colleges alone to 
specialize, to evolve, and very importantly, to serve with 
enormous variety and almost infinite interest among student 
populations in colleges with varying interests, priorities and 
designs. Since we believe in that, we would also not micro 
regulate the issues that you described.
    We would not require a college to have a DEI policy, or 
would we object if they had one. It is their business.
    Mr. Good. Within the boundaries of the law, of course, a 
college should be somewhat free to be the kind of college that 
it wants to be, that attracts students and parents helping 
their students make decisions, focuses perhaps on academic 
excellence, and academic outcomes. The accrediting institutions 
should be focused on those.
    Changing gears for a moment, moving toward the cost of 
higher education, and this will be toward Dr. Gillen, rather. 
Dr. Gillen, a 2022 GAO study found that direct loan program has 
cost taxpayers approximately 200 billion since its inception, 
largely due to the generous forgiveness and repayment options 
for borrowers in the IDR plans.
    80 percent of parents report that 4-year schools cost too 
much, and 50 percent say 4-year schools are inaccessible to 
middle class Americans. A Wall Street Journal survey this year 
found that 56 percent of graduates from college were not worth 
the cost due to lack of job skills obtained, and the high debt 
in return.
    The Biden administration, of course, is doubling down on 
their student loan transfer scheme. Congress voted to end that. 
The Supreme Court declared it of course, unconstitutional, and 
yet he is trying to do it through other mechanisms as we know.
    This, despite the fact that a 2017 study showed that an 
economist at the New York Federal Reserve found that colleges 
raised tuition costs by 60 cents for every dollar in increased 
Federal loan subsidies.
    To you Dr. Gillen, does loan forgiveness--has it been 
demonstrated to decrease costs, or would it decrease costs? 
What have you found or seen?
    Mr. Gillen. No. I think it would do the opposite actually. 
If you have the anticipation, or the actuality of widespread 
loan forgiveness, that is going to do a couple things. On the 
student side, students are going to borrow as much as possible.
    Right now, most students actually do not borrow because 
most students are going part-time, and so the majority of 
students that borrow, that is going to change. If nobody has to 
repay loans, everybody is going to borrow, and they are going 
to borrow as much as they can.
    At the same time, the school is going to look at the 
students with all this cash, and they are going to say well, we 
could use some of that, and so they are going to raise prices, 
and they are going to cut their other aid.
    The loan forgiveness is basically going to exacerbate the 
student loan debt problem in the sense that we would have even 
higher debt until right after it was forgiven, because it would 
so skew the incentives of both the students and the schools.
    Mr. Good. I think you are exactly right, and the 
President's plan thankfully overridden by the Supreme Court, 
despite his efforts to try to find other avenues there. 60 
percent of the people in my district don't have college 
degrees.
    His student loan transfer scheme to them would have to pay 
for it would apply to families making up to $250,000.00 a year, 
which is far beyond the average income within folks in my 
district, and most districts throughout the country, I am sure. 
With that, I yield back, Madam Chairman.
    Mrs. Foxx. Thank you, Mr. Good. Mr. Courtney, you are 
recognized for 5 minutes.
    Mr. Courtney. Thank you, Madam Chairwoman, and thank you to 
the witnesses for being here today. Again, I think this topic 
is the highest relevance to this Committee.
    I have been on it for a while, and I was around in 2007 
when the College Cost Reduction Act, a bipartisan bill that was 
signed into law by President Bush was signed, that cut the 
interest rate from 6.8 percent to 3.4 percent over a 5-year 
period, established the Loan Forgiveness Program, as well as 
the income-driven repayment program.
    Five or 6 years later in 2013, again, another bipartisan 
effort, the Student Loan Certainty Act was passed. 
Congresswoman Foxx's predecessor, John Kline and I were in the 
oval office when President Biden--sorry, President Obama signed 
that measure into law, which blocked what would have been a 
jump to 6.8 percent interest on Stafford loans and set the new 
10 year note index that is in place here today.
    I say that because we are right now on the brink of a 
cliff. Starting on October 1, despite all of the talk about 
President Biden's--it was only a partial loan forgiveness 
measure, whatever. I mean, all those student loans are going to 
snap back.
    Some of them with very high legacy interest rates on 
October 1st, and also incoming freshmen who are about to start 
their college careers, are looking at 5.5 percent interest 
rates on Stafford loans for this year.
    Again, with the 10-year notes going up plus two, which is 
the formula that is in place today, and so we are really, we 
are just going to start this treadmill for borrowers in October 
for both old borrowers and new borrowers.
    It is incumbent, I believe for us, to act as a congress, 
and certainly this Committee has an essential role to doing 
that. If you look at a kid who's at 5.5 percent interest, the 
average student loan debt is about $26,000.00 on average.
    Across where it is today, in terms of the portfolio that 
exists, that is about 7,800 bucks of added costs per interest. 
That is money that goes into the Federal treasury. That is a 
windfall for the government. It was never the intent of Senator 
Stafford, that this was going to create an income generating 
program for the treasury.
    I think it is time for us to get off that treadmill. Again, 
the problem is who takes the head? The student who pays the 
interests, or the taxpayers that would take the head if you 
eliminate interest because obviously that hole has to be 
filled.
    Well today, myself and Senator Peter Welch in the Senate, 
are introducing the Interest Elimination, Student Loan Interest 
Elimination Act, which again basically zeroes out interest 
across the board. It is paid for, however, and not with taxes. 
What it does is establish a trust fund where principal balance 
payments are deposited.
    Again, administered by a board of trustees, and that would 
then be invested in low interest, low risk securities to 
generate enough income that would again pay the costs of not 
having interest payments going into the treasury.
    It is a model which exists today for the railroad 
retirement fund, which is a completely solvent pension program 
using exactly that type of approach, and that program by the 
way is solvent for the next 25 years in terms of doing that.
    It has other mechanisms in terms of accountability, in 
terms of restricting eligibility for colleges and universities 
to get grants if their tuitions rise above an unacceptable 
level. If it generates a surplus, then there is actually a 
provision in the bill to divert and invest that money into Pell 
Grants that are there.
    This gets us off this train of interest. It does not 
excuse, it is not loan forgiveness, you know, people still have 
to pay their principal levels in terms of their loans, but it 
gets us out of this interest trap, which again with the 
interest recapitalization metastasizes the costs, the level of 
debt for students to a point where they owe more than the loans 
they actually took out.
    With my limited time Professor Cellini, maybe you could 
just sort of comment in terms of this issue of interest.
    Ms. Cellini. Yes. It sounds like a very interesting 
proposal. Yes. We know that students will face a cliff when 
they start to repay. I would just caution that thinking about 
which programs have access to those loan programs, just to make 
sure that taxpayers do not pay for, even with no interest, that 
they do not pay for low performing no value programs.
    Mr. Courtney. That is exactly the intent of this.
    Ms. Cellini. That is right.
    Mr. Courtney. We did it very carefully to avoid that 
dynamic, which in the past has always been how you pay for it. 
We are not doing that with this, and I would ask again, USA 
Today article on this program, this bill, be introduced into 
the record please, Madam Chairman.
    Mrs. Foxx. Without objection.
    [The information of Mr. Courtney follows:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    

    Mrs. Foxx. Ms. Houchin, you are recognized for 5 minutes.
    Ms. Houchin. Thank you, Madam Chair. Thanks to the 
witnesses for testifying before us today. I appreciate your 
time. In alignment with this Committee's continued effort for 
innovation in the higher education policy space, I want to hear 
from some of you about the ideas that this Committee is 
considering in their Higher Education Act reauthorization.
    Dr. Gillen, I really appreciated your testimony that you 
submitted in writing. I can relate to that as both a parent of 
a college student, and as a former graduate student who took 
out some student loans to afford my graduate education. When I 
submitted the paperwork to get a student loan I was asked a 
question, how much does it cost?
    Then the answer is oh, we will pay whatever the cost is. I 
am harkening to your Bowen's Law that you referenced, in the 
quest for excellence, prestige and influence, there is 
virtually no limit to the amount of money an institution could 
spend for a seemingly fruitful educational end.
    Under Bowen's laws, government subsidies do not reduce the 
price to the consumer because the subsidy allows colleges to 
raise and spend more money. Under Bowen's law, subsidies have 
the counter intuitive effect of increasing the cost of 
providing the good or service, rather than reducing the price 
of the good or service for the consumer.
    That has certainly been my experience, both as a student 
loan borrower, a parent, and a taxpayer, so thank you for your 
research. I do want to ask you about the Plus Loan program. The 
Plus Loan program allows graduate students and parents of 
undergraduate students to borrow nearly unlimited sums as the 
only cap on the amount of loans someone could take is whatever 
the college says it costs to go there.
    And surprisingly, multiple studies conducted by economists 
and policy experts across the political spectrum conclude that 
these loans have substantially contributed to the rapid 
inflation of college prices over the last few decades. The 
result has been billions in loan forgiveness for graduate 
students, and financial ruin for some low-income parents.
    What, if any, justification is there to continue the Plus 
Loan program.
    Mr. Gillen. I do not think we need the Plus Loan program 
because it is duplicative of the Stafford Loan program. We have 
already got the Stafford Loan program. If we want to make some 
changes to that we can. The Stafford Loan program is better. It 
has got annual and aggregate limits.
    It has got safeguards. That is completely lacking for the 
Plus, both on the grad and the parents' side. I have seen some 
people argue that Parent Plus was originally only designed to 
allow people to borrow up to expected family contribution. That 
got lost by the wayside.
    Then originally, grad students could not take out Plus 
Loans, but then they were allowed to because we thought it 
would create money we could then spend. That has not worked out 
either. This has kind of been a disaster of a program from the 
start.
    Ms. Houchin. I am glad that you mentioned the Stafford Loan 
program. If we were to eliminate the Plus program, what reforms 
to borrowing limits under the Stafford Loan program should we 
examine?
    Mr. Gillen. Right now, a graduate student can borrow up to 
$20,500.00 from the Stafford Loan program. There are probably a 
few cases where that is not enough, so I think it is something 
like medical school tends to be very expensive. You might want 
to increase the borrowing limit in special cases like that.
    I would also recommend just an aggregate limit based on the 
credential as well.
    Ms. Houchin. Okay.
    Mr. Gillen. It does not make sense to me to have the 
$138,500.00 limit for a doctoral degree, which can take up to a 
decade, and also a master's degree, which some of them will 
only take a year.
    Ms. Houchin. Okay. Thank you. Then do you think the 
potential elimination of Plus Loans for graduate students would 
make higher education less accessible for low-income students 
looking to further their education? If we eliminate Plus Loans 
for graduate students, would that make the education less 
available to low-income students?
    Mr. Gillen. I do not think so. Only about a sixth of 
graduate students even take out grad Plus Loans, so most of the 
borrowing is already done in the Stafford Program, so you are 
not going to see much decline in access there. Particularly for 
graduate students, the Plus Loans, or the parent Plus Loans are 
not an issue.
    If there is any decline in access due to getting rid of 
Parent Plus, that can be easily remedied.
    Ms. Houchin. Finally, Dr. Leschly, or Mr. Leschly, it is 
not often we hear of a new accreditor forming. What were some 
of the reasons you decided to create the Postsecondary 
Commission?
    Mr. Leschly. A lot of the motivation originated in my 
colleagues, and I observing and being frustrated by the lack of 
attention paid to magnificent open admission institutions that 
served high need students.
    In these places remarkable results can hide in plain sight 
unless we pay attention carefully to measuring their 
contributions. The inverse is when selective institutions are 
reflectively applauded for the outcomes of their students, even 
though that may have mostly to do with these very particular 
admissions offices that they have.
    The original of this idea, Congresswoman, was to take very 
seriously how to measure fairly and precisely the contributions 
that institutions make to this thing that almost every student 
needs so desperately, which is a better economic future. 
Nowhere is that more important than in institutions that serve 
high need students.
    Ms. Houchin. I agree. Thank you so much, Madam Chairman, I 
yield back.
    Mrs. Foxx. Thank you. Mr. Sablan, you are recognized for 5 
minutes.
    Mr. Sablan. Thank you very much, Madam Chair, and good 
afternoon and welcome to all our witnesses. An educated 
society, from all time improves everybody's lot in life. It 
promotes relationships, it promotes economies, it promotes very 
smart people get together and discuss very difficult things, 
right?
    That is what an education strives for, whether it is a 
difficult thing, of how to connect with the number in this 
corner, or clinical applications of your education. I would 
think that we all benefit from the programs, the Federal 
student aid programs that are available to those who qualify, 
who need the program to move forward and get a good education.
    Of course, not everybody goes to, you know, gets a good 
education, but as many as we can. One of those programs is the 
Pell Grant, and I am a true supporter. I am a strong supporter 
of the Pell Grant because it is important as we can see all 
throughout the country, such that we--I supported the 
increasing the maximum award of Pell Grants twice in the last 2 
years, and because the Pell Grant is so, so, very important to 
my district, where about 1,000 students attend the community 
college there, and typically covers the cost of tuition.
    If we were to sort of tear down some of the programs 
because, like the majority, my Republican colleagues here are 
proposing to, next year, cut student budgets by the President's 
submission of Fiscal Year 23 budget. It is going to get level 
funding, or actually it is even going to get a modest decrease.
    What happens to the programs, I mean besides continuing 
resolution, what happens to the programs. The agencies that 
administer those programs, for example the FSA, those agencies 
who collect this debt. We have seen it before. I was here 
before in 2013, there is a problem.
    What happens to those, and moreover, what happens to those 
students who want to go to school, who should go to school, and 
yet do not have the resources to do it because we have all 
these new ideas of how to reduce their funds, their student aid 
program. What happens to our community, the investments we have 
done so far that made us the greatest nation on earth?
    It was not just from legacy admissions in colleges, was it? 
There must have been--we must have done something right, and I 
think we did something, we are doing some things right. We 
should not do very much to hurt it. Dr. Cellini, I do not know 
if you have an idea of what I am trying to say, but what would 
it look like to schools if there is no, for example, just one, 
Pell Grant were reduced, or the value removed?
    Ms. Cellini. I think that would be really devastating for 
millions of students if Pell Grants were removed. They are 
incredibly important for low-income students to afford college.
    Mr. Sablan. Even institutions, right? There are 
institutions who absolutely--they are profit institutions, for-
profit colleges that make a lot of money.
    Ms. Cellini. In the for-profit sector, that is where we see 
problems predominantly, but not exclusively. I think we--it is 
incumbent upon policymakers to ensure that the Pell Grant does 
not go to programs that have very low value. That is very 
important.
    Mr. Sablan. Thank you. I yield back, Madam Chair.
    Chairman Owens. Thank you. I would like to now recognize 
Ms. Chaves-DeRemer.
    Mrs. Chaves-DeRemer. Thank you, Chairman Owens. It is nice 
to see you holding this important hearing and thank you to the 
witnesses for being here today. Today's hearing highlights a 
serious issue, which current and former students have known for 
a very long time.
    Our universities have become complacent. The current system 
has rewarded their bad behavior, and graduates have been paying 
life-altering consequences as universities raise and raise and 
raise their prices. Why would they not? The loan system is 
built to benefit the universities, not the students. It might 
have well been designed by the financial departments really at 
the schools.
    These institutions do not have to pay any consequences for 
loading young students with an insane amount of debt. Rather, 
it is the students and taxpayers who are forced to shoulder the 
burden of mounting debt, even though colleges are directly 
responsible for the cost and quality of the education they 
provide.
    Graduates are delaying starting families and cannot save up 
to buy homes because of the predatory practices of universities 
charging students exorbitant amounts for degrees, with really 
little to no financial value.
    I believe universities know full well that engineering 
students will graduate with higher paying jobs, than maybe say 
an English major. Just like the University of Columbia knows 
that piling nearly $200,000.00 in debt onto film majors making 
$30,000.00 a year, it really is not commensurate, and it is 
really criminal.
    Tuition should reflect the expected return on investment 
that the degree provides graduates in the workforce, not some 
arbitrary number that boosts colleges bottom line. If it did, 
maybe it would not be the case that a quarter of the bachelor's 
degrees, and nearly half of master's degrees leaves students 
worse off if they ever enrolled even in the first place.
    Dr. Gillen, in your testimony you mentioned that the return 
on investment metrics, such as those in the Pell Act, could be 
used to determine the extent to which colleges should be 
financially responsible, or financially rewarded for their 
students' outcomes. Can you please elaborate to me, 
specifically, on this concept or risk sharing for student 
loans?
    Mr. Gillen. Yes. You can tie in a return-on-investment 
metric with risk sharing, and that will basically allow you to 
evaluate whether a program is high return, low return, and then 
either provide performance bonuses if it is high return, or 
sanction it if it is low return.
    The risk sharing you can do on its own, but you can also 
tie it into this return-on-investment metric.
    Mrs. Chaves-Deremer. Okay. Could we require these same 
universities for programs with low returns on investment to 
take on a percentage of the graduate's debt?
    Mr. Gillen. Yes. You could actually do that, and this is 
sort of what we had in the college co-sign the loan is all 
about. It is something the college co-signs the loan, they are 
on for 100 percent, but you could set the percentage at 
whatever you want.
    You could say okay, the college is on the hook for 50 
percent of whatever the student does not repay.
    Mrs. Chaves-Deremer. Ensuring that these schools have to 
pay similar consequences if they continue to force financial 
hardships on the students, would that ensure that?
    Mr. Gillen. Yes.
    Mrs. Chaves-Deremer. What would be the impact on tuition if 
something like this were put in place?
    Mr. Gillen. I think we would like to see tuition decline at 
some schools and some programs, and the reason for that is if 
you are a college that is offering a program that is just on 
the cusp of being a higher return or a low return, you have got 
a lot of leeway. You could probably cut a little costs, you can 
cut some staff if you need to.
    Particularly low return programs would likely see a decline 
in price. We might see students shift into higher return 
programs, so like once this information is out there, students 
might say well I am going to go into this higher return program 
instead of the lower return.
    Depending on the capacity, that could have price 
implications for the higher return programs, but as time goes 
on competition would kind of ensure that prices remained pretty 
reasonable.
    Mrs. Chaves-DeRemer. Okay. That is good. I feel confident 
then in saying that a large group of us on this Committee agree 
with what you have said today, so Mr. Chairman, I yield back. 
Thank you.
    Chairman Owens. Thank you. Thank you so much. I would like 
to recognize Ms. Bonamici. Thank you.
    Ms. Bonamici. Thank you, Mr. Chairman. I have some specific 
questions, but first I want to point out a couple of 
fundamental big pictures issues I think that we can use when we 
frame this conversation. The first is education a public good 
or commodity? The second is are we going to eliminate, or 
further blur the difference between education and job training?
    Both important, but not the same. I also want to challenge 
the notion that was brought up earlier in this hearing that for 
some reason diversity, equity and inclusion might not be 
relevant to preparing students for the real world of work. I 
want to dispute that because DEI programs are often used for 
example, first generation students, for veterans with PTSD, for 
students with disabilities.
    DEI programs can help. Here is a great explanation. 
Encourage critical thinking, help students learn to communicate 
effectively with people of varied backgrounds, which I suggest 
people in this building could benefit from as well. I want to 
push back on the notion that they are somehow not related to 
preparing people for the real world.
    I want to followup on Representative Grothman's question to 
you, Dr. Gillen. You have a paper in which you wrote that 
states disinvestment in higher education as you called it, a 
myth. Dr. Gillen, do you agree that disinvestment in this 
context means reduction of financial resources?
    Mr. Gillen. Yes, in the conventional wisdom, yes.
    Ms. Bonamici. Right. Okay. In 2022, 28 states provided less 
funding for students at State universities than they did in 
2008. Ten of those states funded higher education at least 20 
percent below 2008 levels, so if we go back a little further to 
2001, 36 states have reduced their level of funding in today's 
dollars. These states clearly reduced their investments in 
higher education in the past 20 years.
    If 36 states have reduced their funding for public 
universities and inflation adjusted dollars. Does this not meet 
the disinvestment definition?
    Mr. Gillen. 2001 was--before this year, it was the peak 
funding, and you generally do not want to kind of compare a 
peak to some other random because random----
    Ms. Bonamici. Well, my point is that many states have 
disinvested, and from 2008 to 2018 4-year public college 
tuition rose on average 38 percent in inflation adjusted 
dollars. Your research claims that there is no direct 
relationship between this disinvestment by states and increases 
to tuition. I strongly disagree with that, particularly as a 
former State legislator.
    Research from the non-partisan State Higher Education 
Executive Officers Association, SHEEO shows the opposite, 
they've held a direct correlation between decreasing education 
revenue and tuition. So according to SHEEO, the states that, 
excuse me, the student's share of an institution's revenue 
increased from 28.9 percent to 42 percent, and including--or 
excuse me, excluding Federal stimulus funding.
    This is what the report said. Do to declines in education 
appropriations and net tuition revenue increases, this data 
clearly shows that colleges relied on tuition revenue increases 
to recoup losses suffered by declines in State funding. Again, 
I served in the State legislature. I saw universities forced to 
raise their tuition after State disinvestment.
    Right now, at the beginning of this year, my State was 
number 39 out of 50. I just want to make clear that your data 
may be hurting students, institutions, and taxpayers, who rely 
on State funding to support a strong higher education system.
    Dr. Cellini, why is it important to address State 
disinvestment? Why should that be part of what we are talking 
about to discuss issues of costs to students and institutions, 
and how do claims of disinvestment hurt students, institutions 
and taxpayers?
    Ms. Cellini. Yes. Well, we know that states are primarily 
responsible for funding community colleges, which are very low-
cost institutions that have generally----
    Ms. Bonamici. I am a community college graduate myself.
    Ms. Cellini. Better yes, better earnings outcomes than 
programs in, for example, the for-profit sector. My own 
research has shown that the earnings gains in community college 
programs are much higher than the earnings gains in for-profit 
programs for similar programs, for similar students, looking at 
similar students with similar prior earnings.
    We know that those are great investments, and low-cost 
options for students.
    Ms. Bonamici. Thank you, Dr. Cellini. I want to agree with 
the Ranking Member Scott that often times there is value that 
cannot be assessed or measured in higher education. I want to 
make clear I do not agree with the notion that whether a 
student got a good education should be measured by their post-
graduate earnings.
    If someone joins the Peace Corps, or works for a non-profit 
organization, or becomes a teacher, they are not necessarily 
going to have high earnings, but they are doing incredibly 
valuable work. That does not mean that they did not get a good 
education. That being said, Dr. Cellini, you talked about 
imperfect information. I support the bicameral bipartisan 
College Transparency Act.
    How could Federal policymakers better promote communication 
of outcomes data that is privacy protected, and includes 
multiple measures of student success, including completion 
rates. Are there successful examples either in the public or 
private sectors that we could model when it comes to good 
consumer information?
    Ms. Cellini. Well, I will mention that in the new Gainful 
Employment proposal by the Department of Ed, there is a new 
requirement to have information available on high debt, low 
earning programs that students will need to acknowledge, and 
this is across beyond just the non-degree programs, and career 
training programs.
    Ms. Bonamici. Thank you. I am being gaveled down, so I 
yield back. Thank you, Mr. Chairman, sorry I went over.
    Chairman Owens. Thank you so much. I would like to now 
recognize Mrs. McBath.
    Mrs. McBath. Thank you so much, Chairman Owens, and Ranking 
Member Wilson, and to all of your staff for this really 
inciteful hearing today. Thank you to all of our witnesses for 
taking your time to give us information and knowledge.
    Like the title of today's hearing suggests it's so 
important we really take action to increase the value of higher 
education, even further and to ensure that taxpayers are 
getting the quality return on their investment by ensuring that 
these Federal programs are focused in the areas, that are 
proven, and to get the students where they want to be, which is 
to get good careers, good salaries, and a better quality of 
life for themselves and for their families.
    I am very excited about the discussions that we have been 
having here on the hill about this very thing, about expanding 
Pell eligibility to short-term credentials, and certification 
programs, like those that are offered at Gwinnett Technical 
College, which is in my district, Georgia's 7th congressional 
District.
    We need to make sure that this expansion is done right. We 
need to really take our time and make sure that we are doing 
our students justice, and that what we do solves the problems 
that we are trying to address today. We must ensure that any 
expansion be targeted to outcomes that are--that they are based 
in programs that are actually proven to work, that they are 
efficient and effective for our students going forward.
    One of the main reasons that we are actually having these 
conversations is because our current system is not addressing 
the needs of our students, or businesses who need to be able to 
hire the specialized workforce.
    If we do not ensure that those investments are targeted 
programs that are proven to work, you know we truly risk 
doubling down on the strategy that is not producing the 
workforce that we are going to need going forward to compete 
globally in the 21st Century.
    If we are going to expand the number of programs that are 
eligible for Pell, we also need to make sure that there are 
ample resources to go around to provide for this increased 
demand. We need to be increasing the maximum award as well as 
expanding Pell's eligibility for short-term programing, and I 
will be working to make sure here on the Hill, going forward, 
that we take into account these kinds of things in the final 
products when they are signed into law.
    Again, I am very excited that Chairwoman Foxx, and Ranking 
Member Scott, and the Committee are taking steps to address 
this issue, and I hope that we continue to go forward in a 
bipartisan manner to do the very same because we need to make 
sure that a larger authorization of the Workforce Innovation 
and Investment Act.
    And so, Dr. Cellini, my questions are basically for you 
today. You have done extensive research on short-term career 
focus programs. Your work has highlighted that with current 
accountability oversight, many short-term programs are not 
adequately preparing students for gainful employment.
    It is particularly concerning that without targeted 
outcome-based financing, the short-term programs outcomes are 
worse for students of color and low-income students. Given the 
various proposals to expand the Pell Grants, some were talking 
about this all the time on the Hill, expel Pell Grants to 
short-term programs that we are considering.
    Why is it important for Congress to consider trends in 
student outcomes, and what specific accountability measures do 
you believe are essential when we are considering oversight of 
these short-term programs?
    Ms. Cellini. Thank you. I think Congress should ensure 
again that only the highest performing short-term programs can 
access the Pell Grant. My research has been on some of these 
short-term programs that currently are actually eligible for 
Federal student loans, and I found that half of those programs 
had earnings below the average earnings for high school 
graduates, which might be a counter factual against to measure 
what they might have made in the absence of that program.
    Most of those programs that were below that high school 
average threshold, 96 percent of those were in the for-profit 
sector. Currently, there is something called a 70/70 
requirement that requires 70 percent completion rates, and 70 
percent job placement rates to be eligible for those loan 
programs, and that's simply not enough accountability.
    Both of those metrics can be manipulated by institutions, 
and there are just not adequate protections. I would advocate 
an earnings premium type metric that compares the earnings of 
students in those short-term programs to a counterfactual of 
what it might have been had they not gotten something like a 
high school earnings benchmark.
    Mrs. McBath. Well, thank you very much. You know, I live in 
the State of Georgia. I represent the State of Georgia, and we 
have just had millions of dollars that have been cut from our 
university and college system, and so I am very, very concerned 
about the education of our students.
    They will have needs, and I am really glad that we are 
talking about this today because we have to find organic, 
holistic ways to make sure that our students needs are met, so 
that we can globally compete, and that they too, have the 
ability to be economically viable through academics. Thank you, 
and I yield back.
    Chairman Owens. Thank you. I want to once again thank the 
witnesses for a remarkable opportunity to hear from you, the 
innovators. I would like to recognize Ms. Wilson for her 
closing remarks.
    Ms. Wilson. Thank you, Mr. Chair. As we close this last 
Education Committee hearing until after August recess, let us 
review what we have accomplished so far. This year we have held 
20 hearings. 20. We sit here after 20 hearings, after doing 
absolutely nothing to address school shootings. There have been 
23 school shootings so far this year alone, and this is just 
July.
    We are the Education Committee, and we have done nothing to 
ensure that hungry students in our classrooms and college 
campuses have access to food so that they can learn and not 
worry about going hungry.
    Since food is necessary to live, it should be free for all 
students who cannot pay. We are the Education Committee in 
Congress, and we have done nothing to empower teachers or 
address the dangerous teacher shortage that is looming. My 
bipartisan American Teacher Act with 75 cosponsors would solve 
that problem, but it is not on the calendar.
    We are the Education Committee, but we have done nothing to 
address college affordability in ways that are proven to make 
college more affordable. Instead, we as a Committee, have 
chosen to attack anyone giving students the relief they 
deserve. I introduced the LOAN Act, precisely to make college 
more accessible and affordable. It is not on the calendar.
    Yes, we are the Education Committee, but we have done 
nothing to protect the American people and the workforce from 
exploitation and multi-national corporations that overwork and 
underpay them. I joined the Ranking Member, Mr. Scott, on the 
PRO Act, which would protect people's right to organize.
    Yes, we are the Education Committee, and we have done 
nothing to address the minimum wage since 2009. Can you believe 
that the Federal minimum wage sits at $7.25? Disgraceful. You 
cannot even go to McDonalds and get a big Mac combo with that 
level of compensation.
    Democrats on the other hand, continue to push on $17.00 an 
hour minimum wage. You see, this is the Education Committee. 
Instead, what has this Committee focused on? We have 
antagonized the very students we are tasked with protecting 
from students of color to LBGTQ+ students.
    We have brought our students from the freedom to pursue 
their intellectual passions, through book bans, and restricting 
their educational curriculum. We have focused on culture wars 
that will not do a damn thing to help any hard-working 
Americans, or our students, all just to please a small group of 
extreme MAGA Republicans who funnel money into Republicans 
pockets at the expense of everyday Americans who cannot afford 
to purchase a politician.
    In September, Mr. Chair and Committee, I genuinely hope we 
address the needs of our country because they are immense, and 
we do not have time for two more years of culture wars while 
our students and American workforce needs our support. I yield 
back.
    Chairman Owens. Thank you. First of all, I want to thank 
you. This is probably one of the most important phases of 
changing the trajectory of our country that we have. That is 
our education. Our founders understood the importance of that. 
It was Thomas Jefferson who said, ``Ignorant and free can never 
be.''
    They began our country understanding that only an educated 
and engaged people can be a free people. I was blessed. I was 
raised as a child in Florida, and my dad was a college 
professor for 40 years. I did see his frustration though, about 
30 years ago when he recognized the poor preparation of kids 
coming into his classrooms and the pressure of deans to pass 
them through regardless of that.
    Because he had an option of being an entrepreneur, he 
decided to leave industry. I do want to say this, once put back 
in place, let us focus on getting our kids to think, to be 
optimistic, to be thankful for the opportunities. We will get 
our Nation back. I have lived it.
    I watched in the 40's, 50's and 60's when the black 
community during the segregated days, because we believed in 
education as a gateway. We believed that entrepreneurship and 
thinking and engagement would give our community a way of being 
respected, and it was, as we led the country, and we grew the 
middle class.
    We led the country in college with a percentage of 
entrepreneurs, all because we were a thinking people. I was 
excited to see and hear different words today because what we 
need to do is realize our education system is broken. Thank 
goodness for innovators like yourself, those who are not just 
willing to go along.
    We have pushed the boundaries to figure out how can we get 
our kids really thinking again and successful again. To hear 
words like transparency, innovation, risk taking, which was 
never heard back in education, performance based, which you 
never heard about in education.
    How about cosigning loans? My goodness. Declining tuition, 
ejecting non-profit courses, and a level playing field. I know 
that my colleagues on the other side of the aisle like to glean 
profit colleges, just know all we are asking for across the 
board is a level playing field.
    Use the same standards. Whatever those standards are for 
success, profit and public should have the same opportunity to 
prove that they are the best in the game. If they cannot pull 
their weight, then you do something else that is across the 
board. Our kids should be our priorities.
    I am excited to have these conversations. I am excited by 
the fact that thank goodness the Republican party now is the 
majority conference, so these kind of things will be happening, 
and we will be focusing on how our kids can make sure that 
instead of going in the direction it has been the last two 
decades, that we are going to get our act together, and have 
them when they leave whatever decision or way they want to be 
education, they can go out and succeed in that area.
    I want to thank you again for your expertise, your time 
taking out, continually please to share with us your 
innovation. We now have a Congress that wants to legislatively 
be innovative in that process. We need your help to do that. 
Thank you so much for that.
    I would like to again thank the witnesses for taking the 
time to testify before the Subcommittee today. Without 
objection, there being no further business, the Subcommittee 
stands adjourned. Thank you so much.
    [Whereupon at 12:29 p.m., the Subcommittee was adjourned.]

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