[House Hearing, 112 Congress]
[From the U.S. Government Printing Office]


 
                     KEEPING COLLEGE WITHIN REACH:
                    DISCUSSING WAYS INSTITUTIONS CAN
                  STREAMLINE COSTS AND REDUCE TUITION

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

                                HEARING

                               before the

                    SUBCOMMITTEE ON HIGHER EDUCATION
                         AND WORKFORCE TRAINING

                         COMMITTEE ON EDUCATION
                           AND THE WORKFORCE

                     U.S. House of Representatives

                      ONE HUNDRED TWELFTH CONGRESS

                             FIRST SESSION

                               __________

           HEARING HELD IN WASHINGTON, DC, NOVEMBER 30, 2011

                               __________

                           Serial No. 112-48

                               __________

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


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                COMMITTEE ON EDUCATION AND THE WORKFORCE

                    JOHN KLINE, Minnesota, Chairman

Thomas E. Petri, Wisconsin           George Miller, California,
Howard P. ``Buck'' McKeon,             Senior Democratic Member
    California                       Dale E. Kildee, Michigan
Judy Biggert, Illinois               Donald M. Payne, New Jersey
Todd Russell Platts, Pennsylvania    Robert E. Andrews, New Jersey
Joe Wilson, South Carolina           Robert C. ``Bobby'' Scott, 
Virginia Foxx, North Carolina            Virginia
Bob Goodlatte, Virginia              Lynn C. Woolsey, California
Duncan Hunter, California            Ruben Hinojosa, Texas
David P. Roe, Tennessee              Carolyn McCarthy, New York
Glenn Thompson, Pennsylvania         John F. Tierney, Massachusetts
Tim Walberg, Michigan                Dennis J. Kucinich, Ohio
Scott DesJarlais, Tennessee          Rush D. Holt, New Jersey
Richard L. Hanna, New York           Susan A. Davis, California
Todd Rokita, Indiana                 Raul M. Grijalva, Arizona
Larry Bucshon, Indiana               Timothy H. Bishop, New York
Trey Gowdy, South Carolina           David Loebsack, Iowa
Lou Barletta, Pennsylvania           Mazie K. Hirono, Hawaii
Kristi L. Noem, South Dakota         Jason Altmire, Pennsylvania
Martha Roby, Alabama
Joseph J. Heck, Nevada
Dennis A. Ross, Florida
Mike Kelly, Pennsylvania

                      Barrett Karr, Staff Director
                 Jody Calemine, Minority Staff Director

        SUBCOMMITTEE ON HIGHER EDUCATION AND WORKFORCE TRAINING

               VIRGINIA FOXX, North Carolina, Chairwoman

John Kline, Minnesota                Ruben Hinojosa, Texas
Thomas E. Petri, Wisconsin             Ranking Minority Member
Howard P. ``Buck'' McKeon,           John F. Tierney, Massachusetts
    California                       Timothy H. Bishop, New York
Judy Biggert, Illinois               Robert E. Andrews, New Jersey
Todd Russell Platts, Pennsylvania    Susan A. Davis, California
David P. Roe, Tennessee              Raul M. Grijalva, Arizona
Glenn Thompson, Pennsylvania         David Loebsack, Iowa
Richard L. Hanna, New York           George Miller, California
Larry Bucshon, Indiana               Jason Altmire, Pennsylvania
Lou Barletta, Pennsylvania
Joseph J. Heck, Nevada


                            C O N T E N T S

                              ----------                              
                                                                   Page

Hearing held on November 30, 2011................................     1

Statement of Members:
    Foxx, Hon. Virginia, Chairwoman, Subcommittee on Higher 
      Education and Workforce Training...........................     1
        Prepared statement of....................................     3
    Hinojosa, Hon. Ruben, ranking minority member, Subcommittee 
      on Higher Education and Workforce Training.................     4
        Prepared statement of....................................     5

Statement of Witnesses:
    Foster, Tim, president, Colorado Mesa University.............    33
        Prepared statement of....................................    35
    Manahan, Ronald, president, Grace College....................    23
        Prepared statement of....................................    24
    Merisotis, Jamie P., president, Lumina Foundation............    28
        Prepared statement of....................................    30
    Wellman, Jane V., executive director, Delta Project on 
      Postsecondary Costs, Productivity, and Accountability......    13
        Prepared statement of....................................    16

Additional Submissions:
    Altmire, Hon. Jason, a Representative in Congress from the 
      State of Pennsylvania:
        Prepared statement of the Pennsylvania Association of 
          Private School Administrators (PAPSA)..................     8
    Mrs. Foxx:
        Prepared statement of the Education Finance Council (EFC)     7


                     KEEPING COLLEGE WITHIN REACH:
                    DISCUSSING WAYS INSTITUTIONS CAN
                  STREAMLINE COSTS AND REDUCE TUITION

                              ----------                              


                      Wednesday, November 30, 2011

                     U.S. House of Representatives

        Subcommittee on Higher Education and Workforce Training

                Committee on Education and the Workforce

                             Washington, DC

                              ----------                              

    The subcommittee met, pursuant to call, at 10:02 a.m., in 
room 2261, Rayburn House Office Building, Hon. Virginia Foxx 
[chairwoman of the subcommittee] presiding.
    Present: Representatives Foxx, Petri, McKeon, Biggert, Roe, 
Thompson, Bucshon, Heck, Hinojosa, Tierney, Bishop, Andrews, 
Davis, Grijalva, and Loebsack.
    Staff Present: Jennifer Allen, Press Secretary; Heather 
Couri, Deputy Director of Education and Human Services Policy; 
Daniela Garcia, Professional Staff Member; Amy Raaf Jones, 
Education Policy Counsel and Senior Advisor; Brian Melnyk, 
Legislative Assistant; Krisann Pearce, General Counsel; Mandy 
Schaumburg, Education and Human Services Oversight Counsel; 
Linda Stevens, Chief Clerk/Assistant to the General Counsel; 
Alissa Strawcutter, Deputy Clerk; Aaron Albright, Minority 
Communications Director for Labor; Daniel Brown, Minority 
Junior Legislative Assistant; Jody Calemine, Minority Staff 
Director; John D'Elia, Minority Staff Assistant; Brian Levin, 
Minority New Media Press Assistant; and Michael Zola, Minority 
Senior Counsel.
    Chairwoman Foxx. Good morning, everyone.
    This is a fairly small room, and we are all going to be 
very friendly today because we are in tight quarters. And it 
may get a little warm in here. But I want to welcome everybody 
to this hearing.
    A quorum being present, the subcommittee will come to 
order.
    I would like to thank the witnesses for joining us today. 
We appreciate the opportunity to hear your thoughts on the 
growing cost of higher education in America.
    Over the past decade, the cost of attending college has 
increased dramatically. According to the College Board, in-
State tuition and fees at public 4-year colleges and 
universities have increased approximately 72 percent since 
2001. In my home State of North Carolina, the sticker price for 
4-year public colleges has jumped 25 percent in the past 2 
years alone.
    This troubling trend of higher prices has several causes, 
including weak local economies, increased spending on student 
services and academic support, and State budget crises. States 
facing deficits and persistently high unemployment have been 
forced to cut spending across the board. As a result, public 
colleges and universities can no longer rely upon the same 
level of State financial support and must make tough decisions 
to help make ends meet, including cutting services or raising 
student fees.
    Leaders in Washington have long recognized the value of 
higher education in preparing students to compete in the global 
workforce. In 1965, Congress created the Higher Education Act 
to help low-income students pursue a college degree. As a 
result, last year more than $169 billion in federal financial 
aid was disbursed to undergraduate and graduate students, up 81 
percent since 2005.
    However, as our nation struggles with trillion-dollar 
budget deficits and unprecedented national debt, continuing to 
increase federal subsidies to supplement the growing cost of 
college is simply unsustainable.
    In the last school year, the federal government provided 
roughly three-quarters of all student aid. Despite this 
tremendous taxpayer investment, millions of students are still 
struggling with significant student loan debt burdens.
    Clearly, the rise in the cost of higher education in the 
United States is a problem, but the answer cannot be found in 
loan-forgiveness gimmicks or federal takeover of the student 
loan industry. As we continue to rethink our role in education, 
we should use our influence to encourage accountability and 
transparency. Our end goal should be for the States, 
postsecondary institutions, and students to determine the best 
path forward.
    Higher education has remained fundamentally unchanged since 
its inception, with most universities and college relying on 
professors lecturing to a classroom of 18- to 22-year-old 
students who live on or nearby the campus, adding significantly 
to their cost of attending college. To help reduce tuition and 
fees, institutions of higher education should be looking for 
innovative ways to incorporate new technology and better 
address student needs.
    Under the current system, there is little incentive for 
schools to enact lasting changes or accountability measures for 
the billions of taxpayer dollars spent each year. States, 
students, and parents must demand accountability for the 
investment, not depending solely on the federal government.
    In fact, in some instances, the federal government has done 
more harm than good. For example, we have seen this 
administration restrict academic freedom and tamp down on 
innovations through inappropriate regulatory policies.
    Prospective students and their parents must make it a 
priority to educate themselves about the true cost of attending 
college. Meanwhile, colleges and universities must do their 
part to streamline costs and lessen the burden for students 
whenever possible.
    Fortunately, some innovative institutions have already 
taken it upon themselves to do just that. Many colleges and 
universities have dramatically reduced administrative costs by 
eliminating or consolidating duplicative services. Others have 
found ways to make use of empty classroom space, offering 
courses late at night and on weekends to help working students 
pursue a degree.
    The University of Washington and some campuses in the 
University of Wisconsin system recently implemented accelerated 
degree programs. These programs help the institution save on 
operating costs and pricey student services while also allowing 
students to reduce their debt load by graduating in a shorter 
period of time.
    As The Chronicle of Higher Education recently noted, 
Cabrini College in Pennsylvania is working to cut tuition and 
fees by more than 12 percent without lowering merit 
scholarships for incoming freshmen. Indiana's Grace College and 
Colorado Mesa University are also working to reduce costs, and 
we look forward to learning more about their initiatives during 
today's hearing.
    Each of these initiatives helps ensure a more affordable 
college education remains available for students across 
America. We should continue to share best practices like these 
while also encouraging increased transparency in the reporting 
of annual college costs. By making the most up-to-date 
information on tuition and fees available to the public, 
students and their families can better understand the cost, any 
loan commitment they will make, and develop a plan for managing 
any resultant debt before stepping foot on campus.
    I look forward to a productive discussion with my 
colleagues and our witnesses on how we can work together to 
help keep college attendance within reach for students 
nationwide.
    I would now like to recognize the ranking member, Ruben 
Hinojosa, for his opening remarks.
    [The statement of Chairwoman Foxx follows:]

         Prepared Statement of Hon. Virginia Foxx, Chairwoman,
        Subcommittee on Higher Education and Workforce Training

    Good morning, and welcome to today's subcommittee hearing. I'd like 
to thank our witnesses for joining us today. We appreciate the 
opportunity to hear your thoughts on the growing cost of higher 
education in America.
    Over the past decade, the cost of attending college has increased 
dramatically. According to the College Board, in-state tuition and fees 
at public four-year colleges and universities have increased 
approximately 72 percent since 2001. In my home state of North 
Carolina, the sticker price for four-year public colleges has jumped 25 
percent in the past two years alone.
    This troubling trend of higher prices has several causes, including 
weak local economies, increased spending on student services and 
academic support, and state budget crises. States facing deficits and 
persistently high unemployment have been forced to cut spending across 
the board. As a result, public colleges and universities can no longer 
rely upon the same level of state financial support, and must make 
tough decisions to help make ends meet, including cutting services or 
raising student fees.
    Leaders in Washington have long recognized the value of higher 
education in preparing students to compete in the global workforce. In 
1965, Congress created the Higher Education Act to help low-income 
students pursue a college degree. As a result, last year more than $169 
billion in federal financial aid was disbursed to undergraduate and 
graduate students, up 81 percent since 2005.
    However, as our nation struggles with trillion dollar budget 
deficits and unprecedented national debt, continuing to increase 
federal subsidies to supplement the growing cost of college is simply 
unsustainable. In the last school year, the federal government provided 
roughly three-quarters of all student aid. Despite this tremendous 
taxpayer investment, millions of Americans are still struggling with 
significant student loan debt burdens.
    Clearly, the rise in the cost of higher education in the United 
States is a problem--but the answer cannot be found in loan forgiveness 
gimmicks or a federal takeover of the student loan industry. As we 
continue to re-think our role in education, we should use our influence 
to encourage accountability and transparency. Our end goal should be 
for states, postsecondary institutions, and students to determine the 
best path forward.
    Higher education has remained fundamentally unchanged since its 
inception with most universities and colleges relying on professors 
lecturing to a classroom of 18-22 year old students who live on or 
nearby the campus, adding significantly to their cost of attending 
college. To help reduce tuition and fees, institutions of higher 
education should be looking for innovative ways to incorporate new 
technology and better address student needs. Under the current system, 
there is little incentive for schools to enact lasting changes or 
accountability measures for the billions of taxpayer dollars spent each 
year. States, students and parents must demand accountability for the 
investment, not depending solely on the federal government.
    In fact, in some instances, the federal government has done more 
harm than good. For example, we have seen this administration restrict 
academic freedom and tamp down on innovations through inappropriate 
regulatory policies.
    Prospective students and their parents must make it a priority to 
educate themselves about the true costs of attending college. 
Meanwhile, colleges and universities must do their part to streamline 
costs and lessen the burden for students whenever possible. 
Fortunately, some innovative institutions have already taken it upon 
themselves to do just that.
    Many colleges and universities have dramatically reduced 
administrative costs by eliminating or consolidating duplicative 
services. Others have found ways to make use of empty classroom space, 
offering courses late at night and on weekends to help working students 
pursue a degree.
    The University of Washington and some campuses in the University of 
Wisconsin system recently implemented accelerated degree programs. 
These programs help the institutions save on operating costs and pricey 
student services, while also allowing students to reduce their debt 
load by graduating in a shorter period of time. As the Chronicle of 
Higher Education recently noted, Cabrini College in Pennsylvania is 
working to cut tuition and fees by more than 12 percent without 
lowering merit scholarships for incoming freshmen. Indiana's Grace 
College and Colorado Mesa University are also working to reduce costs, 
and we look forward to learning more about their initiatives during 
today's hearing.
    Each of these initiatives helps ensure a more affordable college 
education remains available for students across America. We should 
continue to share best practices like these, while also encouraging 
increased transparency in the reporting of annual college costs. By 
making the most up-to-date information on tuition and fees available to 
the public, students and their families can better understand the 
costs, any loan commitment they will make and develop a plan for 
managing any resultant debt before stepping foot on campus.
    I look forward to a productive discussion with my colleagues and 
our witnesses on how we can work together to help keep college 
attendance within reach for students nationwide. I now recognize the 
ranking member, Ruben Hinojosa, for his opening remarks.
                                 ______
                                 
    Mr. Hinojosa. Thank you, Chairwoman Foxx.
    I would like to welcome and thank our distinguished 
witnesses for joining us today.
    This hearing is an opportunity for this committee to 
reaffirm its commitment to affordability, accessibility, 
equity, and student success in higher education. As we look for 
innovative strategies to reduce college costs and bolster 
college completion, it is vitally important that we do not 
create new obstacles for low-income, first-generation college 
and nontraditional and minority students. These populations are 
entering our colleges and universities in record numbers and 
must have the opportunity to go on and succeed.
    As ranking member of this subcommittee, I am deeply 
concerned that college costs have risen dramatically in the 
last decade. According to the College Board, between the school 
years 2010 to 2012, in-State tuition at public 4-year 
institutions rose by 8.3 percent and the 2-year institutions 
experienced a sharp increase of 8.7 percent.
    In a recent national, bipartisan poll conducted by the 
Young Invincibles, The Institute for College Access and 
Success, known as TICAS, and the Demos, 84 percent of the young 
adults surveyed said that making college more affordable should 
be a priority for U.S. Congress.
    Today, thousands of students find themselves incurring an 
inordinate amount of debt to finance their education. College 
seniors who graduated in the year 2010, for example, have an 
average of $25,250 in student loan debt, according to TICAS. 
These trends are especially troubling given that the jobs of 
tomorrow will require students to have at least 2 years of 
postsecondary education and most States are slashing their 
education budgets.
    In the past several years, Democrats have taken historic 
steps to make a quality higher education more accessible and 
affordable for greater numbers of students. The passage of the 
Student Aid and Fiscal Responsibility Act, known as SAFRA, 
enacted as part of the Health Care and Education Reconciliation 
Act of 2010, made the largest investment in student financial 
aid since the GI Bill.
    In the 111th Congress, Democrats ended the taxpayer-
subsidized, Federally guaranteed Federal Family Education Loan 
Program, known as FFELP, and replaced it with the William D. 
Ford Federal Direct Loan, making federal college loans more 
stable and efficient at no cost to taxpayers. By transitioning 
to the Direct Loan Program, Congress was able to reinvest $68 
billion in federal student aid.
    SAFRA increased the maximum Pell Grant award, enhanced the 
capacity of minority-serving institutions and community 
colleges, and strengthened the income-based repayment, and 
increased investments to other federal programs.
    The bipartisan-passed Higher Education and Opportunity Act 
of 2008 increased transparency and investments in federal 
student aid. Under HEOA, the U.S. Department of Education is 
required to collect and publish lists of tuitions and fees at 
all U.S. postsecondary institutions, holding colleges 
accountable for rising fees and tuition. Those institutions 
with the largest percentage increases in prices most submit a 
detailed description to the Department of Education outlining 
the reason for the increased costs. HEOA also encourages the 
use of innovative strategies to reduce costs, such as need-
based grant aid incentives.
    While Democrats have made great strides in tackling this 
issue through the federal investments in Pell Grants, direct 
loans, the American Opportunity Tax Credit, and the enactment 
of HEOA and SAFRA, I agree with Education Secretary Arne Duncan 
that we must continue to do more to rein in college costs and 
reduce individual student debt. I look forward to hearing from 
today's witnesses on how we can expand the affordability, 
accessibility, and student success in higher education and 
reach our Nation's college-completion goals.
    Thank you.
    [The statement of Mr. Hinojosa follows:]

  Prepared Statement of Hon. Ruben Hinojosa, Ranking Minority Member, 
        Subcommittee on Higher Education and Workforce Training

    Thank you, Chairwoman Foxx.
    I would also like to welcome and thank our distinguished witnesses 
for joining us today. Today's hearing is an opportunity for this 
committee to reaffirm its commitment to affordability, accessibility, 
equity, and student success in higher education.
    As we look for innovative strategies to reduce college costs, and 
bolster college completion, it's vitally important that we do not 
create new obstacles for low-income, first-generation college, non-
traditional, and minority students. These student populations are 
entering our colleges and universities in record numbers and must have 
the opportunity to go to college and succeed.
    As Ranking member of this subcommittee, I am deeply concerned that 
college costs have risen dramatically in the last decade. According to 
the College Board, between the 2010-11 and 2011-2012 school years, in-
state tuition at public four-year institutions rose by 8.3 percent, and 
two-year institutions experienced a sharp increase of 8.7 percent.
    In a recent national bi-partisan poll conducted by the Young 
Invincibles, The Institute for College Access and Success (TICAS), and 
Demos, 84 percent of the young adults surveyed said that making college 
more affordable should be a priority for Congress.
    Today, thousands of students find themselves incurring an 
inordinate amount of debt to finance their education. College seniors 
who graduated in 2010, for example, had an average of $25,250 in 
student loan debt, according to TICAS.
    These trends are especially troubling given that the jobs of 
tomorrow will require students to have at least two years of 
postsecondary education and states are slashing their education 
budgets.
    In the past several years, Democrats have taken historic steps to 
make a quality higher education more accessible and affordable for 
greater numbers of students.
    The passage of the Student Aid and Fiscal Responsibility Act 
(SAFRA), enacted as part of the Health Care and Education 
Reconciliation Act of 2010 (HCERA), made the largest investment in 
student financial aid since the GI bill.
    In the 111th Congress, Democrats ended the taxpayer-subsidized, 
federally guaranteed Federal Family Education Loan Program (FFELP) and 
replaced it with the William D. Ford Federal Direct Loan (DL), making 
federal college loans more stable and efficient at no cost to 
taxpayers.
    By transitioning to the Direct Loan program, Congress was able to 
reinvest $68 billion dollars in federal student aid.
    SAFRA increased the maximum Pell Grant award, enhanced the capacity 
of Minority-Serving Institutions (MSIs) and Community Colleges, 
strengthened the Income-based repayment, and made other investments to 
federal programs.
    The bi-partisan passed Higher Education and Opportunity Act of 2008 
(HEOA) increased transparency and investments in federal student aid.
    Under HEOA, the U.S. Department of Education is required to collect 
and publish lists of tuition and fees at all U.S. postsecondary 
institutions, holding colleges accountable for rising fees and tuition.
    Those institutions with the largest percentage increases in prices 
must submit a detailed description to the Department outlining the 
reason for the increased costs.
    HEOA also encourages the use of innovative strategies to reduce 
costs such as need-based grant aid incentives.
    While Democrats have made great strides in tackling this issue 
through federal investments in Pell Grants, direct loans, the American 
Opportunity Tax Credit, and the enactment of HEOA, and SAFRA, I agree 
with Education Secretary Arne Duncan that we must do more to rein in 
college costs and reduce individual student debt.
    With that, I look forward to hearing from our witnesses on how we 
can continue to address affordability, accessibility and student 
success and provide all students with a high quality education.
    Thank you.
                                 ______
                                 
    Chairwoman Foxx. Thank you so much, Mr. Hinojosa.
    Pursuant to Committee Rule 7(c), all subcommittee members 
will be permitted to submit written statements to be included 
in the permanent hearing record. And, without objection, the 
hearing record will remain open for 14 days to allow 
statements, questions for the record, and other extraneous 
material referenced during the hearing to be submitted in the 
official hearing record.
    [An additional submission of Chairwoman Foxx follows:]

          Prepared Statement of the Education Finance Council

    For nearly 20 years, the Education Finance Council (EFC), the trade 
association representing nonprofit and state agency student finance 
organizations, and its members have been working to improve access to 
and affordability of postsecondary education. EFC members have a deep 
expertise in postsecondary education financing and a long history of 
educating students on the range of options to pay for college. EFC and 
its members understand the financial hardship borne by student 
borrowers struggling to meet the rising cost of college during an 
economic recession and distressed job market. However, student loans, 
when properly understood and managed; provide necessary financing for 
students that have no other option to fund their postsecondary 
education. Student outreach; financial literacy education; and 
responsible borrowing initiatives provided by nonprofit and state 
agency student finance organizations help to prevent over-borrowing of 
student loans, which in turn aids in managing the cost of college. 
These programs allow students to understand their student loan 
obligations before they borrow and repayment options when they 
graduate. The innovative college access strategies offered by nonprofit 
and state agency student loan providers are keeping college within 
reach for numerous students.
    Nonprofit and state agency student finance organizations work 
closely with secondary and postsecondary institutions, financial aid 
officers, guidance counselors, and other local educators as well as 
directly with students to provide vital college access and completion 
programs. Programs range from financial aid awareness, early awareness, 
financial literacy, college planning, and training for educators. 
Nonprofit organizations educate students on postsecondary options, the 
cost of each option, and funding opportunities. Through one-on-one 
counseling, these organizations provide in-person guidance to students 
such as scholarship searches, filling out the FAFSA, completing college 
entrance applications and essays, and other hands-on activities. Many 
EFC members offer interactive online portals to promote smart college 
planning. Interactive portals allow students to align their interests 
with potential college majors and careers and view education options 
for each choice, the estimated cost of each choice, and the estimated 
salary after graduation. Portals include a range of other tools; 
including lesson plans on personal financing, strategies for higher 
education funding, details of postsecondary institutions in the 
student's state, and available scholarships and grants. Oftentimes, 
nonprofit and state agency student finance organizations serve as the 
go-to resource in their states for student support. This private-sector 
collaboration has been a key driver in better preparing students to 
manage higher education costs.
    In today's world, education and training after high school are 
requirements for earning a middle class income. Students must choose 
the education or training option that best meets their needs and which 
will not impose higher costs than they can afford. School counselors 
spend more and more of their time providing guidance to students on 
their personal lives and challenges. As a result, counselors have less 
time to work with students to develop a postsecondary education and 
training plan. EFC member institutions work with students and families 
to explore their interests, aptitudes, and career goals to link these 
interests to the education and training programs required to achieve 
their goals. Importantly, nonprofit and state agency student finance 
organizations provide unbiased counseling to help families select 
education or training options that will meet their needs without 
forcing them to incur greater debt than makes sense for their 
anticipated income.
    Beyond programs to promote access and affordability, nonprofit and 
state agency student finance organizations provide a responsible 
funding option for students to fill the growing higher education 
financing gap. As tuition continues to rise and financial aid remains 
stagnant, students must have access to loans with transparent terms and 
affordable rates in order to attain a postsecondary degree. EFC members 
provide supplemental student loans with low, fixed-interest rates--most 
times below the Department of Education's Parent PLUS loan interest 
rates--and consumer-friendly borrower benefits. All programs require 
the student to have a qualifying credit score or qualifying cosigner. 
Nonprofit lenders provide extensive entrance and exit counseling 
regarding the loan's terms to prevent over-borrowing and ensure each 
student understands repayment obligations and options. In addition, 
most EFC members require that schools certify the enrollment of each 
borrower. School certification acts as a check that the loan is being 
used for an educational purpose and that the amount borrowed is in-line 
with the college's costs and the borrower's needs.
    Recent government efforts to reduce student debt are inadequate and 
ineffective in view of the economic burden students face today. In the 
past, EFC members were able to offer loan forgiveness programs and 
other borrower benefits. These programs allowed borrowers to pursue 
fields such as teaching and nursing they might otherwise not have been 
able to afford to pursue. With rising tuition and unemployment rates 
staggeringly high, students need better options to fund their 
postsecondary education and better guidance on the options that are 
already available. Congress and the Administration must reengage 
nonprofit and state agency student finance organizations to utilize 
proven-effective programs to promote college affordability and success.
                                 ______
                                 
    [An additional submission of Mr. Altmire follows:]

         Prepared Statement of the Pennsylvania Association of
                 Private School Administrators (PAPSA)

    The Pennsylvania Association of Private School Administrators 
represents the more than 300 for-profit career schools, colleges and 
universities in the Commonwealth.
    PAPSA is deeply concerned about student overborrowing. What schools 
have found is that over borrowing is a big part of the loan debt 
problem, especially among unsophisticated borrowers. And it is 
increasing despite aggressive loan counseling.
    Schools constantly report stories of students asking for all the 
financial aid they are entitled to, paying their tuition and then 
walking away with thousands of dollars which ends up paying for a newer 
car, Christmas presents, plastic surgery, bail money or big parties 
which the school usually ends up hearing about. These cash stipends can 
be, in one case, as high as $24,000 for an associate degree. Despite 
the best efforts of schools to curb overborrowing, the U.S. Department 
of Education mandates that schools must disclose to students all the 
loan money they are entitled to borrow. How can schools be responsible 
for repayment when the US Department of Education encourages 
irresponsible overborrowing?
    Overborrowing is defined in three ways by our schools:
     Students transfer or move from school to school and 
continue to mount debt which goes into deferment while they are 
attending another college or school.
     Commuter students, living at home, borrow available funds 
in excess of direct school costs (tuition, fees, books) without regard 
to debt consequences. While these dollars make sense for traditional 
college students, they are not appropriate for commuter students. Since 
schools must disclose all the loan money available to these students, 
they often access these significant additional dollars with no thought 
to the future.
     Students also overborrow when they receive an unexpected 
increase in PELL, OVR, state grant, public assistance or WIA funding. 
As a result, more grant money is received than students originally 
planned. But when the school counsels and encourages them to return the 
excess loan money, the students almost always decline the request and 
keep the extra loan amount.
    The following are actual examples of student overborrowing in 
Pennsylvania:
    A small cosmetology school in Central Pennsylvania--In 2007-08-09, 
the school had a zero percent tuition increase and .06 percent 
enrollment increase, yet overborrowing increased from four to 41 
students (a 925 percent increase). Overborrowing loan amounts increased 
from $2,064 in 2007 to $68,473 in 2009 (over a 3000 percent increase).
                                CHART 1
             OVERBORROWING LOAN AMOUNTS--COSMETOLOGY SCHOOL



    Three Business school campuses in Northwestern Pennsylvania--In 
2007-08-09 the school averaged a 3.8 percent total tuition increase 
with a 43 percent enrollment increase, but a 152 percent increase in 
overborrowing--from $234,000 to $590,000 in two years.

                                CHART 2
         OVERBORROWING LOAN AMOUNTS--THREE BUSINESS SCHOOLS IN
                       NORTHWESTERN PENNSYLVANIA



    One business school campus in Central Pennsylvania--Between 2007 
and 2009, the school averaged a 1.7 percent tuition increase each year 
and no increase in enrollments or borrowers. Yet, overborrowing 
increased by 104 percent (from 36 to 74 students) and overborrowing 
dollars tripled from $100,193 in 2007 to $363,983 in 2009.

                                CHART 3
 OVERWORKING LOAN AMOUNTS--ONE BUSINESS SCHOOL IN CENTRAL PENNSYLVANIA



    Three small Pittsburgh technical schools under one ownership--While 
the number of students overborrowing remained the same between 2007 and 
2009, the total amount of over borrowing increased by 99 percent 
($32,651 to $61,316). Although tuition increases averaged 6.2 percent a 
year and enrollment increased by only 1.2 percent on average over the 
period, the dollar amount of overborrowing increased as the same number 
of students chose to increase their overborrowing.

                                CHART 4
  OVERBORROWING LOAN AMOUNTS--THREE SMALL PITTSBURGH TECHNICAL SCHOOLS



    Nineteen small cosmetology schools throughout Pennsylvania--
Although tuition increases averaged less than one percent per year for 
2007 to 2008 to 2009 and the average enrollment increase was 3.8 
percent a year, the number of students overborrowing increased from 757 
in 2007 to 6,033 in 2009. Actual overborrowing loan dollars increased 
six-fold, from $1,169,261 to $6,551,978 over the three year period.

                                CHART 5
         OVERBORROWING LOAN AMOUNTS--NINETEEN SMALL COSMETOLOGY
                        SCHOOLS IN PENNSYLVANIA



    A trade/technical school in Northwestern Pennsylvania--Between 2007 
and 2009 the school had a five percent total tuition increase; a 42 
percent increase in enrollment; and no change in the student 
demographic. Yet, they experienced a 4,250 percent increase in 
overborrowing--from $6,496 in 2007 to $255,680 in 2009. The number of 
students overborrowing increased from ten in 2007 to 180 in 2009.

                                CHART 6
         OVERBORROWING LOAN AMOUNTS--TRADE/TECHNICAL SCHOOL IN
                       NORTHWESTERN PENNSYLVANIA



    A business school in Northeastern Pennsylvania--Between 2008 and 
2010, 65 percent of the students each took more than $1,000 in extra 
loan stipends, averaging $5,351. Thirty-five percent took less than 
$1,000. The 65 percent however, represented over 97 percent of the 
total amount of loan stipends issued, or $1,480,000 of the $1,530,000 
in extra stipend money.
    The point in this example is the school's concern that 65 percent 
of the students who borrowed more than $1000 averaged over $5000 in 
extra stipends. The school felt the students were taking on unnecessary 
expenses and would have a higher likelihood of default.
    A 37 campus private group of schools in Pennsylvania and in other 
states--Overborrowing increased from $17,601,189 to $34,883,339 a 101 
percent increase in the private school group. Over the three year 
period, there was a 7.6 percent tuition increase and a 41 percent 
increase in enrollment.

                                CHART 7
    OVERBORROWING LOAN AMOUNTS--A 37 CAMPUS PRIVATE SCHOOL GROUP IN 
                     PENNSYLVANIA AND OTHER STATES



    Large private college in Western Pennsylvania--Compare the previous 
data to the data provided by a more expensive two year college in 
Western Pennsylvania. Student overborrowing increased only slightly 
from $1,329,854 in 2007 to $1,373,764 in 2009. The tuition increase 
averaged 3.5 percent a year. Enrollment between 2007 and 2009 increased 
an average of one percent a year. There was no change in student 
demographics.

                                CHART 8
          OVERBORROWING LOAN AMOUNTS--LARGE PRIVATE COLLEGE IN
                          WESTERN PENNSYLVANIA



    In this instance, tuition was above the state average in 2007 and 
students were already borrowing larger amounts for all years in 
question. The conclusion is clear. More expensive private colleges do 
not see an increase in over borrowing since their students have 
traditionally borrowed at higher levels. Relief, however, from 
mandatory loan disclosure to students is needed at lower tuition 
institutions.
    The three year trend appears clear. While there were minor tuition 
increases, no change in student demographics, stable or moderate 
enrollment increases due to some new campuses, only over borrowing, as 
was defined earlier, increased exponentially. In addition, from all 
early indications the upward trend toward excess borrowing will 
continue in 2010 and possibly beyond.
    The problems PAPSA sees now with overborrowing will only be 
exacerbated in the future by the recent gainful employment regulations 
that the Department of Education has implemented. If career schools are 
going to be penalized for high debt, (and currently are under cohort 
default limit requirements) debt problems should be addressed at the 
front-end of the loan as well by curbing over borrowing and considering 
other front-end approaches.
    PAPSA would like to see Congress or the US Department of Education 
consider additional methods beyond counseling for limiting student 
borrowing. We propose Federal changes to allow an institution to use 
professional judgment to decrease the loan amount approved for a 
student based on the appropriateness of the budgeted items and 
Satisfactory Academic Progress (SAP), as long as the loan amount fully 
covers the cost of attendance (COA), as we understand COA to be 
defined, and there are no other government programs that contribute to 
the COA. We would be happy to provide legislative language if 
requested.
    Thank you.
                                 ______
                                 
    Chairwoman Foxx. It is now my pleasure to introduce our 
distinguished panel of witnesses.
    Jane Wellman is the creator and director of the Delta 
Project, a research and policy organization that works to 
improve productivity in higher education through more effective 
management of resources. Since 1995, she has also been a senior 
associate with the Institute for Higher Education Policy.
    Dr. Ronald Manahan is the fifth president of Grace College 
and Seminary, having served as president since 1994. Dr. 
Manahan has also served as the school's professor of biblical 
studies, vice president of college academic affairs, and 
provost.
    Mr. Jamie Merisotis is the president and CEO of the Lumina 
Foundation for Education. Before joining the Lumina Foundation 
in January 2008, he was the founding president of the Institute 
for Higher Education Policy.
    Mr. Tim Foster was appointed as the tenth president of 
Colorado Mesa University in March 2004. Mr. Foster previously 
served as the executive director for the Colorado Commission on 
Higher Education and as head of the Colorado Department of 
Higher Education.
    Before I recognize you to provide your testimony, let me 
briefly explain our lighting system. You will have 5 minutes to 
present your testimony. When you begin, the light in front of 
you will turn green. When 1 minute is left, the lights will 
turn yellow. And when your time has expired, the light will 
turn red, at which point I ask that you wrap up your remarks as 
best you are able.
    After you have testified, members will each have 5 minutes 
to ask questions of the panel.
    I now recognize Ms. Wellman for 5 minutes.

STATEMENT OF JANE V. WELLMAN, EXECUTIVE DIRECTOR, DELTA PROJECT 
    ON POSTSECONDARY COSTS, PRODUCTIVITY, AND ACCOUNTABILITY

    Ms. Wellman. Thank you very much.
    Good morning, Madam Chairwoman and members. It is a 
pleasure to be here speaking about the research done by the 
Delta Cost Project, a nonprofit, nonpartisan research group 
focusing on where the money comes from and where the money goes 
in higher education.
    I am going to speak quickly about what we see as some of 
the major patterns or major trends in the revenue and spending 
data for higher education. Our data cover public and private 
nonprofit institutions. I will be focusing on the time period 
roughly 1999 to 2009. Because we use expenditure data as well 
as revenue data, there is a bit of a time gap involved. So you 
can mentally adjust for some of the numbers I am going to be 
talking about for the last couple of years since 2009 when we 
know that there have been continued dislocations, particularly 
in public institutions.
    First comment, first pattern. We have some slides but I 
think they are not going to work, so this will be more Zen than 
usual. You have little, teeny versions of these in the 
testimony. So bear with me and I will just get through them 
quickly.
    The first pattern has to do with levels of economic 
stratification and the real differences between public and 
private--here we go; we are getting something popping up--
between public and nonprofit private institutions over this 
period.
    One of the really big stories over the last decade has been 
the growing bifurcation between public and private 
institutions, with the majority of new enrollments, 1.6 
million-plus new enrollments, going into public community 
colleges and an awful lot of increased spending occurring 
primarily in a relatively small handful of elite institutions 
with endowments.
    You can see on this chart, the way we have organized all of 
these data are by broad sector, Carnegie categories. On the 
left, we have private research universities, and on the right, 
community colleges. The green line here is what has happened in 
increased spending per student on average in that sector since 
2009. The purple line is where the enrollments have gone. So 
you can see sort of quickly here what the differences have 
been.
    If you will go to the next slide, one of the consequences 
of this, as you will see, is a real unevenness in access to 
resources between the relatively small handful of elite 
institutions and the majority of institutions where students 
are enrolled, with average spending per student in the elite 
institutions somewhere around $35,000 per student versus public 
community colleges where spending is closer to $10,000 per 
student. So it is a real pattern of differences. And, other 
than this one, generalizations about finance in higher 
education are always suspect; there are such differences.
    The second major comment has to do with what has been 
happening to tuition, which I know is of primary interest to 
this panel. You know the story of rising tuitions, which have 
been continuing to rise well above inflation for the last 20 
years. However, there has been a growing difference between 
growing prices charged to student and spending per student or 
cost per student. So the growing price and cost gap is one of 
the other big patterns we see in higher education.
    For the majority of institutions, increased tuition 
revenues are not translating into greater spending. The reason 
for this is cost-shifting. As other revenue sources are 
evaporating in the institutions, rather than reducing their 
spending--and some might argue they can't reduce spending that 
much--but rather than reducing spending, they are shifting the 
cost on to student tuition.
    So costs are here; tuitions are here. And what you see in a 
year like 2009, a time of recession, what you see is both cost-
cutting by the institutions and price increases. And having 
those two things happening simultaneously is one of the real 
unsustainable patterns in higher education.
    If you look at some of the data here, this figure here 
shows just a 1-year change, between 2008 and 2009, in what has 
happened in tuition revenues--how much the institutions are 
capturing in revenues per student--versus what they are getting 
in public institutions from State and local resources versus 
what they are spending on the students. So looking at that gap 
between tuition and State revenues and spending gives you a 
pretty good snapshot of what is going on.
    Just to read one of them off, in public research 
universities, tuition revenues, average increase in 1 year of 
$369, at the same time that the institutions were losing on 
average $751 per student from State and local appropriations. 
Despite that, they kept spending about flat, very modest 
increase, 92 bucks, probably because they were spending down 
reserves during that period.
    If you look at the next chart, you will see a 10-year 
pattern and the same kinds of numbers. And what you see is that 
over that 10-year period most of the new spending in higher 
education is coming in from tuition revenues--the same kind of 
pattern of a price and cost disconnect over that period.
    Third comment--I don't have charts on this one, so let me 
just speak to it, and it has to do with where the money is 
going in higher education. One of the patterns we have seen--
and it has been commented on widely in higher education--has 
been a modest erosion, but a consistent erosion, in the amount 
of money that is going to pay for the direct cost of student 
instruction and an uptick in spending that is going for 
administrative activities, academic support, which could be 
computing, and for other types of functions. So you have seen 
this winding down, very modest but consistent, in all types of 
institutions, from the elite Ivies to the community colleges, 
reduction in spending for instruction and an increase in 
spending for administration.
    What we saw in 2009 was an interesting and we hope welcome 
slight change in that. In the first year of the great 
recession, when you see evidence of spending cuts in 
institutions, this time we saw greater attention--oh, I am 
sorry, I am red already--to the efforts to control 
administrative expenses and make the cuts there versus what is 
going on in spending on instruction. So they are protecting 
instructional spending.
    I am going to jump very quickly to one other major point, 
and then I will stop. And that is, if you looked for a smoking 
gun in higher education about where the spending has been going 
up, the single biggest factor for increased spending is 
employee benefits and specifically health care, up 5 percent 
per year consistently over time. So if there is one area where 
spending has to get cut if we are going to take care of 
tuition, it is going to be health care.
    My apologies for rushing through that. Thank you.
    [The statement of Ms. Wellman follows:]

    
    
    
    
    
    
    
    
    
    
    
    
    
    
                                ------                                

    Chairwoman Foxx. Five minutes goes by in a hurry.
    Ms. Wellman. Well, I didn't even see the--my apologies.
    Chairwoman Foxx. You went 2 minutes over.
    Ms. Wellman. I beg your pardon.
    Mr. Hinojosa. Madam Chair, I ask unanimous consent that we 
all agree to extending the time of 5 minutes to a minimum of 7, 
possibly 8, so that we can really go over these numbers that 
have been extremely of great concern to many of the members on 
both sides of the aisle. And I think that it is worth giving 
them that additional time, if you have no problem with that.
    Chairwoman Foxx. Thank you, Mr. Hinojosa. Let's see how our 
panelists can do within the time frame. And Ms. Wellman has set 
a pattern here, and we will try to be fair to everyone 
involved. But we won't set the time at 7 minutes, we will leave 
it at 5, and try our best to let people finish their thoughts. 
And we will be fairly lenient in the questions. How is that?
    Mr. Hinojosa. I have no problem with that.
    Chairwoman Foxx. Thank you.
    Dr. Manahan?

STATEMENT OF RONALD E. MANAHAN, TH.D., PRESIDENT, GRACE COLLEGE 
                          AND SEMINARY

    Mr. Manahan. Thank you, distinguished committee members, 
for the opportunity to testify this morning. My name is Ron 
Manahan, president of Grace College and Seminary, an accredited 
residential Christian institution of arts and sciences in 
Indiana. Grace offers undergraduate and graduate programs and 
enrolls over 1,600 students from 36 States and 8 countries.
    Thank you for the opportunity to testify and provide you 
with information regarding our institution's efforts to address 
the rising cost of college education.
    For a number of years, we had been concerned about this 
issue, but the economic turbulence of 2008 and beyond made even 
clearer that our campus had to address rising costs with 
greater urgency and that federal and State support of higher 
education was challenged. We could not simply stand by and wait 
for help.
    Grace has received the most attention because of its 3-year 
degree option, but we reviewed many aspects of our college--and 
we have more to do--to determine where savings and reforms can 
be made. Specifically, we addressed rising costs in four ways.
    In 2007, our strategic plan called for the evaluation of 
every academic program in terms of data points such as 
enrollment patterns, staffing, cost-effectiveness, demand among 
high school students, job-market issues, et cetera. Each 
program was placed in one of our four categories, listed in my 
prepared testimony.
    The review was completed in 2009. This led to program 
adjustments in some cases and the teach-out and elimination of 
six programs. Grace helped students either finish at Grace or 
transfer to another institution offering the student's program 
choice. Several programs were added that focused more directly 
on areas of student program interest and regional needs.
    A second way Grace addressed cost was by reviewing 
institutional operations. For more than 8 years, Grace has 
taken steps to reduce operational costs by seeking more 
efficient ways to serve students and employees. After thorough 
reviews, the campus strategically aligned physical plant 
operations, food service, publications, marketing, and printing 
with regional businesses that provide good service. We have 
been able to contain or reduce cost.
    A third way Grace addresses cost was by exploring 
innovation. We developed a 3-year degree option for every 
baccalaureate degree program Grace offers. This innovation 
required an intense 2-year development and preparation process 
and had five goals, among which are requiring 120 credit hours 
for all baccalaureate degrees and achieving increased 
accountability.
    Though the option began just this semester, very, very 
early results are positive. Forty-eight percent of freshman 
students indicate they plan to graduate in 3 years. Freshmen 
are averaging a semester credit-hour load of nearly 17 credit 
hours. Applications and deposits for next year are up 
substantially, partly I think because of this new option. The 
3-year degree option reduces cost 25 percent compared to the 4-
year option.
    A second innovation addressing cost is Grace's Weber 
School. This 2-year degree program is designed to make 
education affordable in more at-risk areas among individuals 
much to lose in this economy. Fort Wayne and Indianapolis are 
our first two locations. We are looking seriously at other 
Great Lakes cities. This program matches the first 2 years of 
our on-campus 4-year degree option. The annual cost for a full-
time student in this program is only $7,800 before any aid is 
applied.
    A third innovation is Grace's Placement Promise. Students 
meeting certain criteria may be eligible to earn an additional 
year of undergraduate education tuition-free if they don't find 
employment or gain graduate school acceptance within 6 months 
of graduation.
    A fourth way Grace addressed cost was through 
collaborations and partnerships. For example, Grace 
collaborated with two 4-year institutions to offer nursing and 
engineering, and designed and offered the nation's only 
graduate program in orthopedic regulatory and clinical affairs 
in order to meet a regional and critical business need.
    We realize that our 3-year degree option and our Weber 
School are not for everyone, but we believe they are right for 
us. We believe our changes address cost and strengthen 
education and access, and we have more to do.
    Thank you for the opportunity to tell you about our 
efforts. I am grateful for federal funding to help students, 
but higher education must be vigilant in controlling cost, 
ensuring access, and increasing employability. Thank you for 
your interest in this topic.
    [The statement of Mr. Manahan follows:]

     Prepared Statement of Ronald Manahan, President, Grace College

    Good morning Madam Chair and other Distinguished Committee Members. 
My name is Dr. Ronald Manahan, President of Grace College and Seminary 
in Winona Lake, Indiana. Founded in 1937 and located in the northern 
part of the state, Grace is an independent, regionally accredited 
institution of higher education offering undergraduate and graduate 
degrees. Thank you for the opportunity to testify about strategic 
changes made at Grace College to address the serious matter of rising 
college cost. I am pleased to provide you with information regarding 
our institution's intentional efforts to address cost through 
efficiency, innovation, and collaborations.
Institutional Profile
    Grace College and Seminary is comprised of a liberal arts college 
offering undergraduate and graduate degrees and a graduate seminary. 
The institution's mission states that Grace is an evangelical Christian 
community of higher education which applies biblical values in 
strengthening character, sharpening competence, and preparing for 
service. Grace has a fall 2011 enrollment of 1,616. The incoming 
undergraduate class had average standardized test scores of 24 on the 
ACT and 1055 on the SAT. The average high school grade point average 
was 3.54 (4.0 scale). Students at Grace this year come from 36 states 
and 8 countries. Full-time student tuition is $22,546 (covers up to 18 
semester hours each semester) and room and board is $7,214. 
Approximately half of our students come from Indiana. The incoming 
students for fall 2011 came from homes with an average adjusted gross 
income of $66,717. 95% of our students receive financial aid. Our 
institutional default rate for the three most recent years is 2.9% 
(2007), 0.8% (2008), and 2.1% (2009). A general overview of 
institutional grants and federal grants and loans follows.


----------------------------------------------------------------------------------------------------------------
                          Financial aid                               2009-10         2010-11         2011-12
----------------------------------------------------------------------------------------------------------------
Grace Institutional Grants (minus grad/non-trad.)...............     $10,649,409     $10,696,166     $10,170,690
Pell Grants.....................................................      $1,535,320      $1,808,685      $1,948,386
Perkins Loans...................................................        $463,879        $466,801        $512,036
Stafford Subsidized Loans.......................................      $3,247,397      $3,535,621      $4,014,510
Stafford Unsubsidized Loans.....................................      $2,976,818      $2,856,314      $3,710,399
----------------------------------------------------------------------------------------------------------------

Background
    For a number of years our institution has been concerned about the 
rising cost of college education and specifically the cost of a Grace 
College education. We realized we were pricing ourselves out of the 
very group of students we desired to serve. As a result of this concern 
we undertook steps to address the cost of our college through review of 
institutional programs, institutional operations, innovation, and 
partnerships and collaborations. The economic turbulence of 2008 and 
beyond made even more clear (a) that our campus had to address rising 
cost with the greatest urgency, (b) that federal and state support of 
higher education was challenged, and (c) that we must find ways through 
our educational mission to contribute to the local and regional health 
of our economy. We could not simply stand by and wait for others to 
help us with these concerns.

Addressing Rising Cost through Review of Institutional Programs
    In early 2006 our institution approved a five-year strategic plan 
that included among its goals the review and evaluation of educational 
programming within the institution.
     Strategic Initiative 3.7: Determine the most efficient and 
effective academic structure
     Strategic Initiative 3.8: Implement aggressively the 
College's current policies on the conduct of comprehensive assessments 
of each academic department
     Strategic Initiative 3.9: Examine the potential for adding 
new majors
    In the case of every program the evaluation included enrollment 
patterns, staffing, cost effectiveness, demand among high school 
students, competitive advantages over similar programs at other 
institutions, and other such data points. Potential outcomes of this 
thorough review were placing each program into one of four categories 
and their respective outcomes: (1) Program is strong, nurture its 
strength; (2) program can be strengthened by selected strategic help; 
(3) program needs substantive changes that, if not achievable within a 
couple of years the program will be closed and taught out; and (4) the 
program must be closed and taught out. The result of that major 
evaluation was that six programs were taught out and eliminated. In 
each case the institution helped students either finish at Grace or 
transfer to another institution offering the student's program of 
choice. By the end of the 2008-2009 academic year all program reviews 
were completed. During this same period several programs were added 
that focused more directly on areas of student program interest and 
local and regional needs.

Addressing Rising Cost through Review of Institutional Operations
    For more than eight years Grace has been taking steps to reduce 
operational cost by seeking more efficient ways to serve students and 
employees. As a result of thorough reviews the campus has strategically 
aligned physical plant operations, institutional food service, 
publications, marketing, and printing services with regional businesses 
that provide good and cost-effective service. In these cases we have 
been able to contain or reduce cost while advancing service to students 
and employees.

Addressing Rising Cost through Institutional Innovations
            (1) Three-Year Degree Option
    In 2009 Grace College undertook a thorough study and review of an 
innovative approach to all of our institution's four-year baccalaureate 
programs. Our goals for this review were to stay committed to our 
institutional mission, maintain baccalaureate programming that in every 
case requires at least 120 semester hours (these hours as defined by 
regional accreditation and federal requirements) for graduation, 
increased focus on competence (not simply content), incorporate applied 
learning experiences as a part of program requirements, increase 
affordability for students and their families, and make use of in-depth 
research through a recognized firm.
    Grace College took dramatic steps to achieve these goals. The 
result was development of a three-degree option (the four-year degree 
option is still available to students selecting that option) for all 
Grace undergraduate degree programs (approximately 54). The institution 
still continues the four-year degree option but makes the three-year 
degree option available in every program. This required a change to the 
institution's academic calendar and restructuring every course to be 
taught in the altered academic calendar:
     Each semester was lengthened to include two eight-week 
sessions. The two sessions in a semester are separated by a brief 
vacation break.
     Students using the three-year degree option take three 
three-hour courses each eight weeks, completing a total of eighteen 
credit hours each semester.
     Students take eighteen hours each of the two semesters of 
a year and do this for three years totaling 108 semester hours of 
credit. Of course, students often bring with them credits earned 
through advanced placement, community college courses, etc.
     Students take six hours on online course work provided by 
the campus for each of the two summers between the first and second 
year and between the second and third year totaling 12 semester hours 
of credit. Because summer work is online, students can live most any 
place for work or travel and still complete the courses. No tuition is 
charged for full-time students taking the 12 hours of summer online 
courses.
     Taking the three-year degree option instead of the four-
year option offers a 25% savings to full-time Grace students paying 
tuition, room, and board, meaning at today's prices a total cost of 
$89,280 instead of $119,040. These are the costs before any federal, 
state, institutional, and other student financial aid is applied.
     The average institutional financial aid for Grace freshmen 
students for the 2011-2012 year is $10,033. At today's prices this 
further reduces the total cost for a full-time three-year degree option 
student to $59,181 ($89,280 minus $30,099).
     Grace College's annual pricing increase for the three most 
recent years averages 3.3%.
     The three-year degree option allows the student to enter 
the workforce a year earlier than the four-year degree option, meaning 
the ability to gain up to an additional year of full-time income.
    Extensive faculty interaction and training was required to 
accommodate all these changes. The new three-year degree option was 
launched with the beginning of the fall 2011 semester. To date we have 
completed the first eight week session and are half-way through the 
second session of the fall semester. While the three-year degree was 
just recently launched, several institutional data points suggest the 
students' attraction to the three-year degree option.
     Full-time freshman enrollment for fall 2011 was 21% higher 
than for fall 2010.
     According to the Grace Office of Registrar 47% of first-
time students entering fall 2011 indicated at the beginning of the fall 
semester that they were taking the three-year degree option.
     Halfway through the fall 2011 semester 48% of the entering 
freshman class indicated they are planning on graduating in three years 
because of the three-year degree option.
     The average credit hours taken by freshman increased 
substantially for fall 2011 over the previous four years:


----------------------------------------------------------------------------------------------------------------
                Average Credit Hours Taken                  2007-08    2008-09    2009-10    2010-11    2011-12
----------------------------------------------------------------------------------------------------------------
New Freshmen.............................................      15.53      14.86      14.90      14.90      16.95
----------------------------------------------------------------------------------------------------------------

     Recruitment for fall 2012 year-to-date is running ahead of 
recruitment for fall 2011 year-to date:


----------------------------------------------------------------------------------------------------------------
                  Year-to-Date Recruitment                     Fall 2009    Fall 2010    Fall 2011    Fall 2012
----------------------------------------------------------------------------------------------------------------
Inquiries...................................................       11,097       11,488       12,299       14,963
Applications................................................        1,058        1,630        1,983        2,559
Accepts.....................................................          412          669          967        1,410
Deposits....................................................           34           33           34           72
----------------------------------------------------------------------------------------------------------------

            (2) Two-Year Weber School
     The two-year Weber School at Grace College is designed to 
be offered in multiple urban areas where family incomes make the cost 
of independent higher education unaffordable. This program was designed 
after the campus evaluated specific research conducted regarding the 
need for a cost effective alternative to independent higher education.
     The annual cost for a full-time student in the Weber 
School is $7,800, a dramatic savings when compared to the average cost 
of independent higher education in Indiana of $25,547 (tuition only in 
2010-11) or of all U. S. independent education of $27,793 (tuition only 
in 2010-11).
     The program is offered close enough to a student's home 
that room and board expenses at the Weber School are eliminated.
     In the summer of 2011 Grace received approval from the 
Higher Learning Commission to offer a two-year associate degree in two 
urban cities in Indiana, Fort Wayne and Indianapolis.
     All courses in the program are designed and approved by 
on-campus full-time resident faculty.
     All courses are taught by either full-time or part-time 
faculty who meet the college's faculty requirements regarding graduate 
degrees, successful higher education teaching experience, and other 
such requirements.
     This program, named to honor a faithful supporter of 
Grace, is designed to be a cost effective alternative for students and 
their families who cannot afford to attend an independent college such 
as Grace.
     This two-year program matches the first two years of the 
on-campus four-year degree option.
     This allows a student completing the associate degree to 
transition to Grace's Winona Lake, IN, campus to complete the student's 
four-year baccalaureate degree.
     If preferred, the two-year Weber School graduate can 
transfer to a baccalaureate program at an institution other than Grace.
Addressing Rising Cost through Institutional Partnerships and 
        Collaborations
    Through several means Grace College is addressing the rising cost 
of higher education through forming institutional partnerships and 
collaborations with other institutions and organizations.
            (1) Articulation Agreements with Regional Two-Year 
                    Institutions
    Grace has a degree completion program called GOAL (Grace 
Opportunity for Adult Learners) and has entered into articulation 
agreements with two regional two-year institutions, Ivy Tech State 
College and Ancilla College. The GOAL program allows students who have 
earned an associate degree to complete a baccalaureate degree in 
sixteen months. Graduates from these two institutions receive a 
discounted rate which means these students are paying $300 per credit 
hour.
            (2) Collaboration with Four-Year Institutions Offering 
                    Nursing and Engineering Programs
    Grace has collaborated with two four-year institutions who offer 
nursing degrees (Bethel College) and engineering programs (Trine 
University). In both cases Grace students take the nursing and 
engineering courses on the Grace campus. This arrangement gains 
efficiencies for Grace, Bethel, and Trine.
            (3) Graduate Education Programming Needed by Regional 
                    Businesses
    Three of the five largest orthopedic companies in the world are 
located within several miles of the Grace campus. Additionally, two 
major suppliers and several start-up companies are located in close 
proximity as well. Grace approached these companies, asking what is the 
greatest educational need the companies had that, if addressed, would 
be of great help. All the companies said graduate education in 
regulatory and clinical affairs. Currently Grace offers a successful 
masters program in orthopedic regulatory and clinical affairs. The 
program was designed in collaboration with experts in the field and is 
the only such program in the country.
            (4) Orthopedic Scholar Institute
    Since 2003 Grace has offered the Orthopedic Scholar Institute (OSI) 
to students who are accepted into the program. Those accepted receive 
strategically designed learning experiences to enhance transferable 
skills expected by the orthopedic industry. OSI provides students 
accepted into the program with an opportunity to meld liberal arts 
learning with marketplace learning and technology. These students are 
given internship experiences within the industry, and their learning 
experiences are designed to help give them preferred employment 
opportunities when they graduate.
            (5) Arranging Applied Learning Experiences with Regional 
                    Organizations and Businesses
    All Grace students are required to take twelve credit hours of 
applied learning. These experiences, completed under the supervision of 
faculty, are designed to provide learning opportunities that interface 
classroom work with real world experiences through internships or other 
applied projects.
            (6) Pursuing Campus Business Incubator Designated as 
                    Certified Tech Park by State
    During the past many months Grace has been working with our county 
economic development corporation, state entities, and regional 
businesses to establish a business incubator on the campus and have 
this campus facility recognized as a Certified Tech Park. Good progress 
is being made. The incubator would provide business, engineering, and 
other students with significant internship opportunities as well as 
enhance the students' employability. We and others believe this will be 
a great advantage to our region in terms of developing future jobs.
Conclusion
    We at Grace College realize that our three-year degree option is 
not for everyone, but it is right for us. It has produced encouraging 
early results. Our applications for fall 2012 are up. We have attracted 
interest from significant external groups within Indiana. Through our 
two-year Weber School we have expanded our educational service to Fort 
Wayne and Indianapolis. And we are looking to expand to other urban 
areas within the Great Lakes region. Our intention is to reach into 
more at-risk areas among individuals with much to lose in this economy. 
We believe the innovative programs and services we developed to address 
cost and strengthen education and access are the right moves for our 
time and our campus.
    Again, I thank the Committee and express my appreciation for the 
opportunity to tell you about Grace College and our efforts. Higher 
education must be vigilant in controlling cost, ensuring access, and 
increasing employability. I personally appreciate your interest in this 
subject and stand ready to assist in whatever way I can on this 
important subject.
                                 ______
                                 
    Chairwoman Foxx. Thank you, Dr. Manahan.
    Mr. Merisotis?

STATEMENT OF JAMIE P. MERISOTIS, PRESIDENT AND CHIEF EXECUTIVE 
            OFFICER, LUMINA FOUNDATION FOR EDUCATION

    Mr. Merisotis. Good morning. Chairwoman Foxx, Ranking 
Member Hinojosa, thank you very much for this opportunity to be 
here. I am Jamie Merisotis. I am president of the Lumina 
Foundation, the nation's largest private foundation focused 
exclusively on postsecondary education access and success.
    Streamlining costs and reducing tuition in higher education 
isn't just a good idea, it is essential to our future. Equity 
of educational opportunity is an American value that gives 
every person the chance to succeed and contribute. But the most 
important reason for streamlining costs and reducing tuition in 
the modern economy is simple: It is jobs.
    Recent estimates show that by 2018 more than 60 percent of 
American jobs will require some form of postsecondary 
education. Today, only about 40 percent of American adults have 
an associate or bachelor's degree. For young adults between the 
ages of 25 and 34, this level is only good enough for the U.S. 
to rank 15th among developed countries. By comparison, a 
stunning 63 percent of young adults in South Korea have a 
college degree.
    Lumina believes that 60 percent of Americans will need a 
high-quality degree or credential by 2025 for the U.S. to 
remain economically competitive. Much, if not most, of this 
increase will need to come from low-income, first-generation, 
minority, and adult populations. Unfortunately, we don't have 
the resources to scale up our current system to the size it 
needs to be in order to be able to produce the number of 
graduates our economy needs while maintaining or improving the 
quality of its graduates.
    The best way to increase the number of highly qualified 
college graduates to the level that we need is for the higher 
education system to become more productive. To meet the big 
goal of raising college attainment rates to at least 60 
percent, productivity improvements will require a substantial 
increase in the number of high-quality degrees and certificates 
produced at a lower cost per degree awarded, while improving 
access and equity for the least well-served populations.
    To this end, Lumina is working with States and institutions 
throughout the U.S. to redesign higher education to produce 
more graduates at lower cost, working with our partners to 
confront the core assumptions of how higher education is 
structured, funded, and delivered.
    Our work on productivity of U.S. higher education is based 
on four specific strategies. The first is performance funding 
or targeting incentives for colleges and universities to 
increase college completion for underserved populations; to 
shorten time to degree or credential; and to reduce the cost of 
delivery.
    Many States are moving to performance-funding models that 
base some portion of institutional support on the number of 
graduates produced rather than just the number of students 
enrolled. Tennessee is it now distributing 70 percent of its 
higher education appropriations based on results and quality 
rather than just enrollment. This concept has spread rapidly, 
with nearly 20 States already using or developing performance-
funding systems.
    The second strategy is using student incentives to increase 
course and degree completion. A good example is found right in 
my home State of Indiana at Indiana University Kokomo, where 
students who commit to completing 30 credit hours per year, 
maintaining continuous enrollment and making satisfactory 
academic progress, receive 3 successive years of discounted 
tuition, producing a savings equal to 1 full year's tuition by 
the end of the program.
    The third strategy is to develop and implement new models 
of delivery. For example, a consortium led by the University of 
Texas at Austin is working with Carnegie Mellon's Open Learning 
Initiative to offer redesigned general education courses, which 
can be completed faster, in some cases twice as fast, than 
traditional courses, with the same or better student 
performance and knowledge retention over time.
    The fourth strategy for increasing productivity of higher 
education is to introduce business efficiencies to produce 
savings that can be used to graduate more students. Much of 
what needs to happen here is to encourage cooperation and 
collaboration among institutions to improve quality and reduce 
costs. Since Ohio began requiring annual efficiency savings, 
their public colleges report more than $900 million in reduced 
costs.
    Now, in my written testimony I discussed some of the 
implications of State and institutional efforts to increase 
productivity related to the critical issues of federal 
financial aid, data systems, and quality assurance. For now, 
let me just say that federal student aid continues to be the 
bedrock of support for low-income populations and must be 
sustained. But innovation and creativity will be required to 
serve the increasing numbers of college graduates that our 
Nation needs. In addition, it is urgent that we develop 
comparable data at the national level on student progression 
toward degrees, college graduation, and ultimately job 
placement.
    And in terms of quality assurance, we need to realize we 
are on the cusp of a fundamental change in American higher 
education, a shift away from a system based on time to one that 
is based on learning. In a knowledge-based economy, degrees and 
other credentials must represent real skills and knowledge, not 
the amount of time a student has spent sitting in a classroom.
    Increasing the number of Americans with high-quality 
postsecondary degrees and credentials is vital to our economic 
future. These dramatic improvements cannot happen unless we 
streamline costs and reduce tuition by making the higher 
education system more productive. As you have heard, Lumina 
Foundation is working on this issue on many fronts, and we 
stand ready to share any and all of what we are learning with 
all of you.
    Thank you very much.
    [The statement of Mr. Merisotis follows:]

          Prepared Statement of Jamie P. Merisotis, President,
                           Lumina Foundation

    Chairwoman Foxx and Ranking Member Hinojosa, thank you for the 
opportunity to testify before the subcommittee on a topic of such 
critical importance to millions of Americans and the future prosperity 
of our country.
    I am Jamie Merisotis, President of the Lumina Foundation. Lumina is 
the nation's largest private foundation focused specifically on 
postsecondary education access and success, and we are based in 
Indianapolis, Indiana. I also previously founded and served as 
President of The Institute for Higher Education Policy, a nonpartisan 
research organization, and as executive director of a bipartisan 
Congressional commission on student aid that operated in the early 
1990s. So the topic of keeping college within reach for all Americans 
is one that I strongly believe is of great importance to our nation. I 
also am proud to say that Pell Grants and other Federal, state, 
institutional, and private aid helped me afford college, so I know 
first-hand the challenges of paying for the ever-increasing cost of 
higher education.
    Streamlining costs and reducing tuition in higher education is not 
just a good idea--it is essential to our future. We've known for many 
years that the benefits of higher education are numerous, with society 
gaining as much, if not more, than individuals. Equity of educational 
opportunity is an American value, one which gives every person--
irrespective of their financial or family circumstances--the chance to 
succeed and contribute to our collective well-being. But perhaps the 
most important reason for streamlining costs and reducing tuition in 
the modern economy is simple--jobs. Jobs that require skills and 
knowledge that can only be obtained through postsecondary education are 
growing much faster than those that don't. Based on an analysis of 
employment data, the Georgetown University Center on Education and the 
Workforce has estimated that by 2018 more than 60% of American jobs 
will require some form of postsecondary education. This trend toward 
increasing skills is worldwide, and many of our economic competitors 
are responding by increasing higher education attainment rates to 
levels well above of ours. Only about 40% of American adults have an 
associate or bachelor's degree, and the rate doesn't vary much between 
older Americans--those between the ages of 55 and 64--and younger 
adults between the ages of 25 and 34. Among those young working adults 
between 25 and 34, this level is only good enough for the U.S. to rank 
15th among developed countries. By comparison, a stunning 63% of young 
adults in South Korea have a two- or four-year degree.
    Lumina believes that 60% of Americans will need a high-quality 
postsecondary degree or credential by 2025 for the U.S. to remain 
economically competitive. Many, if not most, of this increasing 
proportion of Americans who require degrees or credentials will need to 
come from low-income, first-generation, minority, and adult 
populations. I mention this to put the issue of streamlining costs and 
reducing tuition into perspective. We all know that the increasing cost 
of higher education is placing a burden on families and individual 
students. But the challenge is far greater than that. Put bluntly, we 
do not have the resources to scale up our current system to the size it 
needs to be to produce the numbers of graduates our economy needs, 
while maintaining or improving the quality of its graduates. That scale 
of expansion cannot take place solely by increasing the investments 
made by the Federal government, states, parents and students.
    So how do we get there, without increasing costs even more?
    The best way to increase the numbers of highly qualified college 
graduates is for the higher education system to become more productive. 
In order to meet the Big Goal of raising college attainment rates to at 
least 60 percent, productivity improvement must not rely on making 
higher education more selective, or be used as an excuse to serve fewer 
students. Indeed, real productivity will require a substantial increase 
in the number of high-quality degrees and certificates produced, at 
lower costs per degree awarded, while improving access and equity for 
the least well-served populations.
    To this end, Lumina is working with states and institutions 
throughout the U.S. to redesign higher education to produce more 
graduates at lower cost. When we began this work a few years ago it was 
somewhat controversial, in part because budget-cutting in the name of 
productivity previously had been used to justify serving fewer 
students. Few had seen the opportunities that real productivity 
represents to fundamentally rethink how we finance and deliver higher 
education. Today, however, in the increasingly difficult financial 
conditions faced by states and higher education institutions, we are 
finding that more and more state and campus leaders are willing to 
confront the core assumptions of how higher education is structured, 
funded, and delivered.
    Our work to improve the productivity of U.S. higher education is 
based on four specific strategies described in Lumina's recent report, 
Four Steps to Finishing First.
    The first is performance funding, or targeting incentives for 
colleges and universities to graduate more students with quality 
degrees and credentials. Providing a significant portion of funding in 
this way gives institutions the means and incentive to invest resources 
in ways that increase college completion for underserved populations, 
shorten time to degree or credential, and reduce the cost of delivery. 
The particular type of performance funding that many states are moving 
to bases some portion of institutional support on the number of 
graduates produced rather than just the number of students enrolled. 
This concept has spread very rapidly, and nearly 20 states already have 
performance funding plans in place or under development. Tennessee, 
Ohio, Pennsylvania, and Indiana all have plans that are worth your 
study. Tennessee is now distributing 70% of its higher education 
appropriations based on results and quality rather than enrollment. 
Ohio has a new set of formulas that differentiates completion 
incentives by institutional mission. The Pennsylvania state colleges 
have stuck with performance funding for a decade and achieved a 10 
percentage point increase in four-year graduation rates, with increases 
of 6 and 9 percentage points, respectively, for African American and 
Latino students.
    The second strategy for improving productivity is using student 
incentives to increase course and degree completion, specifically 
through the strategic use of tuition and financial aid. There is a lot 
of innovation taking place in states and institutions that use student 
aid to increase completion and to make the higher education system more 
cost effective. In my opinion, Federal aid programs could learn much 
from the lessons of these approaches. A good example is found at 
Indiana University Kokomo, which is piloting a student success tuition 
discount program for students who commit to completing 30 credit hours 
per year, maintain continuous enrollment, and make satisfactory 
academic progress. These students receive three successive years of 
incremental discounted tuition beginning at 20 percent, then 30 percent 
and ending with a 40 percent reduction in the senior year. For 
students, the overall impact is a tuition discount over four years that 
is equivalent to one-year's tuition saved.
    The third strategy for lowering costs while increasing our capacity 
to educate students and improving quality is to develop and implement 
new models of delivery. Too often, our discussions of this issue end up 
as a debate between the pros and cons of traditional vs. for-profit 
delivery models, or place-based versus online delivery. The reality on 
the ground is much more interesting. For example, a Texas consortium of 
systems and institutions, led by the University of Texas at Austin, is 
working with Carnegie Mellon University's Open Learning Initiative to 
offer redesigned general education courses which can be completed 
faster (sometimes twice as fast) as traditional courses, with the same 
or better student performance and knowledge retention over time. Even 
better, research has found that students are more likely to complete 
them.
    Another example of true innovation is found in Indiana, where 
Governor Mitch Daniels had the idea to bring Western Governors 
University to the state and make it a state institution called WGU 
Indiana. Indiana promotes WGU's accredited, online, competency-based 
degrees as an affordable way to educate the state's adult population, 
many of whom previously may have attended college but not received a 
degree. The state also offers students the opportunity to apply for 
state need-based financial aid to reduce their WGU tuition, which, by 
the way, has not increased since 2008. Tuition and fees for a full-time 
student is $5985, which is 27% less than the average public in-state 
four-year tuition. WGU Indiana does not receive state support through 
the higher education funding formula. This model is being replicated in 
Washington and Texas.
    Last but by no means least, the fourth strategy for increasing the 
productivity of higher education is to introduce business efficiencies 
to produce savings that can be used to graduate more students. Much of 
what needs to happen here is to encourage cooperation and collaboration 
among institutions to improve quality and reduce costs. There are many 
ways institutions can collaborate. Ohio has formed a statewide shared 
purchasing consortium and is engaged in cost-saving collaborations 
across a number of institutions. Since its state system began requiring 
annual efficiency savings, Ohio public colleges report more than $900 
million in reduced costs. Cooperation is even possible across states. 
One great example is the Midwestern Higher Education Compact, which 
offers purchasing cooperatives for liability insurance, information 
technology, and student health insurance which save states and 
institutions millions of dollars a year.
    Do these state and institutional strategies to lower cost and 
improve completion and quality have any implications for Federal 
policy? I believe the answer is an emphatic yes.
    First is the critical issue of financial aid. Federal aid continues 
to be the bedrock of support for low-income populations and must be 
sustained. But the fiscal climate and broader economic challenges means 
that innovation and creativity will be required to enhance the capacity 
of the current Federal student aid system to serve the increasing 
numbers of college graduates our nation needs. One of the most 
important elements of a reframed student aid system will be to ensure 
that all Federal aid programs are designed to support student success--
as measured by well-designed indicators such as on-time progression, 
course and program completion, and graduation. This does not mean that 
access should be any less important in designing a new aid system--
quite the contrary. We need to continue to increase access for the 
nation's fastest growing populations in order to meet our employment 
and competitiveness goals as a nation. Yet access alone should not be 
enough. Federal financial aid remains a critical piece of the college 
success puzzle, and we must ensure that it is structured to meet the 
nation's growing needs for more graduates with high-quality degrees and 
credentials. We must have the courage to re-examine the entire system 
of grants, loans, tax credits, and work study to make sure it all works 
as effectively and efficiently as possible to support the success of 
low-income students that desperately need it.
    Second, we must deal with the unglamorous but essential area of 
data. It is impossible to move the entire system of higher education to 
the levels of efficiency and effectiveness our nation needs without 
basic information on its outcomes. It is inexcusable that we do not 
have comparable data at the national level on student progression 
toward degrees, college graduation and ultimately job placement. In the 
absence of reliable Federal data, states are developing their own 
systems to provide these and other critical data. But it is hard for 
states to solve this problem alone. Often, it is difficult to obtain 
data about students at private and for-profit institutions, and the 
interstate mobility of students and graduates poses an additional 
challenge. It would be far more efficient for the Federal government to 
step up and provide a genuine service to states and the public through 
modernizing and improving its higher education data system. At the very 
least, the Federal government should help to assure that state and 
institutional data are comparable and can be easily shared to help 
everyone improve the performance of higher education.
    Third, and perhaps most urgent, is the Federal role in quality 
assurance in higher education. We are on the cusp of a fundamental 
change in higher education--the shift away from a system based on time 
to one based on learning. In a knowledge-based economy, degrees and 
other credentials must represent real skills and knowledge, not the 
amount of time a student has spent sitting in a classroom. WGU and 
other competency-based approaches are the harbingers of change, but the 
full ramifications of this shift affect all aspects of postsecondary 
education. We must recognize the prior learning of displaced workers, 
returning veterans, and millions of others who want and need to improve 
their knowledge and skills to advance their career or improve their 
life. We need transparent credentials based on learning that allow us 
to seamlessly connect the workforce development system and higher 
education. I know the subcommittee has taken a particular interest in 
this topic, and I applaud you for it. Finally, employers, students, and 
the public should have a clear understanding of what degrees and 
credentials represent in terms of skills and knowledge learned. Lumina 
is working with states, institutions, and others to develop the tools 
that will allow these new approaches to emerge--tools like the Degree 
Qualifications Profile, which defines common reference points for 
degrees across disciplines and institutions. These approaches will have 
significant implications for the way quality assurance is addressed by 
the Federal government.
    Again, thank you for the opportunity to appear before you today. 
Increasing the number of Americans with high-quality postsecondary 
degrees and credentials--particularly those populations that are the 
fastest growing and most vulnerable in our society--is vital to our 
economic future. Indeed, there is no more important public policy issue 
facing our nation. These dramatic improvements cannot happen unless we 
streamline costs and reduce tuition by making the higher education 
system more productive--substantially increasing the number of high-
quality degrees and certificates produced, at lower costs per degree 
awarded, while improving access and equity. As you have heard, Lumina 
Foundation is working on this issue on many fronts, and we stand ready 
to share any and all of what we are learning with you.
                                 ______
                                 
    Chairwoman Foxx. Thank you very much.
    Mr. Foster?

              STATEMENT OF TIM FOSTER, PRESIDENT,
                    COLORADO MESA UNIVERSITY

    Mr. Foster. Thank you, Madam Chair, Ranking Member 
Hinojosa, and members of the committee. It a pleasure, in fact, 
to be in front of you. It is actually an honor. And having not 
been in front of a congressional committee, I am probably a 
little more nervous than Jamie. We were supposed to be in 
Denver talking about this very topic but decided to come here 
instead and testify in front of your committee.
    Chairwoman Foxx. Showing good judgment.
    Mr. Foster. Based on the plane flight, I think it was a bad 
choice.
    Our State is home to one of most efficient, according to 
the Delta Project, systems of higher ed in the country. I think 
we are second as you measure baccalaureate degrees, or 
bachelor's degrees, based on dollars invested. We also rank 
amongst the top 5 or 10, depending on the year, percentage of 
our population with a bachelor's degree or higher.
    That said, we face the same stresses and strains that 
institutions in other States face. We took a 30 percent 
reduction in State support over the last 2 years. The 
Governor's budget proposes an additional reduction of another 
10 percent. And, quite frankly, we anticipate that might 
increase to 25 percent.
    This is not news to anyone. We have been watching the 
growth primarily in Medicaid, which is driving those kind of 
cost-shifts in State budgets. And so we have been preparing for 
this at CMU for the better part of 7 years.
    Counterintuitively, what we have done is, on the revenue 
side, went to a pricing model that charges students for every 
credit hour that they take. Surprisingly enough, what we saw 
when students pay for each credit hour, their credit-hour 
activity actually went up, rather than down. And we think their 
speed to degree will accelerate.
    We also have done a lot of different things in terms of 
financial aid. And so we do a merit financial aid system, where 
if you are at 3.75 or above and have one of the other two, 
either top 5 percent in your graduating class or a 29 ACT, we 
give you a full tuition and fee scholarship. What we found was 
that 59 percent of our students who have need also qualified 
for those merit scholarships. And so what we also found is 
because we have higher expectations in terms of academic 
performance, the retention of those students is higher, and we 
think the graduation rates are going to increase as well.
    For middle-income students who get left out of the 
financial aid conversation, we looked at work study. And work 
study I think has been one of things sort of ignored at the 
federal and State level. Because students who are engaged in 
work study also retained at higher levels. And so we offer up 
to 20 hours of work-study money to students regardless of need 
and, again, see a significant increase in the retention. And it 
is really the connection to the institution and connection to 
people at the institution which we think is the critical 
element in that gain.
    On the expenditure side, and with some trepidation with 
Chairman Foxx, we early on decided and looked at our structure, 
our administrative structure--president, vice president of 
academic affairs, deans, chairs, faculty, students--and we 
spent about $1 million 6 years ago on deans. We made a decision 
on our campus to do away with deans. Clearly, we don't save $1 
million; we saved, conservatively we estimate, about a half a 
million dollars. And while our faculty I think missed that 
voice in administration, I don't think our students have missed 
the expenditure of those funds whatsoever.
    We also--because of those ongoing budget reductions, it is 
sort of a continuous budget-cutting exercise. And I say 
``budget-cutting,'' and then I will tell you that, in talking 
with folks in our region, they push me a little bit and say, 
``budget cuts or efficiencies,'' and I would have to concede, 
most of them are efficiencies.
    And so we have done a number of things in addition to the 
deans, with rebidding copier systems to having the largest 
renewable energy program, where we use ground source heat 
exchange to heat and cool our buildings, which saves us about 
75 percent of the cost of heating and college buildings. We get 
suggestions, like in summer we now concentrate all of our 
classes in one or two buildings, and so we don't cool and 
maintain and clean the other buildings. And I could go on and 
on, but I would be way over my 5 minutes and get in trouble 
with the chairwoman.
    I will tell you, according to our State agency, there are 
over 500 accredited institutions of higher learning in the 
State of Colorado. If Adam Smith anticipated a perfectly 
competitive marketplace, I would submit to you we see it in 
higher ed. And I think that is true in most States. If we are 
not doing a good job, our students tell us. And if we are not 
doing a good job, our parents tell us. I have an open office 
hour every Monday at 2:00. I meet every 2 weeks with our 
student government. I go to every dorm every semester and we 
have pizza and talk about what their experience is. And we try 
to listen to what our students tell us, in terms of what we are 
doing.
    Recently, we have been fortunate--I think Mr. Hinojosa 
talked about the percentage increase. Our percentage increase 
this year was 4.7 percent on tuition and fees. Regrettable, 
but, again, there is this two-edged coin which is affordability 
and quality. And I would submit to you that if we slash 
quality, then I don't care how affordable it is, if it is not 
worth experiencing, then it is not worth spending time and 
money on. And the reverse: if it is high-quality and you can't 
afford it, then obviously it is absolutely meaningless.
    I will tell you, a little nervously, we do spend a lot of 
time and energy trying to comply with and understand directions 
from the U.S. Department of Education. For example, we operate 
a satellite campus in Montrose, Colorado, and have for about 20 
years. That community asked us to bring our medical office 
assistant program to Montrose, and because of recent rules with 
the Department of Ed, we have to actually submit a formal 
change request, which is about a 40-page document and will take 
us untold hours and time to try and get that approved so we can 
meet the needs of that community.
    We also spend at the financial aid office an inordinate 
amount of time every year poring through policies and 
directives because the goalposts move every year.
    And last but not least, and with due apologies, this is a 
requirement in terms of what information we have to put where 
on our Web site that has to be one or two clicks away. This 
cost us hundreds of hours of staff time. And, again, I 
guarantee you, with 500 choices, students, if they can't find 
the information that is contained here conveniently, whether it 
is expense, safety, quality of programs, again, they let us 
know, and they let us know with their feet by going somewhere 
else.
    So I have gone over a little bit, and so, with my 
apologies, Madam Chairwoman, and I will wrap up right there and 
just say, thank you for having us. We think this is a critical 
issue and, like Jamie, the future of this country is based upon 
our continuing efforts in educating both young people as well 
as adults.
    [The statement of Mr. Foster follows:]

              Prepared Statement of Tim Foster, President,
                        Colorado Mesa University

    Thank you, Madam Chair, Ranking Member Hinojosa and members of the 
Committee for the invitation to this important hearing. I'm honored to 
be with you today. Colorado Mesa University may be thought of as the 
workhorse of Colorado's higher education system and we greatly 
appreciate the opportunity to tell our story. Our mascot is the 
Maverick, so we're used to bucking trends, challenging the status quo 
and using innovation to lead.
    CMU is a regional, public four-year teaching university with 
offerings ranging from technical and associate's degrees (delivered by 
our community college branch) to a broad array of baccalaureate liberal 
arts and professional programs, as well as targeted graduate programs 
that serve our region and state. We are located in Grand Junction, 
Colorado, a community of approximately 100,000 people and we're the 
largest regional hub between Denver and Salt Lake City. With an annual 
economic impact of over $317 million, CMU serves all of northwest 
Colorado; a region roughly the size of South Carolina.
    The topic of your hearing today is quite timely. As you'll hear 
from Ms. Wellman with the Delta Cost Project, Colorado has one of the 
most productive higher education systems in the United States. Further, 
our state is home to one of our nation's highest percentages of adults 
with postsecondary education. That being said, we face numerous 
challenges with access, affordability and making sure our doors are 
always open to every student who has worked hard and is interested in 
pursuing a higher education.
    As an access institution, we pay special attention to first 
generation students and students with documented financial need as this 
is a significant proportion of our region's population. Recently, CMU 
has seen high need enrollments jump from 2,481 students in 2009 to 
4,643 students enrolled this year. Interestingly enough, last year we 
found that 59% of students receiving institutional merit based awards 
also had documented financial need. As a matter of principle, we have 
found that granting students institutional financial assistance based 
on merit--rather than arbitrary financial calculations--results in 
greater retention and a drive to perform academically to maintain 
eligibility for the award. On our campus, we have seen first-hand the 
positive impact of students earning a hand-up, not simply receiving a 
hand-out.
    Along with our efforts to focus resources on merit-based aid is our 
university's commitment to work study. As we've watched the number of 
federal and state work study awards shrink in recent years, we 
developed our own program known as MavWorks to match students that want 
to work with jobs around our campus. These students work no more than 
20 hours per week during the semester but they wind up with a direct 
connection to the institution in the form of contributing to our shared 
success. Equally important are the human connections student workers 
develop in departments ranging from athletics to grounds-keeping. This 
direct connection results in higher retention which we all care about.
    If you look around our state and region, you won't find an 
institution more focused on low administrative overhead, conservative 
budgeting and strategically serving students than Colorado Mesa 
University. To be sure, budget cuts at the state level have keenly 
focused our attention on running a tighter ship while striving to keep 
costs low and transparent for students.
    When our administration took the helm in 2004, the institution was 
operating in the red, enrollment was flat and our community was eager 
to see CMU live up to its full potential. Right away, we began scouring 
the budget to identify cost savings, efficiencies and opportunities for 
self-sufficiency. This analysis included a hard look at our price 
point.
    With apologies to Chairwoman Foxx whose great experience in higher 
education probably included the title of ``Dean'' along the way, we 
immediately flattened our organization by eliminating Dean positions on 
our campus, which saved us more than $500,000 per year.
    We convened an Academic Program working group to assess all 
academic program offerings in the context of our role and mission to 
make recommendations on which programs the university should continue 
to fund. The process was tough, it included many difficult 
conversations around our campus, but it resulted in our Board of 
Trustees actually eliminating twelve programs and reluctantly letting 
go a very talented, tenured faculty member.
    Much like Colorado's system of higher education in general, CMU has 
been a leader in university efficiency. Our faculty members carry a 4-4 
teaching load (teaching four classes in the spring along with 4 classes 
in the fall); double that of most R1 institutions. On the operations 
side, we have created a continuous improvement mentality whereby every 
year we identify new ways to operate better, smarter, more efficient, 
and for lower costs. From re-bidding copier services; to developing our 
region's largest renewable energy ground-source heating and cooling 
system; to shuttering unused buildings in the summer time; CMU is 
diligent about keeping operations costs low. We do this because it 
allows us to reinvest in what matters in our line of business: top 
notch faculty, facilities, technology and support for students. Because 
people are at the center of our success as a university, I personally 
interview every single prospective faculty member to ensure their 
professional value system aligns with what we value at the university. 
It's that important.
    To be sure, this new approach took some getting used to around our 
campus. But I'm proud to say that our entire campus community has 
embraced it because it yields results and it puts students first. To 
us, this is more than a slogan, it defines our operating philosophy and 
how we conduct business.
    For example, on move-in weekend, you'll see our leadership team and 
our trustees helping students move in to residence halls. Throughout 
the semester you'll see us eating pizza with students in every dorm 
across campus soliciting feedback and asking for suggestions on how to 
improve what we do. What we find is that by listening, really 
listening, to what our students are telling us, we can innovate and 
stay ahead of things that might otherwise serve as barriers to student 
success.
    You see, Madam Chair, CMU understands who our customers are. 
Students. In Colorado alone, over 500 accredited institutions are 
competing with us. On our campus, we believe competition is a good 
thing, whether it's athletics, entrepreneurship or academics. 
Irrespective of how regulators in Denver--or even right here in 
Washington, D.C. tell us how to run our institution, if we're not doing 
a good job, I'll hear about it. I have an open office hour every Monday 
afternoon and if we're not doing something right, students are not 
afraid to come and tell me. Perhaps even more importantly, if we do not 
prioritize student success and the conditions necessary for students to 
thrive, our customers (our students) vote with their feet. And right 
now, our focus is to keep costs in check, provide students a great 
value, and deliver to them an outstanding undergraduate education. 
Watching our enrollment grow by double digits over the past few years 
leads me to believe we're on the right track.
    In visiting with students and parents, I can assure you that 
families are very aware of cost and finding the best value for their 
education dollar. This year in Colorado, the average tuition and fee 
increase at other public colleges and universities was over 13%--ours 
was less than 5%. I've heard many times that families chose Colorado 
Mesa University not only for the quality of our programs but also 
because each education dollar can be stretched further on our campus. 
All of the aforementioned cost savings measures coupled with our 
constant focus on interaction with students allows CMU to keep costs in 
check for students while investing in those things that matter.
    It is worth noting that none of our success would have been 
possible without a strong, engaged Board of Trustees. Our Board 
constantly challenges me to define success and help identify ways to 
measure it. To me, success is defined by providing a high quality 
educational experience with a sharp eye towards the costs associated 
with delivering it. If first generation and middle income students 
cannot afford our tuition, the level of quality is rendered 
significantly less meaningful.
    Because higher education is such a competitive arena, I implore you 
to let the market work. Keep an eye on regulations that unnecessicarily 
burden institutions that are trying to do the right thing for students. 
Seek out innovation and flexibility measures that enable institutions 
like CMU to do the most good for students. Ultimately, keep your eye on 
the prize--and trust students and prospective students to keep us 
accountable. As public financial support continues to shrink for 
institutions like CMU, we will have no choice but to continue 
innovating and enhancing our self-sufficiency. We think we're up to the 
challenge and I look forward to your questions.
    Thank you, Madam Chair.
                                 ______
                                 
    Chairwoman Foxx. Thank you very much, Mr. Foster.
    Again, thanks to all of you. I think you did a commendable 
job of transmitting a lot of information in the short period of 
time that you were given, and I appreciate the effort that you 
made.
    I will begin now with our questioning from the members to 
you all. And most of us make some comments before we go ahead 
and do the questions. And I did want to say that I appreciate--
I read your written comments last night, and these will be in 
the record. And I want to say to anyone who is interested in 
getting a fuller perspective on the things that you said that I 
would commend the materials that you submitted. And I will make 
two or three brief comments, and then I will ask a couple 
questions.
    Number one, Mr. Foster, I really appreciated your saying--
and you didn't mention this in your comments--that CMU 
understands who our customers are: students. As someone who 
worked in institutions of higher education, I think too often 
there is a failure on campuses to recognize that.
    Ms. Wellman, at some point I think we should talk a little 
bit more about the area of benefits and how that is driving 
costs, because I am not sure that we have had a full enough 
discussion of that.
    And as somebody who has, again, worked in this system for a 
long time, or did work in the system for a long time, I would 
like to see us talk a little bit more about what we have known 
about innovative programs for a long, long time and how they 
are working. It seems to me we have known a lot of these 
things. We have known about student learning styles, we have 
known about dual credits and things like that that I think 
perhaps don't get enough attention in the public arena and 
aren't presented as alternatives to increasing spending that 
are ways that we could reduce cost.
    And, Mr. Merisotis, I could not let this meeting go by 
without commenting on the really impressive comments that you 
made about a system based on learning and not on time. I am 
very impressed with that approach that the Lumina Foundation is 
taking. And, obviously, we need to do more of that in higher 
education.
    I wonder, Ms. Wellman, if you have any other examples that 
you would like to give about how institutions are dealing with 
State spending shortfalls. Very, very quickly, do you have any 
other examples that you would like to present?
    Ms. Wellman. The general pattern, as I mentioned, 
historically has been for public institutions to offload a lot 
of the reductions in State spending on the student tuitions. I 
think in this recession institutions figured that they have hit 
the wall on that, and we see much more evidence now of big 
public systems, as well as small institutions, paying a lot of 
attention to cost-cutting and productivity.
    They are cutting back on--they are paying attention to 
student credit accumulation. They are going into purchasing 
cooperatives. They are tackling health care. So I think there 
are a lot of good examples, more now than we have ever seen 
before.
    Chairwoman Foxx. Mr. Foster, would you mention something 
more about what kind of scaling back--you mentioned scaling 
back administrative and operational costs. Tell me a little bit 
more about how you address some of those concerns. I am 
intrigued about, for example, the summertime, using only a 
couple of buildings and cooling them. That seems to me to be 
something that more and more schools could do; the same thing 
in the wintertime.
    Would you mention something more about that? And how did 
you address the concerns that were expressed on your campus?
    Mr. Foster. Well, when I first got to campus, we were 
actually operating slightly in the red. And so, one of the 
first things--that is not a sustainable model, as we all 
appreciate. And so, the dean concept came up. We did the 
traditional approach, which convened a committee, unfortunately 
an even-numbered committee. I was not very seasoned at the 
time. And they came back three-three and said, you know, we 
would tie on whether we eliminate deans. Although, the other 
three said, if money is an issue, then we would have to join 
those who say it is time to walk away from deans.
    We have also engaged the campus as a whole, though. The 
classroom idea in the summertime--we have a suggestion spot on 
our Web site, and we get suggestions all the time. We have 
rebid our insurance. We were able to pull out of the State's 
insurance pool, and we were effectively underwriting the 
Department of Corrections and Department of Transportation, 
which are obviously much riskier than teaching on a college 
campus. And so we are able to save money there.
    From a student perspective, I should go back and say--
because we chatted a little bit earlier--one of the things that 
our students have the ability to do and I think was an 
experience you had when you were president was dual-enrollment: 
students who in high school can take college credits while they 
are in high school. And in Colorado, the school district 
actually pays for those courses. And so we have students who 
increasingly start with 20, 30, 40, as much as a full year 
under their belt, and so it just gives them a running start. 
And really, maybe they aren't completing in 3 years, but it 
somehow feels like they are paying for much less.
    Chairwoman Foxx. One more quick question. The program that 
you mentioned that you want to take to another place, is that 
program already approved by all the approval systems on your 
campus and you are having to do the regulatory process all over 
again just because you are moving it to another place? Is that 
what I understood?
    Mr. Foster. Yes, ma'am. What is ironic about it is, in 
Colorado we are actually--and it is one of these federal agency 
trumping State, kind of, statutes as well as State 
regulations--we are designated as a regional educational 
provider for the western part of the State, about the size of 
the State of West Virginia. And so, what we are supposed to do 
is deliver all of our programs, which are all completely 
approved and as you described. And so it is just a matter of 
that community would like us to take that program within our 
region 50 miles down the road.
    And for some reason--and I think it has to do with the 
debate you all had about proprietary schools and those sorts of 
things here fairly recently. And so them trying to ratchet back 
and tighten up the controls on colleges' abilities to offer 
programs in different locales. It just makes absolutely no 
sense to me whatsoever. But we will write a 40-page report and 
go through the process, right?
    Chairwoman Foxx. Well, our subject today is not regulatory 
reform, but it is an issue we are very concerned about.
    Mr. Hinojosa?
    Mr. Hinojosa. Thank you.
    I have found your presentations, each one of you, very 
interesting, and I certainly hope that we can take advantage of 
your sharing your success stories.
    My first question is to Jamie from Lumina Foundation. The 
federal government's continued role in ensuring access to low-
income and traditionally underserved populations is exceedingly 
important throughout the country. Briefly, tell us how do you 
square the national goal of increasing the number of college 
graduates with controlling costs.
    Mr. Merisotis. Yeah, thank you very much.
    You know, I think there is no issue more important than 
increasing high-quality degree attainment for our nation's 
least-served populations: low-income, first-generation, 
minorities, and the important population of adults as well.
    I think that we need to think hard about these issues of 
productivity and not see productivity as something that is 
actually being done by somebody to somebody but, in fact, 
represents an opportunity to increase the capacity of the 
system to serve more students. And so, we can't expect parents 
and their students to bear the increasing cost of higher 
education without there being very high consequences for us as 
a country. And what we have done in the last decade or so is 
essentially shifted more and more of that burden to them.
    So productivity represents the best path forward in terms 
of increasing the capacity to get the students into and through 
college as quickly as possible and help them to become 
productive members of our workforce and our society.
    Mr. Hinojosa. May I ask, will you elaborate on how the 
federal government can work with States and institutions to 
better collect and disseminate clear and concise information on 
those college costs that you all talked about?
    Mr. Merisotis. Yeah, I think it is going to be extremely 
important that we have comparable data based on progression, on 
completion, and on job placement for students. There are lots 
of cases where the data systems simply don't allow to us make 
effective decisions about how well students are doing and 
whether or not the system of higher education is actually 
serving our goals as a country.
    In moving from that time-based to that learning-based 
system of higher education that I mentioned, where student is 
the unit of analysis and not institutions, I think we have an 
opportunity to better serve the students by using these federal 
data systems, as well as the State institutional data systems 
and collaboration, to help us better understand where the 
challenges are and how to serve those students better.
    Mr. Hinojosa. Thank you.
    Tim Foster, in your written statement, you used the phrase 
``arbitrary financial calculations.'' What do you mean by 
``arbitrary financial calculations''? And are you referring to 
the calculations used to determine student eligibility for the 
federal Title IV program, or is it something else?
    Mr. Foster. We would be referring to the Pell Grant and the 
eligibility for Pell Grants, as well as their student loans, 
and how those change and how much attention we have to pay and 
our financial aid staff have to pay, because the rules change 
every year in terms of, if you are in this major, are you 
making this much progress.
    And, at some point--you know, I served in the State 
legislature, and I will never forget, we had a district 
attorney; we were debating sentencing. And he said, you have to 
have some confidence in the district attorney's judgment. And I 
would submit to you that we would be much more effective if we 
had a little more confidence in financial aid officers' 
abilities to package and have flexibility in terms of students 
that they want to give that aid to and feel are making 
progress. Trust me, they are not out there trying to give aid 
to students who aren't progressing.
    And, you know, there just are inconsistencies in terms of 
what my major is, and if I fail this class and it is not my 
major, okay, then I am still eligible, but if I fail this class 
and it is in my major, then I am not eligible. And it is just 
the sort of one-size-fits-all parameters that just really gets 
in the way and leads to all sorts of crazy gyrations and 
machinations to try and maintain those students in college.
    Mr. Hinojosa. Mr. Foster, CMU saved $500,000 by eliminating 
all the dean positions. Will you point specifically to where 
the savings was invested in students attending--CMU students?
    Mr. Foster. What we have been able to do--and, again, the 
chairwoman will appreciate this. On a college campus, you 
really can't start new programs, because new programs are like 
small businesses. They all lose money the first year. You can 
imagine, if we started a new program, a bachelor's degrees of 
nursing or, you know, pick a construction management program or 
mechanical engineering program--all programs we have started--
none of them will be fully enrolled, and none of them will 
carry themselves. And so, what that half-million dollars in 
savings allowed us to do was to have actual revenues over 
expenditures so that we could start those kind of programs.
    And it is those kind of programs--and I guess I would go 
back to the old NAACP ads, which were, you know, ``Go to 
college, get a better job.'' All right? If you don't have those 
degree programs--and we have added the better part of about 20, 
all of which have double-digit employment opportunities over 
the next decade. And first-generation students, in particular, 
find it very compelling, as do all students: If I go into this 
major, what am I going to do with it afterwards?
    And so those revenues enabled us to start those variety, 1-
year, 2-year, 4-year degree programs, which create wonderful 
opportunities. And, for us, our strength as a 2-year, 4-year, 
and graduate institution, you can come and in 1 year have your 
certificate, be a nursing aid and be working, pursue your 2-
year AAS R.N., continue working, pursue you bachelor's in 
nursing, continuing working, come back now and get your doctor 
of nurse practice.
    And so, those sorts of things are what we think are going 
to help people and keep them committed, because they lose 
focus. Why do I need a college education? And it is really that 
employment opportunity.
    Mr. Hinojosa. Thank you very much.
    My time has expired, but I hope that one of my colleagues 
will address Grace College's 3-year degree program, because 
that really caught my attention.
    Chairwoman Foxx. Go ahead.
    Mr. Hinojosa. I yield back.
    I can ask that question?
    Chairwoman Foxx. Sure.
    Mr. Hinojosa. Excellent.
    Ronald Manahan, I liked your discussion with us, your 
dialogue with us on the 3-year program, saying that it ends up 
offering 25 percent savings to the full-time Grace students 
paying tuition, room, and board.
    Tell us a little bit more about the few years that you all 
have carried this out and why more colleges are not using your 
model.
    Mr. Manahan. Thank you for the question.
    Our understanding was that we were, in some sense, beholden 
to more of an agricultural calendar on the economic year. And 
we asked the question, is there another way to conceptualize 
the academic calendar? And we did. And the basics of the 
program is simply this: that each semester is divided into two 
8-week sessions with an extended weekend break between them. 
And that is repeated both in the fall semester and the spring 
semester.
    When students enroll in the 3-year degree option, they take 
three 3-hour courses in the first 8 weeks. So the focus is 
narrowed down to three as opposed to five courses, and it comes 
at them more quickly, if you will. They repeat that again in 
the second 8 weeks, so at the end of the first year they have 
completed 36 hours.
    Mr. Hinojosa. So that means that it is the equivalent of 
taking 18 credit hours per semester under the regular program 
that we know?
    Mr. Manahan. That is correct.
    And what we have learned about that is this: having taught 
for a lot of years in a more traditional format, Monday, 
Wednesday, Friday, so on, there is a lot of stop-and-go traffic 
that happens in the classroom. You teach, then there is a long 
weekend, and you come back and you are hooking up to the 
previous time, and you are moving forward. This reduces some of 
that.
    And we have learned from students that, once they adjust to 
the pace of it, they are intrigued with and seem to prefer 
narrowing the focus to three as opposed to five scattered over 
a longer period of time.
    Mr. Hinojosa. That is an interesting response to my 
question. And I will close by saying, is it possible that those 
taking that program, that 3-year program, that they could work 
some number of hours per week of, say, 10, 15, or 20 hours? Is 
that possible?
    Mr. Manahan. I think it is, if they chose to. Another 
element of that 3-year degree option is that we require of all 
students 12 hours of applied learning. That is, they must 
participate in an actual, real-world situation to test the 
value of what they are getting in the classroom, how they are 
progressing. And we do that to advance their employability. And 
there are some other elements to that, but I will----
    Mr. Hinojosa. Thank you, Madam Chair.
    Chairwoman Foxx. Thank you, Mr. Hinojosa.
    Ms. Biggert?
    Mrs. Biggert. Thank you, Madam Chairwoman, and thank you 
for holding this hearing. I think this is really very timely 
and very important.
    And thank you, all the witnesses, for being here.
    In thinking about this and the revenues that come in, one 
thing that wasn't mentioned--and I know that colleges really 
try and keep their alumni involved by participating in the 
fundraising that the universities and colleges do.
    Maybe, Mr. Foster, you could speak to that. We have seen a 
reduction in the appropriations from the State and federal. Has 
there been a decrease in the giving by alumni or others to the 
universities?
    Mr. Foster. Well, Madam Chairwoman, as you identify, you 
know, those reductions in State support, one way that we can 
try to make that up is, in fact, with donor and particularly 
alumni. And I would say that while the dollar amount per gift 
has declined, actually the number of gifts have increased. And 
so we have a broader pool, although they are giving less 
intensely.
    And so it helps. It is not the entire solution. It is like 
any problem you have, you look around and you try and find as 
many possible contributors to solving that problem. And that is 
certainly one of them.
    Mrs. Biggert. Okay. Thank you.
    And then, Ms. Wellman, you know, there is thought to be a 
view that in higher education that institutions like to keep up 
with the Joneses and the other universities. I took a tour of 
one of the universities in my State of Illinois, and it was 
great. The one thing that I noticed was this huge building that 
was just being built, and it was beautiful, huge. And I asked 
what it was, and they said, ``Oh, that is the fitness center.''
    Now, this is very important to me, and Illinois is the only 
State that even has PE every day for K-12. So fitness is very 
important. But in this time of--and I asked, ``Well, why are 
they building this?'' And they said, ``Because we need to have 
that to get the students to come to the university.''
    How could we, you know, make sure that the colleges provide 
the things that are necessary for kids? But is this something 
that is done to really keep up with other universities, the 
competition?
    Ms. Wellman. It is a good question. I don't have a great 
answer.
    I think that many institutions face a double-edged sword in 
this environment. It is a very competitive environment. They 
are looking more and more to students as a consumer. They need 
to get the students who have the money to pay, and the students 
who have the money to pay want to have those facilities. And so 
they say they need to have it in order to compete in the market 
they are in.
    I think that the competition for amenities rather than for 
academics, putting the money into the academic program, is of 
great concern to a number of educators. You see spending going 
up on athletics more than it is going up on academics. It is 
going up in dorms; it is not going up in student support.
    I think it is the nature of the consumer reality, though, 
that those kinds of immediate, palpable benefits are ones that 
students seem to want to have. And so I think it is a tension 
that isn't easily resolved.
    Mrs. Biggert. Thank you.
    Then, I co-chaired the House Financial and Economic 
Literacy Caucus with Mr. Hinojosa. And we have had this for 
years and years. And I think that it is really important that--
it is critical for information like this to be available to 
students and their parents.
    And, Mr. Foster, given your close interaction with 
students, how much of this responsibility should fall on 
students to be informed consumers? And are they, when they are 
coming to the school? And is there more that students and 
parents can do, as consumers, to help increase the competition 
among institutions of higher education so that they are picking 
the school that really fits their financial needs?
    Mr. Foster. Well, I would say a lot of responsibility 
obviously falls on our shoulders, in terms of making sure that 
information is available to them. And we really look at--a good 
match for the student is critical for us. You know, not having 
them retain and finish at Colorado Mesa University is kind of a 
personal affront to us.
    And I would tell you, increasingly--and you could probably 
go back, you know, to 9/11--that, all of a sudden, I think you 
saw a change in terms of family, parents, and students, and 
nontraditionals' behavior in terms of their inquiry and pursuit 
of information relative to: If I come, will my son or daughter 
finish? What is the total cost of attendance?
    And we emphasize to them total cost of attendance, because 
they always want to whittle it down and assure themselves that 
they will be able to afford it. And we try to say, don't do 
that because you have to be prepared for this cost. Mind you, 
ours cost is significantly less than a lot of the institutions 
that we have talked about.
    But it is a two-way street, I guess would be my answer to 
you. And I think it is a place State agencies can play a big 
role, in terms of--when I was at the Department of Higher 
Education, we really transitioned away from that regulatory 
role to being more--and published a consumer guide and found 
that people in Colorado had more faith in that because it was a 
third-party, objective listing of costs, expenses, graduation 
rates, retention rates. And then you can evaluate for yourself 
which school you want to go to.
    Mrs. Biggert. Thank you.
    I yield back.
    Chairwoman Foxx. Thank you, Ms. Biggert.
    Mr. Bishop?
    Mr. Bishop. Thank you very much, Madam Chair. And thank you 
very much for having this hearing. I think it is a very 
important topic, and I think our witnesses have provided us 
with very helpful testimony and very enlightening testimony.
    Mr. Foster, I wasn't going to do this, but I just wanted to 
start. You made reference in response to the question from Mr. 
Hinojosa to shifting eligibility for federal assistance based 
on a student's academic major. I am not aware of any 
eligibility standard that the federal government maintains that 
differs for any of the Title IV programs based on a student's 
major. Am I missing something?
    Mr. Foster. Let me do this, let me get you some additional 
information. I am not a financial aid expert, I am just a 
president, and so we are obviously the least informed.
    But as we talked about in preparation for this hearing, we 
talked about the fact, if, in fact, I take--and it ties to 
satisfactory academic progress. And so if I am taking biology, 
for example, as a biology major and I fail that course, then, 
in fact, that puts in doubt my eligibility for federal 
financial aid. If I am not a biology major, I am a political 
science major, I fail that same course----
    Mr. Bishop. I am going to respectfully disagree with the 
advice that you have gotten. Eligibility for financial aid on 
the federal level, to the best that I know--and I administered 
student financial aid programs for a number of years before I 
came here--is rooted exclusively in information provided on the 
FAFSA, which is subject to a so-called uniform methodology 
which spits out a bottom line called the ``expected family 
contribution,'' which, by the way, is not perfect but it is, I 
think, the best system we have.
    So if you do learn of something, I think we would--I, at 
least, would like to know about it. And I thank you.
    Ms. Wellman, thank you for your testimony.
    I just want to be clear. You have found that the principal 
driver of increased student tuition is cost-shifting--that is 
to say, reduced State appropriations for publicly supported 
colleges and for all colleges reduced philanthropy, reduced 
income from endowment and so on. Is that correct?
    Ms. Wellman. Yes. In the public sector in particular, it is 
cost-shifting. There is a little bit more evidence of increased 
spending driving tuition among some private but not all private 
institutions.
    Mr. Bishop. When you say ``some private'' with increased 
spending driving tuition, is that more localized in what we 
might refer to as the elite privates?
    Ms. Wellman. Actually not. It is the institutions that 
don't have the endowments that----
    Mr. Bishop. That are trying to keep up?
    Ms. Wellman. That is right.
    Mr. Bishop. So they are trying to walk that tightrope that 
Mr. Foster talked----
    Ms. Wellman. That is right.
    Mr. Bishop [continuing]. About, about increasing quality 
while at the same time maintaining affordability?
    Ms. Wellman. Yes. That is exactly right.
    Mr. Bishop. Okay.
    One of the things that we hear frequently is that--and 
there is a very forceful proponent of this notion that I am 
about to suggest, a man named Richard Vedder, who we hear 
frequently tell us that the reason costs are increasing is that 
federal student aid is increasing, and because federal student 
aid is increasing, that gives college administrators the 
license to raise costs beyond what they normally would.
    Does your data give you any evidence that that is true?
    Ms. Wellman. No.
    Mr. Bishop. Okay. Thank you. I appreciate that.
    Dr. Manahan, I administered a small college that was 
particularly good at being not for profit. And I wanted to 
commend you for your efforts, and I really think they are very 
good and very innovative.
    But I wanted to quickly--the little over $10 million of 
institutional aid that you administer, what proportion of 
tuition revenue does that represent? So, in other words, what 
is your discount rate?
    Mr. Manahan. It is about 40 to 41 percent, in that range.
    Mr. Bishop. So, if you will, your gross sales are 100 
percent and your net sales are roughly 60 percent; is that 
right?
    Mr. Manahan. Yes, exactly.
    Mr. Bishop. And does that represent discounted tuition, or 
does that represent income from endowment and philanthropy that 
allows you----
    Mr. Manahan. It is almost entirely from tuition.
    Mr. Bishop. Okay, so you discount tuition to that extent.
    Do you have any sense of where that places you among 
comparable institutions? I was in New York State. When I left 
New York State, the average discount rate was somewhere in the 
low 30s. That was 9 years ago.
    Do you have any sense of where that puts you?
    Mr. Manahan. Yes, I do. There are a few discount rates over 
50 percent. We certainly are not there. Depending on endowment 
levels, if you think of comparable endowments to ours, you 
might find some in the upper 30s. But we have worked 
religiously to move that to this level and find an operational 
path to succeed on at that point, if that is----
    Mr. Bishop. Okay.
    Mr. Manahan. Yes.
    Mr. Bishop. And is the $10 million principally need-based, 
or is it a combination of need and merit?
    Mr. Manahan. It is a combination of need and merit. But 
given the nature of the students we serve and families from 
which they come, there is----
    Mr. Bishop. The merit would have been justified by need 
anyway.
    Mr. Manahan [continuing]. Included in that.
    Mr. Bishop. Okay. All right.
    Thank you very much, Madam Chair.
    Chairwoman Foxx. Thank you, Mr. Bishop.
    Dr. Heck?
    Mr. Heck. I thank you, Madam Chair.
    And thank you all for your testimony today.
    Student aid and the cost of postsecondary education is 
personal to me on two levels: One being 23\1/2\ years since I 
graduated medical school and still paying what I affectionately 
call my ``second mortgage'' on my student loans, and the fact 
that my daughter is a recent graduate from UNLV and her 
deferment period is about to end.
    I am intrigued by both Mr. Merisotis' comments and Dr. 
Manahan's on your, kind of, training to success as opposed to 
time. After spending 21 years in the military, if there is one 
thing we are experts at, it is training to time and not to 
standard. We are the foremost experts at cramming 30 minutes of 
information into 2 hours.
    Of all the areas that we have talked about driving cost, 
two questions: Do you believe, anybody, that there is an 
increased cost due to duplicity amongst programs in States' 
systems of higher education? I can tell you that in my State, 
Nevada, we went through a period where community colleges 
decided to offer 4-year degrees, the State college decided to 
get into advanced degrees, and the competition that causes with 
the 4-year academic research universities.
    And, secondly, is there an increased cost due to the need, 
perhaps, to provide remedial coursework for matriculating 
freshmen who aren't quite up to standard? And is that due to 
the fracturing of the K-12 and postsecondary approach as 
opposed to a P-16 approach to education?
    Mr. Merisotis. The question on duplication--look, I think a 
lot of that has been eliminated. There is still some of that in 
existence, but with the economic crisis that we have faced, 
there have been a lot of tough choices that institutions have 
had to make in States.
    And one way I think you can see that being promoted is 
through performance-based funding models that I mentioned in my 
testimony, where you differentiate by mission. You have a 
better chance of being clear about what you expect of 
institutions based on their institutional mission. And, 
therefore, you can create incentives so that you don't have 
these overlapping programs and things like that.
    So in the time period of cost-cutting where--and I think we 
have gotten pretty close to the end of that because there is 
not a lot left to cut in a lot of States--what we are seeing is 
that these efforts to differentiate mission is a very important 
outcome, actually a potentially positive outcome, of the 
unfortunately challenging economic times.
    Mr. Heck. Anybody else on the issue of the requirements for 
remedial work in a K-12 postsecondary approach versus a P-16 
approach to overall education?
    Ms. Wellman. Remedial education is clearly a cost-driver. 
It is not a smoking-gun kind of cost-driver. It is actually a 
fairly low-cost education. I think the big problem with 
remediation is it isn't working very well. The proportion of 
students who get into it who are successfully remediated who go 
on to some kind of academic success is just way too low.
    So I think we have a big conundrum in there about making it 
more cost-effective, reducing costs, but actually making it 
work better. It is a big problem.
    Mr. Foster. I think it is a student cost-driver. It is a 
zero-credit course--developmental courses, that is. And so it 
is amazing what percentage of students come in and require--
primarily in math but significantly in reading/writing as well.
    The chairwoman and I spoke a little bit about dual 
enrollment. And you have some districts that are taking a lot 
of ownership. In Colorado, we have community colleges, as well 
as ours, that partner up with some of our area high schools. We 
identify those students who need developmental education at the 
junior level when they take the ACT, and then on their campus--
actually, we send instructors over, and the district pays for 
those instructors. And then when they graduate, they are 
college-ready.
    But it really is more an individual cost-driver, delaying 
them in time as well as in tuition.
    Mr. Heck. Great. Thank you.
    Thank you, Madam Chair. I yield back.
    Chairwoman Foxx. You get the gold star for today.
    Mr. Grijalva?
    Mr. Grijalva. Thank you, Madam Chair, and thank you for the 
hearing.
    Mr. Merisotis [continuing]. Did I say it right? No.
    Mr. Merisotis. It is fine.
    Mr. Grijalva. No, I have a lot of vowels, too, and it is--
--
    Mr. Merisotis. Yeah.
    Mr. Grijalva. Your point about performance funding is a 
very good and valid point, and thank you for that.
    But let me ask you a little bit about the phenomena--not a 
phenomena--the reality of the income disparity that is 
happening in this country. And one of the--the major tool to 
close that gap is education, and particularly postsecondary 
education. And so, as we look at making sure that that 
educational equity part of the discussion is applied to the 
next generation, let me talk a little bit about the TRIO 
programs.
    And can you discuss how increased investments in those 
programs and similar programs across the country might help 
mitigate, first, the increased tuition costs by helping 
students degree and the preparation gap that also has to 
happen?
    Mr. Merisotis. Yeah, absolutely. Look, your point about 
equity is absolutely right, which is that equity of educational 
opportunity is extremely important. That equity has to include 
both improving access to higher education and ensuring that 
those low-income, first-generation, minority, and other 
students actually have an opportunity to succeed.
    And I think that is what a lot of what is going on in these 
performance-based funding models is efforts to ensure that they 
are actually successful. In Indiana, for example, the 
performance-based funding model actually takes into account the 
success of low-income students in the population.
    The federal TRIO programs have been one of the most 
important efforts at the federal level to increase 
opportunities for first-generation and other students for 
decades, and I think they are extremely important in terms of 
our future. We have to recognize that students don't just pay 
for college; they actually have to be prepared for college and 
they have to succeed academically, financially, and socially. 
And that academic, financial, and social support comes from 
TRIO programs because they help students better understand the 
system, work their way through the system, getting into and all 
the way through college. So TRIO is a very important part of 
the overall federal landscape.
    Mr. Grijalva. And, if I may, Mr. Foster, you mentioned the 
regulation issue that Mr. Bishop asked you about. And I agree 
that regulations should be streamlined for schools. But I think 
there are also very important reasons for them. They are 
important to help us understand rising costs, prevent 
accidental or intentional misuse of taxpayer funds.
    And you mentioned that you have spent hundreds of hours, as 
an additional cost, in preparing the school's information that 
the students expect to have and that they have to have before 
they make their decision. Doesn't that information make it--the 
information you have to generate for the federal government 
also available in the same sense?
    Mr. Foster. And it is an important observation. All of the 
information that came out and was required to be one or two 
clicks away was contained in different places that we thought 
were more intuitive. And we spent a lot of time--I am sure like 
Dr. Manahan--you know, with focus groups, with students, 
saying, ``Where do you look for this information? What do you 
want from us? What do you want when you make a decision?''
    Mr. Grijalva. So you are saying they are not comparable.
    Mr. Foster. I am just saying that what we had is we had it 
collected where we thought students would go, and then what we 
had to do was reconfigure it to make sure that students could 
be one or two clicks away.
    Mr. Grijalva. Okay. If I may, Mr. Foster, let's talk about 
that reconfiguration. One of the things that I think was a 
great accomplishment that the last Congress did was creating 
the income-based repayment program so that students would be 
able to manage their debt.
    Can you speak to efforts that your college has undertaken 
to inform students about that program and as a means for them 
to be able to manage that debt? Is that part of the information 
they receive?
    Mr. Foster. Actually, apart from that information, that 
whole one-click-away, which is really different sort of data 
and information than what you are talking about, we look and 
monitor our average student loan debt, and it is an issue that 
we try to track very closely. And so what we have done is 
actually added a person in our financial aid office who all 
they do is debt counseling.
    Mr. Grijalva. Okay.
    Mr. Foster. Because in student loans, unlike in a banking 
situation, nobody sits down and says, ``This is how much you 
can afford to pay back based on your occupation.'' And so we 
have tried to create that person who sits down with those 
students and says, ``This is how much you can really afford to 
borrow as you graduate and you want to pay it back and you want 
to pay it back in a reasonable amount of time.''
    Mr. Grijalva. Okay. That is excellent.
    The elephant in the room: On the debt side and the loan 
side, 40 percent of the debt that students have is through for-
profit colleges, which represents about less than 30 percent of 
the student enrollment.
    And do you see that as--anyone--do you see that as a factor 
affecting cost and as a factor about the regulatory intent of 
trying to find out what debt is and who is responsible for that 
debt? To anybody.
    I am out of time. That was my best question, too.
    Ms. Wellman. If I might very quickly, the data we have on 
spending, revenues and spending, we can't include for-profits 
because of the problems in comparable data. It is something 
that the Feds ought to deal with----
    Mr. Grijalva. Thank you.
    Ms. Wellman [continuing]. And we have to step up, too. 
Because I can't answer----
    Mr. Grijalva. Great.
    Ms. Wellman [continuing]. Your question because the data 
aren't there.
    Mr. Grijalva. Thank you very much.
    Thank you, Madam Chair.
    Chairwoman Foxx. Thank you, Mr. Grijalva.
    Dr. Roe?
    Mr. Roe. Thank you, Madam Chairman.
    And thank the panel for being here.
    I think our higher education system in America is the best 
in the world. I think there are two great issues that we face 
in this country right now, and those are rising health-care 
costs and rising education costs. Probably not a one of us 
sitting up here at this dais has not benefited from a great 
college education--and, basically, public education. I went to 
school for 24 years, and, Dr. Manahan, I went to medical school 
in 3. I wouldn't recommend that to my worst enemy. But, anyway, 
that is what we did then.
    One of the concerns I have is, I lived at home when I went 
to college. I had a job. My father worked in a factory. We had 
no student loans then. I was able to work, live at home, go to 
college, and finish college with no debt.
    Number two, because medical school was affordable at that 
time, I graduated from medical school with no debt. I was able 
to move to east Tennessee in Appalachia, an underserved area, 
because I didn't have hundreds of thousands of dollars in debt, 
and take less salary and serve that area.
    I see young people now that leave--I get letters all the 
time, and I am sure every one of us do, with hundreds of 
thousands of dollars in debt. How has that happened, where a 
young man like myself from a middle-class family--quite 
frankly, it was very simple when I went to medical school.
    I saw what the tuition was at one great private university 
not too far from where I lived--it was more than what my father 
made in a year--and the University of Tennessee at Memphis, 
which wasn't, and I made my decision to go there. Both great 
schools. A lot of people do that. That is not hard information 
to get. And I thank the Lord three children of mine all have 
graduated from college and they are out on their own.
    But how has that happened to us? Because we cannot sustain 
this current 7, 8, 10 percent or kids like myself will never be 
able to go to college. Or, as Dr. Heck said, spend 25 years of 
your life basically paying for a house, which is what it costs 
to go now--$50,000 a year at a private university. When I went 
to school, probably the State of Tennessee covered 80 percent, 
90 percent. Today, it is under 50 percent in the State of 
Tennessee at a public institution, and it is all being shifted 
to the students.
    Any comments?
    Mr. Merisotis. Look, I am a walking advertisement for 
student financial aid in this country. I got a Pell Grant, I 
got federal student loans, I got State assistance, I got----
    Mr. Roe. Are you out of debt yet?
    Mr. Merisotis [continuing]. Support from my church, I got 
support from the institution I went to, I worked, I did all 
those things.
    That was 30 years ago. The problems for today's students 
have multiplied greatly because of the rising costs of higher 
education. And, to your point, I think the challenge is that 
students and families really are at their limit in terms of 
their capacity in order to be able to deal with these issues.
    I think part of the challenge comes back to the point in my 
remarks, which is that we can't afford to reduce the capacity 
of the system to produce graduates. It is very important to our 
economic future as a country that we increase the number of 
highly qualified college graduates in this country. That means 
we have to make this system much more productive, particularly 
for those students who haven't had the opportunity, who haven't 
had the prior successes from their families, et cetera.
    And I think that is an important issue for us to understand 
from a State policy perspective, from an institutional policy 
perspective, and from a federal policy perspective. There are 
many things that I think need to be done to enhance 
productivity.
    Mr. Roe. Well, I served on--I was a foundation board 
president at my college before I came here, and I am still on 
the foundation board at East Tennessee State University--both 
public schools. And we have raised money on the private side, 
and we have shook everybody down that we could. And I know Mr. 
Foster probably has done the same thing as president of his 
college, and Dr. Manahan also. But there are limits to all of 
that.
    And I don't know, where does this end?
    Ms. Wellman. I think we--the good thing about this 
recession has been that we finally, I think, are starting to 
hit the wall. For many years, in the public sector, States and 
institutions were both complicit in allowing this to happen. 
Nobody decided to make it happen. It happened because of other 
things: budgets went down, tuitions went up. But institutions 
have too long believed that more money always was necessary for 
more quality.
    And I think we are turning the corner. I don't think we 
have turned the corner.
    Mr. Roe. Well, let me just go over a couple things that Mr. 
Merisotis said and we are trying to do in Tennessee. We have 
the Pell Grants, we have the HOPE scholarship, which is where 
we use our lottery money. And still, young people are 
graduating.
    But what we have done is, if you go to a community 
college--I remember when I was in school, if you went to a 
community college, you didn't transfer to a 4-year college, so 
you had to repeat the same course again. We have stopped that. 
You can go to Northeast State Community College and then 
transfer that credit to the University of Tennessee.
    We now are requiring our colleges to look at graduation 
rates, not at the number of students that are in there, to get 
their funding. I think that is an extremely positive step that 
you mentioned just a moment ago.
    There is a higher ed center in Kingsport, Tennessee, which 
has five colleges in it. The city built it, the bricks and 
mortar, and yet University of Tennessee, King College, 
Northeast Community College all have classes in there, so they 
don't have this incredible investment in bricks and mortar, as 
Ms. Biggert mentioned. And in trying to attract students, you 
can go from a freshman degree to a Ph.D. and never leave 
Kingsport, Tennessee, and go to two different schools and, in 
doing that, transfer credit. I think that is extremely 
important.
    And there are many other things--online classes, which are 
less bricks-and-mortar--that we are doing. We have to do these 
things or, as I said, folks like myself will never have a 
chance or, number two, will never be out of debt.
    I thank you all.
    Chairwoman Foxx. Thank you, Dr. Roe.
    Mr. Tierney?
    Mr. Tierney. Thank you, Madam Chairwoman.
    I was wondering if Dr. Heck could get some help from Dr. 
Roe. He seems to have some loose cash hanging around.
    I want to thank our witnesses. It really has been helpful, 
you know, on this. This is an issue that has troubled us all 
the way through the last reauthorization and forever on that.
    Maintenance of effort, Ms. Wellman. You know, we have been 
troubled by the fact that this is a partnership. The federal 
government, the State, the families are supposed to be 
partnering to try to get more people into college in an 
affordable way, make it accessible and move on. States have, I 
think, routinely backed away from that partnership in a huge 
way over a period of time.
    So we put into the last reauthorization a maintenance-of-
effort provision. We have heard tremendous feedback, 
particularly from community colleges but from a lot of 4-year 
colleges as well, that if we hadn't done that, tuition costs 
would have gone up even more; it would have been more and more 
difficult.
    Should we enhance that maintenance-of-effort program? Are 
you feeling it is not necessary anymore because schools are now 
trying to deal with this stuff on their own?
    Ms. Wellman. I don't have a good answer. I think the 
problem of State budgets is so much bigger than what is 
happening in higher education that the pressures on States to 
cut funding are going to be with us for the next several years. 
Whether the federal maintenance-of-effort requirements put some 
brakes on that, I think they probably do. So I wouldn't--this 
is not the time to take them off.
    Whether they can be strengthened or rewritten, I honestly 
don't know. I don't think the thing that is causing the cuts 
from States is related to federal funding. It is related to 
what is happening to State budgets.
    Mr. Tierney. Yeah. Well, thank you for that.
    Endowments to a lot of well-off schools, well-off 
institutions on that. Senator Grassley and I started on this 
path last time. We got a lot of consternation from some. But 
many of those schools don't even pay 5 percent of their income 
back into education-related efforts on that. Now, they still 
maintain their tax-exempt status.
    Is that an area where we ought to be expecting more, we 
ought to be expecting those schools that have billions of 
dollars in endowments to pay at least the minimum amount that 
other charities have to pay in order to maintain their the tax-
exempt status and put that back into education efforts, maybe 
even in a way that helps public 4-year and 2-year institutions 
on that basis?
    Anybody that wants to reflect on that?
    Ms. Wellman. The wealthiest institutions are already 
spending a lot of money from their endowments. I guess I am 
sympathetic to your question. My question is why they are 
continuing to raise tuitions at the same time that they have 
that level of revenue.
    Requiring an even higher payout in this environment in 
those institutions would be like putting kerosene on a fire. 
They are already spending a lot of money.
    Mr. Tierney. So an institution that has almost $30 billion 
in an endowment that spends 4.3 percent or less of their income 
from that----
    Ms. Wellman. And raises tuition every year.
    Mr. Tierney. Yeah--that would be a problem for you?
    Ms. Wellman. I think the issue of the public purpose is a 
really important one.
    Mr. Tierney. Thank you.
    We see that one of the drivers--I mean, there are a number 
of drivers of cost increases. I was listening to Dr. Roe on 
that. And I also was a State college product and was able to 
afford to go and get through on that. But the cost of safety 
now--we expect campuses to be little communities. They are 
responsible for the safety of their students. They have huge 
energy costs. Technology is far more expensive than it used to 
be. The cost of construction, you know.
    And the benefits, as you mentioned, all of you, the costs 
of paying for your staff, whether it is administration or 
faculty, the cost of the benefits. So a lot of schools, I have 
noted, have now switched to adjunct faculty.
    Ms. Wellman. Yes.
    Mr. Tierney. I am not sure that is a great thing for the 
student or the faculty member, but it essentially looks to me 
as a cost-shift. So now the school might not have to pay for 
the benefits of that person but the individual does. So they 
are getting paid less, have higher out-of-pocket expenses for 
benefits of that nature, or they shift it somehow onto a health 
system within their State on that basis.
    That doesn't seem, to me, the wisest way to proceed. Is 
there another alternative here?
    Mr. Foster?
    Mr. Foster. Boy, you ask the hardest questions, and I am 
glad I ducked the first two.
    I would tell you that I think there is a temptation to do 
what you talked about, and I think some schools have gone down 
that road. And I think most of those that have have turned 
around and gone back the other direction, because it comes down 
to quality and quality of people. And I think we all are 
scrambling, trying to find other places to contain costs.
    Your--I was nodding because it is; technology we used to 
think would be a cost. It is a cost-driver because this 
generation of students just demands way more robust technology 
than you and I even consider feasible. And so it really has us 
searching everywhere possible to try and reduce those costs and 
see if we can't simplify, you know, what we do and what is 
extraneous to the core mission of what we do.
    And so our faculty, for example, teach a four-four teaching 
load, four courses per semester, which is double that of most 
R-1 institutions. You know, there are just those sorts of 
metrics that, at some point, you know--you are ready to be a 
college president, it sounds like to me. So we will switch 
places and----
    Mr. Tierney. Sounds attractive, some days around here.
    And, lastly, you know, on that transparency issue that you 
talked about, Mr. Foster, I think that you are probably unusual 
if you had all of the transparency provisions that the Higher 
Education Opportunity Act asks for. And I commend you if you 
did.
    You know, the idea of having institutions with the largest 
percentage increases in tuition prices submit an explanation 
for that, did you have that on before the act or is that 
something you added on?
    Mr. Foster. We didn't hit those percentages, so we didn't 
have to deal with that particular issue.
    Mr. Tierney. Okay. And you have used innovative strategies 
to rein in price increases and use those incentives to keep 
costs low, you share that information with other institutions?
    Mr. Foster. We do. I do a monthly email to all of the 
parents of our students and try to two things: one, communicate 
those sorts of issues; and, secondly, as I tell them, the more 
engaged they are in their students' education--and if you are 
like me, you ask your son--I have four sons--``What happened 
today?'' I get no answer. If I have a little bit of 
information, I get a whole lot more back.
    And so we try and give them, you know, ``This is what is 
going on on campus,'' so then they can engage with their 
student. And we tell them, ``Midterms are coming. You might 
want to inquire if, in fact, they are studying for midterms.'' 
And so those sorts of things really, we think, help that 
dynamic.
    Mr. Tierney. And just quickly, what kind of feedback have 
you had with your institution's online net price calculator?
    Mr. Foster. You know, the feedback I have gotten--I go out 
and help move students in. And so, this year was the first year 
that I had probably a half dozen parents say, ``We were 
considering this institution''--generally a private and in a 
couple instances a public--``and we looked at your programs and 
your price, and we chose here because you are this much less.'' 
And so it was the first time I had someone just out of the blue 
say, that was a consideration and that is why we are here.
    And so I assume they were doing that using our net price 
calculator as well as the other institutions they were 
comparing us to.
    Mr. Tierney. Great. Thank you.
    Thank you, Madam Chairman.
    Chairwoman Foxx. Thank you, Mr. Tierney.
    Mr. Thompson?
    Mr. Thompson. Thank you, Chairwoman.
    Thank you to the panelists for I think a very good hearing 
on a very important topic, in terms of access to affordable 
education.
    We have spent a lot of time in committee talking about the 
burdens of federal regulations, reporting requirements in all 
forms of education.
    This question is specifically for Dr. Manahan and Mr. 
Foster. In your experience with your universities, you know, do 
you have a sense about how much time you spend on federal 
regulatory and reporting compliance? And do you have some 
suggestions for us about how regulations reporting could be 
eliminated without jeopardizing integrity of the federal 
financial aid system programs?
    Mr. Manahan. I would be happy to begin with that good 
question.
    We have calculated on our campus that--and we are a small 
campus--we spend about $460,000 a year on salary and benefits 
to address regulatory issues. And then that is not counting 
equipment and other things we need to provide them. So what 
that equals for us is, we spend about $300-plus a year per 
student to care for regulatory matters.
    We certainly believe there are a number of regulations that 
are very helpful and protective. But those that have less 
value, perhaps, and fewer changes to continue adapting to, that 
is a way to reduce some of that cost. Because that is passed on 
in the cost of the institution.
    But I would grant you that there are regulations that are 
very helpful, as well, to the student as a consumer and other 
such things. But overreaching regulations make it challenging 
to carry on funding.
    Mr. Foster. I tried to give you some sense of just a couple 
of areas. We haven't quantified it, and now I am glad I haven't 
because I would be just absolutely under my bed lamenting how 
much we are spending on regulatory compliance.
    I would say, though, that, you know, the federal collection 
of data we use intensely to compare ourselves to other 
institutions. And so, you know, we track things that the Delta 
Project puts out or we actually go mine that information 
ourselves. Because you just never know how well you are 
performing or how poor you are performing without getting it in 
context. And so I would say the collection area is something 
that is actually very beneficial, I think, for all of us, 
because you use common definitions, everybody knows exactly 
what that is.
    It is below that radar screen in terms of, you know, 
increasing--and I appreciate the difficulties with proprietary 
schools and whatever other issues you are dealing with, but it 
is pulling us into that vortex that is really starting to tilt 
and have us spend hours. And we can get you more discrete 
suggestions in terms of areas.
    If nothing else, if we would just stopped changing the 
definitions in federal financial aid, that would be great. 
Because then we would know and we could tell students year to 
year exactly what those criteria are.
    Mr. Merisotis. I just wanted to quickly commend to you the 
brand-new report from the Federal Advisory Committee on Student 
Financial Assistance that looks at the 15 major areas of Higher 
Education Act regulations and ways in which burden and overlap 
and other things can be reduced. And I think that may be 
helpful in terms of the decision-making on the committee.
    Mr. Thompson. What role, from your perspective, the panel's 
perspective, does the integration of online learning, virtual 
campus, have in increasing access and, frankly, potentially 
decreasing costs?
    Mr. Foster. Huge. Like I said, we represent or cover an 
area that is fairly rural. More jackrabbits than people in 
large portions of western Colorado. And so, from an access 
perspective, for them to be able to take classes online, it 
also, equally, is a matter of convenience for our students. I 
think the overwhelming majority on most campuses' online 
activity are students who are actually taking classes 
physically on campus, and they use it to balance their schedule 
and time management, whether they are working or doing other 
things.
    And then there is the obvious avoidance--it is more 
intense. You know, the theory was, you could scale it and have, 
you know, hundreds of students in a classroom, and the 
experience is not that way. But it certainly avoids bricks-and-
mortar, and so it is extending the life of our classroom 
buildings. And so we can grow beyond--we anticipate about 20 
percent of our credit hours will be delivered online because of 
those sorts of things, and so there is a 20 percent bump in 
terms of how many classrooms we won't need because of that 
online activity.
    Mr. Merisotis. I mentioned Carnegie Mellon's Open Learning 
Initiative, which is delivering the same outcomes in half the 
time for students.
    Another great example is the Western Governors University, 
which is an online, competency-based learning model, which is 
delivering programs in only four key areas: teacher education, 
business, IT, and nursing. And they are having a very high 
success rate with their competency-based model, but it is using 
online delivery. And we think there is a lot of potential for 
those competency-based models using technologies to 
proliferate.
    Mr. Manahan. We would agree with that. We, in fact, in this 
3-year degree option, the 3 years allows the 2 summers in 
between to be taken online by courses provided from our campus, 
and those are tuition-free to the students. It allows the 
student to go--perhaps return to their home for summer 
employment, whatever they need to do. If they need to fulfill 
some degree component, traveling to another country, it still 
allows that. And we have other uses of online, as well, in our 
graduate programs.
    Mr. Thompson. Okay.
    Thank you, Chairwoman.
    Chairwoman Foxx. Thank you, Mr. Thompson.
    Ms. Davis?
    Mrs. Davis. Thank you, Madam Chair.
    Thank you to all of you for being here.
    I want to switch the scale here for a second and just talk 
about California, if I may. And I am not expecting that you are 
experts, necessarily, in that system. But in terms of what you 
know and to apply, as you probably know, as well, the 
Governor's 2011-2012 budget is below 1998 funding levels with 
75,000 fewer students than the 237,000 students that are 
enrolled today. So, clearly, a different scale than what we are 
talking about. And, of course, thousands of people have been 
laid off, et cetera.
    But I am wondering, you know, at what point does the 
streamlining and the savings hinder student learning? How far 
can a large system like that really afford to go to afford 
graduates both an opportunity to graduate but to graduate with 
something substantive to contribute?
    Ms. Wellman. California--I worked there for many years, 
including in the legislature in the Ways and Means Committee. I 
know more about it than I know what to do with. But----
    Mrs. Davis. Well, that is good.
    Ms. Wellman [continuing]. It is a tough--it is a tough one. 
They are already--they are cutting access. They are probably 
cutting quality. You can't cost-manage your way out of the 
problem California has.
    Having said that, California has weakened its policy 
capacity in the last decade so that they no longer have what 
they once had, which was a way to look at integrated, 
comprehensive solutions. So they are all on their own, sort of 
flailing.
    I think there has to be a return to policy capacity in that 
State to once again look comprehensively across those 
institutions. As bad as it is, California has still got a lot 
of money in higher education, but it is not being invested very 
well.
    Mrs. Davis. Uh-huh. And revenues, as we know, are really 
coming from students at this point.
    Ms. Wellman. Right.
    Mrs. Davis. I fondly tell groups of people in my district 
of San Diego that I do recall writing checks for $89 a semester 
to Berkeley. I don't want to tell you when that was. But it 
sent a different message to me, certainly, that the State 
thought I was actually pretty important, because they were 
making an investment. And I don't think students feel that way 
today.
    I wonder if you could talk just for a second about the 
transparency issue. Because I understand what you are saying, 
that people figure out how they want to make comparisons. They 
know if they have some assistance, some scholarship money, 
whether it is cheaper to go to one school than another and 
still get quality. But are there other things that you think 
families and students really should know?
    I heard a statistic this morning: 85 percent of graduating 
seniors this year will be living at home. That is pretty 
striking.
    What is it that you think is fair for people to know as 
they are making those comparisons? And does the federal 
government have a role in that? Perhaps not by fiat or by 
regulation, but how is it that we can assist and craft for 
parents and students better information? Or, really, are we 
there? Is there nothing else, really, that needs to be done?
    Mr. Foster. Well, I think there is a lot that needs to be 
done. And this goes to, I think, Congressman Roe's question, 
and I think it builds off of Mrs. Biggert's question, and that 
was, where does the individual have some responsibility to go 
seek that information out?
    Now, that falls apart with first-generation students 
because they don't know what questions to ask. And so, for us, 
it is really trying to figure out what they think is important. 
And it is always surprising to me, the questions you get when 
you interact with parents and students. And sometimes it is 
safety, sometimes it is cost, sometimes it is whether the 
dorms--it is just a myriad of things.
    And so, like I said, I think most of the institutions I am 
familiar with are trying to push that information out and make 
it as available as possible. We do a lot with high schools, 
with first-generation students to try and educate them and help 
them understand. Because the barrier for them is, they have a 
desire to go to college; it is they have a complete--they tend 
to shut off, and they just say, ``It is too expensive; I will 
never be able to realize that.'' And so it is really the 
reverse, where we are trying to pull them in and say, there are 
a lot of opportunities for you as a first-generation student.
    But, you know, I don't think there is a limit, in terms 
of--you know, any question those prospective students and 
families want is fair game. I guess I go back to, kind of, 
Margaret Thatcher, which is the market is just more powerful 
and more reliable and a more liberating force than government 
can ever be. And so the pressure we get from those folks is 10 
times what you can do in terms of a policy directive.
    Mr. Merisotis. Three things I think a student or family 
should know about an institution. One is, are students 
completing at that institution, particularly students who look 
like me? The second is, what are they learning, and how can we 
tell? And the third is, are they getting jobs?
    Those three areas of outcomes I think represent the most 
important things that all students and families should have 
access to as a result of better data systems.
    Mr. Manahan. I would just say this. To the degree there is 
a lack of transparency, it diminishes the value of the 
education, and people begin to sense that deeply. And I think 
the more transparent we are up front with real cost adds to a 
better value of the education and trustworthiness in higher 
education as a whole. I think every campus bears responsibility 
to make its own contribution to set a level of transparency 
that helps people make a decision.
    We noticed this remarkably on our campus. As the value of 
homes decreased and people had less access to home equity, they 
became quite well schooled in asking financial questions, 
commitments on a number of fronts. And we do get people coming 
to our campus and saying, how does this cost compare to that 
cost and what am I getting into? So it is important.
    Chairwoman Foxx. Thank you, Ms. Davis.
    I want to again thank the panel very, very much for taking 
time to testify before the subcommittee today.
    And I want to thank all the members of the committee who 
came and asked such great questions. One of the wonderful 
things about Congress is the diversity that we have, and that 
diversity causes us to ask lots of different kinds of questions 
and get many differing perspectives.
    Mr. Hinojosa, do you have some closing remarks you would 
like to make?
    Mr. Hinojosa. Thank you, Madam Chair.
    I thought it was very interesting and informative. I like 
some of the new ideas that were discussed.
    I can't help but think of some of the--I guess comparable 
to Dr. Manahan's 3-year program--the Western Governors 
University and how they are doing it with about half of the 
cost and without having all the campuses and all the expensive 
athletic programs that we have in many of our big flagship 
schools, where we pay coaches upwards of $4 million to be a 
football coach, or other expenses that are never discussed as 
part of the cost of running a university.
    But I think that what I like is the fact that, more and 
more, we are accepting that online courses are going to be more 
and more acceptable by the employers, particularly when they 
are producing a graduate that is capable of coming into a 
business or to a program and take it to a new higher level in 
effectiveness and profits and so forth. So I think that we are 
making progress in this committee in terms of looking at new 
success models.
    And I want to thank the witnesses for sharing their 
insights with us this morning. And I look forward to working 
with all of you and my colleagues on this committee to make 
college more affordable and to achieve our Nation's college-
completion goals.
    Thank you very much.
    Chairwoman Foxx. Thank you, Mr. Hinojosa.
    I want to repeat what Dr. Roe said earlier, and I think 
sometimes we forget to talk about it. I think we have had the 
best higher education in the world in this country. I think 
like many things that are being threatened, I think the quality 
of higher education in this country is being threatened these 
days, and not just because of the lack of money. In fact, I 
think the lack of money is probably the least reason that 
higher education is being threatened.
    And I agree with what someone else has said--I think, Ms. 
Wellman, it was you--that perhaps the squeezing budgets have 
been a benefit, not a negative, because it is forcing people to 
look at what they are doing.
    I think that one of the big problems we have had in higher 
education and what I have seen happen in higher education in my 
lifetime is having institutions of higher education decide what 
it is they want to do. I think that Mr. Foster's comment about 
focusing on the students as customers is very important. But 
are the institutions focusing on what learning the students are 
getting, Mr. Merisotis, or seat time? Or are they simply 
providing income to maintain the institution?
    So I think there is much that we need higher education to 
be looking at. And I agree with Ms. Wellman; I think that 
having this money crunch may be helpful. And I go back to a 
comment Mr. Foster said, when you had your committee split 
three and three, and one side of the committee said, ``Well, if 
money is an issue, then''--well, money is always an issue. 
However, in higher education, people haven't thought that.
    And I remember when I was a community college president 
that the president of our system came to the presidents one day 
and said, ``The days are gone, ladies and gentlemen, when I 
could go to the legislature and say, 'We are doing the Lord's 
work; therefore, you should be giving us lots of money.''' And 
I thought that was going to happen a long time ago. Because, I 
think, we had a booming economy, that got sort of waxed over.
    But I also want to say, in conjunction with what Dr. Roe 
said, it is still possible to graduate from very fine 
institutions in this country without a dime of debt. It is up 
to the student and up to the parents to shop. And I think 
sometimes you sell parents and students short--I think our 
whole society does--in terms of their ability to make those 
decisions. We go out and buy cars every day. We go to the 
grocery store. We are very capable of going out and shopping.
    Transparency, though, I think is going to be one of the 
biggest issues. And I think that is something that has to be 
looked at.
    I want to thank all of you for emphasizing both 
affordability and quality. I do think that we can have both 
high quality and affordability, I should say. And I think that 
is an extremely important concept for us to keep in mind. We do 
want, again, I think, too, as Tennessee has done, to 
concentrate on funding results, not necessarily enrollment.
    So there are some things that have to be done. I think you 
all have brought up some really, really important issues to us. 
And I am extremely pleased with the way the panel has gone 
today, with the questions that have been raised and the issues 
that have been raised.
    And I want to say, again, on the issue of parental 
involvement, we have known for 50, 60, 70 years that what makes 
a good elementary and secondary school is a good principal, 
good teachers, and parental involvement. That is not different 
from higher education. It should be exactly the same thing. You 
will get good results if you get the customers involved with 
checking out the quality of the goods that they are receiving.
    So I want to thank you all for being here and again thank 
the panel.
    And there being no further business, the subcommittee 
stands adjourned.
    [Whereupon, at 11:56 a.m., the subcommittee was adjourned.]