[House Hearing, 113 Congress]
[From the U.S. Government Printing Office]



 
                     KEEPING COLLEGE WITHIN REACH:
                THE ROLE OF FEDERAL STUDENT AID PROGRAMS

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

                                HEARING

                               before the

                    SUBCOMMITTEE ON HIGHER EDUCATION
                         AND WORKFORCE TRAINING

                         COMMITTEE ON EDUCATION
                           AND THE WORKFORCE

                     U.S. House of Representatives

                    ONE HUNDRED THIRTEENTH CONGRESS

                             FIRST SESSION

                               __________

             HEARING HELD IN WASHINGTON, DC, APRIL 16, 2013

                               __________

                           Serial No. 113-14

                               __________

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


                   Available via the World Wide Web:
                       www.gpo.gov/fdsys/browse/
           committee.action?chamber=house&committee=education
                                   or
            Committee address: http://edworkforce.house.gov



                  U.S. GOVERNMENT PRINTING OFFICE
80-339                    WASHINGTON : 2013
-----------------------------------------------------------------------
For sale by the Superintendent of Documents, U.S. Government Printing Office, 
http://bookstore.gpo.gov. For more information, contact the GPO Customer Contact Center, U.S. Government Printing Office. Phone 202�09512�091800, or 866�09512�091800 (toll-free). E-mail, gpo@custhelp.com.  

                COMMITTEE ON EDUCATION AND THE WORKFORCE

                    JOHN KLINE, Minnesota, Chairman

Thomas E. Petri, Wisconsin           George Miller, California,
Howard P. ``Buck'' McKeon,             Senior Democratic Member
    California                       Robert E. Andrews, New Jersey
Joe Wilson, South Carolina           Robert C. ``Bobby'' Scott, 
Virginia Foxx, North Carolina            Virginia
Tom Price, Georgia                   Ruben Hinojosa, Texas
Kenny Marchant, Texas                Carolyn McCarthy, New York
Duncan Hunter, California            John F. Tierney, Massachusetts
David P. Roe, Tennessee              Rush Holt, New Jersey
Glenn Thompson, Pennsylvania         Susan A. Davis, California
Tim Walberg, Michigan                Raul M. Grijalva, Arizona
Matt Salmon, Arizona                 Timothy H. Bishop, New York
Brett Guthrie, Kentucky              David Loebsack, Iowa
Scott DesJarlais, Tennessee          Joe Courtney, Connecticut
Todd Rokita, Indiana                 Marcia L. Fudge, Ohio
Larry Bucshon, Indiana               Jared Polis, Colorado
Trey Gowdy, South Carolina           Gregorio Kilili Camacho Sablan,
Lou Barletta, Pennsylvania             Northern Mariana Islands
Martha Roby, Alabama                 John A. Yarmuth, Kentucky
Joseph J. Heck, Nevada               Frederica S. Wilson, Florida
Susan W. Brooks, Indiana             Suzanne Bonamici, Oregon
Richard Hudson, North Carolina
Luke Messer, Indiana

                    Juliane Sullivan, Staff Director
                 Jody Calemine, Minority Staff Director
                                 ------                                

        SUBCOMMITTEE ON HIGHER EDUCATION AND WORKFORCE TRAINING

               VIRGINIA FOXX, North Carolina, Chairwoman

Thomas E. Petri, Wisconsin           Ruben Hinojosa, Texas,
Howard P. ``Buck'' McKeon,             Ranking Minority Member
    California                       John F. Tierney, Massachusetts
Glenn Thompson, Pennsylvania         Timothy H. Bishop, New York
Tim Walberg, Michigan                John A. Yarmuth, Kentucky
Matt Salmon, Arizona                 Suzanne Bonamici, Oregon
Brett Guthrie, Kentucky              Carolyn McCarthy, New York
Lou Barletta, Pennsylvania           Rush Holt, New Jersey
Joseph J. Heck, Nevada               Susan A. Davis, California
Susan W. Brooks, Indiana             David Loebsack, Iowa
Richard Hudson, North Carolina
Luke Messer, Indiana


                            C O N T E N T S

                              ----------                              
                                                                   Page

Hearing held on April 16, 2013...................................     1

Statement of Members:
    Bonamici, Hon. Suzanne, a Representative in Congress from the 
      State of Oregon, on behalf of Hon. Ruben Hinojosa, ranking 
      minority member, Subcommittee on Higher Education and 
      Workforce Training.........................................     4
        Prepared statement of Mr. Hinojosa.......................     5
    Foxx, Hon. Virginia, Chairwoman, Subcommittee on Higher 
      Education and Workforce Training...........................     1
        Prepared statement of....................................     3

Statement of Witnesses:
    Hartle, Terry W., senior vice president, American Council on 
      Education..................................................     7
        Prepared statement of....................................     9
    Madzelan, Daniel T., U.S. Department of Education (retired)..    24
        Prepared statement of....................................    25
    McGuire, Patricia, president, Trinity Washington University..    15
        Prepared statement of....................................    16
    Miles, Moriah, state chair, Minnesota State University 
      Student Association; student, Minnesota State University, 
      Mankato....................................................    28
        Prepared statement of....................................    29

Additional Submissions:
    Barletta, Hon. Lou, a Representative in Congress from the 
      State of Pennsylvania:
        The Pennsylvania Association of Private School 
          Administrators (PAPSA), prepared statement of..........    62
    Mrs. Foxx, questions submitted for the record to:
        Mr. Hartle...............................................    63
        Mr. Madzelan.............................................    67
        Ms. McGuire..............................................    70
    Mr. Hartle, response to questions submitted by:
        Mrs. Foxx................................................    64
        Kline, Hon. John, Chairman, Committee on Education and 
          the Workforce..........................................    65
        Mr. Hudson...............................................    65
        Mr. Messer...............................................    65
    Hudson, Hon. Richard, a Representative in Congress from the 
      State of North Carolina, questions submitted for the record 
      to:
        Mr. Hartle...............................................    64
        Ms. McGuire..............................................    70
    Mr. Kline, questions submitted for the record to:
        Mr. Hartle...............................................    64
        Mr. Madzelan.............................................    67
        Ms. McGuire..............................................    70
    Mr. Madzelan, response to questions submitted by:
        Mrs. Foxx................................................    68
        Mr. Kline................................................    68
        Mr. Messer...............................................    69
    Ms. McGuire, response to questions submitted by:
        Mrs. Foxx................................................    71
        Mr. Kline................................................    72
        Mr. Hudson...............................................    72
        Mr. Messer...............................................    73
    Messer, Hon. Luke, a Representative in Congress from the 
      State of Indiana, questions submitted for the record to:
        Mr. Hartle...............................................    64
        Mr. Madzelan.............................................    67
        Ms. McGuire..............................................    70


 KEEPING COLLEGE WITHIN REACH: THE ROLE OF FEDERAL STUDENT AID PROGRAMS

                              ----------                              


                        Tuesday, April 16, 2013

                     U.S. House of Representatives

        Subcommittee on Higher Education and Workforce Training

                Committee on Education and the Workforce

                             Washington, DC

                              ----------                              

    The subcommittee met, pursuant to call, at 11:05 a.m., in 
Room 2175, Rayburn House Office Building, Hon. Virginia Foxx 
[chairwoman of the subcommittee] presiding.
    Present: Representatives Foxx, Petri, Walberg, Salmon, 
Heck, Brooks, Hudson, Messer, Hinojosa, Tierney, Bishop, 
Bonamici, Holt, and Davis.
    Also present: Representative Kline.
    Staff present: Katherine Bathgate, Deputy Press Secretary; 
Heather Couri, Deputy Director of Education and Human Services 
Policy; Amy Raaf Jones, Education Policy Counsel and Senior 
Advisor; Brian Melnyk, Professional Staff Member; Krisann 
Pearce, General Counsel; Nicole Sizemore, Deputy Press 
Secretary; Emily Slack, Legislative Assistant; Alex Sollberger, 
Communications Director; Alissa Strawcutter, Deputy Clerk; 
Juliane Sullivan, Staff Director; Tylease Alli, Minority Clerk/
Intern and Fellow Coordinator; Kelly Broughan, Minority 
Education Policy Associate; Jody Calemine, Minority Staff 
Director; Jamie Fasteau, Minority Director of Education Policy; 
Brian Levin, Minority Deputy Press Secretary/New Media 
Coordinator; Rich Williams, Minority Education Policy Advisor; 
and Michael Zola, Minority Deputy Staff Director.
    Chairwoman Foxx. A quorum being present, the subcommittee 
will come to order.
    John Donne famously asked a long time ago for whom the bell 
tolled, and we know that we are--when there is a tragedy we are 
all touched by it in our country. The people of Boston, 
especially the victims and their families, remain in our 
thoughts and prayers today.
    We are thankful for the first responders and brave citizens 
who bravely ran to the scene to help others in the midst of 
chaos and uncertainty. Terror and cowardice will be met with 
justice and resolve.
    Mr. Tierney, who is a member of our committee and this 
subcommittee represents the state of Massachusetts, and I 
especially want to express to him that our hearts go out to him 
and all of the people of Massachusetts today for what happened 
in Boston yesterday.
    Good morning. Welcome to our subcommittee hearing to 
explore the role of federal student aid programs in the 
nation's higher education system. We have an excellent panel of 
witnesses with us today.
    And thank you all for joining us.
    In the coming months we will work together to reauthorize 
the Higher Education Act. Established in 1965, this law is 
intended to help low- and middle-income students earn a degree. 
The 2008 reauthorization of the law includes several provisions 
to help enhance transparency, requiring colleges and 
universities to make information about price, demographics, 
financial aid, and graduation rates available to the public for 
the first time.
    However, more work must be done. College costs continue to 
skyrocket and too many students struggle to navigate our 
financial aid system. Families face uncertainty about repayment 
options and confusion about the differences between various aid 
programs.
    Under the Higher Education Act there are several student 
financial aid and college access programs, from Pell Grants and 
Stafford Loans to GEAR UP and Federal Work-Study programs. Each 
program has unique characteristics, eligibility requirements, 
and funding streams.
    As we begin exploring ways to strengthen the Higher 
Education Act we must first take a hard look at federal student 
aid programs to determine what is and is not working for 
students, families, and taxpayers.
    Without a doubt there are opportunities to strengthen the 
current system. The Bill and Melinda Gates Foundation's 
Reimagining Aid Design and Delivery project recently released 
several reports from business, higher education, civil rights, 
and public policy leaders that offer proposals to improve 
federal financial aid so more students can realize the dream of 
a college education.
    The reports offer a wide range of suggestions, including 
reducing the current aid system to a ``one grant and one loan'' 
structure, eliminating program inefficiencies and simplifying 
the federal aid application process by linking it with IRS 
information.
    The reports also raise the question of whether the federal 
government should maintain its traditional focus on improving 
access to higher education or should move toward a system that 
ties federal student aid to student outcomes: job placement, or 
graduation rates. President Obama has indicated his support for 
the latter, proposing campus-based federal aid only be 
allocated to higher education institutions that limit tuition 
increases and provide good value.
    In this debate we find ourselves at a crossroads between 
accountability and limited government. The federal government 
spends more than $140 billion on financial aid programs 
annually. Given the significant amount of taxpayer money being 
spent and our nation's budgetary challenges, we all want to 
ensure dollars are actually helping more students earn college 
degrees.
    However, we must also be mindful of the consequences that 
could come with expanding the federal government's role in the 
allocation of financial aid. Federal financial aid programs 
intended to help low-income Americans pay for college should 
never be used as bargaining chips to impose federal price 
controls, nor should we take any action that could limit 
students' ability to choose the institution that best suits 
their needs. Additionally, adding more reporting mandates could 
create more costs and red tape for institutions, which could 
trickle down to students in the form of higher tuition.
    We are fortunate to have with us today a panel of higher 
education leaders who can discuss the merits of various 
proposals for reform as we begin a larger discussion on the 
appropriate federal role in higher education, and I look 
forward to their testimony.
    Before I yield to my distinguished colleague, Ms. Bonamici, 
who is substituting currently for Mr. Hinojosa, I would be 
remiss if I did not mention the President's fiscal year 2014 
budget proposal, which was released last week after much delay 
and anticipation. While the plan as a whole is disappointing, 
there is one bright spot in the higher education arena.
    I am very pleased to see that the President seems to have 
embraced Republicans' proposal to shift the calculation of 
student loan interest rates away from Washington politicians 
and toward a market-based formula. As you may recall, this was 
the subject of a recent hearing before the full committee where 
we heard from economists and higher education experts about the 
way this plan will help provide more stability for borrowers 
and taxpayers. I hope we can work together with the 
administration to find common ground on a student loan interest 
rate plan.
    Again, I would like to thank our witnesses for joining us 
today. And I now recognize Ms. Bonamici, the senior--one of the 
Democrat members of the subcommittee, for her opening remarks.
    [The statement of Chairwoman Foxx follows:]

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

    Good morning, and welcome to our subcommittee hearing to explore 
the role of federal student aid programs in the nation's higher 
education system. We have an excellent panel of witnesses here with us 
today. Thank you all for joining us.
    In the coming months, we will work together to reauthorize the 
Higher Education Act. Established in 1965, this law is intended to help 
low- and middle-income students earn a degree. The 2008 reauthorization 
of the law included several provisions to help enhance transparency, 
requiring colleges and universities to make information about price, 
demographics, financial aid, and graduation rates available to the 
public for the first time.
    However, more work must be done. College costs continue to 
skyrocket, and too many students struggle to navigate our financial aid 
system. Families face uncertainty about repayment options and confusion 
about the differences between various aid programs.
    Under the Higher Education Act, there are several student financial 
aid and college access programs--from Pell Grants and Stafford Loans to 
GEAR UP and Federal Work-Study programs. Each program has unique 
characteristics, eligibility requirements, and funding streams.
    As we begin exploring ways to strengthen the Higher Education Act, 
we must first take a hard look at federal student aid programs to 
determine what is and is not working for students, families, and 
taxpayers.
    Without a doubt, there are opportunities to strengthen the current 
system. The Bill and Melinda Gates Foundation's Reimagining Aid Design 
and Delivery project recently released several reports from business, 
higher education, civil rights, and public policy leaders that offer 
proposals to improve federal financial aid so more students can realize 
the dream of a college degree.
    The reports offer a wide range of suggestions, including reducing 
the current aid system to a ``one grant and one loan'' structure, 
eliminating program inefficiencies, and simplifying the federal aid 
application process by linking it with IRS information.
    The reports also raise the question of whether the federal 
government should maintain its traditional focus on improving access to 
higher education, or should move toward a system that ties federal aid 
to student outcomes, job placement, or graduation rates. President 
Obama has indicated his support for the latter, proposing campus-based 
federal aid only be allocated to higher education institutions that 
limit tuition increases and provide good value.
    In this debate, we find ourselves at a crossroads between 
accountability and limited government. The federal government spends 
more than $140 billion on financial aid programs annually. Given the 
significant amount of taxpayer money being spent and our nation's 
budgetary challenges, we all want to ensure dollars are actually 
helping more students earn college degrees.
    However, we must also be mindful of the consequences that could 
come with expanding the federal government's role in the allocation of 
financial aid. Federal financial aid programs intended to help low-
income Americans pay for college should never be used as bargaining 
chips to impose federal price controls, nor should we take any action 
that could limit students' ability to choose the institution that best 
fits their needs. Additionally, adding more reporting mandates could 
create more costs and red tape for institutions, which could trickle 
down to students in the form of higher tuition.
    We are fortunate to have with us today a panel of higher education 
leaders who can discuss the merits of various proposals for reform as 
we begin a larger discussion on the appropriate federal role in higher 
education, and I look forward to their testimony.
    Before I yield to my distinguished colleague, Mr. Ruben Hinojosa, 
I'd be remiss if I did not mention the president's fiscal year 2014 
budget proposal, which was released last week after much delay and 
anticipation. While the plan as a whole is disappointing, there is one 
bright spot in the higher education arena.
    I am very pleased to see that the president seems to have embraced 
Republicans' proposal to shift the calculation of student loan interest 
rates away from Washington politicians and toward a market-based 
formula. As you may recall, this was the subject of a recent hearing 
before the full committee, where we heard from economists and higher 
education experts about the ways this plan will help provide more 
stability for borrowers and taxpayers. I hope we can work together with 
the administration to find common ground on a student loan interest 
rate plan.
    Again, I'd like to thank our witnesses for joining us today, and I 
will now recognize Mr. Hinojosa, the senior Democratic member of the 
subcommittee, for his opening remarks.
                                 ______
                                 
    Ms. Bonamici. Thank you very much, Chairwoman Foxx. And I 
am making this statement on behalf of ranking member Hinojosa, 
and I know we would join you in keeping the families and 
victims of Boston in our thoughts and prayers.
    To begin, I would like to thank our distinguished panel for 
joining us this morning. I am eager to hear your testimony 
regarding federal financial aid programs.
    As we are aware, the Higher Education Act of 1965 made 
college more accessible to all students through grants and 
loans. We are proud of the federal investments that Congress 
has made since 1965 to expand accessibility and affordability 
in higher education.
    Over the years, landmark investments in federal higher 
education programs have improved the lives of low-income and 
middle-income students and workers by creating ladders of 
educational and economic opportunity. But Democrats believe 
that Congress can do much more.
    First of all, the purchasing power of the Pell Grant has 
eroded over the past several years. While Pell Grants used to 
cover three--excuse me--two-thirds of the cost of a 4-year 
public institution, Pell Grant awards now cover less than one-
third of the cost, the lowest purchasing power in the history 
of the Pell Grant. Bolstering improvements in Pell Grants and 
ensuring the program's long-term sustainability is vitally 
important to expanding access, affordability, and student 
success.
    We have worked throughout Congress with colleagues on this 
committee to increase and protect investments in the federal 
Pell Grant program because Pell Grants are the lifeline for 
more than 9 million students. And while we are members of this 
chamber we will continue to do so.
    I am also concerned that millions of students and families 
are being saddled with an inordinate amount of student loan 
debt to pay for a college education. Last year the Consumer 
Financial Protection Bureau announced that student loan debt 
had surpassed $1 trillion, exceeding credit card debt for the 
first time. In fact, April 25th marks the first-year 
anniversary of student loan debt surpassing $1 trillion.
    Due to cuts in state appropriations and skyrocketing 
tuition costs, students and families have had to shoulder a 
greater share of the cost, resulting in high debt load that 
adversely affects their quality of life. To make matters worse, 
student loan interest rates are set to double, from 3.4 percent 
to 6.8 percent for 8 million students who rely on subsidized 
Stafford Loans.
    While I commend President Obama for increasing the maximum 
Pell Grant award to $5,785, I strongly believe that all federal 
student loan programs must ensure that students have affordable 
college loans now and into the future.
    Our federal loan program was created to provide access to 
college and low interest rates to help manage college costs. It 
is imperative that we keep this in mind and work to do better 
for our students.
    Over the next decade, the family sustaining jobs of the 
future will require students and workers to have a college 
degree or an industry-recognized credential. To remain globally 
competitive and prepare a highly-trained workforce, America 
must continue to invest in federal financial aid programs that 
support student access and success. Every year employers 
continue to tell me and my colleagues on this committee that 
they have difficulty filling millions of jobs that require 
specialized skills or training.
    Finally, America is becoming increasingly diverse, and this 
committee and this Congress must ensure that all students, 
including students of color and immigrants, are able to afford 
a college education. By strengthening our federal student aid 
programs, Congress can ensure that all students, regardless of 
income or racial or ethnic background, have greater access to 
the American dream.
    In closing, it is my hope that members of Congress from 
both sides of the aisle will work together to reauthorize the 
Higher Education Act.
    With that, I yield back to Chairwoman Foxx.
    [The statement of Mr. Hinojosa follows:]

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

    Thank you, Chairwoman Foxx. To begin, I would like to thank our 
distinguished panel for joining us this morning! I am eager to hear 
your testimony regarding federal financial aid programs. As many of you 
are aware, the Higher Education Act of 1965, made college more 
accessible to all students through grants and loans.
    As Ranking member of this Subcommittee, I am proud of the federal 
investments that Congress has made since 1965 to expand accessibility 
and affordability in higher education. Over the years, landmark 
investments in federal higher education programs have improved the 
lives of low-income and middle income students and workers by creating 
ladders of educational and economic opportunity. But Democrats believe 
that Congress can do much more.
    First of all, the purchasing power of the Pell Grant has eroded 
over the past several years. While Pell grants used to cover two thirds 
of the cost of a four-year public institution, Pell Grant awards only 
cover less than one third of the cost, the lowest purchasing power in 
the history of the Pell Grant.
    In my view, bolstering investments in Pell Grants and ensuring the 
program's long-term sustainability is vitally important to expanding 
access, affordability, and student success.
    During my tenure in Congress, I have worked with my colleagues on 
this committee to increase and protect investments in the federal Pell 
grant program because Pell Grants are the life line for more than 9 
million. While I am a Member of this chamber, I will continue to do so.
    I am also concerned that millions of students and families are 
being saddled with an inordinate amount of student loan debt to pay for 
a college education. Last year, the Consumer Financial Protection 
Bureau (CFPB) announced that student loan debt had surpassed $1 
trillion, exceeding credit card debt for the first time. In fact, April 
25th marks the 1st year anniversary of student loan debt surpassing $1 
trillion dollars. Due to cuts in state appropriations and skyrocketing 
tuition costs, students and families have had to shoulder a greater 
share of the cost, resulting in high debt loads that adversely affect 
their quality of life.
    To make matters worse, student loan interest rates are set to 
double from 3.4 percent to 6.8 percent for 8 million students who rely 
on subsidized stafford loans. While I commend President Obama for 
increasing the maximum Pell grant award to $5,785, I strongly believe 
that all federal student loan programs must ensure that students have 
affordable college loans now and into the future. Our federal loan 
program was created to provide access to college and low interest rates 
to help manage college costs. It is imperative that we keep this in 
mind and work to do better for our students.
    Over the next decade, the family sustaining jobs of the future will 
require students and workers to have a college degree or an industry 
recognized credential. To remain globally competitive and prepare a 
highly trained workforce, America must continue to invest in federal 
financial aid programs that support student access and success.
    Every year, employers continue to tell me and my colleagues on this 
committee that they have difficulty filling millions of jobs that 
require specialized skills or training. Finally, America is also 
becoming increasingly diverse, and this committee and this Congress 
must ensure that all students, including students of color and 
immigrants, are able to afford a college education.
    By strengthening our federal student aid programs, Congress can 
ensure that all students, regardless of income, or racial or ethnic 
background, have greater access to the American Dream.
    In closing, it is my hope Members of Congress from both sides of 
the aisle will work together to reauthorize the Higher Education Act.
    With that, I yield back to Chairwoman Foxx.
                                 ______
                                 
    Chairwoman Foxx. Thank you very much.
    Pursuant to committee rule 7(c), all subcommittee members 
will be permitted to submit written statements to be included 
in the permanent hearing record. And without objection, the 
hearing record will remain open for 14 days to allow 
statements, questions for the records, and other extraneous 
material referenced during the hearing to be submitted in the 
official hearing record.
    It is now my pleasure to introduce our distinguished panel 
of witnesses.
    Mr. Terry Hartle is the senior vice president of the 
division of government and public affairs for the American 
Council on Education. Prior to joining ACE in 1993, Mr. Hartle 
served for 6 years as education staff director for the Senate 
Committee on Labor and Human Resources, then chaired by Senator 
Edward M. Kennedy.
    Ms. Patricia M. McGuire has served as president of Trinity 
Washington University since 1989. Before coming to trinity Ms. 
McGuire was the assistant dean for development and external 
affairs for Georgetown University Law Center, where she was 
also an adjunct professor of law.
    Mr. Dan Madzelan began his federal career with the Office 
of Education in 1978 as a program analyst in the campus-based 
aid program area. He retired last year as the Senior Director 
of the Strategic Planning, Analysis, and Initiatives staff in 
the Office of Post-Secondary Education at the Department of 
Education.
    Ms. Moriah Miles is currently serving as the state chair 
for the Minnesota State University Student Association, which 
represents over 75,000 students attending Minnesota's seven 
state universities. She currently attends Minnesota State 
University Mankato, where she is pursuing a bachelor of arts in 
international relations.
    Before I recognize you to provide your testimony, let me 
briefly explain our lighting system. You will have 5 minutes to 
present your testimony.
    When you begin the light in front of you will turn green; 
when 1 minute is left the light will turn yellow; when your 
time is expired the light will turn red. At that point I ask 
that you wrap up your remarks as best as you are able. After 
you have testified, members will each have 5 minutes to ask 
questions of the panel.
    I now recognize Mr. Terry Hartle for 5 minutes.

 STATEMENT OF TERRY W. HARTLE, SENIOR VICE PRESIDENT, DIVISION 
OF GOVERNMENT AND PUBLIC AFFAIRS, AMERICAN COUNCIL ON EDUCATION

    Mr. Hartle. Thank you very much, Madam Chairman. I greatly 
appreciate the opportunity to be here.
    I was asked to summarize the history of the Higher 
Education Act, and I have done that in my written statement. 
This morning I thought I would focus on several observations 
about the evolution of federal student aid policy that might be 
helpful to the members of the committee.
    I think there are three core characteristics that we have 
seen in federal student aid policy since the original Higher 
Education Act in 1965. First characteristic is that the goal of 
federal student aid was access for low-income students and aid 
to middle-income families.
    The initial formulation was grants for low-income families 
and low-interest loans for the middle class. Over time we have 
seen some shifts in emphasis and there has occasionally been 
tension between these two goals, but this basic theme has been 
present from the start.
    The second central characteristic of federal student aid 
policy is that to promote access, student aid is a voucher 
which is given to students and they decide where to spend it. 
Harvard, a community college, a for-profit school--where it 
gets spent depends on the decision that the student makes. The 
money belongs to the student, not the institution.
    Third central characteristic is that federal student aid is 
designed to serve all students, both traditional and 
nontraditional, using the same programs. When the Higher 
Education Act was enacted there were 8 million college 
students, the vast majority of whom were between the ages of 18 
and 22, financially dependent on their families, enrolled full-
time, and residing in campus housing.
    Today, just 15 percent of college students meet those 
characteristics. Serving both populations equally well with the 
same set of programs has become a complex issue of program 
design.
    Four quick observations for you: One, when the Higher 
Education Act was enacted it was built upon the premise that 
states would keep tuition affordable at public colleges, which 
would free the federal government to help low- and middle-
income families. This is really no longer a good assumption.
    Historically, the bulk of funding for public colleges, 
which is where more than 80 percent of college students are 
enrolled, has come from the state. In the last 40 years state 
support has fallen steadily; it has dropped 23 percent in the 
last 5 years alone.
    Tuitions have increased to make up the difference. Federal 
student aid has helped insulate many families from some of 
these increases, but I don't think we can any longer count on 
the states to perform their historic role.
    Second point: The complexity of post-secondary education 
has made decisions about institutional eligibility a lot 
harder. In 1965 there were about 2,000 institutions of higher 
education, most of them traditional 4-year colleges. Today 
there are more than 6,000 institutions and they vary 
enormously.
    From the beginning it was assumed that the states would 
ensure that schools would be licensed to operate as educational 
entities, the federal government would establish a set of 
conditions for institutional eligibility to participate in 
student aid programs, and accrediting agencies would attest to 
the academic quality of the institution. Unfortunately, the 
federal and state roles have never been fully realized, and we 
now rely on accreditors to be the primary gatekeepers.
    A third: The role of federal regulation has grown 
dramatically. Until recently, most federal student aid 
regulations were almost entirely designed to ensure that 
students--that institutions were good stewards of federal 
funds. But in the 1990s the federal government began to impose 
regulations on institutions for a variety of purposes that are 
totally unrelated to student aid, from the number of fire 
alarms in dorms to gifts from foreign countries.
    In addition to the costs, campuses cannot be sure that they 
are in full compliance with all the rules, the regulations, and 
the sub-regulatory guidance issued by the Department of 
Education. Unfortunately, the department has never implemented 
a provision in the 2008 reauthorization, which required it to 
create and publish an annual calendar showing key compliance 
dates for institutions. This would at least give every campus a 
checklist of their federal regulations.
    Finally, simplification has become the holy grail of each 
reauthorization of the Higher Education Act for the last 25 
years. Unfortunately, the desire to simplify federal student 
aid is complicated by two different reasons.
    First, simplification can be expensive. We could streamline 
the FAFSA dramatically, but this would increase eligibility and 
drive up costs.
    Second, the desire to simplify often runs headlong into the 
goal of creating more options for students and families. The 
federal government now gives seven repayment options to 
borrowers. This provides more choices for borrowers, but it 
dramatically increases the complexity those borrowers face.
    This is not to say that simplification is bad. It is a 
terrific goal. Rather, it is simply to call your attention to a 
real paradox: Simplification in federal student aid policy is a 
pretty complex issue.
    Madam Chairman, the central point of my testimony is simply 
to note that there are a large number of lessons we have 
learned over the long history of the Higher Education Act and 
that it would behoove us to keep these lessons in mind as we 
embark on another--the ninth, I believe--reauthorization of the 
Higher Education Act.
    Thank you for the opportunity to be here.
    [The statement of Mr. Hartle follows:]

     Prepared Statement of Terry W. Hartle, Senior Vice President,
                     American Council on Education

    I am Terry W. Hartle, senior vice president at the American Council 
on Education, a trade association representing 2,000 public and 
private, two-year and four-year colleges and research universities. 
Thank you for inviting me here today. I have been asked to provide an 
historical overview of federal higher education policy and to draw upon 
that history to identify lessons learned as we look forward to the next 
reauthorization of the Higher Education Act.
    The first significant aid to education, including the Higher 
Education Act (HEA), was created in 1965 as part of the Johnson 
administration's War on Poverty. The HEA authorized a program of need-
based grants, student support programs (Upward Bound and Talent 
Search), and the Guaranteed Student Loan program. In addition, it 
incorporated two other programs--the College Work-Study Program, which 
had been enacted a year earlier as part of the Economic Opportunity Act 
of 1964, and National Defense Student Loans, created in 1958. All of 
these programs, although substantially altered, remain part of the 
Higher Education Act today.\1\
---------------------------------------------------------------------------
    \1\ Collectively, these programs have become the Federal TRIO 
Programs, the Federal Work-Study Program, the Perkins Loan Program, the 
Federal Direct Student Loan Program and the Federal Pell Grant Program.
---------------------------------------------------------------------------
    From the start, the federal government sought to help both low- and 
middle-income families consider and finance a college education. The 
Defense Loans, Opportunity Grants and Work-Study were designed to help 
low-income students while Guaranteed Student Loans were intended to 
help middle-income students and families manage college costs through 
low-interest loans. Initially, federal funding was modest and 
relatively few students took advantage of the programs. In 1970, just 
over $1 billion was issued in guaranteed student loans and just $365 
million in the Educational Grant and Work-Study Programs.
    The architecture of the Higher Education Act as we know it today 
was completed during the 1972 reauthorization, when Congress created 
the Basic Education Opportunity Grant (BEOG) Program.\2\ This 
initiative fundamentally shaped higher education policy because it 
awarded the money to students as a voucher they were free to spend at 
any eligible school of their choosing. Institutional officials, 
including representatives of my organization, argued in favor of giving 
money directly to the institutions. The ultimate decision was to move 
in favor of direct government aid to students. In retrospect, that was 
clearly the right decision and it remains a central and abiding aspect 
of federal student aid. In the case of federal loans and Pell Grants, 
the money goes to students who are free to spend it at any approved 
postsecondary educational institution.\3\
---------------------------------------------------------------------------
    \2\ The Basic Education Opportunity Grant program was renamed the 
Federal Pell Grant Program in 1980.
    \3\ Funds are distributed directly to the institutions. However, 
funds are sent in the name of students who then must sign them over to 
their institutions.
---------------------------------------------------------------------------
    The 1972 reauthorization marked the point when students at for-
profit schools were first made eligible to participate in federal 
student aid programs. In a related step, the legislation eliminated the 
references to ``higher education'' and replaced them with the term 
``postsecondary education'' to signify the act was meant to make a 
broader array of training and educational experiences eligible for 
federal aid.
    The 1972 reauthorization was based on a model that assumed states 
were responsible for financing public higher education and would 
adequately fund public colleges and universities in order to maintain 
the very low tuition that had historically been a key feature of the 
sector. But to encourage states to provide need-based student aid, 
Congress established the State Student Incentive Grant (SSIG) program 
to award federal matching funds to states that created or expanded such 
efforts. While all states did eventually put need-based student aid 
programs in place, some remained very small. The SSIG program was 
rebranded as the Leveraging Educational Assistance Partnership (LEAP) 
Program in the 1998 HEA Amendments. It has recently been defunded, and 
we are seeing states pull out of need-based student aid as a result.
    Throughout the 1970s, Congress was confronted with evidence that 
despite the federal guarantee on student loans, many banks were 
reluctant to lend money. To address this problem, Congress took several 
steps that brought a large number of new actors into the program. 
First, in 1972, it established the Student Loan Marketing Association 
(Sallie Mae) as a government-sponsored enterprise. Sallie Mae, which 
would later be privatized and become a hugely profitable company, was 
designed to provide a secondary market that would buy student loans 
from banks (thus injecting liquidity into the federal loan program) and 
service the loans when the borrowers entered repayment. In 1976, 
Congress established the ``special allowance payment'' for lenders, 
which was designed to provide a financial incentive to encourage banks 
to lend, and authorized the creation of state guarantee agencies to act 
as a bridge between lenders, students and institutions. The steps were 
well intended and necessary to smooth the functioning of a growing 
student loan program. But by creating a large number of new actors, 
Congress was adding to the complexity and political immutability of the 
student loan program, a development that would complicate federal 
efforts to shape policy for many years to come.
    The desire to help middle-income families finance a higher 
education was also an increasingly central issue for policymakers in 
the 1970s. At the request of the Carter administration, Congress 
approved the Middle Income Student Assistance Act of 1978 (MISAA) which 
let any student or family regardless of income take out a federal 
student loan at a very generous interest rate. Not surprisingly, 
student loan volume expanded sharply and we soon learned what has 
become another enduring lesson of federal education policy: Federal 
programs create incentives and individuals respond to them. Indeed, the 
expansion of borrowing in the federal student loan program was so 
dramatic that Congress terminated most of MISAA in 1981, just three 
years later.
    Another milestone in federal education policy occurred in 1979, 
when, at the request of the Carter administration, Congress approved 
legislation to create the Department of Education. The higher education 
community generally did not support this legislation because of 
widespread concern that such an agency would inevitably begin to 
dictate the academic affairs of colleges and universities and come to 
regard itself as a federal ministry of education. Given the significant 
role that education now plays in national policy discourse, few would 
question the wisdom of having a federal agency focused solely on the 
important education issues of the day. However, as this Committee 
knows, concerns about federal intervention into academic affairs have 
only increased in recent years.
    Federal student aid expanded slowly in the 1980s--the 1986 
reauthorization of the Higher Education Act largely preserved the 
status quo. But by the last years of the decade, the cost of the 
student aid programs (particularly student loans) began rising 
dramatically, in large part as the number of for-profit schools 
participating in the program grew. While many of these schools provided 
high quality education, others did not and the cost of federal student 
loan defaults increased sharply. The default rate peaked at 22 percent 
in 1990, and in the same year, if student loan defaults had been given 
their own appropriation, it would have been the third largest 
expenditure at the Department of Education.
    Through successive budget reconciliation bills, Congress imposed 
new requirements through the Higher Education Act on institutional 
eligibility in an aggressive effort to weed out the ``bad actors.'' 
Other changes were made to curb defaults and achieve cost savings. A 
large number of schools closed and the student loan default rate 
dropped sharply from 22 percent in 1990 to 6 percent in 1999.
    The surge in institutional participation in the late 1980s was 
facilitated by the ease with which schools could become eligible for 
the federal student loan program. From the beginning, eligibility 
required a school to meet three tests: 1) It had to be accredited by an 
accrediting agency recognized by the federal government; 2) It needed 
to be authorized to do business by the state in which it was located; 
and 3) It had to be judged ``eligible'' by the U.S. Department of 
Education. This system was relatively reliable when a small number of 
schools participated in student aid programs. However, as the number of 
schools and students increased, this eligibility network, called the 
triad, proved inadequate to protect students and taxpayers.
    Extensive hearings into student loan defaults by the Permanent 
Subcommittee on Investigations of the Senate Government Affairs 
Committee, then chaired by Senator Sam Nunn (D-GA), demonstrated that 
the three-part mechanism designed to ensure that only high quality 
schools could participate in federal student aid programs was barely 
functional. As a result of extensive investigation, the Committee 
concluded that too many ``schools'' were more interested in making 
money than in educating students.
    The Nunn Committee made 22 recommendations for addressing the 
shortcomings and virtually all them were adopted in the 1992 
reauthorization. In short, accreditors were given detailed and specific 
responsibilities, as was the Department of Education. The states were 
handed a broad grant of authority under an initiative called State 
Postsecondary Review Entities (known as SPREs) in an effort to increase 
state oversight of postsecondary institutions. While Congress wanted 
SPREs to focus on problem schools, some states and the Department of 
Education saw them as a much broader mechanism to oversee institutional 
quality. However, after a series of embarrassing missteps, Congress 
quietly killed the program in 1995.
    A number of other developments occurred in this ambitious 
reauthorization. First, Congress created two new loan programs--the 
unsubsidized loan program and the parental loan program (PLUS). These 
were designed to be ``loans of convenience'' to help middle-income 
families finance higher education. The loans carried a market-based 
interest rate and borrowers did not receive the subsidies that were 
available under the traditional subsidized loan program.
    Second, Congress created a direct loan pilot program. Direct loans 
were designed to take banks out of the federal student loan business. 
In the traditional student loan model, the federal government paid a 
subsidy to banks, banks lent the money to students, borrowers repaid 
the banks and, in the case of default, the federal government paid the 
bill. Under direct lending, however, the Department of Education made 
the loans directly to the students and the borrowers repaid the federal 
government. In the event of non-payment, the government would use all 
the resources at its disposal to collect.
    Finally, for the first time, Congress moved student loans from a 
fixed interest rate that had characterized the program since its 
creation and adopted a variable interest rate.\4\ Under the new policy, 
the interest rates on student loans would be reset every July 1 and 
would be based on the 91-day Treasury Bill rate. The interest rate 
would reset annually throughout the life of the loan.\5\
---------------------------------------------------------------------------
    \4\ The variable interest rates were capped to protect student 
borrowers.
    \5\ To help students manage differential interest rates, the 
federal government created the consolidation loan program to give 
student borrowers an opportunity to combine all their student loans so 
that they could avoid juggling multiple payments, make one payment each 
month and count on a fixed interest rate.
---------------------------------------------------------------------------
    The arrival of President Bill Clinton brought more changes in 
federal higher education policy. In 1993, the federal government was, 
as it is now, plagued by slow economic growth and a large federal 
budget deficit. Upon discovering that, under federal budget rules, 
direct lending saved money, the administration moved to turn all 
federal student loans into direct loans.\6\ Congress was unwilling to 
take such a dramatic step and simply made every school eligible to 
participate in direct lending, rather than the sharply limited number 
of institutions permitted to do so in the direct loan pilot that had 
been approved the year before. Importantly, this new policy was largely 
driven by the desire to reduce federal spending. The administration and 
its congressional allies certainly expected that the plan would be 
better for students, but it was actually the prospect of significant 
cost savings that led Congress to take this step.
---------------------------------------------------------------------------
    \6\ The assumption that direct loans would save money was 
vigorously disputed by proponents of bank-based lending and remains a 
controversial topic to this day.
---------------------------------------------------------------------------
    Second, under the Clinton administration, the federal government 
began to make use of the tax code to help students and families finance 
a higher education. Prior to 1992, the federal government had few tax 
benefits in place to help families finance a college education. In 
1993, however, President Clinton recommended Congress establish a 
federal program modeled after the Hope Tax Credit Program, established 
in Georgia by Governor Zell Miller. It proved impossible to recreate 
the Georgia program exactly and as a result Congress established two 
separate tax benefits--one aimed at traditional aged students (Hope 
Scholarship Credit) and one focused on adults (Lifelong Learning 
Credit). In both cases, the federal government sought to help middle-
income families. Indeed, low-income families were largely excluded from 
participation because neither credit was refundable.
    Once it began to make use of the tax code to help families finance 
a college degree, Congress quickly enacted additional benefits. Today, 
the tax code authorizes at least nine specific tax benefits to help 
families save for college (Section 529 College Savings Plans, Coverdell 
Education Savings Accounts, and tax-free status of U.S. Savings Bonds 
if used to pay for college), pay for college (American Opportunity Tax 
Credit, Hope Scholarship and Lifetime Learning Tax Credits, the ``above 
the line'' tuition deduction, Sec. 127 Employer-provided Educational 
Assistance, Sec. 117 Qualified Scholarships exemption), and to repay 
student loans (Student Loan Interest Deduction).\7\
---------------------------------------------------------------------------
    \7\ Several of these were reauthorized on January 1, 2013, in the 
American Taxpayer Relief Act of 2012.
---------------------------------------------------------------------------
    Legislation governing higher education, and especially student aid, 
has increased significantly in the last few years. Beginning with the 
College Cost Reduction and Access Act of 2007 (CCRAA), eight major 
pieces of legislation affecting student aid have been passed into law. 
In just this short period, we have seen major expansions of Pell Grant 
funding and eligibility (the College Cost Reduction and Access Act of 
2007, the American Recovery and Reinvestment Act of 2009, the Health 
Care and Education Reconciliation Act of 2010), and then sizable 
reductions in Pell Grant funding and eligibility (the Consolidated 
Appropriations Act of 2012). The interest rate on Subsidized Stafford 
loans was lowered over time from 6.8 percent to 3.4 percent. Two new 
loan repayment programs were created, loan forgiveness options have 
been added and expanded, and the in-school interest exemption was 
eliminated for graduate and professional students. Two new grant 
programs were created, one of which (the TEACH Grant) contains an 
unprecedented and controversial feature: If the terms of the grant are 
not met, the grant is converted to a loan with interest accruing from 
the moment the money was awarded.
    Most notably, in the 2010 Affordable Care Act, Congress eliminated 
the federal guaranteed student loan program and put every institution 
into direct lending. According to the Congressional Budget Office 
(CBO), this step saved roughly $60 billion. Most of these funds were 
used to pay for the expanded Pell Grant Program and the remainder went 
to finance health care reform and reduce the federal budget deficit.
    These changes to the federal student aid programs are in addition 
to significant changes in tax provisions, including the creation of the 
American Opportunity Tax Credit, which has become the single largest 
higher education tax benefit.
    Frequent changes in complex programs means that even experts have 
difficulty keeping track of what has happened. Campus officials are 
often hopelessly confused and one can only imagine what student and 
parents will make of it. Changes are often made to current law before 
there has been sufficient time to fully understand the impact of 
previous changes. What's more, many of these changes have occurred not 
in legislation originating with the authorizers, but through (often 
times fast-tracked) funding legislation, where fiscal matters rather 
than best policy are the primary concern.
    The Obama administration has also changed the playing field in 
higher education policy by increasing regulation of higher education 
institutions in new and very complex ways. We now, for example, have a 
federal definition of credit hour and, sadly, it's not a very good one. 
Aside from our strong belief that the Department of Education should 
not be regulating academic standards, the definition is based on time 
spent ``in class'' which, in an era when distance education is 
expanding very rapidly, means it is obsolete. In addition, the 
department has published complex regulations on gainful employment and 
state authorization that have created enormous confusion and, at least 
temporarily, have been blocked by the courts.
    As always happens when the economy slips into a recession, college 
enrollments increased in recent years as millions of Americans sought 
to improve their education and skills. This, coupled with the increased 
eligibility for federal student aid, meant that the cost of the federal 
student aid programs has increased sharply. In 2007-08, the cost of the 
Pell Grant Program was $14 billion and roughly 6 million Americans 
received awards. Three years later, the cost had more than doubled to 
$31 billion and 9.6 million individuals benefited. Over that same time 
period, total federal lending grew from $75 billion to $110 billion.
    The story of federal student aid is obviously long and complex. 
This summary just touches on the major developments. But more important 
than the history itself perhaps are the lessons and insights that we 
can draw from it.
    Federal student aid programs have worked remarkably well. But the 
world has changed and that change should be acknowledged and 
incorporated in the architecture and design of student aid.
    For almost 50 years, the central goal of federal student aid was to 
increase access to postsecondary education for all students without 
regard to income or a family's ability to pay. Universal opportunity 
was a uniquely bold and American experiment and it worked. From this 
vantage point, taking stock of historical evidence, it is obvious that 
the farsighted goals and the design of the core student aid programs 
contributed to the success of the programs. However, in this century 
and in this year, it is incumbent upon Congress to debate whether this 
goal ought to be amended or expanded in ways that acknowledge current 
realities and contemporary challenges. Regardless of whether or what 
changes or additions to the core federal goal are desirable, it is 
important that we maintain the goal of facilitating access to higher 
education.
    While the higher education policy landscape has changed in many 
ways over the last 50 years, there are eight lessons worth noting that 
will impact HEA reauthorization discussions:
    First, the student population served by the programs has changed 
dramatically. When Congress enacted the Higher Education Act in 1965, 
the vast majority of nation's 7.4 million students were 18 to 24 years 
old, predominantly dependents who attended higher education full time, 
lived in campus housing, and were seeking a bachelor's degree. Today, 
college students are much more likely to be older and financially 
independent. Many of them work part-time and a substantial number of 
these students have families of their own. They may be pursuing a four-
year degree or seeking short-term training that leads to a certificate 
rather than a degree. They may not even be seeking a credential, just 
taking a few specific courses. Today, the traditional students who were 
the focus of the original Higher Education Act represent just 15 
percent of the nation's 21 million students. It is vitally important to 
recognize these differences and to shape federal policy that helps all 
students achieve their postsecondary education goals.
    Second, there has been a marked shift in the policy arena that 
elevates completion above access. Higher education is increasingly 
central to economic and social well-being in American society. While 
many students start a postsecondary education, a significant number do 
not finish. In recent years, numerous observers have suggested that 
graduation, or completion, ought to be equally central to federal 
policy. Designing policies around a completion metric is complicated, 
especially as participation and completion varies considerably by 
socio-economic status, because such policies are highly susceptible to 
the laws of unintended consequences, and also because they skirt 
complex issues regarding the role the student plays in achieving 
success versus the role the institution plays. This is not to say that 
we should not have a vigorous debate about what we want federal student 
aid to accomplish. We must. But we should do so in a way that 
compliments, but does not abandon or retreat from, the central purpose 
of federal student aid.
    Third, federal student aid policy has been built upon the premise 
that states would support public higher education and keep tuitions 
affordable, freeing the federal government to ensure equal educational 
opportunity and a measure of choice in the selection of a college. This 
assumption has fallen by the wayside as state governments have slashed 
funding for public colleges and universities and sharp tuition 
increases have followed.
    Since 80 percent of American college students attend public 
institutions, this has meant much higher college costs for millions of 
families. As partial compensation for this trend, there has been 
dramatic growth in the total amount of federal financial aid 
expenditures. But even while the federal investment has grown, it has 
not been enough to make up for the decrease in support from states for 
higher education and unless the trends in state support change, tuition 
increases and public concerns about paying for college will continue to 
grow. Unfortunately, the federal government has few tools available to 
ensure states continue to play their historic role in making higher 
education available at a modest price and there is a real question as 
to whether the federal government, acting virtually alone in the 
student aid policy sphere, has the resources to ensure meaningful 
access to college.
    Fourth, postsecondary education has become much more complex, and 
this has complicated decisions about institutional eligibility. In 
1965, there were just over 2,000 colleges and universities in the 
United States. The mid-1970s witnessed a rapid increase in the growth 
of community colleges throughout the country. Today, there are more 
than 6,000 two- and four-year, public and private non-profit colleges, 
research universities, for-profit career colleges, and online as well 
as brick and mortar schools. All of this poses enormous challenges 
regarding decisions about institutional eligibility and the design of 
student aid programs.
    Fifth, once institutional eligibility is settled, there remains the 
issue of oversight. Historically, the HEA has relied on the so-called 
``triad'' consisting of states, the federal government and regional 
(and national) accrediting agencies to ensure proper stewardship of 
federal resources. As I noted earlier, within the triad, roles were 
clear: The states were to ensure schools were licensed to operate as 
educational entities within their borders and to receive consumer 
complaints; the federal government was to ensure institutions met a 
clear set of conditions for eligibility to participate in federal 
student aid programs and to oversee compliance with those conditions; 
and the accrediting agencies were to evaluate and attest to the quality 
of the academic programs consistent with the mission of the 
institution. Unfortunately, the state and federal roles never have been 
fully realized. The states have always had differences among them in 
the way they relate to their higher education institutions and many 
have been indifferent to their responsibilities under the federal aid 
programs. The federal government itself has a spotty record of 
oversight. The practical effect of these realities means that over 
time, accreditation has become overwhelmed with added, and some would 
say inappropriate responsibilities. Instead of being a barrier to 
federal regulation, accreditation has become a portal to it.
    Sixth, Congress should consider the role federal regulation plays 
as a cost-driver in tuition growth. As the size and complexity of 
student aid has increased, government regulation of colleges and 
universities has grown exponentially and changed considerably. Until 
the early 1990s, federal student aid regulations were almost entirely 
designed to ensure campuses would be good fiscal stewards of federal 
funds. But in the 1990s, Congress began to impose regulations on 
institutions for a huge variety of purposes that are totally unrelated 
to student aid. At present, for example, colleges and universities must 
provide information about salaries of athletic coaches, provide the 
Department of Education with an annual list of gifts accepted from 
foreign governments and corporations, and conduct activities to 
commemorate Constitution Day every September 17th. These are all worthy 
things, but they impose compliance costs and someone must pay for them.
    Moreover, even the most conscientious campus can never be sure that 
it is in full compliance with all the rules, regulations and ``sub-
regulatory guidance'' published by the Department of Education. The 
department has a strong bias toward regulation but seems unwilling to 
look for the simplest and most direct ways to accomplish its 
responsibility to ensure the laws are faithfully executed. Indeed, the 
department's reluctance to address the compliance burden created by 
government regulations has led it to ignore a specific legislative 
requirement in the 2008 reauthorization [HEA Sec. 482 (e)] which 
required publication of an annual calendar showing key compliance dates 
for institutions.
    Seventh, ``simplification'' has been the holy grail of each 
successive reauthorization and remains so today. Unfortunately, efforts 
to make federal student aid simpler rarely succeed. The reasons are 
two-fold. First, simplification can be expensive. It would be easy to 
streamline the Free Application of Federal Student Aid (FAFSA) by 
simply asking for less information from applicants, but doing so would 
inevitably make more individuals eligible for aid and increase the cost 
of the federal programs. Second, efforts to simplify the federal 
student aid system often run headlong into a desire to create more 
options to help students and families. For example, the federal 
government now offers student loan borrowers seven different loan 
repayment options. Multiple options may well make for more choice for 
borrowers, but it significantly increases program complexity. This is 
not in any way to suggest that ``simplification'' is undesirable. 
Rather, it suggests that genuine simplification in federal student aid 
is actually complex.
    Eighth and finally, experience has taught us that federal policy 
creates incentives and individuals and organizations will respond to 
them. In the 2008 reauthorization, to enable students to shorten their 
time to a degree, Congress made it possible for students to receive a 
Pell Grant to attend school year-round. So many students responded to 
this incentive and took advantage of ``summer Pell grants'' that more 
than $4 billion per year was added to the cost of the program. 
Unfortunately, the sizable cost increase of the program proved 
unsustainable, and in 2010, less than two years after approving the 
provision, Congress repealed it. Once again, students who wish to study 
year-round cannot use Pell grants for that purpose. It is a pattern we 
have seen before--public policy creates incentives and people act 
accordingly. It's vitally important that we understand those incentives 
before changing public policies because we will get what we ask for.
    There are many more insights and lessons that flow from the long 
and complex history of the Higher Education Act. As this committee 
embarks on reauthorization, I hope you will keep this history in mind. 
I believe that doing so will improve the design and implementation of 
the many changes you will make to this vitally important legislation.
                                 ______
                                 
    Chairwoman Foxx. Thank you very much, Mr. Hartle.
    I now recognize Ms. Patricia McGuire for 5 minutes.

           STATEMENT OF PATRICIA MCGUIRE, PRESIDENT,
                 TRINITY WASHINGTON UNIVERSITY

    Ms. McGuire. Chairwoman Foxx, thank you so much for 
inviting me here to discuss this vitally important topic of 
federal financial aid today.
    My university, Trinity, in Washington, has been the proud 
alma mater of two women members of Congress, a member of the 
President's Cabinet, and many public officials over the years. 
Today's Trinity women are somewhat different from the mostly 
young, middle-class, Catholic women who attended Trinity when I 
was a student, and yet, our new populations have every bit as 
much ambition, if not more so, to earn their degrees and go on 
to great achievements, particularly in service to our nation.
    About 90 percent of Trinity's 2,600 students today are 
African-American and Latina. Seventy-five percent of our 
freshmen receive Pell Grants, and their median family income 
this year is just $25,000.
    About 50 percent of Trinity students today are residents of 
the District of Columbia, most from the eastern half of the 
city where poverty rates are high. I am proud of the fact that 
Trinity educates more D.C. residents than any private 
university in the nation, but these students need a great deal 
of support to achieve their dreams.
    Trinity operates with great efficiency and effectiveness. 
Our full-time undergraduate tuition of $20,550 in 2013 is the 
lowest among the private colleges and universities in the 
Washington region by far, and Trinity returns an average of 40 
percent of that tuition price to our full-time students in the 
form of institutional grants based on need.
    The characteristics of Trinity's full-time undergraduates 
are emblematic of the new populations of students driving the 
future of higher education. By 2021, the population of Hispanic 
students in college will increase by 42 percent, African-
Americans by 25 percent, Asians by 20 percent, while the more 
traditional white population will increase by only 4 percent in 
college.
    These students will come into higher education with 
considerably greater needs than any prior population. Congress 
and colleges must work together to find good solutions to 
ensure continuing access for talented, low-income students.
    Let me mention just five considerations to shape the 
reauthorization of federal financial aid. First, do no harm. 
Federal financial aid is one of the most reliable, durable 
pillars of the framework we create for low-income students who 
have few other sources of support to help them leverage their 
lives from places of despair to platforms of real success.
    We can all agree that the current system can use some 
reform to make it better, but the system is hardly broken, as 
some critics claim. Rather, it needs updating for the new 
population of students who attend schools in ways that are 
quite different from the traditional students of the past.
    Second, do not impose the wrong measures of success. No one 
quarrels with accountability, but some of the notions about 
accountability are quite destructive.
    Allowing measures of return on investment that rigidly 
monetize the value of majors will be harmful to the nation. We 
need teachers, counselors, and nonprofit leaders as much as 
computer scientists and engineers.
    As well, beware of using the current federal graduation 
rates as measures of success. The IPEDS graduation rate is 
deeply flawed, treating transfers as dropouts and rewarding 
seat time in place of real achievement.
    Moreover, too much emphasis on the graduation rate could 
have the unintended consequence of social promotion, reducing 
rigor while raising graduation rates; or alternatively, raising 
entrance barriers for more low-income students who are most at 
risk of completing in different ways.
    Encourage more effective outcomes measures and incentives. 
Recognize and support nontraditional learners who are the 
majority of undergraduates today. To promote degree attainment, 
make financial aid more flexible for the entire calendar year 
and support all credit-bearing enrollments.
    Incentivize students to focus on completion, such as the 
Pell Well concept that the National Association of Student 
Financial Aid Counselors is advancing. Incentivize 
institutional programs that support at-risk students. Trinity, 
and many institutions like mine, have great programs in place 
to help students come to completion.
    Simplify, simplify, simplify. Everyone involved in 
financial aid agrees on one thing: It is too complicated and 
too expensive to administer. Reducing complexity, improving 
simplicity will achieve great results.
    Finally, engage the students and practitioners. If you ask 
my students, as I did--and their comments are in my longer 
testimony and on our Web site--they would tell you the system 
is too complicated, there are too many forms and acronyms, and 
they need interest rates that are fair, that are certain, and 
that are not collected while they are still in school.
    I know how constrained the federal budget is. I live in a 
world of highly constrained budgets.
    We are very frugal at Trinity. Just this week a dean was 
complaining to me that we don't serve cookies at faculty 
meetings and I said to the faculty member, ``Who pays for the 
cookies? Our students go into debt to be in college. We cannot 
be eating their tuition.''
    We are very frugal at Trinity. I urge Congress to keep our 
national priorities in the right place for low-income students.
    Thank you.
    [The statement of Ms. McGuire follows:]

           Prepared Statement of Patricia McGuire, President,
                     Trinity Washington University

    On the threshold of reauthorization of the Higher Education Act, 
Congress has an unparalleled opportunity to ensure fulfillment of 
national goals for collegiate degree attainment by making the federal 
financial aid system even stronger and more effective in advancing the 
educational horizons of new generations of students, particularly those 
from low income families and students of color who will be the citizen 
leaders of the late 21st and even 22nd centuries.
    Trinity in Washington is one of our nation's most effective 
universities for the education of low income students who have high 
ambition but extremely challenging personal and financial 
circumstances. Historically known as Trinity College, now a 
comprehensive university, Trinity was founded by the Sisters of Notre 
Dame de Namur to educate women who had few other educational options in 
the nation's capital in 1897.
    About 90% of Trinity's 2,600 students today are African American 
and Latina; 64% receive Pell Grants. About 50% are residents of the 
District of Columbia, most from the eastern half of the city where 
poverty rates are high. (See more on Trinity and our commitment to D.C. 
in my extended written testimony.) Trinity educates more D.C. residents 
than any private university in the nation.
    With an institutional budget of just $34.6 million in Fiscal 2013, 
and a small endowment of just $12 million, Trinity operates with a high 
degree of efficiency while also delivering highly effective academic 
programs and related services. Trinity's full-time undergraduate 
tuition of $20,550 in 2013 is the lowest among the private colleges and 
universities in the Washington region, and Trinity returns on average 
40% of that tuition price to full-time students in the form of 
institutional grants based on student need.
    Notable characteristics of Trinity's full-time undergraduates 
include:
     75% of freshman in Fall 2012 received Pell grants;
     $25,000 is the median family income for the Fall 2012 
freshmen;
     Most are daughters of single mothers;
     Majority are self-supporting even in their late teens;
     15% or more of the freshman class have children of their 
own;
     40% start college with health issues that might impede 
their academic progress.
    The characteristics of Trinity's full-time undergraduates are 
emblematic of the new populations of students driving future 
enrollments in higher education. According to data from the National 
Center for Education Statistics (Projections in Education to 2021), 
from now to 2021 the population of Hispanic students in college will 
increase by 42%, African Americans by 25%, Asians by 20% while the more 
traditional White population will increase by only 4%.
    These students will come into higher education with considerably 
greater needs than any prior population, and they will come in larger 
numbers. To achieve national goals for greater degree attainment, even 
in this time of considerable fiscal constraint, Congress and colleges 
must work together to find good solutions to ensure continuing access 
and success for talented low income students. That's why I welcome this 
discussion today because we all know that ensuring success for low 
income college students will return more to the nation in the future 
through improved earnings (hence, an improved tax base), a more capable 
workforce for economic growth, and significantly less reliance on 
federal and state support for social programs that address the 
conditions of poverty.
    How will the federal financial aid system ensure that higher 
education opportunities remain available for these students in the 
future? Five key considerations should shape the reauthorization of the 
federal financial aid programs:
    1. Do No Harm: Federal financial aid is one of the most reliable, 
durable pillars of the framework we create for low income students who 
have few other sources of support to help them leverage their lives 
from places of despair to platforms of real success. We can all agree 
that the current system can use some reform to make it better. But the 
system is hardly ``broken'' as some critics claim. Rather, it needs 
updating for the new populations of students who attend school in ways 
that are quite different from the traditional students of the past.
    Accompanying my written testimony are statements from Trinity 
students about the value of federal loans and Pell Grants in their 
ability to reach their large goals for themselves and their families. 
In many different voices, they have one clear message: federal 
financial aid is key to ensuring economic stability and success not 
only for themselves, but for their children as well.
    2. Do not impose the wrong measures of success: No one quarrels 
with accountability for the considerable federal investment in higher 
education, but some of the notions about what constitutes 
accountability are potentially quite destructive.
    We are hearing a lot of talk right now about the ``ROI'' for 
federal financial aid. Policymakers looking for evidence of the 
``return on investment'' should come talk to the young mothers at 
Trinity whose decision to enroll is intensely driven by their desire to 
make sure their babies have more opportunities and experience fewer of 
the consequences of poverty than they knew growing up. For my students, 
as for millions of others, the return on investment yields in their 
lifelong intellectual fulfillment, improved economic security for their 
families, greater opportunities for their children and considerable 
professional contributions to their clients, patients, students, 
communities and places of work. Such returns go beyond the mere listing 
of starting salaries of recent graduates, a trend that warps the values 
of higher education in startling ways. Our nation needs teachers and 
counselors as much as it needs computer scientists and engineers, but 
the rank-ordered listing of jobs and salaries that some proponents of 
accountability now favor does great harm to the idea that worthy 
employment might be found in the service professions or nonprofit 
careers.
    Some policy analysts suggest that colleges need a cudgel to force 
them to improve graduation rates. These analysts do not know what 
they're talking about. The current graduation rate, established in 
IPEDS (the federal government's data system for higher education, 
formally, the Integrated Postsecondary Education Data System) to 
measure the academic performance of athletes, is a measure of brand 
loyalty (first-time full-time freshmen staying at the same institution 
for 4-6 years) that should not be used to penalize institutions that, 
quite willingly, take the risk of educating students whose life 
circumstances are different from older norms.
    As well, beware the temptation that some schools will feel to 
revert to social promotion to improve completion rates! Too much 
pressure on improving graduation rates at the expense of rigor and 
genuine learning outcomes will have the opposite effect that federal 
policy should desire, namely, more people with credentials who have 
less knowledge and fewer skills. Be careful what you wish for! K-12 is 
paying dearly these days for this very problem.
    The other real danger of the inappropriate use of the graduation 
rate measure is that some schools will decide to enroll fewer low 
income students since those are the students at greatest risk of not 
completing on the traditional timetable. Our national goals for 
collegiate attainment need more opportunities, not fewer, for low 
income students.
    3. Encourage More Effective Outcomes Measures and Incentives: 
Certainly, colleges want our students to be wildly successful, and we 
do want them to finish their degrees. But because students attend in 
very different patterns from the way the old measures assume, we have 
to develop new ways to measure success.
     Recognize and support non-traditional learners: The 
majority of undergraduates today have characteristics that are quite 
different from the traditional students of yesteryear. But our 
financial aid policies still largely focus on traditional students, 
discouraging working students, students with their own children, 
students who want to or need to attend in different ways, including 
summer enrollment. To promote degree attainment, embrace the idea of 
new ``non-traditional'' attendance and learning patterns.
     Incentivize students to focus on completion: Rather than 
penalizing students or institutions for non-traditional attendance 
patterns, recognize that modern students will attend and complete on 
very different timetables, often through multiple institutions, and 
provide incentives to help the student reach degree completion. Remove 
barriers like the ban on summer Pell Grants or artificial numbers of 
semesters for participation; replace barriers with pro-active 
incentives like the ``Pell Well'' concept promoted by NASFAA that 
provides each low-income student an amount of Pell Grant to draw down 
as they progress toward a degree--whether they attend part-time, during 
summers, taking 3 years or 12 years. The same concept could be applied 
to student loan programs.
     Look at the totality of degrees awarded: more than half of 
the students who earn degrees at Trinity transfer into the university 
from elsewhere, but they are treated as dropouts in the IPEDS data 
system, rather than great success stories. This is simply wrong. Every 
student counts, no matter his or her pathway to the degree. Let's 
change IPEDS from emphasizing seat time in one place to actual degree 
attainment.
     Incentivize institutional programs that support at-risk 
students: Trinity and many colleges like us have extensive programs to 
promote student success. These programs often receive little public 
attention, though we are pleased that the U.S. Department of Education 
has begun to gather the ``promising practices.'' Incentives to spread 
effective academic strategies will do more to encourage national degree 
attainment goals than reams of negative reports calling for even more 
complicated rules.
    4. Simplify, Simplify, Simplify: Everyone involved in federal 
financial aid agrees on this one thing: it's too complicated. Every 
reauthorization seems to make it worse, not better. For low income 
students, often without strong families to help them--and many who do 
not speak English at home--the terminology, forms and expectations 
about disclosures can be daunting and discouraging. Every new 
regulation seems to come with new expectations for measuring, counting 
and managing students in the system. The sheer complexity and time-
consuming nature of administering the federal financial aid programs 
requires increasingly large campus-based staffs, which drive up college 
costs. Reduce complexity, achieve simplicity, promote continuous 
enrollment and efficiency in financial aid management.
    5. Engage the students and the practitioners: One of the most 
notable features of most of the proposals for changing federal 
financial aid is that they are devoid of the voices of real students 
with real needs. This is why I so appreciate this invitation to testify 
today. If you asked my students, they would tell you that the system is 
too complicated, that there are too many forms and acronyms, that they 
do not attend school in ways that regulators think is the best way to 
attend, that seat time is not the best way to learn in college, that 
they want more respect for different formats for learning, that they 
are suspicious of the manipulation of interest rates, and that the 
restoration of the interest rate grace period is essential
    My final message is: Thank you! I know how strained the federal 
budget is. I also live in a world of highly constrained budgets. Just 
this week, a dean complained that the faculty are unhappy that we don't 
serve cookies at meetings. ``Who pays for our cookies?'' is a question 
I often ask, rhetorically, when we discuss the demand for more 
amenities. I point out that every cookie we eat on the school dime 
comes at the expense of a student who takes on debt, skips her own 
lunch to buy books, cuts costs at every turn to stay in school. Our 
students need so much support, we cannot justify eating their tuition. 
The faculty must bring their own cookies!
    We operate quite frugally at Trinity and we provide a great deal of 
aid to our students while keeping our tuition price low, and yet, our 
students need even more. I urge Congress to keep our national 
priorities in the right place for low income students with great 
promise and high need, ensuring strong and durable federal financial 
aid programs so that students today and far into the future can 
continue to achieve not only degrees, but great returns in their lives 
and the life of the nation.
    Trinity in Washington is one of the nation's most effective 
universities for the education of low income students who have high 
ambition but extremely challenging personal and financial 
circumstances. Historically known as Trinity College, now a 
comprehensive university, Trinity was founded by the Sisters of Notre 
Dame de Namur to educate women who had few other educational options in 
the nation's capital in 1897. Trinity today continues the women's 
college at the heart of the university while also welcoming men as well 
as women into adult professional and graduate programs.
    About 90% of Trinity's 2,600 students today are African American 
and Latina; about 50% are residents of the District of Columbia, most 
from the eastern half of the city where poverty rates are high. Another 
30% of Trinity's students are from the nearby Maryland suburbs, 
particularly Prince Georges County that has characteristics quite 
similar to far northeast and southeast D.C. 64% of all Trinity 
undergraduates (enrolled full-time and part-time in day, evening and 
weekend programs) receive Pell Grants, a marker for a student body with 
very high need.
    Trinity educates more D.C. residents than any private university in 
the nation. (See Trinity and DC: Partnership for Success on Trinity's 
website.) About one-third of the 1,300 D.C. residents at Trinity reside 
in the wards east of the Anacostia River, a geographic boundary that 
also delineates the neighborhoods with the highest rates of poverty, 
chronic illness, lowest-performing schools, violent crime and numerous 
other social and economic challenges. Trinity is the only university 
offering a degree program east of the river. About 60% of Trinity's 
full-time undergraduate D.C. residents have zero ``expected family 
contribution'' (EFC) in the federal financial aid analysis.
    With an institutional budget of just $35 million in Fiscal 2013, 
Trinity operates with a high degree of efficiency while also delivering 
highly effective academic programs and related services. Trinity's 
tuition of $20,550 in 2013 is the lowest among the private colleges and 
universities in the Washington region, and Trinity returns on average 
40% of that tuition price to full-time students in the form of 
institutional grants based on student need. Part-time tuition rates are 
also deeply discounted. Trinity's total volume of institutional aid is 
more than $8.5 million, almost all of which is simply tuition 
forgiveness since Trinity's endowment is quite small, just about $10 
million.
    Notable characteristics of Trinity's full-time undergraduates 
include:
     75% of freshman in Fall 2012 received Pell grants;
     $25,000 is the median family income for the Fall 2012 
freshmen;
     Most are daughters of single mothers;
     Majority are self-supporting even in their late teens;
     15% or more of the freshman class have children of their 
own;
     40% start college with health issues that might impede 
their academic progress.
    The characteristics of Trinity's full-time undergraduates are 
emblematic of the new populations of students driving future 
enrollments in higher education. According to data from the National 
Center for Education Statistics (Projections in Education to 2021), 
from now to 2021 the population of Hispanic students in college will 
increase by 42%, African Americans by 25%, Asians by 20% while the more 
traditional White population will increase by only 4%.
    Because black and Hispanic children in the United States suffer 
more poverty and related social problems, and have more significant 
educational challenges because of under-performing K-12 schools in 
their impoverished neighborhoods, the rising tide of low income 
students of color in college will require creative solutions on the 
part of both Congress and colleges to ensure that higher education 
remains accessible to them.
    The changing demographics of this nation also reshape the 
conventional notions of who goes to college and how they attend. 
Regardless of age, low income students are more likely to have non-
traditional attendance patterns and completion timetables because of 
their work and family responsibilities, health conditions and need for 
remediation. Department of Education data reveals that more than 70% of 
all college students have at least one ``non-traditional'' 
characteristic which includes not only age (being 25 or older in 
college), but also attending part-time, working full-time, parenthood, 
being self-supporting.
    Support for non-traditional and adult students is an issue of 
special concern for Trinity, since, as a university founded for and 
with a still-vibrant mission to women, we know that many women stop out 
from the traditional collegiate timetable to care for children, support 
spouses in their careers, attend to the needs of elderly parents. 
Thousands of older women (and some men--Trinity's student body is about 
10% male in adult and graduate programs) have returned to college at 
Trinity over the last 30 years to complete long-deferred degrees. These 
students, too, need Pell grants and other forms of federal financial 
aid.
     57% of the full-time and part-time undergraduates in 
Trinity's School of Professional Studies (for older working students) 
receive Pell Grants;
     85% of the students in Trinity's Associate Degree program 
at THEARC in D.C.'s Ward 8 receive Pell Grants--Trinity is the only 
university offering a degree program ``east of the river'' in 
Washington's most impoverished neighborhoods. These students enroll in 
Trinity's program to get on track for better employment opportunities, 
to secure economic security for their children and to improve the 
stability of their homes.
     Many of these students have gone on to earn bachelor's and 
master's degrees as a result of getting back on track with Trinity's AA 
program.
    Federal financial aid policies need to be more sensitive to the 
attendance patterns and financial realities of the burgeoning 
population of students whose characteristics are quite different from 
the more traditional student populations of the past. Sadly, recent 
changes in federal policies have actually worked against the goal of 
helping these students to enroll and complete college degrees. For 
example, many students with work and family obligations attend on a 
part-time basis but prefer to take classes continuously, including 
during the summer months, so they can stay on pace to finish their 
degrees as soon as possible. Yet, federal policy has now eliminated 
summer Pell Grants, apparently buying into the outmoded agrarian idea 
of the summer as a time to stay home on the farm. More students would 
complete degrees more quickly if they could get the financial aid they 
need to stay enrolled in the summer.
    Similarly, last year's change to reduce the number of semesters of 
eligibility for Pell grants from 18 to 12 applied retroactively to all 
current students means that many of my students who have attended 
various colleges over the years, and who now have settled on Trinity 
for their Nursing or OTA (Occupational Therapy Assistant) degrees, are 
suddenly discovering that they will soon run out of eligibility even 
though they are trying to start fresh in their quest to earn degrees in 
fields that are direct pipelines to acute workforce needs and 
significant starting salaries. Thousands of students who start college 
as teenagers stop out for a period of years, and when they return they 
have the maturity and intense focus necessary to earn the degrees that 
life interrupted. The change in the Pell Grant eligibility rules 
assumed the most traditional timetable for completion, abandoning large 
numbers of adult students whose contributions to the professional 
workforce would be immediate and exceptional if they could only get the 
aid they need to finish their long-deferred degrees.
    Let's consider why federal financial aid, and particularly the Pell 
Grant program, are so vital to our national goals for economic growth.
    Federal financial aid has consistently proven to be one of the most 
effective federal investments in the long-term economic health and 
productivity of our nation. For almost 70 years, since the first G.I. 
Bill in 1944, Congress and the president have agreed that the nation's 
economic health and long-term social stability depends heavily upon a 
well-educated population of citizens and leaders whose contributions to 
the workforce, to research and development, to innovation and social 
transformation have ensured this nation's economic power, safety and 
security.
    Now, with the changing demographics of the national population, 
sustaining and increasing educational investments is essential to 
continue to meet our national goals--not only goals for degree 
attainment, but for improved economic conditions among even more 
diverse citizens, ensuring a robust workforce equal to the challenges 
of rapid innovation, and educating new generations of citizen leaders 
for a nation whose characteristics will be increasingly different from 
anything we have previously known.
    Policymakers looking for evidence of the ``return on investment'' 
should come talk to the young mothers at Trinity whose decision to 
enroll is intensely driven by their desire to make sure their babies 
have more opportunities and experience fewer of the consequences of 
poverty than they knew growing up.
    Hear the pride in the voice of the 40-year-old Pell Grant recipient 
in our associate's degree program in Anacostia who was once homeless, 
but now, because of her education with Trinity, she is employed and has 
her own apartment, and now she's going to finish her baccalaureate 
degree and enroll in the master's program. She's seeing to it that her 
children are also enrolled in school and making progress toward their 
degrees.
    Listen to the sheer exhaustion of 20 year-old students who have no 
permanent place to call home, who sleep from couch to couch, who dream 
of becoming nurses but too often must choose between having dinner or 
riding Metro to some friend's house for the night. They stress about 
not having textbooks that they can't afford to buy, and sometimes 
struggle to find space in the computer lab because these are students 
who cannot afford iPads. Hunger, homelessness, teen pregnancy, abysmal 
academic preparation in their lower schools, the absence of any 
conventional social structure--these are the challenges my students 
face every day.
    Federal financial aid is one of the reliable, durable pillars of 
the framework we create for such students to help them leverage their 
lives from places of despair to platforms of real success.
    Consider the stories of these students, in their own words, whose 
success not only in school but in life became possible because of 
federal financial aid: (each student gave permission for the use of her 
or his name; more comments are on Trinity's website)
    ``Because of federal loans I am able to obtain my second-degree in 
nursing while juggling the duties of being a mother, wife, student and 
employee.'' (Tamina Umana, Second Baccalaureate student in Nursing)
    ``Because of my federal loans I am able to continue my education as 
a single parent. My federal loans have prevented me from becoming a 
statistic. My federal loans will allow my child to see a strong, 
empowered woman who will one day become an educator.'' (Leontia 
Collins, Junior, Education)
    ``Pell Grants and federal loans give me the opportunity as the 
first generation member in my family to attend college. * * * Financial 
Aid changed my life because it gives me the opportunity to create, 
build, reform and make my dreams come true. If I work hard to make my 
dreams come true, then I will become a valuable member to our society. 
With my intellectual knowledge and skills I will be able to give back 
to my community and to the society * * *'' (Minette Achankeng, Junior, 
Political Science)
    ``Because of my Pell Grant and student loans I am able to finish my 
bachelor's degree at the age of 55 after a severe battle with cancer 
and other disabling diseases. It gives me the hope as well as the 
knowledge to be able to go back to the workforce * * *'' (Rose M. 
Zuffi, Freshman, Communications)
    For almost all Trinity students, college is only possible with 
federal financial aid in the form of Pell Grants and loans, combined 
with Trinity's own grants and discounted tuition levels. The chart 
below shows the volume of Trinity's three major sources of support for 
students during the last four years:


    Other sources of financial aid not indicated on the chart include a 
small amount for federal work-study grants, and aid to District of 
Columbia students through the D.C. Tuition Assistance Program and 
private grant programs such as the D.C. College Access Grants and D.C. 
Achievers Scholarships.
    Several issues are immediately clear from this picture:
     Trinity's own grants, which are unfunded discounts on the 
tuition price (tuition forgiveness) are growing rapidly in relation to 
both enrollment growth as well as declining financial strength in the 
student body;
     Parent loans, while always few in number and relatively 
small in volume, have declined precipitously in the last year, evidence 
of the increasing fiscal stress among many families.
    The parent loan data is clear evidence that most Trinity students, 
even those of traditional-age, are self-supporting and not relying on 
parents to help pay for their college education.
    Not shown on the chart, but important to note, of Trinity's total 
student body of 2,600 students, very few qualify for private loans--
only 65 private loans this year, for a total of about $612,000. Trinity 
students by and large do not have the resources to borrow against home 
equity or other assets. Federal financial aid, and Trinity grants, are 
the pillars of their ability to attend college.
    During the four year period depicted on the chart above, Trinity's 
student body grew by 31%, from 2034 to 2664. Enrollment in the full-
time undergraduate program (CAS) grew by 28%. Over that same four year 
period, Trinity's full-time tuition grew just 6%, from $19,300 to
    $20,500. But the volume of Trinity grants, which go mostly to full-
time undergraduates, grew by 42% and the Pell Grant volume grew by 51%, 
compared to the federal loan growth of 39%. What this means is that 
while Trinity is holding the line on tuition price and continuing to 
provide significant discounts, the financial need of the student body 
is growing rapidly. Demand for seats at Trinity is high in the full-
time undergraduate program, and particularly in Nursing and programs in 
the health professions and related fields.
    Yet, despite considerable institutional and public financial aid, 
many accepted students are unable to attend, or find that they must 
stop out after a semester or two of enrollment. Trinity retains about 
70% of full-time freshmen from first to second year; financial barriers 
are the single greatest cause of student failure to re-enroll in any 
given semester.
    If this nation is to meet its oft-stated national goal to achieve a 
college degree attainment rate in excess of 50% of the adult 
population, then strengthening federal financial aid is essential, 
including redirecting more aid to the neediest students.
    Trinity students who persist and graduate become great success 
stories, alumnae like Maisha Leek, Class of 2005, one of the youngest 
chiefs of staff on Capitol Hill with Congressman Chakka Fattah. Maisha 
was able to attend Trinity with the help of federal financial aid.
    A recent survey of Trinity graduates from 2002 to 2012 shows that 
95% are employed or in graduate school, and their median salaries are 
in the $50,000-$60,000 range. 60% enrolled in graduate school after 
completing Trinity degrees and 30% have already earned advanced degrees 
with another group still in graduate school and attending such notable 
universities as Georgetown, Howard and American Universities, the 
London School of Economics, the University of Pennsylvania and others.
    Clearly, the investment of federal financial aid in Trinity 
students over the years has resulted in excellent returns for these 
students, for their families and communities, and for the corporations 
and organizations where they work and have considerable influence.
    Congress should make a particular effort to engage students in the 
deliberations over the future of federal financial aid. Consider the 
voices of Trinity students like these:
    ``Because of Federal loans I am able to be the first woman in my 
family to attend college. Federal loans provide me with the opportunity 
to receive not only a Bachelor`s Degree, but continue my education and 
pursue my Ph.D in psychology which will enable me to help my 
community.'' (Jelisa E. Glanton, Junior, Psychology)
    ``Federal loans are the only way that I am able to put myself 
through school. Without it, I would not be able to serve my country and 
its aging population as a young nurse by the year 2014.'' (Marissa Rose 
Torres, Junior, Nursing)
    ``Because of my federal loans I was able to fulfill my dreams by 
going off to college and receiving my Bachelor's Degree in Child 
Development and Family Studies. I am also able to currently work 
towards my MAT in Early Childhood Education.'' (Sharneice Jones, MAT 
Program)
    ``Because of my federal loans, I was able to continue pursuing my 
Masters degrees after losing my job. * * * I am able to concentrate on 
my education without having to worry how to pay for it right now.'' 
(Meg Ann Imig MSA Nonprofit Management and Community Health)
    ``Because of my Pell Grant and loans, I am able to remain in 
college, accomplish my dream goals to better assist my community 
(District of Columbia) and my family. You see, I come from a low-income 
family where none of my parents are high school nor college graduates 
due to the poverty they had suffered in their home countries. * * * I 
will also be the first in my family seeking and hopefully attaining a 
college degree. Thanks to federal aid I am steps closer to those 
goals!'' (Diana Contreras, Junior, Human Relations) See Trinity's 
website www.trinitydc.edu for the complete set of student comments.
    Congress has a remarkable opportunity and awesome responsibility to 
be sure that the opportunities this nation has historically ensured for 
students to earn college degrees remain strong, not only for the sake 
of the students and their families, but also for the sake of the 
nation. As Congress prepares to reauthorize the Higher Education Act, I 
urge you to consider the points addressed in this testimony:
    1. Do no harm to what works best in the current financial aid 
system.
    2. Do not impose the wrong measures of success.
    3. Encourage more effective outcomes measures.
     recognize new patterns of attendance and new ways of 
learning
     incentivize students to focus on completion
     recognize the totality of degrees attained
     incentivize institutional programs that support at-risk 
students
    4. Simplify the system.
    5. Engage the students and practitioners, those who know how the 
system actually must work!
    Thank you for inviting me to share thoughts on federal financial 
aid on behalf of the thousands of Trinity students and graduates whose 
lives are changed so dramatically by the opportunities they discover on 
their way to earning degrees.
                                 ______
                                 
    Chairwoman Foxx. Thank you very much.
    I now recognize Mr. Dan Madzelan for 5 minutes.

  STATEMENT OF DAN MADZELAN, FORMER EMPLOYEE (RETIRED), U.S. 
                    DEPARTMENT OF EDUCATION

    Mr. Madzelan. Thank you, Chairwoman Foxx, Ranking Member 
Hinojosa, and members of the committee for this opportunity to 
share my perspective on the appropriate role of the federal 
government as you consider the reauthorization of the Higher 
Education Act. I will be brief with my comments, but I have 
prepared a longer written testimony that I ask be included in 
today's hearing record.
    A little more than a year ago I retired from the federal 
civil service after more than 33 years at the Department of 
Education. My work at the department over the years largely, 
though not exclusively, involved issues related to helping 
families financially afford the benefits of higher education 
for their children. I think my own experience as a first-
generation college student focused me to help these benefits 
were made available to all who would pursue them.
    Five years ago I thought that my fifth HEA reauthorization 
would be my last, but I have found that it is difficult to quit 
this line of work cold turkey, and I am honored that I have 
been asked to assist in my sixth such effort.
    I also worked this past year on Gates Foundation-supported 
Reimagining Aid Design and Delivery reports by the National 
Association of Student Financial Aid Administrators and HCM 
Strategists.
    I will briefly describe four ideas that would improve the 
federal financial aid system without generating new cost or 
increasing burden on students, their families, and 
institutions.
    First, the financial aid application process can be made 
simpler for students and families. I know this firsthand. 
Earlier this year I complete my 13th and last Free Application 
for Federal Student Aid.
    We still ask applicants too many questions that are too 
complicated. For example, ``Which federal income tax form could 
you have filed?''
    I believe we can build on the successful electronic data-
sharing arrangements the department has implemented in recent 
years and modify statutory requirements that would further 
simplify the aid application process.
    Second, we have an immediate opportunity to simplify and 
streamline the student loan program. I believe it is time to 
end the multiple loan programs with different eligibility 
requirements, interest rates, and repayment terms.
    I think we should carefully consider an automatic 
enrollment of borrowers in a single, improved, income-based 
repayment plan. Ideally, this approach would implement real-
time income reporting, perhaps via payroll withholding, rather 
than relying on the after-the-fact approach necessitated by 
income verification based on previously filed income tax 
returns.
    Our current system asks young adults--especially low-income 
individuals--to manage complicated loan portfolios for no good 
reason that I can see other than policymakers continually 
responding to near-term budget pressures.
    Third, we should have accountability for all federal aid 
dollars through a multipronged determination of institutional 
eligibility for Title IV financial aid that considers measures 
of access and equity, loan repayment, and risk adjusted 
completion rates. Institutional and government data systems 
continue to improve, so a more balanced set of metrics that 
measure access, completion, and value are more feasible than 
ever and could help protect students and taxpayers from the 
most egregious cases of debt-with-no-degree while also 
promoting overall transparency for consumers.
    Fourth, we know we face significant challenges in higher 
education. None of us has all the answers. I believe we need to 
experiment to find the best solutions. Congress has 
periodically authorized focused demonstration programs and the 
department has ongoing authority to experimental sites to test 
and rigorously evaluate new approaches to delivering financial 
aid on campus in the most cost-effective manner possible.
    The current experimental sites authority provides for 
administrative flexibility; it does not authorize funding. 
Perhaps the authority could be expanded to allow for additional 
experimentation as long as individual students were held 
harmless in terms of federal financial support received.
    Today, one in three Pell Grant recipients report using 
their grant to pay for remedial education. Across the country, 
states, colleges, and other educational providers are searching 
for more cost-effective ways to customize and accelerate 
remedial education. A small-scale experimental site might test 
funding for remedial education through Pell Grants while 
providing alternative funding for students for their 
remediation needs.
    In terms of a larger-scale programmatic approach, a modest 
level of savings redirected from changes in federal needs 
analysis or the loan program could fund the college readiness 
demonstration. A limited number of participating states could 
enter into performance-based agreements with remedial education 
providers. The goal: Serve an agreed upon number of students in 
high-poverty schools, do it in a competency-based way, and 
evaluate what difference financial incentives make for students 
and taxpayers.
    Thank you for the opportunity to testify today. I am happy 
to answer any questions the members of the committee may have.
    [The statement of Mr. Madzelan follows:]

               Prepared Statement of Daniel T. Madzelan,
                 U.S. Department of Education (Retired)

    Thank you Chairwoman Foxx, Ranking Member Hinojosa and Members of 
the Committee for the opportunity to share my perspective on the 
appropriate role of the federal government in higher education. As a 
now-retired senior civil servant in the U.S. Department of Education, I 
had the privilege to serve nine secretaries of Education and 
participate in five reauthorizations of the Higher Education Act.
    Over the past year, I have had the opportunity to advise a number 
of efforts focused on finding ways to serve more students, and serve 
them better, with federal financial aid. These include the American 
Dream 2.0 coalition, and Gates Foundation-supported Reimaging Aid 
Design and Delivery (RADD) reports produced by the National Association 
of Student Financial Aid Administrators and HCM Strategists. Today, 
however, I am sharing my own thoughts and ideas on this important 
topic.
    Why are we hearing so much about financial aid reform and why does 
the federal government care? I think the higher education landscape has 
changed significantly since the last Higher Education Act (HEA) 
reauthorization. The performance of higher education--the outcomes 
institutions achieve on behalf of their students--is at the forefront 
of the public's mind. According to recent polling conducted by Hart 
Research, earning a college degree or credential is very important to 
84 percent of engaged voters, 95 percent of African American parents, 
and 97 percent of Hispanic parents.
    To meet these expectations, the federal government continues to 
spend billions of dollars on college aid and the results of our 
investments are simply inadequate. If today's economy requires valuable 
postsecondary credentials to attain and retain good, middle class jobs, 
we can imagine what tomorrow's economy will demand. The high premium on 
college completion is remarkably different today compared to nearly 50 
years ago when federal college opportunity grants were first created. 
Graduation rates are too low and gaps between student who succeed and 
those who drop out are profound. More than half of Hispanic students--
our country's fastest growing population--who enter postsecondary 
education have not earned any type of credential six years later. Just 
one-fourth of young adult Pell Grant recipients ever complete a 
bachelor's degree, and even fewer ever complete an associate's or 
certificate program. Among adult Pell recipients who complete college, 
only three percent earn a bachelor's degree, while nine percent earn an 
associate's and 25 percent complete a certificate program.
    At the same time, students and families are finding college 
necessary but increasingly unaffordable. More students are accruing 
education debt but attaining no degree. The student loan default rate 
for students who did not attain their credential is four times higher 
than that for those with a bachelor's degree. We must ask ourselves--is 
this what we intended when we designed the federal financial aid 
system?
    Financial aid can and I believe should be used more effectively to 
improve student success. The federal investment in financial aid is at 
an all-time record level. Over the past decade, the number of Pell 
Grant recipients has doubled to more than 9 million undergraduate 
students--nearly half of all such students. Today, nearly 75 cents of 
every financial aid dollar available in this country comes from the 
federal government. Revenues from Pell Grants pay an average of nearly 
20 cents of every tuition dollar received by a college, university or 
other postsecondary institution in this country.
    There are a number of excellent ideas percolating that will improve 
the federal financial aid system without generating new costs, nor 
increasing burden on students, their families, and institutions. I will 
briefly describe four such ideas.
    First, the financial aid application process can be made simpler 
for students and families. For example, why do we ask them to figure 
out which federal income tax form they could have filed? And a simpler 
system can help us better focus resources on our neediest students. We 
can accomplish this with a three-tiered approach to aid application but 
simplified through better leveraging of existing technology to enhance 
the Department's electronic processes, including FASFA-on-the-Web.
    The first tier in this approach would automatically make any 
student eligible for a full Pell grant if they, or their family, 
participated in another federal need-based program. However, this 
``bypass'' approach unequivocally demands reliable, independent third-
party verification of that participation. The second tier, for most 
other students, would ask for minimal income information, not unlike 
the current simplified needs test, but with all financial data provided 
automatically via agency-to-agency arrangement with the Internal 
Revenue Service, not unlike the current IRS data retrieval option 
available in FAFSA-on-the-Web. The third tier would seek additional 
income and asset information (also from the IRS) for families with more 
complicated financial circumstances as indicated by their filing of one 
or more of the several schedules associated with filing the long-form, 
i.e. 1040, tax return. By just simplifying the application process in 
this way, the Brookings and Urban Tax Policy Center estimates 10-year 
savings of at least $37billion.
    Second, Congress faces an immediate opportunity to vastly simplify 
the student loan program and spend those federal resources more 
efficiently. It is time to end the multiple loan programs, with 
different eligibility requirements, interest rates and repayment terms. 
There is a growing chorus supporting the automatic enrollment of 
borrowers in a single, improved income-based repayment plan. The 
current system asks young adults--especially low-income individuals--to 
be managers of complicated loan portfolios for no good reason that I 
can see, other than policymakers continually responding to near-term 
budget pressures.
    I ask your indulgence and allow me to digress for a moment. The 
1986 HEA Amendments authorized a five-year Income Contingent Loan 
demonstration program for ten college and university participants. The 
Department ended the demonstration after four years because by that 
time we learned one critical piece of information--individuals are 
extremely reluctant to disclose their personal income information. 
Consequently, several years later when developing the income-contingent 
repayment plan for the new direct loan program, the Department required 
IRS verification of a borrower's income as a condition of participation 
in that repayment plan.
    Ideally, then, a single, income-based repayment program would be 
implemented in a way that ensures reliable income reporting by 
borrowers. One way would be a payroll-based payment system, that is, 
employer withholding not unlike federal payroll taxes. This approach 
would also have the advantage of ``real time'' income reporting rather 
than relying on the after-the-fact approach necessitated by income 
verification based on previously filed income tax returns. Loan 
payments for borrowers not subject to wage withholding could be tied to 
their required quarterly self-employment tax reporting.
    The borrower's interest rate for these loans should be market-
based. Many of the reform proposals issued recently recommend 
establishing the 10-year Treasury note as the reference rate and then 
adding a few percentage points to set the borrower's interest rate. 
Congress would set the value of the add-on percentage as a way to 
specify the overall level of federal budget support for the student 
loan program.
    Moving to a market-based rate would save money that could be 
invested in Pell Grants. The New America Foundation, using fair value 
accounting, estimates this proposal would cost $17 billion in the first 
five years, chiefly because the gap between borrower interest and 
Treasury borrowing rates is historically wide. This proposal would save 
$25 billion over a 10-year budget window because that gap is expected 
to narrow considerably in the future, reflecting historic trends. In 
2011, CBO estimated that a similar proposal would save $52 billion over 
10 years.
    Third, there should also be accountability for all federal aid 
dollars spent. This can be achieved through a multi-pronged assessment 
of institutional eligibility for Title IV financial aid that considers 
measures of access and equity, loan repayment, and risk-adjusted 
completion rates. Today, the Department essentially uses a check-off 
box approach--cohort default rate, financial responsibility, 90-10 
rule, and the like--to ensure federal funds are appropriately spent. It 
terms of institutional accountability, it simply does not look at 
student outcomes.
    In the late 1980s when policymakers first advanced the notion of 
using student loan default rates as an institutional accountability 
measure for federal student loans, institutions objected, largely on 
the grounds that the Department did not have reliable school-level 
data. But the enacted provision included a transition period, which 
allowed most schools to respond positively to the new measure while the 
bad actors were removed. Institutional and government data systems 
continue to improve, so a more balanced set of metrics that measure 
access, completion and value are more feasible than ever. These metrics 
can protect the taxpayers and students from the most egregious cases of 
debt with no degree while also promoting overall transparency for 
consumers.
    Fourth, we know we face significant challenges in higher education. 
In my view, we need to experiment to find the best solutions. Congress 
has periodically authorized focused demonstration programs. The 
Department has ongoing authority through experimental sites to test and 
rigorously evaluate new approaches to delivering financial aid on 
campus in the most cost-effective manner possible. However, this 
authority precludes waiving award rules, maximum grant and loan 
amounts, and need analysis requirements. I completely agree with this 
prohibition. I would never want to see a Pell recipient lose her grant 
because the federal government was sponsoring an experiment of some 
sort at her school.
    The current experimental sites authority provides for waivers--it 
does not authorize funding. Perhaps the experimental sites authority 
could be expanded to allow for additional waivers as long as individual 
students were held harmless in terms of federal financial support 
received.
    Today, one in three Pell Grant recipients reports using their grant 
to pay for remedial education. Across the country, states, colleges and 
nontraditional providers like Straighterline are showing us that there 
are likely more cost-effective ways to customize and accelerate 
remedial education. A small-scale experimental site might test 
eliminating funding for remedial education through Pell Grants while 
providing alternative funding to students for their remediation needs.
    In terms of a larger scale, programmatic approach, a modest level 
of savings redirected from changes in federal needs analysis or the 
loan program, a college readiness demonstration could be funded. 
Perhaps a $100 million investment could finance a limited number of 
participating states that would enter into competency-based performance 
agreements with remedial education providers and serve an agreed-upon 
number of students in high-poverty high schools. These agreements could 
also cover young adults just out of high school as well as low-income 
working adults returning to college seeking to acquire new job skills. 
These agreements would have built-in bonuses for early attainment of 
college readiness so we can test and evaluate ways to provide 
incentives to students to gain competencies at an accelerated pace.
    In closing, I think we are seeing a remarkable convergence. The 
general public and employers agree that the most effective jobs program 
is one that ensures that more students graduate with a post-secondary 
credential--whether a certificate, 2-year or 4-year degree. At the same 
time a number of organizations have been thinking creatively about ways 
to increase the number of well-educated graduates by improving the way 
the federal government spends the dollars it already invests in higher 
education.
    Thank you for the opportunity to testify today. I am happy to 
answer any questions that Members of the Committee may have.
                                 ______
                                 
    Chairwoman Foxx. Thank you very much.
    I now recognize Ms. Moriah Miles for 5 minutes.

            STATEMENT OF MORIAH MILES, STATE CHAIR,
         MINNESOTA STATE UNIVERSITY STUDENT ASSOCIATION

    Ms. Miles. Thank you Chairwoman--rookie mistake.
    Thank you, Chairwoman Foxx and committee members, for 
having me today. I would like to address a few issues with you.
    The cost of college in Minnesota and across the country is 
rising dramatically. The tuition at the seven Minnesota State 
Universities has increased by more than 100 percent in the last 
decade. This, coupled with the disinvestment by our state, has 
caused student debt to rise to unreasonable amounts.
    Approximately 1 year ago the student loan debt in the 
United States surpassed credit card debt, now averaging $28,566 
per university student. This issue is one of the most important 
challenges facing students across the country and we must 
address it.
    There are many things Congress can do to assist students 
and position our generation for success. First, Congress needs 
to address the impending doubling of the subsidized Stafford 
Loan interest rate.
    Students are already delaying purchasing homes, starting 
families, and fully contributing to the economy because of the 
massive amounts of debt they incur in their efforts to get 
ahead. Reducing interest rates now and providing affordable 
loans in the future will greatly benefit our country by 
allowing these students to contribute more money to the 
economy.
    I also urge the House to protect the Pell Grant. The Pell 
Grant was designed to provide access to a new generation of 
low- and middle-income students. While tuition has risen across 
the country, the Pell Grant has not kept up.
    The most recent Ryan budget proposal would devastate 
funding for the students by freezing the maximum Pell Grant for 
10 years, eliminating $86 billion in mandatory funding for the 
Pell Grants. Millions of students will rely on this funding to 
escape poverty and to make better lives for their families. 
Disinvestment in this area not only harms students, but will 
also hurt the U.S. economy by reducing the workforce.
    As Congress works on the proposals to help students, it is 
important to remember that reducing the Pell Grant funding is 
not the direction we should take. Instead, we must invest in 
future generations and provide additional support for low-and 
middle-income students. Investment in the Pell Grant is the 
most important tool America can use to enhance the workforce of 
the future and increase the number of post-secondary graduates.
    Many students rely on some form of financial aid, whether 
it is loans, scholarships, or grants. Often the amount of 
financial aid a student receives can vary from institution to 
institution and can impact a student's decision on where they 
attend college.
    Students and their families report difficulty in 
deciphering college financial aid award letters. This is 
because colleges write their own letters and use their own 
terminology, abbreviations, and acronyms to describe different 
types of aid, such as federal student loans.
    The terms they use can be so confusing students may not 
even know certain forms of financial aid are loans. This makes 
it hard for families to compare financial aid offers among 
different schools.
    Congress and the Department of Education can solve this 
problem with a uniform award letter that will provide families 
the ability to effectively compare available options.
    Another cost that students face--another cost facing 
students within our system is under-regulated financial aid 
disbursement companies and banks, such as Higher One. These 
financial institutions are getting rich off taxpayer dollars 
that are intended for students.
    These companies disburse billions of dollars of student aid 
and leave students to pick up the tab. There needs to be a 
serious discussion in Congress and the Department of Education 
to ensure our students are protected.
    Finally, passing the DREAM Act will allow America to remain 
an economic leader. We must encourage the talent already 
residing in our country to stay. This is especially true when 
it comes to children who have grown up here and benefitted from 
a strong K-12 education system.
    It is imperative we encourage these students to continue 
their education and training at one of America's many fine 
higher education institutions. The best way to do this is to 
ensure they are not forced to pay higher tuition rate based 
solely on where they were born. Congress should pass the DREAM 
Act and provide stability to a new generation of leaders.
    We have provided additional testimony, information, and 
student comments on these issues as well as information about 
the effects of sequestration on Minnesota. We are excited to 
work with this subcommittee and the full House committee to 
ensure students' voices are heard throughout this process.
    Again, thank you very much for inviting me today.
    [The statement of Ms. Miles follows:]

   Prepared Statement of Moriah Miles, State Chair, Minnesota State 
 University Student Association; Student, Minnesota State University, 
                                Mankato

                               BACKGROUND

    The cost of college in Minnesota and across the country is rising 
dramatically. The tuition at the seven Minnesota state universities has 
increased by more than 100% in the last decade. During the same period 
our state has dramatically cut the appropriation our universities rely 
on to keep college accessible and affordable to all students regardless 
of income. Meanwhile, student debt has risen dramatically. 
Approximately one year ago, the total student loan debt in the United 
States surpassed credit card debt, now averaging $28,566 per university 
student. Addressing this issue is one of the most important challenges 
facing students across the country.
    There are many things Congress can do to assist students and 
position our generation for success. First, Congress needs to address 
the impending doubling of the subsidized Stafford Loan interest rate.
    Students are already delaying purchasing homes, starting families 
and fully contributing to the economy because of the massive amounts of 
debt they incur in their efforts to get ahead. Reducing interest rates 
now and providing affordable loans in the future will greatly benefit 
our country by allowing these students to contribute more money to the 
economy.
    I also urge the House to protect the Pell Grant. This program was 
designed to provide access to a new generation of low and middle income 
students. While tuition has risen across the country, unfortunately the 
Pell Grant has not kept up. The most recent ``Ryan'' budget proposal 
would devastate funding for students by freezing the maximum Pell grant 
for ten years, eliminating $86 billion in mandatory funding for Pell 
grants (which will likely result in a substantial cut to the maximum 
award), increasing student indebtedness by eliminating the in-school 
interest subsidy and allowing interest rates to double for subsidized 
student loans, and narrowing eligibility for need-based student aid. 
This proposal will hinder student success for years to come. Millions 
of students rely on this funding as tool out of poverty and to make 
better lives for their families. Disinvestment in this area not only 
harms students, but will also hurt employers by diminishing the 
workforce.
    As Congress works on proposals to help students, it is important to 
remember that reducing the Pell Grant funding is not the direction we 
should take. Instead, we must invest in future generations, and provide 
additional support for low and middle income students. Investment in 
the Pell Grant is the most important tool America can use to enhance 
the workforce of the future and increase the number of post-secondary 
graduates.
    Many students rely on some form of financial aid whether it is 
loans, scholarships or grants. Often, the amount of financial aid a 
student receives can vary from institution to institution and can 
impact a student's decision on where to attend college. Students and 
their families report difficulty in deciphering college financial aid 
award letters. This is because colleges write their own letters and use 
their own terminology, abbreviations, and acronyms to describe 
different types of aid, such as federal student loans. The terms they 
use can be so confusing students may not even know certain forms of 
financial aid are loans. This makes it hard for families to compare 
financial aid offers among different schools. Congress and the 
Department of Education can solve this problem with a uniform award 
letter that will provide families the ability to effectively compare 
all available options.
    Tuition is not the only financial burden students are facing. 
Students are continuously concerned with the dramatically increasing 
cost of textbooks. In 2012, our association conducted a survey on 
textbook costs and the findings were pretty dramatic. Almost 1,500 
students responded to the survey and hundreds left comments about their 
personal experiences with textbooks. One of the most important things 
we found from this survey is that textbook cost is an issue affecting 
students across the state. 94% of student respondents indicated the 
price of textbooks and course materials impacts their ability to afford 
college, with nearly one-third stating that textbook costs greatly 
impacted their ability to fund their education. More than half of those 
responding said they have simply chosen not to purchase a textbook at 
all in order to save money. Congress must work together with all 
stakeholders to find creative ways to cut the costs of these materials.
    Another cost issue facing students within our system is under 
regulated financial aid disbursement companies and banks, such as 
Higher One. These financial institutions are getting rich off of 
taxpayer dollars that are intended for students, and through unfair 
fees, instead end up in the pockets of wealthy investors. There needs 
to be a serious discussion in Congress and the Department of Education 
to ensure students are not continually taken advantage of.
    Passing the DREAM Act will allow America to remain an economic 
leader. We must encourage the talent already residing in this country 
to stay. This is especially true when it comes to children who have 
grown up here and benefited from a strong K-12 education system. It is 
imperative we encourage these students to continue their education and 
training at one of America's many fine higher education institutions. 
The best way to do this is to ensure they are not forced to pay a 
higher tuition rate based solely on where they were born. Congress 
should pass the DREAM Act and provide stability to a new generation of 
leaders.
    MSUSA has provided additional written testimony on each of these 
issues as well as information on the effects of sequestration in 
Minnesota. We have also provided student comments that have been 
collected over the last year from student surveys, emails and other 
outreach efforts. We are excited to work with this Subcommittee and the 
full House Committee to ensure students voices are heard throughout 
this process.
            Sincerely,
              Moriah Miles, State Chair,
                    Minnesota State University Student Association.

I. Federal Student Loan Programs and Student Debt
    Unless Congress acts decisively, the interest rate on new federal 
subsidized Stafford student loans will double from 3.4 percent to 6.8 
percent on July 1, 2013. A 2007 college affordability plan gradually 
reduced the interest rate from 6.8 percent to 3.4 percent through 2012, 
when the rate was scheduled to revert to 6.8 percent. Last year, in the 
midst of the election cycle, motivated primarily by sluggish economic 
conditions, President Obama and Congress led a successful effort to 
extend the low 3.4 percent rate for one more year.
    Students have already suffered from a variety of aid restrictions 
and limitations that have resulted in students contributing $4.6 
billion to deficit reduction. Since the federal government makes 36 
cents on every dollar loaned, increasing interest rates simply 
increases the government's profits from students. We need to overhaul 
the student loan system so it is equitable to all borrowers. Such a 
comprehensive approach will take time and must provide ample 
opportunity for participation by borrowers and the general public.
    In Minnesota, state appropriation and federal aid have failed to 
keep pace with the rising cost of college. As a result more students 
than ever rely on student loans. The Project on Student Debt shows the 
average borrower at a MnSCU University graduates with over $28,500 in 
student loan debt.
    And now, in the midst of more borrowing and continuous increases in 
tuition, on July 1st the federal student loan interest rate will 
double, from 3.4% to 6.8%, for over 300,000 Minnesota students.
    If Congress does not take action, the average subsidized Stafford 
loan borrower will have $2,800 in increased student loan debt over a 
10-year repayment term. Those who borrow the maximum of $23,000 will 
see their interest payments increase approximately $5,000 over a 10-
year repayment period and $11,000 over 20 years. These loans are 
provided to almost eight million low and moderate-income students each 
year and do not accumulate interest while the borrower is in school.
    Heavy student loan debt carries crippling consequences for 
students. High debt can affect where graduates live, the kind of 
careers they pursue, when they start a family or whether they purchase 
a home. We simply cannot afford to balance the budget on the back of 
students.
    In 2011 MSUSA completed a survey on Financial Literacy. Please view 
the results here: http://www.msusa.org/vertical/sites/%7B8F60E86D-EE41-
444E-926B-0493E70B13F9%7D/uploads/Student--Financial--Literacy--
Report--(1).pdf
    Also, in 2013 we completed a survey of part-time students at our 
universities. Please view the final report here: http://www.msusa.org/
vertical/sites/%7B8F60E86D-EE41-444E-926B-0493E70B13F9%7D/uploads/
Part--Time--Survey--Report--.pdf
            Student Comments on Debt
    ``I have two children currently attending college along with myself 
attending part-time. I exhausted the money I had saved for my 
children's college in the first two years of their attendance. I was 
amazed at how expensive the tuition was and the associated fees. I wish 
my paycheck increased at the same rate as the college tuition. * * * We 
have given up family vacations, dinners out, and numerous other 
activities. I just bought my 15 year old a prom dress at a consignment 
store. She loves it * * * I just wish I could buy her a dress that was 
new. Don't get me wrong, the sacrifices are worth my children having a 
good quality education. I just wish it was not such a financial 
struggle.''
              Student, St. Cloud State University

    ``With working full-time and being a part-time student, it makes it 
very difficult to pay the amount that I need to when payments are due. 
This semester I got a grant for $112--that is nothing when tuition + 
fees is $1570. * * * they claim I make enough to pay tuition, yet I do 
have other bills to pay--I do have to eat, have a place to live, and I 
need a car (and all the things that go with having a car) to get me to 
school and work. None of those things are free/cheap * * * I do not 
currently take out loan to pay my college expenses, but the first two 
years of college I had to. I have gotten two paid off but I have my 
largest loan left which is currently sitting at $16,000. I waited until 
I was almost 25 to return to college so I could get help, and that 
didn't help me! I want to know what it takes to get help for college.''
              Student, Winona State University

    ``The rising cost of higher education has affected me dramatically. 
I am a single mother of three children, and I pursued my education to 
provide a better life for them. With the debt I accrued being so high, 
I have no idea how or if I will ever be able to afford paying it off or 
be able to move forward in life.''
              Student, Winona State University

    ``I did not return to college until age 28 for fear of owing on 
student loans. After completing three years of schooling from 2004-07 & 
receiving my ADN (Associate Degree in Nursing) I was deeply in debt. 
Fear of increasing my financial aid total (over $40,000 then) 
originally kept me from finishing my BSN when I began pursuing it from 
2007-09, and I instead accepted full-time work. After losing my job in 
December 2011, I returned to school and am now on my 3rd consecutive 
semester & will graduate in May. I want to go to grad school for my DNP 
(Doctor's of Nursing Practice) but the cost may be prohibitive, as I 
don't qualify for a Minnesota Grant (too old? too many credits? I can't 
recall why) and the loans I will take will be unsubsidized. As a single 
mother, things are even harder. I will note that grants are slanted 
against ``non-traditional'' student like myself, who had some college 
earlier in life, and then returned when I actually knew what I wanted 
to do, then was turned down due to high credit load.''
              Student, Minnesota State University Moorhead

    ``It's a constant, sickening pressure to know I will be in crushing 
debt the rest of my life repaying these loans while I raise my daughter 
by myself with very minimal child support. I fear I will have a harder 
time in grad school since I'll have to work a lot to support us, 
although I know from experience this is hard for me to do. I would do 
better in school if I could work part time, but would hate to take out 
loans to pay for rent again, as that's how I got in this mess in the 
first place. So I will have a poorer academic experience than I would 
like because I will be working more than I would like to, so I don't 
have to add to my already-crushing student loans.''
              Student, Minnesota State University Moorhead

    ``I have been emotionally distracted at times. I thought about 
dropping out several times. It affects my future by maintaining a 
steady fear of debt and additional fees, with the worry of never being 
able to pay it off or get ahead in life.''
              Student, Winona State University
            Recommendations on Student Loan Debt and Interest Rates
    With such little time left before July 1st, Congress should keep 
interest rates low for students now, and during the reauthorization 
process take a deeper look into long-term solutions. Keep Debt Low and 
Repayment Manageable: Student debt levels are at record highs, as is 
the default rate on student loans. High loan debt has serious economic 
impacts on a graduate's ability to move forward in life, whether 
purchasing a home, starting a family, or continuing their education.
     Maintain Low Interest Rates on Student Loans: Unless 
Congress and the President act decisively, the interest rate on new 
subsidized Stafford student loans will double from 3.4 percent to 6.8 
percent on July 1, 2013. That will drive up loan costs by $1,000 per 
student, per loan, for over 7 million students
     Strengthen Income-Based Repayment: IBR is an important 
safety net for borrowers struggling to make their payments. 
Unfortunately, far too few distressed borrowers are participating. 
Right now, there are only approximately 1.1 million students enrolled 
in IBR, while 5.4 million borrowers are currently late on their 
payments.

II. Pell Grant
    In 2010-11, about 153,000 students attending Minnesota institutions 
received $513 million in Pell Grants. The growth of the Pell Grant 
program has placed it in the budget crosshairs in Washington, D.C. It's 
important to understand that the Pell program is not unsustainable. In 
fact, it's doing exactly what it's supposed to do--meet the demand for 
higher education. Someone once told me that if the economic slump was a 
tornado, the Pell grant would be disaster relief. Eliminating thousands 
of Minnesotans from the Pell grant program is yet another disastrous 
financial hardship for students already struggling with increased 
higher education costs. We need to do better than to give students a 
choice between not attending school or assuming even greater debt.
    To restore our economic health, Minnesota businesses need a labor 
pool of unmatched skill and expertise. This requires a college 
education for its citizens. A recent study from Georgetown University 
showed that the Minnesota economy will need 70% of its workforce to 
hold a post-secondary degree by 2018. Currently fewer than 45% of 
Minnesotans hold a post-secondary degree. To remain economically 
competitive, we must ensure higher education institutions are 
accessible and affordable for the Minnesota workforce.
    In 2011 while the US House was debating cuts to the Pell Grant 
MSUSA in partnership with the Minnesota State College Student 
Association (MSCSA) completed a petition with more than 4,000 
signatures in opposition to the cuts. During this process we also 
collected many student stories about how the Pell Grant has helped 
them. Please view the full petition and comments here: http://
www.msusa.org/vertical/sites/%7B8F60E86D-EE41-444E-926B-
0493E70B13F9%7D/uploads/Pell--Petition--(1).pdf
            Pell Grant Student Stories
    ``My husband and I found out while I was attending SCSU that we 
were going to have our first child. As with children one of our 
concerns was, how are we going to be able to afford me to go to school. 
As the school progressed we were very worried about it and considered 
the possibility of not continuing and getting a full time job. The next 
time I did our FAFSA, I was surprised to see that we were eligible for 
a Pell grant that would pay for my semesters in college. I have 
continued my education and will be graduating Fall of 2013 with a 
degree in Biology and a Chemistry minor. It has been nothing but 
helpful for so many reasons!''
    ``I am a freshman student at St. Cloud State University, and I 
receive no financial aid from my parents. I have to rely only on grants 
and scholarships to pay for my college expenses. The Pell Grant is the 
single largest source of funds I depend on for financial aid. I 
consider it a lifeline because it covers nearly a third of my tuition. 
Without the Pell Grant, I probably would not be able to afford college 
unless I were to borrow against my future by taking out a loan. 
According to my judgment, post-college success is directly connected to 
college debt.
    ``I hope I can depend on the Pell Grant in the future for 
supporting me the way it has thus far. By staying at SCSU, I believe I 
am using the federal monies more efficiently because the grant can 
cover a higher proportion of tuition expenses. Thank you, MSUSA, for 
advocating on my behalf.''
              Brody Hagemeier, Saint Cloud State University

    ``My name is Emalee Arends, and it would have been financially 
difficult for me to attend college without the funds from the Pell 
Grant. A couple years before college, my dad contracted a rare tick 
virus that put him in the hospital in critical condition for three 
months. My family was swarmed with thousands of dollars in doctor's 
bills. With the help of the Pell Grant, we only had to pay around $4000 
dollars for my first year of college! Paying for my second year of 
college is going to be even more difficult. This past Christmas, we 
found out that my dad has bone marrow cancer and kidney failure. He is 
going through expensive dialysis and chemo treatment. Once again, my 
family is hammered with doctor's bills. Now that I have used all my 
scholarships from High School for the 2011-2012 school year, I am going 
to have to take out a lot of loans to help cover my sophomore year and 
future years of college. I will have little help from my parents 
financially. Without help from the Pell Grant, I will be covered in 
even more debt and student loans, and it will be extremely difficult to 
survive financially while in college. Thank you for listening''
              Sincerely, Emalee Arends

    ``I am in my last semester of my collegiate experience at 
Metropolitan State University where I am double majoring in History and 
Gender Studies. I also previously attended Winona State University for 
about a year and a half before transferring to Metropolitan State 
University. For the five years that I have been attending college I 
have been receiving the Pell Grant as a part of my financial aid 
package. Without the Pell Grant I would have had to taken out bigger 
loans while I was attending Winona State University and would have had 
to take out loans while attending Metropolitan State University.
    ``The Pell Grant has been a live saver in not having to rack up 
huge student loans as most college students end up with after receiving 
their post-secondary education. I believe that it would be huge mistake 
to take away the Pell Grant for future post-secondary students that are 
just trying to further their education. Everyone should have access to 
a post-secondary education regardless of their economic background, 
ethnicity, or sexuality. Please keep the Pell Grant!''
              Elizabeth Pretzel, Metropolitan State University

    ``I am a full-time student in Moorhead, MN. I am attending school 
to obtain my Bachelor's degree in photography. I am currently finishing 
up my fifth year, and will have one more full year and summer semester 
before I can graduate. School has been a long journey and very 
difficult for me as I have two disabilities that make college harder 
for me than the average student. I have been registered with disability 
services since I started attending school. The Minnesota Pell-grants I 
have received have made a huge impact on my ability to afford school 
because I have been in school longer than four years solely because of 
my health issues, and college is already very expensive. I am extremely 
grateful for any and all pell-grants that have made it possible for me 
as a Disabled student to get a four year college degree!''
              Angela N. Buchanan, Minnesota State University-Moorhead

    ``The Pell Grant funded most of my education costs and allowed me 
to attend college. It would have been difficult to get through without 
it!! I am now a productive member of society, and I get to work in a 
professional capacity and make informed decisions for a $200B+ 
corporation! Thanks!''
              Aaron Hall, St.Cloud State University

    ``I grew up in a single parent home. When I was in sixth grade my 
mother was diagnosed with Radiation Cancer from the Gulf War. At this 
point in my life I was already thinking about college, however with the 
change in my mother's health I started to question if college would be 
an option for me. My mother was quick to talk to me about college. She 
told me wanted me to go to college and get the degree she was never 
able to get. My mother believed that money should never be a reason not 
to go to college. She said that she wanted me to reach my potential and 
have a chance to follow my dreams. I remember her talking to me about 
my dreams to be a leader and helping others.
    ``Thanks to the Pell Grant I was able to attend college where I not 
only excelled in my classes but was able to lead through 
extracurricular activities and grow as a leader. Without the Pell Grant 
I would have had to work full-time and only been able to go to school 
part-time. I would have lost the leadership opportunities that college 
has to offer. College offered me the opportunity to have hands on 
learning and leadership development. Without these opportunities I 
would not be the person I am today. Thank you.''
              Sarah Shepard, Bemidji State University

III. Lender and Institution Requirements Relating to Education Loan 
        Program
    Minnesota SELF Loans are better for many students--The Minnesota 
SELF Loan annually provides 14,000 students with loans that have a 3.3% 
current variable interest rate or a 7.25% fixed rate option. In 
contrast, the federal PLUS loan interest rate is 7.9%.
    The preferred lender requirement--Since 2010, the Higher Education 
Opportunity Act of 2008 (34 CFR 682.212 and 682.401) requires colleges 
to use a preferred lender process in order to provide students with 
information on any non-federal student loans, including state student 
loans. The preferred lender process is essentially a request for 
proposals in which lenders submit to the schools information about the 
terms and conditions of their loans. Schools that go through the 
process have a checklist of several things they have to do in order to 
select lenders.
    Once a school has gone through the preferred lender process, they 
can list lenders on their website and direct students to the list. 
However, the list has to have more than one lender on it, even if the 
school thinks only one lender has a program they want to recommend. In 
addition, the order of lenders on a school's preferred lender list must 
be rotated so one lender is not always the first one listed.
    Many colleges choose not to go through this process--Many are wary 
of the time and administrative costs of complying with these 
requirements on an annual basis. As a result, most colleges are 
prohibited from telling students about SELF Loans and are only able to 
provide information on federal PLUS loans, which currently have a 
higher interest rate. Also, only parents of undergraduate students with 
good credit can be borrowers of federal PLUS loans. In some cases, a 
student may be better equipped to repay the loan than a low-income or 
unemployed parent.
    Many students are not aware of the Minnesota SELF Loan and other 
state education loan programs--Colleges who do not go through the 
required process are prohibited from providing guidance and information 
on state education loan programs, leaving students and parents to fend 
for themselves. Minnesota SELF Loan volume decreased by $42.5 million 
from 2009 to 2011 at Minnesota State Grant eligible colleges while 
federal PLUS Loan volume increased by $42.4 million.
            Minnesota is part of a coalition of state education loan 
                    programs in 16 states with borrower-friendly 
                    terms--
    At least 80% of state education loan programs in these states share 
the following terms:
     interest rates are the same regardless of the type of 
college students attend and fixed interest rates are available,
     colleges must certify the loans,
     applicants are informed about federal and state grants and 
federal loans and
     Compensation for loan staff is not based on loan volume.
    Some states offer loan forgiveness and innovative beneficial 
repayment options like:
     loan forgiveness for on-time graduation (Texas B-on-Time 
Loan and the Georgia Student Access Loan) and
     Deferment for active duty military service and modified 
payment plans for periods of economic hardship.
    The 16 states are--Alaska, Connecticut, Georgia, Iowa, Kentucky, 
Maine, Massachusetts, Minnesota, New Jersey, New York, North Carolina, 
North Dakota, Rhode Island, South Carolina, Texas and Vermont.

                                MINNESOTA SELF LOAN--INTEREST RATES 2002 TO 2013
----------------------------------------------------------------------------------------------------------------
            Year                   Quarter 1            Quarter 2            Quarter 3            Quarter 4
----------------------------------------------------------------------------------------------------------------
                                                    VARIABLE

2002........................  ...................                4.6%                 4.6%                 4.5%
2003........................                4.3%                 4.3%                 4.2%                 4.1%
2004........................                4.2%                 4.4%                 4.6%                 5.1%
2005........................                5.6%                 6.1%                 6.6%                 7.1%
2006........................                7.5%                 7.9%                 7.9%                 8.1%
2007........................                7.7%                 7.4%                 7.4%                 7.4%
2008........................                7.0%                 6.0%                 5.8%                 5.9%
2009........................                5.7%                 4.7%                 4.3%                 3.9%
2010........................                3.8%                 3.8%                 3.9%                3.85%
2011........................                3.8%                 3.8%                 3.8%                 3.8%
2012........................                4.0%                 4.0%                 3.5%                 3.4%
2013........................                3.3%   ...................  ...................  ...................
----------------------------------------------------------------------------------------------------------------
                                                      FIXED

2010........................  ...................  ...................               7.25%                7.25%
2011........................               7.25%                7.25%                7.25%                7.25%
2012........................               7.25%                7.25%                7.25%                7.25%
2013........................               7.25%   ...................  ...................  ...................
----------------------------------------------------------------------------------------------------------------

   Recommendation on Lender and Institution Requirements Relating to 
                         Education Loan Program

                          PUBLIC LAW 110--315
           Higher Education Opportunity Act (Draft Revisions)

 PART E--LENDER AND INSTITUTION REQUIREMENTS RELATING TO EDUCATION LOANS
                         [SEC. 151. DEFINITIONS]
------------------------------------------------------------------------
         Existing Language                    Proposed Language
------------------------------------------------------------------------
(8) PREFERRED LENDER                 (8) PREFERRED LENDER
ARRANGEMENT.--The term ``preferred   ARRANGEMENT.--The term ``preferred
 lender arrangement''----             lender arrangement''----
(A) means an arrangement or          (A) means an arrangement or
 agreement between a lender and a     agreement between a lender and a
 covered institution or an            covered institution or an
 institution-affiliated               institution-affiliated
 organization of such covered         organization of such covered
 institution----                      institution----
(i) under which a lender provides    (i) under which a lender provides
 or otherwise issues education        or otherwise issues education
 loans to the students attending      loans to the students attending
 such covered institution or the      such covered institution or the
 families of such students; and       families of such students; and
(ii) that relates to such covered    (ii) that relates to such covered
 institution or such institution-     institution or such institution-
 affiliated organization              affiliated organization
 recommending, promoting, or          recommending, promoting, or
 endorsing the education loan         endorsing the education loan
 products of the lender; and          products of the lender; and
(B) does not include----             (B) does not include----
(i) arrangements or agreements with  (i) arrangements or agreements with
 respect to loans under part D of     respect to loans under part D of
 title IV; or                         title IV; or
(ii) arrangements or agreements      (ii) arrangements or agreements
 with respect to loans that           with respect to loans that
 originate through the auction        originate through the auction
 pilot program under section          pilot program under section
 499(b).                              499(b).; or
                                     (iii) private education loans made
                                      under a State-Based Loan Program.
(9) PRIVATE EDUCATION LOAN.----      (9) PRIVATE EDUCATION LOAN.----
The term ``private education loan''  The term ``private education loan''
 has the meaning given the term in    has the meaning given the term in
 section 140 of the Truth in          section 140 of the Truth in
 Lending Act.                         Lending Act.
                                     (10) STATE-BASED LOAN PROGRAM.--The
                                      term ``State-based Loan Program''--
                                      --
                                     (A) means a private education loan
                                      program that----
                                     (i) is provided by a state agency,
                                      state authority, or not for profit
                                      corporation, separately or
                                      jointly;
                                     (ii) makes loans not funded,
                                      insured or guaranteed by the
                                      federal government; and
                                     (iii) is authorized or established
                                      by state statute and is fully or
                                      partially funded by state funds or
                                      tax-exempt indebtedness issued
                                      pursuant to requirements of the
                                      Internal Revenue Code (Title 26 of
                                      the United States Code).
------------------------------------------------------------------------

IV. Uniform Award Letter
    Students seeking to enroll in postsecondary education face a series 
of hurdles, chief among them, how to pay for college. Many students 
must rely on some form of financial aid whether it is loans, 
scholarships, grants or some combination. Often, the amount of 
financial aid a student receives can vary from institution to 
institution and can impact a student's decision on where to attend 
college. Students and their families report difficulty in deciphering 
financial aid award letters from colleges because they write their own 
letters and use their own terminology, abbreviations, and acronyms to 
describe different types of aid, such as federal student loans. The 
terms colleges use can be so confusing that students may not even know 
that certain forms of financial aid are loans. This makes it hard for 
families to compare financial aid offers among schools.
    At a time when college costs continue to increase and the average 
college senior graduates with $25,250 in student loan debt, we need to 
make it easier for students and their families to understand financial 
aid offers and exactly how much it will cost to attend college. And we 
need to establish an apples-to-apples comparison of college costs so 
that students can compare the offers they receive from different 
institutions. This legislation would do just that by requiring 
institutions to use a uniform financial aid award letter. The 
legislation would require the Department of Education to work with 
colleges, students, school guidance counselors, and consumer groups to 
develop standard definitions that would be used in the award letters. 
The legislation would also ensure the letters are useful to students by 
requiring the letters to be consumer tested before being put into use.
    Specifically, the Understanding the True Cost of College Act would:
     Require institutions of higher education to use a uniform 
financial aid award letter.
     Call on the Department of Education to work with colleges, 
consumer groups, students, and school guidance counselors to develop 
standard definitions of various financial aid terms for use in the 
uniform financial aid award letters.
     Establish basic minimums of information that must be 
included in the uniform financial aid award letters, such as: cost of 
attendance; grant aid; the net amount a student is responsible for 
paying after subtracting grant aid; work study assistance; eligible 
amounts of federal student loans; expected federal loan monthly 
repayment amounts; and disclosures related to private loans, front-
loading of grants, and treatment of scholarships.
     Require the Department of Education to establish a process 
to consumer test the uniform financial aid award letter and use the 
results from the consumer testing in the final development of the 
uniform financial aid award letter.

V. Textbooks
    Textbook prices are rising four times faster than inflation, 
leaving the average student now paying over $1,100 every year for 
textbooks. After working to end many tricks the publishing industry 
used to increase prices unfairly, MSUSA is fostering real competition 
in the textbook market place by promoting more affordable options like 
open textbooks and open education resources. In July, 2012 MSUSA 
completed a survey of students at its seven universities. Please go to 
this link to view the final report: http://www.msusa.org/vertical/
sites/%7B8F60E86D-EE41-444E-926B-0493E70B13F9%7D/uploads/Textbook--
Survey--Report.pdf
            Student Comments on Textbooks:
     ``The cost of certain textbooks has caused me not to take 
certain classes even though the material covered was of great interest 
to me and would have filled requirements * * *''
     ``[Textbook cost] has had an impact on the courses I chose 
later in my college career. When the classes became more of a choice 
rather than required, I would sometimes choose a course over another 
because of the cost of the text.''
     ``I cannot buy all my books at once, and some classes I 
end up not buying all the books I need because books are so expensive. 
I do not receive enough financial aid to cover textbook costs, so I pay 
for my books out-of-pocket.''
     ``I try and locate and purchase the cheapest textbooks in 
good condition. At the end of the semester, I sell my textbooks on eBay 
or Amazon for the price I purchased them; this helps me recycle my 
money so I can afford textbooks for the upcoming semester.''
     ``Most classes require purchasing a textbook, and 
sometimes more than one. When a student gets deeper into their major, 
books tend to be hard cover and cost a lot; hundreds of dollars. And 
once the semester is over, one tries to return the book and get some 
money back and you usually don't even get half the price you paid for 
it.''
     ``I always end up borrowing extra money for books. If I 
didn't have loan eligibility it would be very difficult to afford 
books.''
     ``Textbooks usually influence the amount of credits I take 
per semester because I add that into the amount I can afford [every 
semester].''
     ``It would be much more cost effective to use other 
resources like Amazon, but I often don't have the money to order them 
in advance. I rely on financial aid to pay for these things. That, 
coupled with the fact that overage doesn't get sent out until later in 
the semester, means that I'm forced to pay the inflated prices at the 
campus bookstore.''
     ``Sometimes I just can't find that extra $500 to buy 
books. Most times, I hope the teacher put a book in reserve or 
something. I had in the past made copies from other students who had 
bought their book already.''
     ``This semester I chose not to buy two books because I 
couldn't afford them. I ended up splitting the costs with a friend 
because you need books whether you can afford them or not.''
     ``I have been in classes where I know of a few other 
people in the class. We will sometimes pool our money together and just 
buy 1 or 2 books for the group of us to use.''
     ``I can only afford so many textbooks so I don't buy them 
right away and only buy the ones that are absolutely necessary.''
     ``Coming into my senior year, and the major I am in has 
one book that I am supposed to purchase-will cost me over $250.''
     ``It seems that most instructors are becoming more aware 
of how the cost of course materials impacts their students. I've 
noticed that some instructors have worked hard to limit these costs.''

VI. Dream Act
    The DREAM Act would enable children of undocumented immigrants to 
pay resident in-state tuition at Minnesota state universities and 
colleges and receive federal and private financial aid. In addition, it 
would encourage those students without lawful immigration status to 
seek out legal status at the soonest possible convenience.
    In order for Minnesota to remain an economic leader, we must 
encourage the talent already residing in the state to stay. This is 
especially true when it comes to children who have grown up here and 
benefited from the state's K-12 education system. It is imperative we 
encourage these students to continue their education and training at 
one of Minnesota's many fine higher education institutions. The best 
way to do this is to ensure they are not forced to pay a higher tuition 
rate based solely on where they were born.
    This has been an important concern of MSUSA for many years. As you 
know, 80% of students who attend a Minnesota State Colleges and 
University institution stay in Minnesota to work upon graduation. 
Considering this fact, we feel it is vital to encourage the type of 
low-income, at-risk students this law would most benefit to stay in 
Minnesota for their education. By offering them the same tuition rates 
and financial aid opportunities many Minnesotans already receive, it 
would ensure a state university or college education would remain 
accessible for this important population. This increased accessibility 
would translate into a larger, better-educated workforce in this state 
for years to come.
    While we understand there will be costs associated with the DREAM 
Act, we believe they are far outweighed by the benefits. At a time when 
Minnesota not only has to compete with other states for talent and 
resources, but other countries as well, it is vital we retain our best 
and brightest. Many of the students this law would benefit grew up in 
the United States and consider this their home. We owe it to them and 
the state to give them the same incentives and opportunity as everyone 
else.

VII. Sequestration Effects in Minnesota
    Federal supplemental grants to students (FSEOG)--In 2010-11, 33,100 
undergraduates in Minnesota received $21.2 million in FSEOG awards. 
Approximately $15.9 million (75 percent) of the money came from federal 
funds and 25 percent came from institution matching funds. 
Sequestration would mean fewer students would receive the grants, or 
the awards would be smaller. The federal government is estimating 920 
fewer students would receive FSEOG grants.
    Federal Work-Study--In 2010-11, 15,000 postsecondary students in 
Minnesota received $26.3 million in earnings from federal work-study 
jobs. Approximately $19.7 million (75 percent) of the money came from 
federal funds and 25 percent came from institution matching funds. The 
federal government is estimating 500 fewer students would have Federal 
Work-Study jobs.
    Get Ready--The Office of Higher Education receives $3.1 million a 
year in federal funding for the Get Ready/GEAR UP program. The program 
works with approximately 4,700 low-income K12 students each year to 
prepare them for education after high school. Assuming the reduction 
would be about 5.3 percent in the 2013-14 academic year, the agency 
would protect direct services to students, so purchases of supplies 
would be reduced. The agency also would probably reduce or eliminate 
opportunities for science, technology, engineering and math (STEM) 
grants to schools that began this year. A 5.3 percent reduction would 
be about $164,000.
    College Access Challenge Grants--$1.5 million a year in federal 
funds are used to foster activities to increase the number of low-
income students prepared for postsecondary success. The activities 
include making software available to extend the efforts of high school 
counselors at low-income schools and competitive grants to 
organizations such as College Possible that work with students to 
encourage and support college attendance. A 5.3 percent reduction would 
be about $80,000. The agency would reduce expenditures on the 
activities.
    Improving Teacher Quality Program--$847,000 each year is used for 
grants to about 16 institutions of higher education to provide teacher 
professional development in core academic areas. The program's funding 
was cut two years ago and the Office of Higher Education cut the amount 
for each grant at that time. Reducing the amount available a second 
time would mean smaller awards for each recipient or a reduction in the 
number of recipients. A 5.3 percent reduction would be about $45,000.

                 BIOGRAPHY: MORIAH MILES, STATE CHAIR,
             MINNESOTA STATE UNIVERSITY STUDENT ASSOCIATION

    Moriah Miles was raised in Sioux Falls, SD and attended South 
Dakota State University and later transferred to Minnesota State 
University, Mankato. She is a senior majoring in International 
Relations and serves as the State Chair of the Minnesota State 
University Student Association (MSUSA). MSUSA is a 501(c)(3) 
organization that advocates on behalf of the 75,000 students attending 
one of the seven state universities in the Minnesota State Colleges and 
University (MnSCU) system. She has previously served as the Vice 
President of Minnesota State University, Mankato Student Association 
and President of the Model United Nations at MSU-Mankato.
    Moriah Miles has been a student leader throughout her time in 
college. She lead a group of students on a 90 mile walk from Mankato to 
the steps of the Minnesota Capitol in Saint Paul to meet with Governor 
Dayton and highlight the importance of higher education funding. She 
has testified to the state legislature numerous times as a student 
representative on issues ranging from expanding internship 
opportunities to increasing state grants for working part-time 
students. Moriah also serves as the Chair of the Student Advisory 
Council and works with students from all systems in Minnesota to advise 
the Director of the Minnesota Office of Higher Education and ensure 
student voices are heard at the highest levels of state government.
                                 ______
                                 
    Chairwoman Foxx. Thank you very much.
    I appreciate very much all of the comments that the 
witnesses have made.
    I would now recognize the chairman of the full committee, 
Mr. Kline, for 5 minutes for any questions that he has.
    Mr. Kline. Thank you, Madam Chair.
    And thanks to the witnesses for being here today, and my 
colleagues. A busy day here in the Capitol, with hearings 
occurring all over the place, so I apologize for missing so 
much of the hearing.
    I want to thank Ms. Miles for making the trip. I know it 
was a hardship to leave that balmy weather in Mankato. I 
haven't seen the grass in my front yard since somewhere around 
Thanksgiving, and I am sure you are about the same. But we very 
much appreciate your testimony and your making the trip here 
today.
    Ms. McGuire, you mentioned, as others have, the importance 
of simplifying federal student aid programs. It is a major goal 
of mine--I can say of ours, as we move to reauthorize the 
Higher Education Act. Have you got some specific suggestions 
for simplifying the current system, and what would that mean to 
students and taxpayers?
    Ms. McGuire. Thank you so much for asking that question. I 
think first of all, for students, as several of the panelists 
suggested, simplifying the form itself for the application 
would make a great deal of sense. So many students--
particularly low-income students--find the form daunting.
    I should also point out that so many students who are from 
families where they are the first ever to attend college don't 
have any parent in the family who knows how to fill out the 
form, and if students don't speak English in their households 
the problem is more complex. Similarly, the requirement for 
parental tax forms and other kinds of documentation adds to the 
burden on students and at some point they just give up or they 
don't do it and that is complex.
    Secondly, putting a financial aid package together requires 
so many different components and so many acronyms and so much 
verbiage that it becomes very confusing for students and 
families alike, and even for financial aid administrators. 
Remember, on top of federal aid we not only have institutional 
aid, but frequently a lot of state grants, as well.
    Looking at the system in order to decide how to streamline 
the processing so the student gets one number or two numbers 
and not 10 numbers would enhance the ability of students to 
understand both the debt they are taking on, the grants they 
are receiving, and the amount they have to pay. Right now it is 
an extremely confusing process for most.
    Mr. Kline. Yes. Thank you. You make a good point about not 
having a parent that has been through the process, but I can 
imagine there are many, many, many, many parents who really 
can't help the process. It is getting to be like doing your 
taxes. You almost have to go have----
    Ms. McGuire. That is absolutely true.
    Mr. Kline. Thank you, again, very much.
    And, Madam Chair, I yield back.
    Chairwoman Foxx. Chairman yields back.
    I now recognize the ranking member, Mr. Hinojosa, for 5 
minutes.
    Mr. Hinojosa. Thank you.
    Ms. Miles, I was very impressed with your statement----
    Ms. Miles. Thank you.
    Mr. Hinojosa [continuing]. And I congratulate you for 
having such an important position, representing thousands and 
thousands of students.
    Ms. Miles. Thank you.
    Mr. Hinojosa. In your testimony you indicate that the Ryan 
budget proposal would devastate funding for students by 
freezing the maximum Pell Grant for 10 years, eliminating $86 
billion in mandatory funding for Pell Grants, allowing the 
interest rates to double on subsidized loans and eliminating 
the in-school interest subsidy. How will these proposed cuts to 
Pell Grants affect students in your state and across the 
country, and how will it affect student debt levels in your 
state and across the country?
    Ms. Miles. Thank you very much.
    The research my organization has done on Pell has shown 
that the students that receive Pell rely on that to attend an 
institution of higher education. Many of them reported to us 
that without the Pell Grant they would not attend higher 
education.
    And so a cut to the Pell Grant program would be extremely 
detrimental to the students that need education. They are the 
students that are driven to find a way to make it into college, 
and if we don't provide that Pell Grant we open this door to 
opportunity where they can go to other private loan options, 
which, if you, very well aware of the student debt in our 
nation, is not the best option for our students, and frankly, 
in my opinion, if the Pell Grant is available they should 
receive the Pell Grant.
    Mr. Hinojosa. What I hear you say is that affordability and 
accessibility would be shut out for many, many students, and 
that is exactly what the chancellors and the presidents of 
universities told me during the period that I was chairman of 
this subcommittee----
    Ms. Miles. Yes, sir.
    Mr. Hinojosa [continuing]. And I agree with you.
    Thus, in your expert testimony you urge Congress to pass 
the federal DREAM Act. Can you tell us why you believe it is 
vitally important that Congress pass that particular initiative 
which is known as the DREAM Act?
    Ms. Miles. Yes, sir.
    I am sorry, was there a question? I am sorry. I didn't hear 
you.
    Mr. Hinojosa. Yes, the question was tell my why you believe 
it is vitally important.
    Ms. Miles. Why it is vitally important? Access and 
affordability, again, and I am going to go back to that. We 
have students in our state that need this DREAM Act. In fact, 
they filled up an entire hearing room a few weeks ago asking 
for our state to also find a way to support this.
    We need to support the workforce of our future, and this 
DREAM Act allows those students that want to be a part of that 
to become a part of that and create that opportunity for them. 
By not allowing the DREAM Act to go through, I myself have 
identified many people that want to be a part of creating a 
better economic future for this country but won't be allowed to 
take that opportunity.
    Mr. Hinojosa. I agree with you.
    I want to ask the next question to Terry W. Hartle.
    In your expert opinion, what are the student demographics 
of our nation's higher education system and how have they 
changed since President Lyndon Johnson signed the Higher 
Education Act into law?
    Mr. Hartle. Thank you for the question, Congressman. The 
biggest change, I think, would be that when the Higher 
Education Act was created we had a modest enrollment in higher 
education--8 million students, most of whom were what we would 
call traditional students--18 to 22 years old, financially 
dependent on their parents, attending full-time, living in 
college housing.
    Today, those students are less than 15 percent of all 
college and university enrollments. So we have a much more 
diverse, much more nontraditional student population.
    In addition, the population has gotten much larger. At the 
present time we have 21 million students enrolled in higher 
education, the highest it has ever been. And that compares 
for--just to put it in context, there are only 15 million 
students in high school in the United States.
    We have 21 million students in college, entirely 
attributable to the propensity of adults to seek further post-
secondary education and training. And designing programs that 
meets the need of the huge array of students attending that 
vast number of institutions is an increasingly complicated 
task.
    Mr. Hinojosa. In your statement you pointed out that the 
federal government has few tools available to ensure states 
continue to play their historic role in making higher ed 
available at a modest price. And you also said that there is a 
real question as to whether the federal government, acting 
virtually alone in the student aid policy sphere, has the 
resources to ensure meaningful access to college.
    So in your opinion, what can the federal government do to 
ensure that the states do their part?
    Mr. Hartle. I think that is a very challenging question 
because federal student aid funds--the beauty of them is they 
go directly to the students and let the students decide where 
to spend them. The drawback is they do not go through state 
governments so you find it very difficult to condition what 
state governments have to do for their citizens to get those 
funds.
    I think the strength of student aid, the fact that it goes 
directly to the students and it is so strong on student choice, 
undermines the ability to hold the fire--the feet--states' feet 
to the fire on this particular issue. I think the increases in 
federal student aid that Congress has provided in the last 5 
years have helped insulate many students and families from 
these huge tuition increases, but the chance to really force 
the states to recognize and to honor the obligations they have 
is very limited from the federal policy direction.
    Mr. Hinojosa. We will take your considerations and your 
statement into consideration as we are working on this 
reauthorization.
    Thank you.
    Chairwoman Foxx. Thank you, Mr. Hinojosa.
    Mr. Walberg, you are recognized for 5 minutes.
    Mr. Walberg. Thank you, Madam Chairman.
    Let me just ask a question directly that may be strange in 
this setting, but do too many students go to college or 
university right now? And maybe added to that, should we set 
higher entrance requirements? What are your thoughts briefly on 
that?
    Ms. McGuire. If I may answer that?
    Mr. Walberg. Sure.
    Ms. McGuire. First of all, I think it is imperative in the 
knowledge economy this nation has to make sure that every 
student who wants to and is able to go to college really can. 
Most of the jobs that are begging right now are jobs that do 
require post-secondary education, if not a baccalaureate or 
even an advanced degree.
    So in order for this nation to remain productive, to 
support innovation, to support the future goals that we have, 
the idea of college access that must not be repressed. There 
are not too many students going to college; there are a lot of 
students who need a great deal of support.
    Mr. Walberg. Let me ask, at Trinity what is your 
remediation rate for freshmen entering students?
    Ms. McGuire. What is our remediation?
    Mr. Walberg. Remediation.
    Ms. McGuire. Well, we don't call it remediation; we call it 
education.
    Mr. Walberg. Well, whatever you call it.
    Ms. McGuire. And our students come in at varying education 
levels and our----
    Mr. Walberg. Why?
    Ms. McGuire [continuing]. Goal is to bring them up to----
    Mr. Walberg. Why?
    Ms. McGuire [continuing]. The ability to do--pardon me?
    Mr. Walberg. Why?
    Ms. McGuire. Well, because half of them come from public 
schools that are not up to snuff, and that is----
    Mr. Walberg. Okay.
    Ms. McGuire [continuing]. Another whole discussion, so----
    Mr. Walberg. Let me go on with my next----
    Ms. McGuire. But our goal is to educate them and to----
    Mr. Walberg. Right.
    Ms. McGuire [continuing]. Have them achieve college.
    Mr. Walberg. I appreciate that and it is a great work you 
do.
    I am concerned about the fact that there is so much 
remediation that goes on at our colleges, universities, our 
community colleges. We push kids to dream about education in 
the long run. That is great.
    But let's make sure that we have the students pushed in 
understanding that it takes academic qualifications and it 
takes excellence to continue on this world, and let's not just 
manufacture students. Let me go on.
    Last week I was fortunate enough to host Chairwoman Foxx at 
a field hearing in Monroe, Michigan in my district in which we 
highlighted how partnerships with employers and educational 
entities are making significant positive result impacts in 
getting education and ultimately jobs for students in all 
different fields.
    One of the witnesses was Mr. Douglas Levy, who is the 
director of financial aid at Macomb Community College. He 
commented on the need to address fraud in the Pell Grant 
system.
    In the 2007-2008 academic year the cost of the Pell Grant 
program was roughly $14 billion and used by 6 million 
Americans. Just 3 years later that program has swelled to $31 
billion and used by 9.6 billion.
    Many of these students need this funding, granted. However, 
I have numerous examples of these funds by misspent on areas 
other than educational expenses, including keeping foreclosures 
from happening.
    My first question would be to Mr. Madzelan: How can we 
ensure that we keep this vital program strong and healthy and 
intact for those who use it for its intended purpose, and 
beyond that, how do we do that while reducing intentional fraud 
or misuse of the program?
    Mr. Madzelan. Well, I think one of the beauties of the 
federal financial aid programs, as Terry Hartle mentioned about 
providing the assistance, the vouchers directly to students, 
but coupled that with there is always a financial aid 
administrator between the federal government and the student's 
money. So we do have, you know, internal controls, if you will, 
built in.
    I think where challenges are coming forward in the near 
term is around distance education, which I think we are all 
supportive of, be we tend to kind of move away from that 
notion, with respect to federal aid, of having, you know, a 
real person standing between the federal government's dollar 
and the individual students.
    I know just before I left the department our inspector 
general became very concerned about that. The department 
indicated it would be working on some--perhaps pursuing some 
regulatory solutions. I would be, you know, interested hearing 
what, you know, those ideas are, but I really don't have, you 
know, a solution right now how to better protect the integrity 
of the program.
    Mr. Walberg. Mr. Hartle?
    Mr. Hartle. Let me simply begin by saying fraud has 
absolutely no place in federal student aid programs, and where 
there are examples of it we need to identify what the systemic 
problems are and to root them out. One of the challenges 
institutions face in federal student aid policy is that federal 
student aid is an entitlement right to the student, and we have 
very limited authority to deny those rights to students because 
the money goes to the student.
    I know of many institutions, including, particularly, 
community colleges, that would prefer that their students not 
borrow money to finance their education because they are afraid 
that the students won't complete the education, the students 
will get in over their head with debt and will end up with an 
obligation they might not be able to repay. But institutional 
authority to deny students the right to borrow is very limited.
    So that is sort of the tradeoff that I think the committee 
will have to wrestle with is how much authority you would like 
to put in the hands of people like the financial aid 
administrator at Macomb to interfere or to limit student 
entitlement rights that Congress has established.
    Personally, I think it would be a very good idea if 
institutions had some discretionary authority to deny 
certification for loan eligibility to broad groups of students. 
Not talking here about by race, or sex, or gender, or anything 
like that; simply talking about broad groups of students--
perhaps students in certain programs that are not likely to 
result in high earnings, perhaps students that need a 
substantial amount of developmental or remedial education 
before they will be ready to do college-level work. Those sorts 
of situations.
    Mr. Walberg. That would be super----
    Chairwoman Foxx. Thank----
    Mr. Walberg. Correct.
    Thank you, Madam Chairman.
    Chairwoman Foxx. Thank you both.
    Ms. Bonamici?
    Ms. Bonamici. Thank you very much, Chair Foxx and Ranking 
Member Hinojosa, for holding this important hearing, and to the 
panel, especially Ms. Miles, for bringing that very important 
student voice to the conversation.
    President McGuire, thank you so much for raising the issue 
of how we measure success. I share your concern about assessing 
a return on investment by looking at the salaries of graduates. 
As you rightly point out, worthwhile employment is often found 
in the service or nonprofit or public sectors.
    So if, as you suggest, assessing the return on investment 
based on salaries is inappropriate, how should we be 
determining which colleges and universities offer a good 
investment, or is that the wrong question?
    Ms. McGuire. I don't think that is the wrong question at 
all, but I think the criteria must be broader than what the 
starting salaries are of recent graduates.
    At Trinity, 95 percent of our graduates from the last 10 
years are employed or have gone on to graduate school. Many 
recent graduates go on and don't work for quite some time or 
work in part-time jobs because they are earning master's 
degrees, or law degrees, or other advanced degrees. And they 
will eventually, in fact, return much higher salaries.
    I represent an institution that is a historic women's 
college, and we know that many women have to interrupt their 
careers in order to raise families and care for children. They 
should not be penalized, nor should institutions with large 
populations of female students be penalized, both because of 
the kinds of careers they choose or the fact that they stop out 
to care for families. Women are also caught in the middle, 
frequently, with caring for elder parents, as well as children, 
and so forth.
    I think each institution that is credible does, in fact, a 
good deal of research on satisfaction of graduates, 
satisfaction of current students. There is a tremendous amount 
of data that we already collect and that we already use 
internally, and I think to be able to educate both policymakers 
and others about how we know the success of our students and 
how we, in fact, represent that to the public is something that 
we should share.
    Ms. Bonamici. Terrific. Thank you very much. We need to 
keep that in mind as we go forward.
    I happen to be a graduate of a community college. Went to 
community college for many reasons. Had a great program I was 
interested in, and of course, affordable tuition--I was working 
my way through. So I was fortunate enough to be able to 
transfer most of my credits to the university and finish in 4 
years, and that experience really helped me understand that 
community colleges play a critical role.
    I am very concerned, Mr. Madzelan, in your testimony you 
state that only one-quarter of Pell Grant recipients complete a 
bachelor's degree, and the numbers for completion of an 
associate's or certificate program are even lower.
    And, Dr. Hartle, you testified that 85 percent of students 
today could be considered nontraditional, and many of those 
students earn their degrees at community colleges.
    So I am concerned--of course access is critical, but also 
about completion. How much of the completion issue is 
attributable to financial aid and tuition challenges? Is that 
the main reason for non-completion?
    And I will start maybe with Mr. Hartle and Mr. Madzelan but 
also want to ask the other two witnesses, as well.
    Mr. Hartle. Well, thank you for the question.
    The goals of federal higher education policy have shifted. 
For most of the last 50 years the principal goal has been 
access. In the last couple of years there have been a number of 
calls to make completion or graduation or attainment a coequal 
goal of federal higher education policy.
    That is a very desirable goal. We want people to finish 
with their degrees, or certificates, or whatever it is they 
started out to achieve--to realize. It is a complicated issue 
for multiple reasons.
    As President McGuire indicated, the first reason is simply 
that the federal government can't accurately count graduates. 
If one of her students transfers, say, to Georgetown or G.W., 
not that they would ever want to do that, but if they did they 
would be counted as a dropout to Trinity University. If one of 
her graduates, as many do, takes longer than 6 years to finish 
their degree they are immediately counted as a dropout.
    So I think one thing that would be very helpful would be if 
we could figure out a way to count accurately completion rates.
    I think completion is complicated for a second reason, 
because there is clearly an institutional responsibility and 
clearly a student responsibility. Everyone knows people who 
went to college or graduate school and didn't finish because 
they couldn't or wouldn't do the work.
    There are also questions where individuals go to college 
and the institution doesn't provide the courses for them in a 
timely fashion and inadvertently puts up roadblocks to their 
finishing their education. And we need to address both sides of 
that equation.
    Ms. Bonamici. Right. Right. And because my time is about to 
expire, what I am interested in is how many of the non-
completion is attributable to the cost or because of those 
other factors that you mentioned.
    Anybody else in the----
    Mr. Madzelan. Well, I think it is very difficult to figure 
out why someone has failed to complete. We do have data 
limitations at the department. The numbers that I referenced in 
my testimony are based on survey information that is conducted 
by the department's National Center for Education Statistics, 
and that is by, you know, design and budget, just periodic 
surveys of individual students.
    I think if there is a way to begin to, and I think there 
is, I think the department has begun moving in this direction, 
to begin to collect some completions information through 
program administration records. For example, the Pell Grant 
program, to have colleges tell the department when a student is 
no longer a Pell recipient. Why? Did they complete the program? 
Did they just leave? And once we begin to get more census 
rather than survey data I think we can move in that direction.
    Ms. McGuire. May I just say, we track every student who 
stops out, and money is the number one reason why students must 
stop out. Eventually they come back.
    Ms. Bonamici. Thank you. My time is----
    Ms. Miles. I agree with that.
    Ms. Bonamici. Thank you.
    Chairwoman Foxx. Thank you all.
    I now recognize Mr. Petri, for 5 minutes.
    Mr. Petri. Madam Chairman, thank you very much for holding 
this important hearing.
    And thank the witnesses, I would like to thank the 
witnesses.
    I would make a small statement and then a question, if I 
could. One point that was mentioned repeatedly in the 
witnesses' testimony is the importance of simplicity. As 
everyone knows and as Mr. Hartle highlighted very well in his 
testimony, our financial aid system has evolved over the years, 
often with very good intentions, into something that is 
extraordinarily complicated for students and even for 
administrators to negotiate.
    Regarding student loans in particular, despite all of the 
repayment options, deferments, forbearances, and other 
protections we have put in place over time, over 13 percent of 
students will default on their federal student loans within 3 
years of entering repayment, often unmanageable amounts of 
debt. This is often financially ruinous for those students and 
is costly for the government.
    While certainly not a solution to all of the problems we 
face with student loans, I have always felt that simple, 
universal, income-based repayment has the potential to 
accomplish the goals of the various protections we have 
created, but in a way that is intuitive and automatic for 
borrowers and that doesn't force them to navigate our current 
labyrinth of paperwork and bureaucracy. Many students will fail 
to navigate our current bureaucracy and will fall to default 
despite the fact that they could have repaid their loans under 
a system that was more responsive.
    So, Mr. Hartle, your testimony provided a helpful history 
of the federal financial aid programs based on your extensive 
experience in this area. Recognizing, as you mentioned in your 
testimony, that simplification is always more complicated than 
it seems, I was hoping you could share your thoughts on the 
potential of universal, income-based repayment, paid through 
the employer withholding system, to simplify and improve our 
student repayment system, as is currently done in Great 
Britain, Australia, and New Zealand.
    Mr. Hartle. Thank you for the question, Congressman.
    Full disclosure, the American Council on Education a couple 
weeks ago held a meeting, basically, a conference to talk about 
Congressman Petri's proposal for universal, income-based 
repayment with a wage withholding done by employers as a way to 
facilitate student loan repayment. We brought several observers 
from other countries who had firsthand experience in designing 
and implementing income-based repayment plans and their opinion 
seemed to be that the proposal you have put forward is the most 
complete and thoughtful plan that they have seen.
    And certainly we would hope that the committee would look 
very, very carefully at the ideas you have put forward. You 
have obviously been working on income-contingent repayment for 
25 years, and I think, frankly, we have made progress, we have 
put it in place, but this is the most complete and thorough 
proposal we will ever have.
    Two points: One, it very much does move in the direction of 
simplification because it puts students in one repayment plan; 
it limits the explanations that students have to receive. It is 
a very big step in the direction of simplification.
    On the other hand, it means that a number of repayment 
options that students currently have would disappear. So it 
would reduce student choice, but it would greatly simplify 
their repayment process at least in part because they would no 
longer have to write checks to the Department of Education 
every month.
    Second, I think there are three central issues that need to 
be addressed with federal student loans: the over-borrowing by 
some students, the extent to which future earnings are burdened 
by student loans, and defaults.
    I think your proposal fixes the issues related to defaults 
and burden. Those issues go away, largely, under your proposal. 
On the other hand, your proposal could become an incentive to 
over-borrowing.
    And so we could fix two problems and make one problem 
worse. No one wants to do that.
    I think given the issues related to unintended consequences 
we need to be very mindful of what those might be, but yours is 
a very thoughtful proposal, and I look forward, as does my 
staff and the other higher education organizations, of working 
with you to continue to refine this going forward.
    Chairwoman Foxx. Thank you.
    Mr. Holt, you are recognized for 5 minutes.
    Mr. Holt. I thank the chair.
    I think I have heard some people say in effect this morning 
that one of the problems with the student loan program is that 
too many people might use it. I go back to why we have it, 
which is to encourage more students to get higher education for 
the sake of our society at large, as well as for their 
individual sakes.
    Mr. Hartle, I thought you said that simplifying FAFSA would 
encourage more people--would bring more people into the student 
loan programs. Did I hear you say that? And then I think you 
said further, ``and that might be a problem.''
    Mr. Hartle. If we eliminate questions from the FAFSA we 
undoubtedly make more people eligible to receive financial aid, 
so you run the possibility that by asking fewer questions you 
simply increase eligibility. That could have significant cost 
implications depending on what questions you eliminated.
    Also, from a complexity point of view, if you----
    Mr. Holt. Well, let me actually pursue that, then. Have we 
as a society reached the point where each additional student 
does not contribute more to the economy and society than she or 
he takes from the economy? In other words, have we reached the 
ceiling at which we want students in higher education?
    Mr. Hartle. Absolutely not. As President McGuire said, we 
want to do everything we can to encourage that----
    Mr. Holt. And let me ask President McGuire to address that 
same point, please.
    Ms. McGuire. Yes. I would like to address that.
    In fact, we could have as many as 20 or 30 million more 
students if we look to achieve the national goal to have 60 
percent degree attainment by the year 2020. Now, that is 
probably an impossible number, but the fact of the matter is 
that for the needs of this nation in terms of the kind of work 
that we expect people to do now and in the future and the ways 
we expect them to participate in our community and economy, we 
need as many people educated in post-secondary programs as 
possible.
    And let me just point out one career field for example: 
health care. Health care reform is going to put 30 million more 
people in the system. We need millions more health care workers 
educated and they come from our colleges and universities.
    Mr. Holt. So are you saying that the expenses of a program 
such as this are outweighed by the economic benefits that we 
get of higher education?
    Ms. McGuire. Well, sure, because you will improve the 
earning power, and therefore the tax returns that the 
government----
    Mr. Holt. So our goal should not be somehow to tighten 
things up. Obviously there is no room for fraud. It is 
unadvisable to entice students to get in over their head. But 
our goal here should not be to try to somehow shrink or 
constrain the----
    Ms. McGuire. Absolutely not.
    Mr. Holt. Well, thank you.
    Ms. Miles. Representative Holt, if I may?
    Mr. Holt. Yes, Ms. Miles. And I would like to join the 
others in commending you, President McGuire, and the other 
witnesses for some really articulate, persuasive testimony this 
morning. Yes, please.
    Ms. Miles. Great. Thank you.
    Yes, and I would also like to comment that our schools 
aren't manufacturing students; we are graduating global 
citizens. And we have done studies within Minnesota with our 
communities and one of our community colleges actually found 
for every dollar that they put into their students they had 
nearly $14 come back to them, and that return was unbelievable. 
We are building communities, not just graduating students with 
debt.
    Mr. Holt. Thank you.
    We have often talked about something called an academic 
year, which is, you know, maybe September to May. Does that 
have any meaning, President McGuire, does that have any meaning 
anymore? And I ask with a particular piece of legislation in 
mind. I have had legislation to reinstate the year-round Pell 
Grants----
    Ms. McGuire. Thank you.
    Mr. Holt [continuing]. Year-round meaning it would be 
available in the summer as well as during the so-called 
academic year.
    Ms. McGuire. I have students right now who need to be 
enrolled full-time this summer in our occupational therapy 
assistant program and they can't have Pell Grants. We are going 
to pick up the cost of their staying in school for the summer 
but we can't do that indefinitely.
    Most of my students are nontraditional by one definition or 
another. They would complete their degrees more quickly and 
enter their workforce more quickly if they could be funded for 
12 months. We operate year-round. We do not take the summer 
off.
    Mr. Holt. Okay. You spoke a few moments ago about health 
care as an area of need. I would say that teachers of science, 
and foreign language, and so forth are also areas of need.
    We have had a program known as the TEACH Grants to help 
with tuition for students. Is it appropriate to use federal 
grants and federal student loans to direct students, to 
encourage students into areas of general societal need?
    Ms. McGuire. Oh, absolutely. I think it is very appropriate 
for Congress and the White House and colleges to work together 
to identify what are the workforce areas that we really do need 
students to enter, and that benefits everybody. That helps 
students make good choices also.
    Mr. Holt. Ms. Miles----
    Chairwoman Foxx. Thank you.
    Mr. Holt. Oh, I can see my time is up. I----
    Chairwoman Foxx. Thank you, Mr. Holt.
    I now recognize Mrs. Brooks, for 5 minutes.
    Mrs. Brooks. Thank you, Madam Chairman.
    I am a--and I apologize that I wasn't here earlier, but I 
am a former senior administrator at Ivy Tech Community College 
and was general counsel for the college. But many, many years 
ago worked as a Work-Study student in a student financial aid 
office and know the tremendous burdens that a lot of student 
financial aid offices are under in processing student loans and 
then advising student--those needing student loans.
    And I am going to shift perspectives a bit from what I 
think has been talked about. You know, the rising cost of 
college tuition, I think, is also a huge reason why we have 
such a tremendous need for greater student loans.
    And I am curious as to what your perspectives are on how 
colleges can begin to really, you know, at least, you know, 
level off the rising costs of college tuition. College tuition 
rates and the expenses have just skyrocketed, which I think is 
causing part of the student loan problem, as well. And so I am 
curious what the panel's thoughts are on how we can begin to 
reduce college costs.
    Ms. McGuire. I will start by addressing that, and let me 
point out that at Trinity, where our tuition is $20,500, which 
is about $10,000 less than the next private university in D.C., 
we discount tuition by 40 percent for most students. And in 
fact, being our own grant provider also helps us repress 
tuition because we understand that if we grow tuition too much 
we just have to return more.
    I think it is very possible to have very sensible tuition. 
We do, however, have to fund certain things. We have to fund 
technology; we have to fund infrastructure; we have to fund the 
cost of regulation, which is considerable; and we have to be 
able to continue to fund the financial aid obligations we have 
to students. In fact, financial aid obligations are a big part 
of our rising costs, so it is a chicken and egg problem.
    Having said that, I think incentives for institutions to 
find ways to reduce costs for some of the operating costs like 
infrastructure, like technology are ways to work on this 
problem.
    Mrs. Brooks. Thank you.
    Ms. Miles. Congresswoman, if I may, for us it is been a 
disinvestment by our state. For the past 10 years consecutively 
we have been slashed. Our higher ed funding has been slashed 
consecutively for the past decade. That is the number one 
clearly attributed issue.
    Aside from that, we do need federal regulation in specific 
areas to help keep down other costs. It is often forgotten that 
the cost of higher education is just not our tuition and fees. 
It is our textbooks; it is our cost of living; it is the 
interest that we will accrue after we graduate, and many other 
things.
    Mrs. Brooks. Thank you.
    Mr. Hartle. Thank you for the question.
    I think the issue of the price of higher education--what 
students actually pay--is a complex, multifaceted issue that we 
have been wrestling with for a long time. The biggest 
consideration for most students and families is the question of 
state support for public higher education. When states decide 
to cut funding for higher education they often decide to let 
tuition go up simply as a revenue replacement measure for the 
institution.
    Most public colleges and universities don't set their own 
tuition. It is set by a state board of higher education or by 
the state legislature. So the tuition is--the control of the 
budget is oftentimes the public institutions, not in the hands 
of the institution.
    Institutions like Trinity University Washington, President 
McGuire's institution, are extraordinarily frugal. My guess is 
that President McGuire would be prepared to tell you where 
every single dollar in her budget goes right now because they 
have to meet a payroll every month, they have to balance their 
books every month, they have to maintain their buildings, and 
they can only do that by getting students to enroll and 
students who are willing to pay what they are charging.
    We may be seeing a surge in technology that will provide 
ways to reduce the cost of post-secondary education for many 
students. There has been a great deal of talk about the new 
learning modalities that are coming online and that are being 
explored. These may well open up the doors to students to 
pursue post-secondary education at less cost.
    There is a great deal of interest in prior learning 
assessment--giving students academic credit for education, 
training, and skills that they have picked up outside the 
classroom setting. And this, too, holds some possibility for 
minimizing tuition increases.
    But I think the single biggest thing that we could do to 
help students and families finance higher education is simply 
to encourage states to play the role that they have always 
played of adequately supporting public colleges and 
universities, including such places as Ivy Tech, which is an 
extraordinarily distinguished 2-year institution in Indiana.
    Mrs. Brooks. Well, thank you very much. I see that my time 
is up.
    Thank you.
    Chairwoman Foxx. Thank you very much.
    I now would recognize Mrs. Davis, for 5 minutes.
    Mrs. Davis. Thank you. Thank you, Madam Chair.
    And thank you to all of you for being here. I know that you 
have already addressed the issue that is certainly of great 
concern to all of us, that it is one thing to get students 
enrolled in the university; it is another to have them leave 
with a diploma in their hand. And you have addressed the issue 
of how do we count, and how do we really evaluate the students 
who aren't able to finish, particularly those students who have 
Pell Grants?
    Do you think there is any role that the federal government 
might have in trying to either focus better on those students 
who do go to school with Pell Grants, or that the information 
students receive in terms of completion rates at school, 
particularly around Pell Grants, should be more apparent? I 
understand what you were saying, it is hard to count them. So 
how do you provide that information if, in fact, it may be that 
it is great and maybe sound more transparent, but in the end it 
really doesn't provide the kind of information that students 
need.
    Is there a federal role in here?
    Ms. McGuire. If I may answer that, first of all, don't ever 
come up with a solution when you don't understand what the real 
nature of the problem is. A lot of people have studied the 
issue of completion rates for low-income students. As a 
practitioner of this at Trinity with a very high-need, low-
income population, I can tell you that money is the number one 
reason, and we studied the students who receive more financial 
support--they tend to do better; they tend to complete more on 
time.
    Students do swirl in higher education today, which means 
they attend multiple institutions and they don't necessarily 
think about the federal timetable of 4-to 6-year completion. We 
have many young mothers who start at age 18 or 19 with several 
children of their own, they might stop out in their early 20s 
to go to work to take care of their kids and come back when 
they are 29 or 30 or 35 to continue their education. They are 
swirling through college all the time.
    We have students who are enrolled at Trinity and also 
enrolled at public institutions nearby so they can amass 
credits more quickly, so they are actually enrolling at 
multiple institutions at the same time. This is not unusual.
    Family issues, medical issues--with low-income students we 
see tremendous medical and health care issues. The college 
health center is the first time many of my students have had 
primary care on a routine basis, and health issues can impede 
their time to completion.
    So there are a lot of things that can be done. I am not 
sure that it is a federal role.
    What I would urge is that the federal government not step 
in to impose measures that would be inappropriate and would add 
to the burden of the students, who already have so many burdens 
on their way to completing their degrees.
    Mr. Hartle. If I may pick up on President McGuire's point, 
I would simply mention that there is a pretty clear 
relationship between the extent to which students are prepared 
for college and their likelihood of completing. There are an 
awful lot of students who are sort of on the bubble and who may 
complete and who may not complete, and the question is the sort 
of services and assistance that they get or don't get that 
helps them get through that door.
    Institutions like President McGuire's are involved in a lot 
of labor-intensive activities to help students and they have 
evolved pretty good ways to do this, and I would think that the 
committee might benefit from talking to a number of campuses 
like President McGuire's to find out the lessons that they 
would have based on the success that they have experienced.
    Mrs. Davis. Yes, I appreciate that. And that is certainly 
why you are here. And I greatly appreciate what you are saying 
about that.
    But I also wondered, I guess, shifting to the kinds of 
information that students receive as they are beginning to look 
at colleges and institutions across the country. Stanford had a 
study recently that indicated that providing students with 
more--and--better-organized information was helpful to students 
who ordinarily might not even aspire to particular schools 
because they just haven't been able to get that information in 
a clear and concise way. And I know there is really no totally 
concise way to do this, but they actually felt in their study 
that it made a difference and it wasn't a huge cost to 
providing information in that way, and they did a control 
group.
    Ms. Miles, are you aware of that study at Stanford, and any 
other thoughts that you might have?
    Ms. Miles. I am not aware of that specific study, no, 
ma'am. But the idea that comes to mind is something that was 
included in my testimony, and that is the financial aid award 
letter.
    I can use myself as an example. I had no idea where to 
start with financial aid, and I grew up in Sioux Falls, South 
Dakota. Many of my friends were going to South Dakota State 
University so I just went there.
    When I found out that wasn't the correct fit for my 
academic needs I found other programs online and found 
Minnesota State Mankato. I had this illusion in my mind that if 
I left my state, if I left that institution, anywhere else 
would be more expensive, and that was not the--that is not what 
happened.
    And so I could have gone to a cheaper institution that 
better fit my needs and my academic interests if I would have 
known.
    Mrs. Davis. Yes. And you went online and you were able to 
get that information.
    I mean, there are tools available--College Navigator, 
Tuition Calculator. Is there anything else you would suggest 
that we might focus on that would be a role to make sure that 
that kind of information is out there? So, just throwing it out 
for you. Thank you.
    Mr. Hartle. Well, I think the point that Ms. Miles made----
    Chairwoman Foxx. Mr. Hartle, I am sorry.
    Mr. Hartle. Sorry.
    Chairwoman Foxx. Mrs. Davis' time is up. Thank you. I 
appreciate it. But please submit any responses that you have 
for the record. We would appreciate it very much.
    I am now going to recognize myself for 5 minutes, and I 
realize--first of all, I want to say--and I will say this again 
in my closing remarks--I really do appreciate the panel and all 
the great information that you have shared with us today. I 
think this has been very, very useful to us.
    Ms. McGuire, you have talked a lot and I particularly 
appreciate your talking about be careful we know what the 
problem is before we decide what the solution is. But if you 
would fairly quickly, talk a little bit about some of the 
things that you do that you might not have mentioned already in 
terms of promoting successful outcomes for your students.
    How closely do you look at completion rates, job placement 
rates? What kind of support services are you providing on 
campus?
    And I do have one other question I would like to ask, so if 
you could be succinct----
    Ms. McGuire. Sure.
    Chairwoman Foxx [continuing]. I would appreciate it.
    Ms. McGuire. Very quickly, we provide intensive first-year 
experience with learning communities for every student, 
evaluation of what are the right math and writing courses they 
need to take, and also a full range of academic support 
services--tutoring and academic counseling as well as the 
health services I mentioned.
    We also recognize student success every semester. We have 
dean's list receptions and other kinds of moments to celebrate 
the students who do achieve and that makes the others jealous 
so they want to achieve.
    There is a lot more and I could go into detail, and it is 
on our website.
    Chairwoman Foxx. That is wonderful. Thank you very much. I 
think those things are helpful to hear.
    Mr. Madzelan, we have to ensure taxpayer dollars are being 
spent appropriately, and as others have said in their comments, 
we want to be careful about whether we entrench the federal 
government on campuses more than it already is. Could you talk 
a little bit more about improving accountability for taxpayer 
dollars without the federal government infringing on academic 
affairs and without our collecting more information than we 
ought to be collecting?
    Mr. Madzelan. Certainly. I think the, you know, what we 
have now in terms of institutional accountability is really a 
ham-handed approach--you know, cohort default rates, financial 
responsibility, 90-10 rules for for-profit institutions. They 
are really just check-off boxes of have you been able to 
accomplish this, and it really doesn't look at student 
outcomes.
    And that is a difficult issue. I mean, we want--I think we 
all want to see completion rates increase but we also don't 
want to see institutions stop taking chances on students. I 
mean, back at the department years ago when we were 
implementing the cohort default rate we kind of joked that, 
``Gee, if you are a school with a zero cohort default rate you 
are probably not doing something right, you know? You are not 
taking chances on risky students or high-risk students.''
    So I think that if we can come up with a set of measures 
that--and I am not supportive of a return on investment that 
tries to find something around salaries of graduates. I think 
colleges and universities have enough trouble trying to contact 
with their former graduates in the--sort of the alumni affairs 
context. But that seems to be sort of a data collection that is 
not needed.
    But something that does look at some measure of, perhaps, a 
former borrower's, ability to repay their student loans. Not 
necessarily a default rate, maybe something that is--you know, 
default is kind of a negative consequence. If we could think of 
positive things, like yes, you are paying back your student 
loan, that kind of approach, then maybe, you know, that would 
be something that we could use as a proxy for, you know, a 
post-secondary education resulting in better economic 
opportunities than that individual would otherwise have faced.
    Chairwoman Foxx. Thank you very much.
    And now, Mr. Tierney, I recognize you for 5 minutes.
    Mr. Tierney. Thank you very much.
    First, Madam Chairwoman, I want to thank you and my 
colleagues. I wasn't here; I was at another meeting--another 
committee, but I want to thank you for recognizing the tragedy 
in Boston yesterday, and our thoughts obviously go out to all 
of the victims there, and I am very much appreciative of 
everybody's comments and recognition of that here.
    I was going to start with Mr. Hartle if I could, just to 
talk a little bit about student loans. You indicated that you 
thought federal loans were intended to help middle-income and 
low-income students manage costs with low interest rates, 
right?
    Mr. Hartle. Yes, sir.
    Mr. Tierney. Okay. So assuming that if we make rates 
variable then there are some times when that may be beneficial 
to the students and some times when it may drive those costs up 
to a certain degree and make it less manageable for them. Will 
that be true as well?
    Mr. Hartle. Yes. Well--sorry.
    Mr. Tierney. So my thought here is that to the extent that 
we lend money to students and then cover the principal and the 
administrative cost and the default rate on that, anything 
above that sort of tends to make it less manageable for them to 
afford college; anything that comes off that number itself 
makes it easier for them to manage. Is that right?
    Mr. Hartle. Yes, sir.
    Mr. Tierney. Okay. And I think that helps us decide how we 
want to structure a loan on that basis and whether we want to 
cap it or just let it go on ad infinitum on that, and that 
could be a problem. So I appreciate your comments there.
    Well, I am going to talk generally, Mr. Madzelan and Mr. 
Hartle could probably answer this one. The state--we put a 
maintenance of effort provision into the last Higher Education 
reauthorization, and I sort of wanted to move in that direction 
because I agree with what Ms. Miles made very clear and all of 
you have indicated: the states have really retreated from their 
obligations under this act.
    The problem was that when we put the maintenance of effort 
in there we got severe resistance from governors and 
legislators who, of course, want to have the option to do just 
that--to take the retreat. But we also found it very difficult 
to enforce. What is going to be the stick, so to speak, if 
schools don't--states don't maintain their effort?
    Does anybody have any thoughts of how we might implement a 
provision so that the federal aid doesn't just go on ad 
infinitum upward and the states take a hasty retreat, using 
that federal money to supplant what used to be their 
obligation?
    Mr. Madzelan. I think that some of the efforts in the past 
in this area have been focused on sort of the smaller federal 
programs, like, you know, leveraging, educational assistant 
partnership, those kinds of things. So it has been as if, you 
know, the federal government is kind of nibbling at the edges 
of that.
    I think, with respect to states and, you know, sort of 
pulling back on their own assistance over the years, it is--and 
I think that in my view, at any rate, it is been this kind of a 
stepping more toward, you know, higher education as a private 
good, away from it being a public good. And, you know, I think 
it is----
    Mr. Tierney. Pretty tough when you figure 80 to 90 percent 
of our students are going for the public good.
    Mr. Madzelan. Yes. But I mean in terms of the outcomes.
    And so if it is being viewed more as a private individual 
good, well then the private individual ought to pay more for 
it. I mean, I----
    Mr. Tierney. My businesses don't see it that way. You know, 
my businesses see it very clearly as a public good that is 
helping them find really good innovators, and creators, and 
workforce people, and anything like that. So I don't know who 
is thinking it is only an individual benefit, but----
    Mr. Madzelan. Yes, but again, I think that is when you 
think about why have states pulled back in recent years----
    Mr. Tierney. I get what all their excuses--I heard them all 
when I went to put the effort in, and I heard them all through 
all the people in the Senate who wanted to champion the 
governors and the legislators and give them a path of retreat. 
But frankly, does anybody have any ideas on how we might put a 
maintenance of effort in that has some teeth that would also be 
fair to the institutions and the states and the students?
    Mr. Madzelan. I think that, you know, if you are talking 
about teeth then you are talking about some of the larger 
federal aid programs.
    Mr. Tierney. Mr. Madzelan, while we are talking to you, you 
mentioned in your remarks about having one form of income-based 
repayment program. Were you suggesting that as a replacement 
for student loans?
    Mr. Madzelan. I think that ultimately, possibly. I think 
what we need to do is examine carefully the issue, and I say 
this because I am trying to figure out how worried I am about, 
you know, difficulty of students repaying their loans in the 
context of--I mean, we saw a report about 2 months ago out of 
the New York Federal Reserve by one of the analysts saying 
that, you know, a third of the student loans in repayment are 
90 days or more past due. And I am--excuse me--and I am 
thinking to myself, you know, really, how can that be, because 
federal loans--we really never make you choose between paying 
your loan and, like, eating because we do have deferments, 
forbearances are easy to come by. If you are, you know, in a 
rough patch, call your lender, he will call the servicer, can I 
get a break for a couple of months? Yes, you can.
    But that is a very administrative and bureaucratic approach 
and I think maybe with some kind of income-based repayment that 
is more based on sort of real-time income, you know, that kind 
of takes care of itself. I mean, you don't then worry about, 
you know delinquencies that--and then how does the Federal 
Reserve know about this? Because they are reported under 
federal regulations to the credit bureaus.
    And so again, I think it is--I haven't figured out just how 
worried I am about this yet, but when I see that a third of 
student loan borrowers in repayment are 90 days delinquent on 
federal student loans I start to worry about that.
    Mr. Tierney. Thank you. I was just curious of whether that 
was a more developed idea or just a thought that you had down, 
and so far it is just a thought and you are fleshing it out?
    Mr. Madzelan. Yes, and along with Mr. Petri's legislation 
and others that, you know, I worked on in the past when I was 
in the Education Department.
    Mr. Tierney. Thank you.
    Thank you all for testifying.
    I yield back.
    Chairwoman Foxx. Thank you, Mr. Tierney.
    Mr. Messer, you are recognized for 5 minutes.
    Mr. Messer. Thank you, Madam Chairman. I have prepared a 
formal question, but with your permission I would submit that 
for the record and then try to get to the essence of my 
question in the interest of time.
    Thank you all for being here today to talk about this very 
important issue. It is certainly an important issue in my life. 
I was raised in a working-class family in Greensburg, Indiana, 
and frankly, would not have been able to go to school without 
the benefits that came with Pell Grants and the like, and so I 
think it is important we maintain these programs.
    With that said, there is a very real recognition that we 
have inflationary pressures in the area of higher education. 
The numbers I have seen is between 2000 and 2012 federal 
financial aid in constant dollars has increased by 140 percent; 
however, over the same period, published tuition and fees for 
in-state students at 4-year colleges have increased by 5.6 
percent faster than the rate of inflation.
    There is bipartisan recognition of this problem. In last 
year's State of the Union Address the President said, ``We 
can't just keep subsidizing skyrocketing tuition. We will run 
out of money.'' This year the President said, ``Taxpayers 
cannot continue to subsidize the soaring cost of higher 
education.''
    Forgive me for the--I was here and then I had to run back 
to the--to give a speech on the House floor and came back, so 
if this has been addressed before I certainly would just love 
to hear a summary of those comments, but do you believe that 
our current rate of tuition inflation is driven in part by the 
federal education subsidies we have there? And if so, what can 
we do to try to ratchet back the rising cost of education?
    Mr. Hartle. The increasing price of higher education is a 
complex, multifaceted problem. I think the biggest reason for 
higher tuition bills facing student and families is because 
states have been cutting support for higher education for the 
last 40 years.
    Particularly in response to the most recent economic 
crisis, I think I mentioned a short while ago, state 
appropriations for higher education fell by 23 percent in the 
last 5 years. Most states set tuition for public colleges and 
universities at the state level, and therefore, the decision 
about what the tuition is is actually not in the hands of many 
public college and university presidents.
    Does federal student aid influence tuition? No. The issue 
is----
    Mr. Messer. You really believe no?
    Mr. Hartle. Pardon?
    Mr. Messer. You really believe no?
    Mr. Hartle. Absolutely. The issue has been examined 
exhaustively, including a study by the Department of Education 
that concluded the only thing that they related--they could 
relate to changes in public--in college and university tuition 
were changes in state appropriations, and it was an inverse 
relationship. When state appropriations went down, tuition went 
up.
    When you look at the effect of one thing on another in 
social science research you either have a clear, consistent 
relationship or you do not. We do not have such a relationship 
with respect to federal student aid. Indeed, Dan Madzelan 
worked on that study at the Department of Education when he was 
there and could actually talk about it.
    Mr. Messer. And do you have a consistent--I have a second 
question, so if you have a consistent answer that is great, 
but----
    Mr. Madzelan. Yes. We did look at, as President McGuire 
mentioned, you know, the price of technology, the, you know 
price of instruction, price--labor costs, and really it was--
the only thing that we and our statisticians could make a case 
for was the level of state--direct state support for higher 
education.
    Mr. Messer. Very much appreciate that.
    And I direct my next question to Mr. Madzelan.
    You mentioned--I think you used the phrase ``debt with no 
degree,'' and, you know, one of the social dynamics that have 
changed in the last several decades is it used to be that some 
college meant you had a higher income path through your 
lifetime, and that has really changed to the point where some 
college makes very little difference on your income path but a 
degree, particularly in a subject matter that has economic 
value, can make a difference. And I would ask you just to 
comment a little further.
    You know, we are on a path now--the second dynamic that has 
changed is the cost of education has gone up so high that 
someone can compile tens of thousands of dollars of debt and 
not have a degree that helps their economic future.
    Mr. Madzelan. Again, I think the, you know, the beauty of 
the federal aid programs is that they are voucher programs, 
where the money is made available to individuals as soon as 
they choose what to do with that, which, of course, a study to 
pursue at which institution. It is also, they get to decide, 
basically, when they have acquired enough education and 
training. So I think it is a--and we don't condition, at the 
federal level, next year's aid on receipt of last year's aid. I 
mean, we do it a year at a time.
    Mr. Messer. My question, would we--would any of you have 
federal policy recommendations that could help get at the heart 
of this dilemma? Because I think in fairness, we are incenting 
folks to make this decision. We are incenting them to give it a 
try. And we may well be incenting them into positions where 
they acquire tens of thousands of dollars of debt and some real 
challenges in their life.
    Ms. Miles. Sorry, Mr. Congressman, if I may, I don't think 
federal financial aid is incentivizing them. It is at least--I 
go to a state school--it is potential recruiters for for-
profits that aren't as honest as other for-profits, and they 
are the ones incentivizing because they are the ones that are--
there is proof out there from U.S. PIRG and from other 
organizations that they are illegally incentivizing students 
and their parents that, ``Oh, yes, we have tons of recruiters 
that will come in and we will have you a job before you 
graduate.'' Those are lies. That is the incentivizing fancy 
pictures, it is not the aid.
    Chairwoman Foxx. The gentleman's time is expired.
    Mr. Bishop, you are recognized for 5 minutes.
    Mr. Bishop. Thank you madam Chairwoman, and I apologize for 
arriving so late. I was in another hearing.
    Let me pick up on where Mr. Messer left off, because this 
was an area that I wanted to pursue as well. There is a man 
named Richard Vedder who is a higher ed economist who has 
postulated the theory that it is the very existence of student 
financial aid programs that are giving college administrators 
license to raise costs greater than they would ordinarily do 
and that therefore higher ed expenditures are being driven by 
federal policy.
    This is a view that has great currency among a great many 
of my colleagues, to the point where the House budget 
resolution that recently passed the House makes specific 
reference to the work of Mr. Vedder and says that higher ed 
financing is being driven primarily by the federal government's 
policies.
    Now, I think it is important--Mr. Hartle, you just 
emphatically rejected that school of thought. Is that correct?
    Mr. Hartle. I did.
    Mr. Bishop. Okay, and this subcommittee had a hearing on 
this subject I believe a year-and-a-half ago and we had a panel 
of expert witnesses testifying on why costs were rising at the 
rate that they were, and the consensus opinion was, without any 
question, that it is primarily the retreat from support of 
higher education on the part of the states. Now, that is a view 
that--I am sorry to get here so late, but that is a view that 
the panel pretty much holds?
    Mr. Hartle. Yes.
    Mr. Bishop. Okay. Thank you.
    I think it is just important because it is skewing the 
conversation, and I think if we all start the conversation with 
the same set of facts and the same understanding of what is 
driving behavior, I think we maybe will arrive at a more 
rational policy going forward. So I hope that this is 
information that we can continue to share among our colleagues 
and we can continue to disabuse our colleagues of this very 
flawed conclusion.
    President McGuire, I want to ask you, I am very concerned 
about the future of the campus-based programs. Under current 
law the Perkins Student Loan program goes away as of September 
2015. The House budget resolution that passed would cut 
domestic discretionary spending, which is where the other Title 
IV programs are, by about a third over 10 years. So I am 
worried that what we are going to wind up with is a Title IV 
program that consists of a significantly diminished Pell, no 
Perkins, perhaps we will have Work-Study, and no SEOG because a 
lot of my colleagues view that as duplicative of Pell.
    So my question is, what role does the campus-based programs 
play in terms of assisting the students at your university to 
attend? And I would ask the same question of Ms. Miles with 
respect to her peers.
    Ms. McGuire. Well, Mr. Bishop, thank you for asking that. 
And first of all, let me say, every single dollar that supports 
my very needy students is important, and if we lose those 
dollars we have to find other sources of support.
    And to go back to your other issue, as one of those campus 
administrators that seems to be maligned by experts who don't 
know what they are talking about, in fact, when my tuition goes 
up by a modest 1 or 2 percent in any given year, it is mostly 
because the need of my students is accelerating faster than 
federal aid or state aid or any aid can accommodate. And in 
fact, recently in the District of Columbia we lost the LEAP 
Program, for example, so we had to pick up several hundred 
thousand dollars worth of that through our own budget to keep 
subsidizing those students.
    The D.C. Tuition Assistance grant program was threatened 
this year and we had to keep paying--subsidizing that grant 
program. It was finally restored, thank heavens, but in fact, 
we are always trying to pick up need-based aid.
    Federal Work-Study is a very small part of our tuition 
support program because, in fact, it is normed according to 
prior statistics from prior years and not the current year, so 
our students never have as much because our enrollment is 
increasing faster than the federal aid through the campus-based 
programs can.
    I think if the programs go away the question is what 
replaces those? And I have to ask, how much more can we put in 
through Trinity grants when it is already 40 cents on every 
tuition dollar that we are putting in, and at some point it 
means that some low-income students are not going to have the 
option to stay in school, and that would be a great tragedy.
    Mr. Bishop. Okay. Thank you.
    Ms. Miles?
    Ms. Miles. I am sorry, can you repeat the specific 
question?
    Mr. Bishop. Question has to do with the existence of the 
campus-based student financial aid programs--Perkins Loan, 
College Work-Study, and Supplemental Educational Opportunity 
Grant. My fear is that I see those programs as imperiled.
    I am sorry, Madam Chair, if you would just allow Ms. Miles 
to answer.
    Chairwoman Foxx. A very quick response.
    Ms. Miles. I have a Perkins Loan. Without that Perkins Loan 
I would have had to take out a private loan.
    The students that we serve need these financial aid 
opportunities. We don't pride ourselves on the students we 
don't allow in; we pride ourselves on the success of our 
graduates. Our graduates need that financial aid to have that 
success.
    Mr. Bishop. Amen. I yield back the balance of my time.
    Chairwoman Foxx. Thank you, Mr. Bishop.
    I want to thank our witnesses again--our distinguished 
panel of witnesses--for taking the time to testify before the 
subcommittee today.
    Mr. Hinojosa, do you have closing remarks?
    Mr. Hinojosa. Yes. Thank you.
    Madam Chair, I want to thank our witnesses for sharing 
their thoughts and recommendations on the important role of the 
federal financial aid programs. And I know that on both sides 
of the aisle we have many first-term and a few second-term 
members of Congress and our hopes are that these hearings will 
quickly help them go through a fast learning curve and thus be 
able to make good policies and good regulations that will help 
us on this very important issue.
    So I want to just add to the record that in my 16 years in 
Congress I couldn't help but listen very attentively to 
everybody's statements and questions. And I look back to the 
beginning of my first year in 1997 to the year 2010, which 
equals 13 years that legislatures started cutting back 
significantly, causing the problem, as was pointed out to Mr. 
Bishop. And along with that came the direct loans going with 
interest rates up to 10 and 12 percent interest rate.
    So it is interesting that by the year 2010, when we were 
able to make direct student loans, that the amount that was 
lent on direct loans by Citigroup banks, by Sallie Mae and 
other private loans, was a staggering amount, which if you add 
from 2010 to 2013 now exceeds $1.1 trillion of student loans, 
but much of that is interest that has accumulated, much of it 
at a very high interest rate--8, 10, 12 percent.
    I am a businessman and I can tell you that we cannot blame 
the start of federal student loans that we suddenly hit $1 
trillion. No, it was a cumulative period of time.
    So I think that on both sides of the aisle members should 
be looking at waste and fraud, because our chair said we as 
congressmen must watch that tax dollars are spent 
appropriately. And several others talked about, what about the 
waste and fraud in Pell grants? Well, let me just say that from 
my point of view I think there was a lot of wasted money that 
was paid to banks who were borrowing the money at 3 percent on 
Wall Street and lending it out at 10 percent with the federal 
government guaranteeing 97 percent of that loan. Now that, 
nobody questioned on either side of the aisle.
    That has to go into the record so that it doesn't happen 
again.
    So again, I am going to close by saying that as we work to 
strengthen the federal financial aid and student loan repayment 
programs through this year's reauthorization of the Higher Ed 
Act, I agree, Congress must take into consideration the types 
of challenges that the majority of today's college students are 
facing. As ranking member of this subcommittee I intend to 
continue to work with my colleagues on both sides of the aisle 
to expand college affordability and accessibility and build on 
the strength of federal financial aid programs.
    And above all, federal student aid programs must support 
student success.
    I look forward to working with my colleagues in a 
bipartisan manner to achieve these goals and the 
reauthorization of Higher Ed.
    With that, I yield back my time.
    Chairwoman Foxx. Thank you, Mr. Hinojosa.
    I would like to take a personal point of privilege and 
recognize two guests that I have here today. They are not in my 
district; they actually live in Mr. Pittenger's district. But I 
want to commend them for sitting through a hearing they didn't 
need to sit through. Deedee Pavlic and Diane Umberger have--
Autenbarger have come here to visit Washington and they are 
true patriots. They want to learn all they can about the 
process. And they sat through the hearing today, and I want to 
recognize them for doing that.
    I again want to thank the panel for their comments.
    I just make a few remarks in response to your comments, and 
I am sure we may have some questions we will ask for some other 
information. But some things that didn't get picked up on by my 
colleagues that I would like to point out: Number one, I have 
been very interested in the comment that over and over we hear, 
now only 15 percent of the students in colleges and 
universities are what we call ``traditional students.'' I am 
searching for a better term. If only 15 percent of the students 
are ``traditional,'' we need a different name. Eighty-five 
percent--well, it seems to me we need to reverse those terms. 
What is a traditional student anymore?
    So I think I am going to put out a prize for somebody to 
come up with a term that better fits the students who are 
coming into colleges and universities these days.
    I appreciate--I think Mr. Madzelan used the terms 
``education,'' ``training,'' and ``skills.'' I am not sure who 
used those phrases but I want to commend the person who did 
that because I do think we are talking about all three of those 
things, and as the staff knows, I am very concerned about the 
use of one of these terms when I think we are doing education 
most of the time, but skills are certainly very important to 
us.
    President McGuire, I love the term ``swirling'' that you 
used. I have never heard that one before. People are swirling 
through education.
    I suspect some of the students probably had the same 
experience that I had: you felt like you were swirling with 
weights on your feet, though. I am not sure exactly how that 
goes.
    Another comment that I heard, I think correctly, Mr. 
Madzelan, that you said out of the Pell money one-third of that 
is going into remediation. If I didn't hear that correctly we 
will get a clarification from you on it, but that is certainly 
a concern that I have in terms of what we are talking about in 
terms of accessibility.
    And I also heard somebody say what is so important in terms 
of success is the preparation for college that the students 
bring when they come into an institution of higher education, 
and yet we have not had very much focus on that issue in all of 
the discussion that we have.
    So I am very pleased, again, with the testimony that we 
have had here today, and I thank you for helping us move along 
the path that we are going to have to move along as we consider 
the reauthorization of Higher Education and as we look at the 
important issue of student loan interest rates. We are sort of 
getting a two-for out of today's hearing, I think.
    So I thank you all very much.
    I thank the members of the committee for being here.
    There being no further business, the subcommittee stands 
adjourned.
    [A submission by Hon. Lou Barletta, a Representative in 
Congress from the State of Pennsylvania, follows:]

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

    The Pennsylvania Association of Private School Administrators 
represents the more than 300 for-profit career schools, colleges and 
universities in the Commonwealth.
    Like the rest of the country, PAPSA is deeply concerned about 
student debt. What schools in Pennsylvania have found is that over 
borrowing is a big part of the loan debt problem, especially among 
unsophisticated borrowers. And it is increasing despite aggressive loan 
counseling.
    For years, schools have been reporting stories of students asking 
for all the financial aid they are entitled to, paying their tuition 
and then walking away with thousands of dollars which ends up paying 
for a newer car, Christmas presents, plastic surgery, bail money or big 
parties which the school usually ends up hearing about. These cash 
stipends can be, in one case, as high as $24,000 for an associate 
degree. Despite the best efforts of schools to curb overborrowing, the 
U.S. Department of Education mandates that schools must disclose to 
students all the loan money they are entitled to borrow. How can 
schools be responsible for repayment when the US Department of 
Education encourages irresponsible overborrowing?
    Overborrowing is defined in three ways by our schools:
     Students transfer or move from school to school and 
continue to mount debt which goes into deferment while they are 
attending another college or school.
     Commuter students, living at home, borrow available funds 
in excess of direct school costs (tuition, fees, books) without regard 
to debt consequences. While these dollars make sense for traditional 
college students, they are not appropriate for commuter students. Since 
schools must disclose all the loan money available to these students, 
they often access these significant additional dollars with no thought 
to the future.
     Students also overborrow when they receive an unexpected 
increase in PELL, OVR, state grant, public assistance or WIA funding. 
As a result, more grant money is received than students originally 
planned. But when the school counsels and encourages them to return the 
excess loan money, the students almost always decline the request and 
keep the extra loan amount.
    PAPSA collected data from our schools over 3 years (2007-08-09 data 
available upon request) and the three year trend appears clear. While 
there were minor tuition increases, no change in student demographics 
and stable or moderate enrollment increases due to some new campuses, 
only over borrowing, as was defined earlier, increased exponentially.
    The problems PAPSA sees now with overborrowing will only be 
exacerbated in the future. If career schools are going to continue to 
be penalized for high debt, as they are currently under cohort default 
limit requirements, debt problems should be addressed at the front-end 
of the loan as well by curbing over borrowing and considering other 
front-end approaches.
    PAPSA would like to see Congress or the U.S. Department of 
Education consider additional methods beyond counseling for limiting 
student borrowing. We propose Federal changes to allow an institution 
to use professional judgment to decrease the loan amount approved for a 
student based on the appropriateness of the budgeted items and 
Satisfactory Academic Progress (SAP), as long as the loan amount fully 
covers the cost of attendance (COA), as we understand COA to be 
defined, and there are no other government programs that contribute to 
the COA. We would be happy to provide legislative language if 
requested.
    Thank you.
                                 ______
                                 
    [Questions submitted for the record and their responses 
follow:]

                                             U.S. Congress,
                                       Washington, DC, May 8, 2013.
Mr. Terry W. Hartle, Senior Vice President,
Division of Government and Public Affairs, American Council on 
        Education, One Dupont Circle NW, Washington, DC 20036.
    Dear Mr. Hartle: Thank you for testifying before the Subcommittee 
on Higher Education and Workforce Training at the hearing entitled, 
``Keeping College within Reach: The Role of Federal Student Aid 
Programs,'' on Tuesday, April 16, 2013. I appreciate your 
participation.
    Enclosed are additional questions submitted by members of the 
subcommittee after the hearing. Please provide written responses no 
later than May 22, 2013 for inclusion in the final hearing record. 
Responses should be sent to Amy Jones, Brian Melnyk or Emily Slack of 
the committee staff who can be contacted at (202) 225-6558.
    Thank you again for your important contribution to the work of the 
committee.
            Sincerely,
                                 Virginia Foxx, Chairwoman,
           Subcommittee on Higher Education and Workforce Training.

                    CHAIRWOMAN VIRGINIA FOXX (R-NC)

    1. How can we improve the ``triad'' to ensure accrediting agencies 
aren't asked to do too much, but also prevent the federal government 
from overreaching into traditionally academic affairs? Also, what can 
states do to hold up their end of the bargain?

                       CHAIRMAN JOHN KLINE (R-MN)

    1. How do you think the shift from access to completion will affect 
students? Are there ways to incorporate both concepts without limiting 
a student's choice to attend the institution that meets his or her 
needs and budget?

                  REPRESENTATIVE RICHARD HUDSON (R-NC)

    1. What do you see as the appropriate federal role in higher 
education? Has that role expanded too much or not enough with each 
reauthorization of the Higher Education Act?
    2. As the committee begins to reauthorize the Higher Education Act, 
what are some key principles that should guide how we review and reform 
federal student aid programs?

                   REPRESENTATIVE LUKE MESSER (R-IN)

    As a member of both the Education and the Workforce Committee and 
the Budget Committee, I am especially interested in slowing the rapidly 
rising cost of higher education. College costs too much. Parents are 
scrimping and saving and spending their nest eggs to pay for their 
children's education while trying to make ends meet in this sluggish 
economy.
    Between 2001 and 2012, federal financial aid in constant dollars 
increased 140 percent. However, over the same period, published tuition 
and fees for in-state students at public four-year colleges increased 
by an average of 5.6 percent faster than the rate of inflation. In last 
year's State of the Union address, the President said ``we can't just 
keep subsidizing skyrocketing tuition; we'll run out of money.'' This 
year, the President said ``taxpayers cannot continue to subsidize the 
soaring cost of higher education.''
    I am concerned that well-intentioned federal education subsidies 
are hyper-inflating the cost of higher education, leading to more 
borrowing, higher interest payments, and less disposable income, 
essentially creating an ``education bubble'' not dissimilar to the 
housing bubble that nearly crippled the economy several years ago.
    I have several questions on this topic:
    1. Do you believe the current rate of tuition inflation is driven 
in part by federal education subsidies?
    2. Might rising college costs be constrained by more carefully 
targeting and measuring the effectiveness of federal education 
assistance?
    3. What role has federal education assistance like Pell Grants 
played in subsidizing rising tuitions?
    4. CBO's February baseline shows the Pell Grant program facing a 
funding cliff in Fiscal Year 2015 and annual shortfalls in subsequent 
years through the budget window. Do you believe the current structure 
of this important program is sustainable?
    5. Are the costs of the Pell Grant program affordable without 
regular infusions of mandatory funds?
                                 ______
                                 

      Mr. Hartle's Response to Questions Submitted for the Record

                    CHAIRWOMAN VIRGINIA FOXX (R-NC)

    1. This is a very important question, but one for which there are 
no perfect answers. Presenting you with options for reauthorization is 
a high priority for us, and we have begun working to develop 
recommendations. That said, I think a key to solving this problem lies 
squarely with the Department of Education (ED), which, arguably, has 
proven to be the weakest link in the TRIAD. The boundary between 
evaluating academic quality (the primary role of accrediting agencies), 
and monitoring compliance with federal mandates (the primary role of 
the Department) has been breached. Over time, ED has increasingly 
shifted its oversight obligations onto the accreditors. In order to 
reverse this trend, the Department needs to make a real investment in 
the development of guidelines for its program reviews and compliance 
and financial audits that guarantee uniformity, fairness, and, except 
when sensitive institutional information is involved, transparency. It 
also needs to make a real investment in training Department staff 
associated with these processes and better designing the training 
materials they utilize.
    We do not yet have suggestions regarding the states. The recent 
ill-considered regulations concerning state authorization suggest this 
is an area where policymakers need to tread carefully in order not to 
trigger the law of unintended consequences.

                       CHAIRMAN JOHN KLINE (R-MN)

    1. Respectfully, I do not support a shift from access to 
completion. Completion is a concept better suited to the K-12 education 
arena, where: 1) compulsory attendance laws are in place: 2) a 
presumption exists that the government will assume the full cost of 
making education free; and 3) students are viewed as children, not 
adults. None of these conditions holds true for postsecondary 
education.
    However, I do not think the goals of access and completion are 
mutually exclusive in the postsecondary realm, and I do think 
institutions should be challenged and, in some instances, even required 
to do more to promote completion. Targeted strategies such as better 
counseling, prior to as well as during college; using diagnostic 
metrics (like those employed by Arizona State University and others) to 
make timely interventions when a student appears to be going off track; 
and other focused tools should be aggressively employed.
    As to the second part of your question, I think narrowing the 
options and choices that students have would erode the real value of 
college as a place where second chances can put a life or a career back 
on track.

                  REPRESENTATIVE RICHARD HUDSON (R-NC)

    1. In my opinion, the primary federal role in higher education 
remains ensuring that students are not denied the opportunity to pursue 
postsecondary education because they or their families lack the 
resources. One of the main points I attempted to convey in my testimony 
is that the particular direct-to-students mechanism (effectively a 
``voucher'' which the student can take to any eligible institution) for 
federal grants and loans was a truly inspired approach. When states 
were meeting their part of the bargain--supporting public colleges and 
universities with state budget allocations sufficient to prevent large 
hikes in tuition--federal government resources created opportunities 
for students with limited funds to pursue a college education. This 
approach, uniquely American in its egalitarian roots, is as valuable 
today as it was decades ago.
    What has changed and has consequently increased the federal 
financial burden is that the states have abdicated their role of 
keeping tuitions affordable. What has expanded in successive years is 
the amount of federal micromanagement, presumably driven in part by the 
federal government's increased fiscal role in helping to make college 
possible.
    2. Thank you for this question. There are several principles I 
think are important to honor. One is that because college is one of the 
main passports to economic opportunity, access remains a critical 
principle in the design of federal student aid, especially in light of 
disturbing data about growing income stratification among Americans. A 
corollary is that for our democracy and economic system to thrive in 
its own right as well as against global competition, a vibrant and 
growing middle class is critical. Helping those who need help to pursue 
their college goals should not be reduced to a calculation about 
individual benefit but should always be viewed through the prism of 
national interest.

                   REPRESENTATIVE LUKE MESSER (R-IN)

    1. I have not seen any reputable study that has demonstrated that 
federal subsidies drive tuition inflation. In fact, two economists from 
the College of William and Mary, Robert Archibald and David Feldman, 
have found that contrary to the belief that the availability of federal 
aid gives colleges room to raise prices, ``increased federal support is 
indeed causally related to tuition, but not in the direction predicted. 
We found that increases in the maximum Pell Grant caused private four-
year institutions to decrease tuition.'' (See Why Does College Cost So 
Much? [2011]).
    While federal student aid is not among them, there are many drivers 
of tuition inflation that are unique to higher education. At the top 
are costs associated with being a labor-intensive enterprise and having 
expensive related benefit costs. Another powerful cost driver is the 
extraordinarily high cost associated with the imperative to keep 
abreast of technological change, whether the expense derives from 
updating costly research laboratory equipment, from the need to acquire 
state-of-the-art technologies to educate and train students, or from 
purchasing more efficient software for administrative operations like 
billing and accounting. A third category of institutional costs stems 
from the high software and personnel costs of keeping abreast of ever-
changing and ever-expanding federal regulations (and in the case of 
public institutions, state regulations as well). These are only a few 
of cost pressures colleges routinely face.
    2. Over the past decade, trends clearly show that while public and 
private non-profit college tuitions have continued to rise at rates 
that surpass CPI, the trends also show that private college tuitions 
hover close to inflation, while public college tuitions have 
mushroomed. This correlates to the fact that general operational and 
administrative funds from state appropriations to public colleges and 
universities have been declining year-to-year and now stand at an 
historic 25-year low. Because public higher education support is 
discretionary, it has been eclipsed in the budgets of virtually all 
states by funding for prisons, Medicare, and other mandatory 
obligations. Tuition increases have become the relief valve utilized by 
state legislatures to meet statutory requirements to balance their 
budgets. In many cases, the decisions to raise tuition at public 
institutions are made by legislatures and not by public colleges. Would 
states be able to continue this practice without an expectation that 
federal student aid would help to fill the gap? Who can say for sure, 
since the stakes are too important to leave to chance. But it is much 
more difficult to address the question of what the appropriate federal 
role is without relying on states to uphold their part of the equation.
    3. Because of congressional interest in understanding whether a 
relationship exists between increases in Pell Grant funding and 
increases in tuition levels, ACE engaged Donald E. Heller, dean of the 
College of Education at Michigan State University and a respected 
higher education policy analyst, to explore this topic. Dr. Heller's 
paper is entitled, ``Does Federal Financial Aid Drive Up College 
Prices.'' I am happy to submit it for the hearing record.
    The paper concludes that, ``There is little compelling evidence 
that it (the hypothesis attributed to former Secretary of Education 
William Bennett that holds that increases in financial aid have enabled 
colleges and universities to increase tuition) holds true with respect 
to the price-setting behavior of colleges and universities in the 
United States. This complex process involves far too many variables for 
it to be essentially explained by the simplistic notion that tuition--
setting boards sit around and say, `Well, Pell grants are going up $200 
next year, so we can raise tuition $100.' While any change in federal 
aid may be a very small piece of the puzzle that leads to year-to-year 
tuition increases, there is scant evidence that it is a major 
contributing factor.''
    4. My colleagues and I are very concerned about the long-term 
fiscal health of the Pell Grant program, which, as you note, faces a 
looming fiscal cliff in 2014. Figuring out how to put the program on 
secure footing will be a top priority in the reauthorization 
discussions, and we believe that reauthorization is the proper forum 
for addressing the problem.
    Throughout its history, the growth curve for the Pell Grant program 
has been slow and gradual. Commonly, when the annual Pell Grant maximum 
award was increased, it grew by only $100. A $200 annual increase was 
rare. The number of eligible students was also fairly stable, going up 
gradually as slight upticks in high school graduation rates or adults 
returning to school increased the pool of students hoping to pursue 
postsecondary education.
    The program has never witnessed the kind of dramatic annual maximum 
award increases that have occurred through the sizable infusion of 
mandatory funds authorized by the 2007 College Cost Reduction and 
Access Act. Larger grants and a dismal economy have made thousands more 
students eligible for the grant. However, even without this unusual set 
of circumstances, the Pell Grant program has always been 
countercyclical to economic trends; that is to say, demand rises during 
an economic downturn. For example, when a parent loses her job, the 
loss of household income may make her daughter eligible for Pell. In 
addition, the mother herself (or other working adults) may return to 
college to secure new employment skills. If these factors are present 
during normal economic cycles, they have been greatly magnified during 
the past several years of flat economic growth and spiraling 
unemployment. Compounding these added pressures on student aid, 
families who had been covering college costs by refinancing their homes 
saw this option evaporate as the mortgage industry collapsed and the 
housing market flat-lined.
    Going forward, if historical trends hold true, an improving economy 
will greatly lessen the demand for Pell Grant assistance, reducing the 
cost of the program. According to both the Office of Management and 
Budget and the Congressional Budget Office, this has already begun and 
should give us a more realistic starting point for considering what 
changes--if any--may be needed to avoid the Pell fiscal cliff.
    5. The costs of the Pell Grant program are entirely manageable 
without regular infusions of mandatory funds, although like all 
discretionary programs, it will have to withstand the ebbs and flows of 
available federal funding within the annual budget parameters. As much 
as students and the higher education advocacy community were happy to 
have a year-to-year jump in the maximum award and predictable annual 
increases thereafter, my colleagues and I are not enthusiastic about 
the practice of transferring funds from one group of students (those 
who rely on federal student loans) to help send to college another 
group of students (those who depend on Pell Grants). For a substantial 
number of students, those with incomes so low as to qualify (and need) 
both a Pell Grant and loans, this amounts to transferring money from 
one pocket to another.
                                 ______
                                 
                                             U.S. Congress,
                                       Washington, DC, May 8, 2013.
Mr. Dan Madzelan, U.S. Department of Education (Retired),
6517 40th Avenue, University Park, MD 20782.
    Dear Mr. Madzelan: Thank you for testifying before the Subcommittee 
on Higher Education and Workforce Training at the hearing entitled, 
``Keeping College within Reach: The Role of Federal Student Aid 
Programs,'' on Tuesday, April 16, 2013. I appreciate your 
participation.
    Enclosed are additional questions submitted by members of the 
subcommittee after the hearing. Please provide written responses no 
later than May 22, 2013 for inclusion in the final hearing record. 
Responses should be sent to Amy Jones, Brian Melnyk or Emily Slack of 
the committee staff who can be contacted at (202) 225-6558.
    Thank you again for your important contribution to the work of the 
committee.
            Sincerely,
                                 Virginia Foxx, Chairwoman,
           Subcommittee on Higher Education and Workforce Training.

                    CHAIRWOMAN VIRGINIA FOXX (R-NC)

    1. What are some of the benefits of shifting the conversation from 
student access to outcome measures? What are the harmful effects of 
maintaining the current financial aid system?

                       CHAIRMAN JOHN KLINE (R-MN)

    1. In your testimony, you mentioned that the federal government 
does not currently look at student outcomes. As you know the Higher 
Education Act requires institutions to report on graduation rates and 
other metrics, and limits the amount of time that students can access 
Pell Grants and (recently) subsidized Stafford loans. What other 
outcome measures do you think are the most important for us to examine 
during the reauthorization process?

                   REPRESENTATIVE LUKE MESSER (R-IN)

    As a member of both the Education and the Workforce Committee and 
the Budget Committee, I am especially interested in slowing the rapidly 
rising cost of higher education. College costs too much. Parents are 
scrimping and saving and spending their nest eggs to pay for their 
children's education while trying to make ends meet in this sluggish 
economy.
    Between 2001 and 2012, federal financial aid in constant dollars 
increased 140 percent. However, over the same period, published tuition 
and fees for in-state students at public four-year colleges increased 
by an average of 5.6 percent faster than the rate of inflation. In last 
year's State of the Union address, the President said ``we can't just 
keep subsidizing skyrocketing tuition; we'll run out of money.'' This 
year, the President said ``taxpayers cannot continue to subsidize the 
soaring cost of higher education.''
    I am concerned that well-intentioned federal education subsidies 
are hyper-inflating the cost of higher education, leading to more 
borrowing, higher interest payments, and less disposable income, 
essentially creating an ``education bubble'' not dissimilar to the 
housing bubble that nearly crippled the economy several years ago.
    I have several questions on this topic:
    1. Do you believe the current rate of tuition inflation is driven 
in part by federal education subsidies?
    2. Might rising college costs be constrained by more carefully 
targeting and measuring the effectiveness of federal education 
assistance?
    3. What role has federal education assistance like Pell Grants 
played in subsidizing rising tuitions?
    4. CBO's February baseline shows the Pell Grant program facing a 
funding cliff in Fiscal Year 2015 and annual shortfalls in subsequent 
years through the budget window. Do you believe the current structure 
of this important program is sustainable?
    5. Are the costs of the Pell Grant program affordable without 
regular infusions of mandatory funds?
                                 ______
                                 

     Mr. Madzelan's Response to Questions Submitted for the Record

                    CHAIRWOMAN VIRGINIA FOXX (R-NC)

    1. What are some of the benefits of shifting the conversation from 
student access to outcome measures? What are the harmful effects of 
maintaining the current financial aid system?

    Answer: I am not yet ready to say that we have solved the problem 
of higher education access for students from lower-income families in 
this country. However, when the number of Pell grant recipients is 
nearly one-half of the number of enrolled undergraduates, I do think we 
are getting very close. Thus, I also think that it is appropriate to 
begin thinking more about student outcome measures for the Title IV 
student aid programs.
    We should expand the criteria for determining institutional 
eligibility to participate in the Title IV student aid programs. 
Participating schools must be held accountable for meeting certain 
thresholds for performance against a set of access and completion 
metrics. It is important to implement an access measure otherwise 
institutions may be incentivized to move to more selective admissions 
policies in order to improve their completion rates. Such a measure 
could be based on Title IV aid recipients, especially Pell grants. 
Similarly, institutional completion rates should be risk-adjusted, that 
is, special consideration should be given to an institution's mission 
and enrollment of low-income individuals, to account for institutional 
diversity. Completion rates must also better account for the behavior 
of transfer students. It is difficult for institutions to gather post-
graduation information and labor market outcomes for their former 
students. Thus, I think it is appropriate to include a student loan 
repayment rate calculation, in addition to the existing cohort default 
rate calculation, as an institutional Title IV eligibility criterion. I 
think the Department had the right idea regarding a repayment rate 
calculation they proposed in the gainful employment regulation two 
years ago. Of course, the specifics of that calculation can be debated, 
but I think the overall concept is sound.
    There is an old adage, ``If you always do what you've always done, 
you'll always get what you've always got.'' If we as a Nation are 
serious about improving our postsecondary education completion rate for 
degrees, certificates and industry-recognized credentials, then we must 
modify out policies in ways that emphasize pathways to improved student 
outcomes. Otherwise we will have changed nothing.

                       CHAIRMAN JOHN KLINE (R-MN)

    1. In your testimony, you mentioned that the federal government 
does not currently look at student outcomes. As you know the Higher 
Education Act requires institutions to report on graduation rates and 
other metrics, and limits the amount of time that students can access 
Pell Grants and (recently) subsidized Stafford loans. What other 
outcome measures do you think are the most important for us to examine 
during the reauthorization process?

    Answer: I think several of the more recently enacted student-based 
measures are a good start. While I agree with the imposition of 
``lifetime'' limits for Pell grant recipients, this program feature 
helps safeguard program integrity rather than provide a meaningful 
outcome measure, although it could become an incentive for students to 
reduce their time to degree. Limiting access to subsidized Stafford 
loans seems to have been more about finding budget savings than 
measuring student outcomes. Conversely, graduation rates are an 
important and critical outcome measure, but the current approach 
remains flawed inasmuch as it does not appropriately account for the 
outcomes of transfer students.
    I am a proponent of an institution-specific student loan repayment 
rate calculation, not unlike the approach the Department developed for 
its gainful employment regulation. If the purpose of the Title IV 
student aid programs is to make the benefits of higher education 
available to individuals irrespective of their families' financial 
circumstances, then one of those benefits is certainly better 
employment prospects for aided students. Consequently, it is reasonable 
to require that some percentage of an institution's borrowers have 
improved their financial circumstances as result of the education or 
training provided as evidenced by the fact that borrowers are able not 
only to make payments on their loans but also reduce their outstanding 
loan principal in the short term. The repayment rate model should be 
simple: ``X percent of a school's borrowers have reduced the 
outstanding principal balance of their loans by Y dollars (or percent) 
within Z years of entering repayment.'' I do not know what the 
appropriate parameters--X, Y and Z in this model--for a loan repayment 
rate measure should be. It seems that initial values could be specified 
and then reevaluated after several years and modified as necessary.

                   REPRESENTATIVE LUKE MESSER (R-IN)

    As a member of both the Education and the Workforce Committee and 
the Budget Committee, I am especially interested in slowing the rapidly 
rising cost of higher education. College costs too much. Parents are 
scrimping and saving and spending their nest eggs to pay for their 
children's education while trying to make ends meet in this sluggish 
economy.
    Between 2001 and 2012, federal financial aid in constant dollars 
increased 140 percent. However, over the same period, published tuition 
and fees for in-state students at public four-year colleges increased 
by an average of 5.6 percent faster than the rate of inflation. In last 
year's State of the Union address, the President said ``we can't just 
keep subsidizing skyrocketing tuition; we'll run out of money.'' This 
year, the President said ``taxpayers cannot continue to subsidize the 
soaring cost of higher education.''
    I am concerned that well-intentioned federal education subsidies 
are hyper-inflating the cost of higher education, leading to more 
borrowing, higher interest payments, and less disposable income, 
essentially creating an ``education bubble'' not dissimilar to the 
housing bubble that nearly crippled the economy several years ago.
    I have several questions on this topic:
    1. Do you believe the current rate of tuition inflation is driven 
in part by federal education subsidies?

    Answer: I do not believe that federal higher education subsidies, 
especially the Title IV student aid programs, contribute to rising 
tuition prices.

    In the 1998 amendments to the Higher Education Act, Congress 
directed the Department of Education to study college costs paid by 
institutions and tuition prices paid by students. The National Center 
of Education Statistics (NCES), the Department's operating component 
tasked with completing the Congressionally Mandated Studies of College 
Costs and Prices, found that for public four-year institutions, 
declining state appropriations was the single factor associated with 
tuition increases. For private not-for-profit colleges, NCES found no 
single overriding factor consistently related to tuition increases.

    Additionally, the principal Title IV programs are completely (Pell 
grants) or largely (Stafford loans) insensitive to tuition prices. The 
amount of a student's Pell grant is determined based solely on his or 
her family income and household circumstances. A low-income student 
receives the maximum Pell grant whether attending a community college 
or high-priced private university. Similarly, Stafford loan borrowers, 
most of whom are first- or second-year undergraduates, have relatively 
modest annual borrowing limits.

    So, tuition price insensitivity (Pell grants) and limited annual 
Stafford borrowing means that increasing tuition prices will not 
generate significantly more institutional revenue from current students 
from these two federal student aid programs. The way for institutions 
to increase revenues from these two federal student aid programs is to 
enroll more low- and moderate-income students.

    2. Might rising college costs be constrained by more carefully 
targeting and measuring the effectiveness of federal education 
assistance?

    Answer: I think that targeting and measuring the effectiveness of 
federal student aid can help achieve program goals--including improved 
completion rates--articulated by federal policymakers. I think the 
utility of such efforts with respect to constraining tuition prices 
would be largely non-existent. The calculation of student Title IV aid 
award amounts is simply insufficiently sensitive to the price of 
tuition to be an effective cost containment tool.

    3. What role has federal education assistance like Pell Grants 
played in subsidizing rising tuitions?

    Answer: The amount of a student's Pell grant is determined based 
solely on his or her family income and household circumstances. A low-
income student receives the maximum Pell grant whether attending a 
community college or high-priced private university. This insensitivity 
to tuition prices means that a college cannot generate more revenue 
from a Pell grant recipient by increasing tuition.
    That said, I do I think that the Pell Grant program has had a 
positive role in protecting low-income students from rising tuition 
prices. The Department reported in the Congressionally Mandated Studies 
of College Costs and Prices that grant aid in general, but largely Pell 
grants, was sufficient to offset tuition price increases for low-income 
students during the period beginning in 1992 and ending in 2000. Said a 
bit differently, net tuition prices, that is, ``out-of-pocket'' 
expenses, for low-income students did not increase during the time 
period of the study.

    4. CBO's February baseline shows the Pell Grant program facing a 
funding cliff in Fiscal Year 2015 and annual shortfalls in subsequent 
years through the budget window. Do you believe the current structure 
of this important program is sustainable?

    Answer: Both CBO and the Department excel at forecasting near-term 
Pell grant program costs. However, external variables that are harder 
to predict in the longer term lead to significant variation in out-year 
forecasts. When I was with the Department in the early 1990s, the Pell 
grant program--when annual spending was less than $6 billion--faced an 
estimated $2.1 billion shortfall. Congress funded about half of that 
shortfall through special and supplemental appropriations. The other 
half never materialized. CBO and Departmental forecasting did not 
accurately predict program demand several years out, which declined 
largely due to a generally improving economy. Thus while I think 
concern regarding the financial sustainability of the program is 
appropriate, it is important to remember that student demand for Pell 
grants is generally countercyclical--demand subsides as general 
economic conditions improve.

    5. Are the costs of the Pell Grant program affordable without 
regular infusions of mandatory funds?

    Answer: I think Pell grant program costs are affordable. Student 
demand for Pell grants is countercyclical--demand subsides as general 
economic conditions improve. In the history of the program, funding 
shortfalls have coincided with periods of economic recessions. The CBO 
and Administration budget estimates indicate ordinary year-to-year 
increases (around one percent) in demand going forward. So, maintaining 
current service expenditures for Pell grants should be affordable over 
the next ten years.
                                 ______
                                 
                                             U.S. Congress,
                                       Washington, DC, May 8, 2013.
Ms. Patricia McGuire, President,
Trinity Washington University, 125 Michigan Avenue, NE, Washington, DC 
        20017.
    Dear Ms. McGuire: Thank you for testifying before the Subcommittee 
on Higher Education and Workforce Training at the hearing entitled, 
``Keeping College within Reach: The Role of Federal Student Aid 
Programs,'' on Tuesday, April 16, 2013. I appreciate your 
participation.
    Enclosed are additional questions submitted by members of the 
subcommittee after the hearing. Please provide written responses no 
later than May 22, 2013 for inclusion in the final hearing record. 
Responses should be sent to Amy Jones, Brian Melnyk or Emily Slack of 
the committee staff who can be contacted at (202) 225-6558.
    Thank you again for your important contribution to the work of the 
committee.
            Sincerely,
                                 Virginia Foxx, Chairwoman,
           Subcommittee on Higher Education and Workforce Training.

                    CHAIRWOMAN VIRGINIA FOXX (R-NC)

    1. Your testimony recognizes the importance of accountability for 
federal student aid dollars. How can we ensure that taxpayer dollars 
are spent effectively, without impinging on student choice or limiting 
access for the lowest income students and families?

                       CHAIRMAN JOHN KLINE (R-MN)

    1. How are federal regulations and reporting requirements affecting 
the recent spike in college tuition? Is the federal government putting 
too large of a burden on colleges and universities?

                  REPRESENTATIVE RICHARD HUDSON (R-NC)

    1. What are the biggest problems facing the existing federal 
financial aid system and what suggestions do you have for improving the 
system?

                   REPRESENTATIVE LUKE MESSER (R-IN)

    As a member of both the Education and the Workforce Committee and 
the Budget Committee, I am especially interested in slowing the rapidly 
rising cost of higher education. College costs too much. Parents are 
scrimping and saving and spending their nest eggs to pay for their 
children's education while trying to make ends meet in this sluggish 
economy.
    Between 2001 and 2012, federal financial aid in constant dollars 
increased 140 percent. However, over the same period, published tuition 
and fees for in-state students at public four-year colleges increased 
by an average of 5.6 percent faster than the rate of inflation. In last 
year's State of the Union address, the President said ``we can't just 
keep subsidizing skyrocketing tuition; we'll run out of money.'' This 
year, the President said ``taxpayers cannot continue to subsidize the 
soaring cost of higher education.''
    I am concerned that well-intentioned federal education subsidies 
are hyper-inflating the cost of higher education, leading to more 
borrowing, higher interest payments, and less disposable income, 
essentially creating an ``education bubble'' not dissimilar to the 
housing bubble that nearly crippled the economy several years ago.
    I have several questions on this topic:
    1. Do you believe the current rate of tuition inflation is driven 
in part by federal education subsidies?
    2. Might rising college costs be constrained by more carefully 
targeting and measuring the effectiveness of federal education 
assistance?
    3. What role has federal education assistance like Pell Grants 
played in subsidizing rising tuitions?
    4. CBO's February baseline shows the Pell Grant program facing a 
funding cliff in Fiscal Year 2015 and annual shortfalls in subsequent 
years through the budget window. Do you believe the current structure 
of this important program is sustainable?
    5. Are the costs of the Pell Grant program affordable without 
regular infusions of mandatory funds?
                                 ______
                                 

      Ms. McGuire's Response to Questions Submitted for the Record

             QUESTIONS FROM CHAIRWOMAN VIRGINIA FOXX (R-NC)

    1. Your testimony recognizes the importance of accountability for 
federal student aid dollars. How can we ensure that taxpayer dollars 
are spent effectively, without impinging on student choice or limiting 
access for the lowest income students and families?

    Effective stewardship of federal student aid dollars is a vitally 
important obligation of colleges and universities as well as the U.S. 
Department of Education. We are all partners in working toward national 
policy goals to ensure broad access to college as a means to improve 
the long-term educational and economic outcomes for the nation. To 
achieve the goals that we all share, we need a regulatory system that 
focuses on the right issues to protect the federal investment from 
fraud and abuse, but that does not discourage institutions that choose 
to serve low income students, or that adds cost burdens with no clear 
gain in producing effective results.
    Institutions of higher education already must meet high standards 
to guard against fraud and abuse in the management of federal student 
aid programs, and the Department of Education should have all the 
support it needs to guarantee effective oversight of these protections.
    The regulatory system also needs to recognize that a ``one size 
fits all'' approach to academic oversight will be very harmful to low 
income at-risk students and the institutions that serve them very well. 
Low income students move through college in many non-traditional ways--
often attending multiple institutions, taking credits in different 
configurations, quite often completing degrees well after the standard 
4-to-6 year completion clock has tolled. Financial aid policies need to 
be more flexible, not less, to encourage non-traditional students to 
complete degrees in the ways that make sense for them, which are not 
necessarily the ways that worked for traditional students half a 
century ago. Financial aid policies should robustly support summer 
semester enrollments, part-time enrollments below half-time credits, 
and resumption of academic coursework after years spent raising 
families. Recent changes to the Pell Grant eligibility rules--
     elimination of summer Pell, reduction in semesters of 
eligibility--are a serious blow to institutional ability to encourage 
non-traditional students to complete degrees.
    Finally, the most effective way to assure that students are getting 
a quality education for the funds expended by the federal government is 
through a strong and independent accreditation system that can focus on 
the academic issues it is intended to address. There has been an 
alarming trend in which the Department of Education increasingly 
expects accreditors to use rigid checklists and measure institutional 
compliance with regulations that are unrelated to academic quality. 
Private voluntary accreditation--both by the comprehensive regional 
accrediting agencies as well as by the specialized disciplinary 
accrediting bodies--probes deeply into the quality of general 
education, major programs, graduate and professional programs, student 
outcomes assessment, faculty quality, student support services, 
governance and the systems and services necessary to ensure overall 
student success. The accreditation system is the most effective means 
available to ensure quality in the federal investment while also 
guarding against the harmful tendency of ``one size fits all'' 
approaches to academic regulation.

               QUESTIONS FROM CHAIRMAN JOHN KLINE (R-MN)

    1. How are federal regulations and reporting requirements affecting 
the recent spike in college tuition? Is the federal government putting 
too large of a burden on colleges and universities?

    Yes, the regulatory burden is adding to overall college costs. The 
last reauthorization of the Higher Education Act brought with it 
numerous new requirements without--to my knowledge--removing any of the 
existing ones. In addition to the regulations issued to implement these 
requirements, the Department of Education also issued an extensive 
package of program integrity regulations, is about to issue new 
requirements related to teacher preparation programs, and is planning a 
new negotiated rulemaking session for this fall.
    At Trinity, we have to keep adding staff and acquiring more and 
more software to keep track of all of the different reporting 
requirements, few of which relate directly to the quality of our 
academic programs. We are a relatively small institution with a strong 
reputation for managing our costs effectively. But in the last few 
years, we've had to add an in-house general counsel's office at more 
than twice the cost of our previous retainer with an outside law firm 
just to help us with compliance.
    We maintain a robust list of policies and procedures on our 
website, all designed to keep up with compliance demands--I've seen 
that list double in the last few years, and even now, we're working on 
even more policy statements to supplement existing policy statements. 
We engage in extensive training with all of our faculty and staff, and 
yet, counsel now advises we must spend even more time on training, 
which is time taken away from students.
    We spent almost $1.5 million on campus security, which is a big 
chunk of our $35 million operating budget--more than four times what we 
spend on our library--and yet, the security chief now tells me we have 
to make the budget even bigger to get some new software for new and 
different reporting mandates. Reporting and compliance considerations 
almost seem to crowd-out the real work, which is to ensure student 
welfare, safety and success.
    We've just added yet another vice president, this time in student 
affairs, to help us keep up with the increasingly complicated 
regulations about the management of student issues. Yet, most of the 
issues we see do not fall within the areas of regulatory concern, so 
while we collect and report voluminous data and strive for excellence 
in compliance, the real work of the university sometimes seems to be 
running on a parallel track.
    Keeping track of all of the myriad ways we must report data is 
demanding on the staff at my small institution--not only in terms of 
the time they spend but also in the lost opportunity costs of time they 
could have spent assisting students. On more than one occasion, I've 
pitched in myself to get it all done. I spent one weekend, for example, 
calculating detailed percentage break-downs of all forms of comparative 
expenditures on men's and women's sports--and this at school where 95% 
of the students are women. Next year we'll be adding more staff yet 
again, this time in institutional research, to augment our ability to 
do all of the data reporting. Once again, another administrative 
position added to our roster that does not go directly to the education 
of our students!

               QUESTIONS FROM REP. RICHARD HUDSON (R-NC)

    What are the biggest problems facing the existing federal financial 
aid system and what suggestions do you have for improving the system?

Funding and Flexibility Funding
    Over the last five years, the federal investment in Pell Grants and 
student loans has grown exponentially. While this has happened during a 
particularly difficult budget period, in many ways it shows the 
programs are doing what they were designed to do. There are two 
particular trends causing program costs to rise: an increase in the 
number of children in poverty in this country, and the tendency of 
Americans who lose jobs to go back to school to retrain so they can 
reenter the workforce. The rate of children from poverty who aspire to 
a college education will continue to grow so funding pressures will 
continue.
    For both of these populations, the cost of the federal investment 
in higher education is worth it. While I think the greatest value is on 
the human side, it also makes financial sense for the federal 
government. When a student from a low-income family graduates from 
Trinity, not only will her life be changed, but so will the life of her 
children. Studies show three things: 1) that she will more than payback 
the cost of her Pell Grant through increased lifetime earnings, 2) that 
her children are unlikely to qualify for Pell Grants or numerous other 
federal aid programs, and 3) the government will make a profit on her 
student loans that will also cover much of the Pell Grant costs.
    The federal student financial aid system works--it helps millions 
of students have access to postsecondary education and complete college 
degrees every year. And it works the way it was designed to work by 
combining basic federal assistance for the poorest students (Pell 
Grants) with incentives for self-help (Work Study and Loans), 
institutional partnerships (Campus-based Aid Programs) and state 
partnerships (SSIG/LEAP), to ensure a capable low-income student had 
the same college opportunity as a better-off peer.

Flexibility
    We need to ensure that student aid program rules keep up with the 
changing characteristics of American students and the changing ways we 
are teaching. It is not flexible enough.
    In my formal written testimony I said that the characteristics of 
Trinity's full-time undergraduates are emblematic of the new 
populations of students driving future enrollments in higher education. 
According to data from the National Center for Education Statistics 
(Projections in Education to 2021), from now to 2021 the population of 
Hispanic students in college will increase by 42%, African Americans by 
25%, Asians by 20% while the more traditional White population will 
increase by only 4%.
    Because black and Hispanic children in the United States suffer 
more poverty and related social problems, and have more significant 
educational challenges because of under-performing K-12 schools in 
their impoverished neighborhoods, the rising tide of low income 
students of color in college will require creative solutions on the 
part of both Congress and colleges to ensure that higher education 
remains accessible to them.
    The changing demographics of this nation also reshape the 
conventional notions of who goes to college and how they attend. 
Regardless of age, low income students are more likely to have non-
traditional attendance patterns and completion timetables because of 
their work and family responsibilities, health conditions and need for 
remediation. Department of Education data reveals that more than 70% of 
all college students have at least one ``non-traditional'' 
characteristic which includes not only age (being 25 or older in 
college), but also attending part-time, working full-time, parenthood, 
being self-supporting.
    Institutions are responding with flexible programs so our students 
take classes and work towards their degrees year-round and seven days a 
week. Our institutions are flexible, but the federal student aid system 
is not. Reinstating the ``summer Pell'' or some other Pell Grant 
delivery system (like the Pell Well concept from NASFAA) that would 
make grant aid available year-round would really help determined low-
income students reach their completion and employment goals.

                 QUESTIONS FROM REP. LUKE MESSER (R-IN)

    Do you believe the current rate of tuition inflation is driven in 
part by federal education subsidies?

    No, this is simply untrue. In fact, quite the opposite, federal 
student aid helps to restrain tuition growth. Almost no student in any 
kind of college or university pays the total actual cost of education; 
virtually all tuition prices are subsidized to some extent by state 
subsidies in public institutions, by charitable gifts and grants in 
private institutions. Among state institutions, we are seeing a 
dramatic rise in tuition prices precisely because the states are 
rapidly dis-investing in public higher education--that is the single 
biggest reason why headlines blare about ``skyrocketing tuition.'' 
State universities are scrambling to cover the actual costs of 
operations as state legislatures slash budgets.
    Among private institutions, charitable gifts and other non-tuition 
revenues help to offset some of the costs of operations, but those 
costs keep rising in large part because of consumer demand and 
regulatory burdens.
    Students want more technology, more amenities like recreation 
centers, more choices whether in the dining hall or the curriculum, 
more elaborate residential facilities, more time and attention in 
advising, counseling and health services. Meanwhile, federal, state and 
local regulators impose more demanding rules requiring more data 
production, more software systems, enhanced compliance activities, 
increased staffing to produce regulatory reports. In the last ten 
years, even at a small university like Trinity, our costs for 
technology have increased dramatically. The safe management of 
facilities, including addressing ancient infrastructures that require 
modernization to comply with the ADA, for example, or environmental and 
life safety improvements, all require considerably more investment.
    Another substantial factor driving tuition prices is the 
expectation of accessibility for more and more low income students 
whose needs go far beyond the subsidies that Pell grants provide. At 
Trinity, where we educate a remarkably low income population of 
students from the District of Columbia, we keep our tuition affordable 
through low rates of increase (just about 2% annually) and strong 
discounting practices that return an average grant of about $8,000, or 
40% of our tuition price ($20,550 in 2012-2013) to almost all full-time 
students. Coming from difficult urban schools, these students also need 
significant academic assistance, health services, counseling services 
and a range of other supports to ensure academic success. As increasing 
numbers of low income students enter the nation's colleges and 
universities, they will also need greater investment to ensure 
retention and completion.
    Federal student aid helps to mitigate the potential for even higher 
prices by filling in some of the gaps in the cost-price equation. Since 
the original financial aid program in the G.I. Bill of 1944, this 
nation has promoted the value of supporting higher education as a top 
priority in public policy as a way to ensure a strong workforce and 
great economic returns for the nation.
    What is more, leading higher education economists, as well as 
federal studies conducted under the Clinton, Bush and Obama 
presidencies, have found no causal relationship between increases in 
federal student aid and tuition.
    (For further reference see: ``Why student aid is NOT driving up 
college costs,'' Washington Post, Jun 1, 2012; Government 
Accountability Office, ``Federal Student Loans: Patterns in Tuition, 
Enrollment, and Federal Stafford Loan Borrowing Up to the 2007-08 Loan 
Limit Increase,'' May 2011; U.S. Department of Education, National 
Center for Education Statistics, ``Study of College Costs and Prices 
1988-89 to 1997-98, Vol. 1,''December 2001; National Commission on the 
Cost of Higher Education, ``Straight Talk about College Costs 
&Prices,'' February 1998.)

    Might rising college costs be constrained by more carefully 
targeting and measuring the effectiveness of federal education 
assistance?

    No. Cuts to federal student aid will not help lower costs. In fact, 
as stated above, cuts to federal student aid could have the opposite 
effect of increasing prices.

    What role has federal education assistance like Pell Grants played 
in subsidizing rising tuition?

    None.

    CBO baseline shows Pell funding cliff in FY 2015--do you believe 
the current structure of this important program is sustainable? Are the 
costs of the Pell Grant program affordable without regular infusions of 
mandatory funds?

    Yes, if Congress makes funding the program a priority. The Pell 
Grant program has had strong bipartisan, bicameral and public support 
since its creation in 1972. The maximum grant was set and funded solely 
by the appropriations committees until 2007, when additional funds were 
made available from the education committees through budget 
reconciliation for the first time. Maintaining the maximum grant and 
helping students get into and through college are the aspects of the 
program that must be sustained and strengthened. How the program is 
paid for is up to Congress. For the sake of low-income students, and 
those of us who serve them, it should be predictable.
                                 ______
                                 
    [Whereupon, at 12:54 p.m., the subcommittee was adjourned.]