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





        KEEPING COLLEGE WITHIN REACH: STRENGTHENING PELL GRANTS
                         FOR FUTURE GENERATIONS

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

                                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, DECEMBER 3, 2013

                               __________


                           Serial No. 113-40

                               __________

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

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                COMMITTEE ON EDUCATION AND THE WORKFORCE

                    JOHN KLINE, Minnesota, Chairman

Thomas E. Petri, Wisconsin           George Miller, California,
Howard P. ``Buck'' McKeon,             Senior Democratic Member
    California                       Robert E. Andrews, New Jersey
Joe Wilson, South Carolina           Robert C. ``Bobby'' Scott, 
Virginia Foxx, North Carolina            Virginia
Tom Price, Georgia                   Rubeen 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                Rauul 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                 Frederica S. Wilson, Florida
Joseph J. Heck, Nevada               Suzanne Bonamici, Oregon
Susan W. Brooks, Indiana             Mark Pocan, Wisconsin
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           Rubeen 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                Suzanne Bonamici, Oregon
Matt Salmon, Arizona                 Carolyn McCarthy, New York
Brett Guthrie, Kentucky              Rush Holt, New Jersey
Lou Barletta, Pennsylvania           Susan A. Davis, California
Joseph J. Heck, Nevada               David Loebsack, Iowa
Susan W. Brooks, Indiana             Frederica S. Wilson, Florida
Richard Hudson, North Carolina
Luke Messer, Indiana

















                            C O N T E N T S

                              ----------                              
                                                                   Page

Hearing held on December 3, 2013.................................     1

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

Statement of Witnesses:
    Dannenberg, Michael, director of higher education and 
      education finance policy, the Education Trust..............    52
        Prepared statement of....................................    54
    Draeger, Justin S., president, National Association of 
      Student Financial Aid Administrators (NASFAA)..............     6
        Prepared statement of....................................     9
    Heath, Richard C., director, student financial services, Anne 
      Arundel Community College, Arnold, MD......................    61
        Prepared statement of....................................    64
    Robinson, Jenna Ashley, Ph.D., John W. Pope Center for Higher 
      Education Policy...........................................    27
        Prepared statement of....................................    29

Additional Submissions:
    Mr. Draeger:
        Appendix A: NASFAA History of Federal Methodology and 
          Pell Changes...........................................    18
        Appendix B: NASFAA Reimagining Aid Design and Delivery 
          (RADD) report, Internet address to.....................    27
        Appendix C: NASFAA A Tale of Two Incomes: Comparing 
          Prior-Prior Year and Prior-Year through Pell Grant 
          Awards, Internet address to............................    27
    Mr. Hinojosa:
        The American Indian Higher Education Consortium, prepared 
          statement of...........................................    94

 
        KEEPING COLLEGE WITHIN REACH: STRENGTHENING PELL GRANTS
                         FOR FUTURE GENERATIONS

                              ----------                              


                       Tuesday, December 3, 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 10:00 a.m., in 
room 2175, Rayburn House Office Building, Hon. Virginia Foxx 
[chairman of the subcommittee] presiding.
    Present: Representatives Foxx, McKeon, Thompson, Walberg, 
Guthrie, Heck, Brooks, Hudson, Messer, Hinojosa, Tierney, 
Bishop, Bonamici, Holt, Davis, Loebsack, and Wilson.
    Also present: Representative Kline.
    Staff present: James Bergeron, Director of Education and 
Human Services Policy; Amy Raaf Jones, Education Policy Counsel 
and Senior Advisor; Nancy Locke, Chief Clerk; Brian Melnyk, 
Professional Staff Member; Daniel Murner, Press Assistant; 
Krisann Pearce, General Counsel; Nicole Sizemore, Deputy Press 
Secretary; Emily Slack, Legislative Assistant; Alex Sollberger, 
Communications Director; Alissa Strawcutter, Deputy Clerk; 
Tylease Alli, Minority Clerk/Intern and Fellow Coordinator; 
Jody Calemine, Minority Staff Director; Eamonn Collins, 
Minority Fellow, Education; Jamie Fasteau, Minority Director of 
Education Policy; Eunice Ikene, Minority Staff Assistant; Julia 
Krahe, Minority Communications Director; Megan O'Reilly, 
Minority General Counsel; 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. Good morning. Thank you for joining us for 
our hearing on the Pell Grant program. We have an excellent 
panel of witnesses here this morning, and we look forward to 
their testimony.
    This hearing is the 11th in a series designed to gain a 
more complete understanding of the challenges facing 
postsecondary students and institutions. The hearings help to 
inform the committee of policy changes that should be 
considered as part of the upcoming reauthorization of the 
Higher Education Act, we abbreviate HEA.
    Over the last year, these hearings have provided a forum to 
discuss opportunities to encourage innovation, increase 
transparency, enhance data collection and improve college 
access and affordability. We have been fortunate to hear from a 
number of expert witnesses whose testimony and insight will 
provide invaluable as we begin crafting legislation next year 
to strengthen America's higher education system through HEA 
reauthorization.
    With roughly 71 percent of undergraduates receiving some 
form of federal financial aid, simplifying the complex system 
of grants, loans and institutional support programs remains a 
central goal in our reauthorization efforts.
    Just last month, the committee discussed proposals to help 
streamline student aid programs. Today, we will build on that 
conversation by examining the Pell Grant program, which many 
consider to be the cornerstone of federal student aid.
    When the Pell Grant program began in the early 1970s, its 
central focus was providing financial assistance to help low-
income students access higher education. In its first year, the 
program provided aid to 176,000 students. Since then, Pell has 
grown dramatically. Today, more than 9 million students are 
Pell Grant recipients.
    The sharp rise in Pell participation in more recent years 
has been attributed to several factors. One is the economic 
recession, which spurred many individuals to go back to school 
to learn skills needed to compete for today's jobs. Also, 
Washington policymakers passed legislative changes to Pell to 
increase the program's maximum grant award and weaken student 
eligibility requirements, allowing more students to receive 
larger Pell Grant awards.
    Since the program guarantees aid to any student who meets 
the eligibility criteria, enrollment spikes threaten the Pell 
program's long-term fiscal viability.
    Pell is one of the federal government's largest education 
expenditures, costing taxpayers about $30 billion a year. As 
with every federal program, especially one with such a hefty 
price tag, Washington leaders have a responsibility to ensure 
the Pell Grant program is effective. There is concern among 
members of the higher education community and many of my 
colleagues in Congress that Pell has strayed too far from its 
original intent.
    With such a large recipient pool, some worry the program 
could eventually become insoluble, leading to a lack of funds 
for our neediest students. Budget experts have projected multi-
million dollar funding gaps, raising additional questions about 
whether the program's current structure is fiscally 
responsible. Recognizing the Pell Grant program is on an 
unsustainable path, leaders in higher education, business, and 
public policy have begun circulating proposals for reform.
    One proposed first step to strengthen the program is to 
simplify the Pell Grant application process. It has been 
suggested that instead of forcing families to complete 
overwhelming amounts of paperwork, a more streamlined process 
would better inform students of their options and generate a 
more accurate reflection of their financial needs.
    Additional proposals suggest tightening eligibility 
requirements, increasing grant flexibility, and implementing 
accountability measures to ensure the program is not only 
helping the neediest students enroll in college, but is also 
rewarding and encouraging those who make progress toward 
completion.
    When hard-working taxpayer money is being spent, taxpayers 
deserve accountability, which means that it is critical that we 
have the information necessary to know what is and is not 
working in the Pell program. The Pell Grant program has become 
the epicenter of our nation's financial aid system, and we all 
want to make sure it meets its targets of supporting low-income 
students who wish to earn a college degree. However, we must 
also be honest about the challenges facing the program and work 
together in good faith to enact smart policy changes that will 
help get the program back on stable ground.
    We have a great panel of witnesses with us today, and I 
look forward to hearing their thoughts on ways we can 
strengthen the Pell Grant program through our upcoming 
reauthorization of the Higher Education Act.
    I am now pleased to recognize my colleague, Mr. Rubeen 
Hinojosa, the senior Democrat member of the subcommittee, for 
his opening remarks.
    [The statement of Chairwoman Foxx follows:]

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

    Good morning. Thank you for joining us for our hearing on the Pell 
Grant program. We have an excellent panel of witnesses here this 
morning, and we look forward to their testimony.
    This hearing is the eleventh in a series designed to gain a more 
complete understanding of the challenges facing postsecondary students 
and institutions. The hearings help to inform the committee of policy 
changes that should be considered as part of the upcoming 
reauthorization of the Higher Education Act.
    Over the last year these hearings have provided a forum to discuss 
opportunities to encourage innovation, increase transparency, enhance 
data collection, and improve college access and affordability. We have 
been fortunate to hear from a number of expert witnesses whose 
testimony and insight will prove invaluable as we begin crafting 
legislation next year to strengthen America's higher education system 
through HEA reauthorization.
    With roughly 71 percent of undergraduates receiving some form of 
federal financial aid, simplifying the complex system of grants, loans, 
and institutional support programs remains a central goal in our 
reauthorization efforts. Just last month the committee discussed 
proposals to help streamline student aid programs. Today we will build 
on that conversation by examining the Pell Grant program, which many 
consider to be the cornerstone of federal student aid.
    When the Pell Grant program began in the early 1970s, its central 
focus was providing financial assistance to help low-income students 
access higher education. In its first year, the program provided aid to 
176,000 students. Since then, Pell has grown dramatically; today more 
than 9 million students are Pell Grant recipients.
    The sharp rise in Pell participation in more recent years has been 
attributed to several factors. One is the economic recession, which 
spurred many individuals to go back to school to learn skills needed to 
compete for today's jobs. Also, Washington policymakers passed 
legislative changes to Pell to increase the program's maximum grant 
award and weaken student eligibility requirements--allowing more 
students to receive larger Pell Grant awards.
    Since the program guarantees aid to any student who meets the 
eligibility criteria, enrollment spikes threaten the Pell program's 
long-term fiscal viability. Pell is one of the federal government's 
largest education expenditures, costing taxpayers about $30 billion a 
year. As with every federal program, especially one with such a hefty 
price tag, Washington leaders have a responsibility to ensure the Pell 
Grant program is effective.
    There is concern among members of the higher education community 
and many of my colleagues in Congress that Pell has strayed too far 
from its original intent. With such a large recipient pool, some worry 
the program could eventually become insoluble, leading to a lack of 
funds for our neediest students. Budget experts have projected multi-
million dollar funding gaps, raising additional questions about whether 
the program's current structure is fiscally responsible.
    Recognizing the Pell Grant program is on an unsustainable path, 
leaders in higher education, business, and public policy have begun 
circulating proposals for reform. One proposed first step to strengthen 
the program is to simplify the Pell Grant application process. It has 
been suggested that instead of forcing families to complete 
overwhelming amounts of paperwork, a more streamlined process would 
better inform students of their options and generate a more accurate 
reflection of their financial needs.
    Additional proposals suggest tightening eligibility requirements, 
increasing grant flexibility, and implementing accountability measures 
to ensure the program is not only helping the neediest students enroll 
in college, but is also rewarding and encouraging those who make 
progress toward completion. When hardworking taxpayer money is being 
spent, taxpayers deserve accountability which means that it is critical 
that we have the information necessary to know what is and is not 
working in the Pell program.
    The Pell Grant program has become the epicenter of our nation's 
financial aid system and we all want to make sure it meets its target 
of supporting low-income students who wish to earn a college degree. 
However, we must also be honest about the challenges facing the program 
and work together in good faith to enact smart policy changes that will 
help get the program back on stable ground.
    We have a great panel of witnesses with us today, and I look 
forward to hearing their thoughts on ways we can strengthen the Pell 
Grant program through our upcoming reauthorization of the Higher 
Education Act. I now am pleased to recognize my colleague, Mr. Rubeen 
Hinojosa, the senior Democrat member of the subcommittee, for his 
opening remarks.
                                 ______
                                 
    Mr. Hinojosa. Thank you, Chairwoman Foxx. Today's hearing 
is an opportunity to discuss ways in which Congress can 
strengthen the federal Pell Grant program, not to weaken it. I 
remember the 8 years during the George W. Bush administration, 
the Pell Grant hovered at about $3,000 to $3,400 a year and, 
often times, cutting it at least 50 percent to try to get more 
money to go to the war in Iraq. I was not happy with that. We 
fought and got it back up to $3,000.
    In the past several years, Democrats have fought to make 
college more affordable by increasing the Pell Grant award by 
at least $1,600, from $4,050 in 2006 to $5,645 in 2014, 
allowing it to increase yearly with inflation.
    Before we hear from our distinguished panel of witnesses, I 
want to underscore the importance of the federal Pell Grant 
program in advancing college access and affordability. Serving 
approximately 9 million hard-working students, the federal Pell 
Grant program is the single largest source of federal grant aid 
which supports college students.
    According to the presidents and the chancellors who came to 
visit me during the period that I was chairman of this 
committee, they said that those were the highest priorities 
they had--and that was to make higher education affordable and 
accessible, and that we should look very carefully at 
increasing the Pell Grant.
    Without a doubt, Pell grants are expanding access for low-
income students and students of color. An estimated 92 percent 
of Pell Grant recipients have family incomes below the national 
median of $51,800. More than 60 percent of African-American 
undergraduates and half of the Latino undergraduates rely on 
Pell grants to afford the cost of a college degree.
    Pell grants strengthen our economy and boost workforce 
productivity. We know that a college degree can dramatically 
increase employment and wages, and move low-income students 
into the middle class. While I am proud of the federal 
investments that Congress has made in the federal grant program 
in the recent years through the passage of Student Aid and 
Fiscal Responsibility Act of 2010, known as SAFRA, and the 
College Cost Reduction and Excess Cost of 2007, I know that 
Congress can do much more to support college access and 
success.
    Unfortunately, recent budget agreements have reduced the 
Pell Grant funding by more than $50 billion, by cutting 
hundreds of thousands of students from the program. Many other 
changes slashed other federal student aid programs to fund the 
Pell Grant program. We can do better than robbing Peter to pay 
Paul.
    Moving forward, the Republican majority wants to eliminate 
hundreds of thousands, if not millions, more students from the 
Pell Grant program. The Republican-passed budget would do 
exactly that, by cutting $98 billion from that program alone.
    To be sure, students and families continue to struggle to 
afford the cost of a college degree. Skyrocketing college costs 
in recent years have eroded the purchasing power of the Pell 
Grant, forcing Pell Grant recipients to increase their reliance 
on student loans. Next year's maximum Pell Grant award of 
$5,785 will cover the smallest share of college costs since the 
start of the program. It is troubling to me to know that Pell 
Grant recipients are already more than twice as likely as other 
students to have student loans.
    In closing, I want to say that as Congress is working to 
reauthorize the Higher Education Act, I urge my colleagues on 
both sides of the aisle to evaluate the Pell Grant as a piece 
of the larger budget discussions, and not limit themselves to 
solving short-term funding problems with long-lasting cuts to 
student aid.
    And with that, Madam Chair, I yield back.
    [The statement of Mr. Hinojosa follows:]

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

    Thank you, Chairwoman Foxx.
    Today's hearing is an opportunity to discuss ways in which Congress 
can strengthen the federal Pell Grant program, not weaken it. In the 
past several years, Democrats have fought to make college more 
affordable by increasing the maximum Pell Grant award by $1,600, from 
$4,050 in 2006 to $5,645 in 2014, allowing it to increase yearly with 
inflation.
    Before we hear from our distinguished panel of witnesses, I want to 
underscore the importance of the federal Pell Grant program in 
advancing college access and affordability.
    Serving approximately nine million hard working students, the 
federal Pell grant program is the single largest source of federal 
grant aid, which supports college students.
    Without a doubt, Pell Grants are expanding access for low-income 
students and students of color. An estimated 92% of Pell Grant 
recipients have family incomes below the national median of $51,800. 
More than 60% of African American undergraduates and half of Latino 
undergraduates rely on Pell grants to afford the cost of a college 
degree.
    Pell grants strengthen our economy and boost workforce 
productivity. We know that a college degree can dramatically increase 
employment and wages and move low-income students into the middle 
class.
    While I am proud of the federal investments the Congress has made 
in the Pell Grant program in recent years through the passage of 
Student Aid and Fiscal Responsibility Act of 2010 (SAFRA), and the 
College Cost Reduction and Access Act of 2007, I know that Congress can 
do much more to support college access and success.
    Unfortunately, recent budget agreements have reduced Pell Grant 
funding by more than $50 billion by cutting hundreds of thousands of 
students from the program. Many other changes slashed other federal 
student aid programs to fund the Pell grant program. We can do better 
than `robbing Peter to pay Pell.'
    Moving forward, the Republican majority wants to eliminate hundreds 
of thousands, if not millions, more students from the Pell program. The 
Republican passed budget would do exactly that by cutting $98 billion 
from the program alone.
    To be sure, students and families continue to struggle to afford 
the cost of a college degree. Skyrocketing college costs in recent 
years have eroded the purchasing power of the Pell grant, forcing Pell 
grant recipients to increase their reliance on student loans.
    Next year's maximum Pell grant award of $5,785 will cover the 
smallest share of college costs since the start of the program. It is 
troubling to know that Pell Grant recipients are already more than 
twice as likely as other students to have student loans.
    As Congress works to reauthorize the Higher Education Act, I urge 
my colleagues to value the Pell program as a piece of the larger budget 
discussions and not limit themselves to solving short-term funding 
problems with long lasting cuts to student aid.
    With that, I yield back.
                                 ______
                                 
    Chairwoman Foxx. Thank you, Mr. Hinojosa. Pursuant to 
committee rule 7(c), all subcommittee members will be permitted 
to submit written statements to be included in the permanent 
hearing record. And without objection, the hearing record will 
remain open for 14 days to allow statements, questions for the 
records, and other extraneous material referenced during the 
hearing to be submitted in the official record.
    It is now my pleasure to introduce our distinguished panel 
of witnesses. Mr. Justin Draeger serves as the president and 
chief executive officer of the National Association of Student 
Financial Aid administrators. Dr. Jenna Ashley Robinson is the 
director of outreach at the John W. Pope Center for Higher 
Education Policy, a non-profit institute dedicated to improving 
higher education in North Carolina and the nation. Mr. Michael 
Dannenberg serves as the director of higher education and 
education finance policy at the Education Trust. Mr. Richard 
Heath is currently the financial aid director at Anne Arundel 
Community College, a public 2-year institution located in 
Arnold, Maryland.
    Before I recognize you to provide your testimony, let me 
briefly explain our lighting system. You will have five minutes 
to present your testimony. When you begin, the light in front 
of you will turn green. When one 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 five minutes to ask questions of the panel.
    I now recognize Mr. Justin Draeger for five minutes.

   STATEMENT OF JUSTIN DRAEGER, PRESIDENT AND CEO, NATIONAL 
      ASSOCIATION OF STUDENT FINANCIAL AID ADMINISTRATORS

    Mr. Draeger. Thank you, Chairwoman Foxx, Ranking Member 
Hinojosa, and members of the committee. As has been said, my 
name is Justin Draeger from the National Association of Student 
Financial Aid Administrators. We represent colleges and 
universities across the country. NASFAA member institutions 
serve 90 percent of all federal student aid recipients.
    I am grateful to be able to talk to you about the Pell 
Grant program which, has been pointed out, serves 9 million 
students annually and over its 41-year history has benefited 
over 60 million students. The program is well-targeted in that 
85 percent of recipients have family incomes of less than 
$40,000.
    Fifty percent of those receiving Pell grants have family 
incomes of less than $20,000, and it is weighted towards those 
with the least resources. Seventy percent of Pell recipients 
are receiving the maximum award for their enrollment status.
    The Pell Grant program, of course, evolved out of the Basic 
Educational Opportunity Grant, or BEOG, in 1972. And the goal 
was very simple. It was to provide every qualified student with 
access to a postsecondary degree. And in 1980, BEOG was renamed 
Pell in honor of Senator Claiborne Pell of Rhode Island, a 
long-time champion of higher education access.
    In its early days, BEOG provided nearly universal access to 
postsecondary education. Its original grant of $1,400 covered 
approximately 70 percent of the cost of attendance at a 4-year 
school, and grew over the next couple years to cover 85 percent 
of the cost of attendance at a four-year public.
    While the maximum grant has gone from $1,400 to now over 
$5,600, it now only covers about 35 percent of the cost of 
attendance at a four-year public school. Over that time, the 
numbers of students and total amount spent on the program have 
also increased dramatically. And I have included in my remarks 
dollar amounts and a list of eligibility requirement changes 
that have been made in recent years for your reference.
    The higher education landscape is also quite different from 
when BEOG was first created, including the large-scale growth 
in the non-traditional student population, where non-
traditional students have now become the traditional student; 
the need and amount of developmental and remedial education 
that is being required in higher education; the rapid expansion 
of innovative learning models; and the need in enrollment in 
vocational education; not to mention the increased scrutiny on 
student outcomes, most notably highlighted by the President's 
recent proposals to tie student aid to student outcomes at the 
institutional level.
    With that changing landscape in mind, I would like to offer 
the committee three suggestions for Pell reform. The first one 
is to provide a Pell Promise as an early commitment program, 
from the government to students, early in high school. This 
type of program has been successful in state-run programs and 
has been shown to change student behavior, helping them make 
smarter decisions in secondary education to prepare for 
college. In Indiana, for example, the number of students 
matriculating to college increased by nearly 90 percent over 
one generation over 18 years due to an early-commitment 21st 
century scholars program.
    The disparity between college enrollment of low-income and 
upper-income families is quite staggering. And when researched, 
most low-income students either do not prepare or do not attend 
college because they didn't know or they didn't believe that 
student aid funding would be available to them. In many 
instances, data showed that the lack of knowledge or confidence 
that funds would be there for them leads low-income students to 
inadvertently choose schools that may be more expensive or that 
doesn't match--best match their academic preparedness. And this 
is sometimes called ``under-matching.''
    Second would be to provide students a Pell Well funds that 
they could draw from as needed until the student completed 
their program or simply ran out of eligibility. This program 
would eliminate the gaps students face when they run out of 
Pell eligibility each summer after taking Pell during the fall 
and winter. It would also match up nicely with some of the new, 
innovative learning models that are being introduced, prior 
learning assessments and competency-based education programs.
    Such a program would be best suited if we moved to a prior-
prior year assessment of a student or family's ability to pay 
for college as opposed to what we use now, which is simply a 
prior year assessment. And finally, to provide a super Pell to 
students who enroll in enough credit hours to graduate within 4 
years; to facilitate, in a traditional model, students 
attending college for 15 credit hours per semester. Doing so 
would eliminate the need of many students--and, most 
specifically, the non-traditional students--from working, 
borrowing or stopping out, which stopping out can run as high 
as 95 percent at some community colleges.
    I thank you for the opportunity to talk about Pell grants 
today, and look forward to working with the committee in this 
regard.
    [The statement of Mr. Draeger follows:]
    
    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
Appendix B: NASFAA Reimagining Aid Design and Delivery (RADD) report
    [The report, ``Reimagining Financial Aid to Improve Student Access 
and Outcomes,'' may be accessed at the following Internet address:]

                   http://www.nasfaa.org/radd-event/

Appendix C: NASFAA A Tale of Two Incomes: Comparing Prior-Prior Year 
        and Prior Year through Pell Grant Awards
    [The report, ``A Tale of Two Income Years: Comparing Prior-Prior 
Year and Prior-Year Through Pell Grant Awards,'' may be opened at the 
following Internet address:]

                 http://www.nasfaa.org/ppy-report.aspx

                                 ______
                                 
    Chairwoman Foxx. Thank you very much.
    Dr. Robinson, you are recognized for five minutes.

 STATEMENT OF DR. JENNA ASHLEY ROBINSON, DIRECTOR OF OUTREACH, 
        JOHN W. POPE CENTER FOR HIGHER EDUCATION POLICY

    Ms. Robinson. Madam Chair, Ranking Member Hinojosa, and 
distinguished members of the committee, thank you for this 
opportunity on my own behalf and on behalf of the Pope Center.
    Pell grants, the Pell program faces two serious problems 
today. First, the increasing cost to the taxpayer and its 
failure to serve students well. The program, in short, is too 
expensive, and too few students graduate. By returning the Pell 
program to its roots, it is possible to trim costs while 
improving student success and access. Let me start with costs.
    In 2011-2012, over 9 million students received Pell grants. 
Awards totaled more than $33 billion. Thirty-five percent of 
all U.S. students received some form of Pell grant. Since the 
creation of the program, participation has grown more than 
4,500 percent, and much of that growth consists of middle-
income students. Eight percent of Pell recipients come from 
families whose income is higher than the national median, and 
60 percent of the Pell recipients come from families above the 
federal poverty threshold.
    It may seem ironic that these middle-income students do 
not, in general, benefit from Pell grants. Students from 
families earning $25,000 to $55,000 who receive Pell grants are 
actually less likely to graduate than non-recipients with the 
same income. For low-income students the opposite is true. Pell 
recipients whose families earn less than $25,000 are more 
likely to graduate than non-recipients with the same income. In 
short, Pell grants help our neediest students achieve 
graduation but do not improve graduation rates for middle-
income students.
    Pell grants also work best for students with strong 
academic backgrounds. The college retention rate of Pell 
recipients who took a rigorous curriculum in high school was 87 
percent, compared to just 57.6 percent for grantees without a 
rigorous curriculum. Pell recipients with SAT scores between 
400 and 800 graduated at a rate of only 34.2 percent. Those 
with scores between 1140 and 1600, out of 1600, graduated at a 
rate of 73.7 percent. Similar differences are seen when high 
school GPAs of Pell grantees are compared.
    With that in mind, we have several recommendations. First 
and foremost, we need better data so the Department of 
Education can evaluate the effectiveness of Pell grants. And 
second, we need to make sure that the public can have access to 
that data. But better data are just a start. Financial 
eligibility should be limited to students whose income falls 
below 133 percent of the federal poverty level, a cutoff 
commonly used for qualification for programs such as Medicaid. 
With a simple cutoff, the FAFSA can be simplified.
    For very low-income students, full eligibility could be 
determined in only five or six questions instead of the long 
form that students face today. And for students who are not 
very low-income, the form could be simplified, but not quite to 
that extent. Colleges and universities, next, should place 
limits on students' Pell grant money to stop students from 
receiving grants and then dropping out of their courses. One 
positive example comes from North Carolina, from Central 
Piedmont Community College. They have implemented several 
policies to do just that.
    They don't disburse grants until after 10 percent of the 
semester has been completed. They disburse money in two parts 
over the semester to make sure that students stay around. And 
they limit what can be purchased with financial aid. Next, 
grants should go to students who are prepared for the challenge 
of college work. Academic requirements for initial and 
continuing Pell eligibility should be tightened. One option to 
do so would be to match academic standards set by the National 
Collegiate Athletic Association, which requires first-year 
athletes to have completed certain high school courses.
    It also requires students to have taken ACT or the SAT and 
to meet threshold scores based on GPA. Such a policy would 
focus on the students most likely to succeed, and give them an 
incentive to better prepare for college. To further encourage 
students to graduate, grant amounts should be linked to 
enrollment intensity. Students who receive the maximum award 
should be expected to take 15 credit hours, not 12. Also, this 
could be coupled with the Pell Well concept introduced by the 
National Association of Student Financial Aid Administrators, 
which bases awards on a 12-month schedule rather than the 
academic year.
    In sum, the current Pell program faces serious challenges. 
But we can meet those challenges with better data, financial 
planning and student accountability. Thank you.
    [The statement of Ms. Robinson follows:]
    
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    Chairwoman Foxx. And I thank the first two witnesses for 
being so good about being on time.
    Mr. Dannenberg, I recognize you for five minutes.

 STATEMENT OF MICHAEL DANNENBERG, DIRECTOR OF HIGHER EDUCATION 
       AND EDUCATION FINANCE POLICY, THE EDUCATION TRUST

    Mr. Dannenberg. Thank you. I have three basic messages for 
the committee. The first is, tread lightly. The second is, 
pursue a balanced approach to any long-term funding gap in the 
Pell program. And the third is to attempt to leverage state 
institutional aid in support of college affordability and 
college completion in order to make the Pell Grant program more 
impactful.
    I am a maximum Pell grant recipient first-generation 
college graduate. I am one of many success stories out there. 
There are millions of folks who have overcome far more 
significant hardships than I have, and have accomplished far 
more. Which is why I want--which leads to my first point of 
treading lightly. The Pell Grant program has been very 
successful. Forty years ago, the percentage of low-income 
students who were pursuing a higher education was less than 
half of the percentage today. We have cut the gap between low-
income students and upper-income students in pursuing higher 
education by 40 percent in those 40 years.
    So Pell is making a difference in millions of lives, as has 
been discussed, at least with respect to access. I think it is 
important to keep in mind Representative Hinojosa mentioned 
that 90 percent of Pell recipients have incomes of less than 
$50,000. For those with incomes between $30,000 and $50,000, 
after you add up grant aid, scholarship aid, whatever the feds 
expect to pay out of your pocket students still have unmet need 
of some $11,000 to pay for 1 year of higher education. Now, 
they are filling that unmet need with loans, with additional 
work, eating Ramen noodles.
    The point is that these students are living on the edge. So 
if you cut Pell grant funding for students who are in that 
$30,000 to $50,000 range you run two major risks. The first is 
that some students will not pursue higher education. And the 
second is, as Justin mentioned, a number of students who are 
eligible and academically prepared to go to 4-year institutions 
will instead under-match down to 2-year institutions where, all 
things being equal, they are substantially less likely to 
complete.
    Second message. In dealing with the long-term funding gap, 
I think a balanced approach is appropriate, one that targets 
spending reductions in areas that are not linked to needy 
students directly and pursues revenue enhancements in the 
program side. I have listed a host of offset options in my 
testimony. I am just going to throw out one with respect to 
targeted spending reduction. Right now, if a student leaves 
higher education before a term is up the school is 
theoretically responsible for returning the financial aid that 
that student received: the Pell Grant aid that student 
received.
    But right now, the rules are very loose. Once a student 
puts in 60 percent of a term, the school gets to keep 100 
percent of the money. If a student drops out and doesn't notify 
the school when they are dropping out, the school gets to 
assume that the student was there 50 percent of the time and 
keep 50 percent of the money. If you tightened up the return of 
Title IV rules alone over some 10 years our estimate is that 
upwards of $10 billion could be saved. And like I said, we have 
a list of offsets included in my testimony. A number of them 
are on the revenue side in terms of increasing revenue to the 
Pell Grant program.
    This brings me to the third message: leveraging state and 
institutional aid in support of improved college completion and 
college affordability. State aid, declining state aid, is the 
number one driver of increased college tuition. As Justin 
mentioned, high school academic preparation is the number one 
driver of college completion. The feds are small players in 
this game, overall; major, but still small. The big players are 
still, financially, states and institutions of higher 
education.
    If we could incentivize states to, if not maintain their 
funding, at least embrace policies that ensure that low-income 
students can pursue higher education with a debt-free guarantee 
or low tuition--as Justin mentioned with respect to Indiana, 
which is a model program--you could dramatically improve 
college completion and reduce college costs.
    I want to be clear that this is not some sort of pie-in-
the-sky idea. I worked for Congress for a long time. Congress 
has a long history of consolidating programs, targeting 
programs, delivering that aid in lump sums. We would suggest 
doing that with respect to a number of higher education 
programs--loans, grants, tax benefits--outside the Pell Grant, 
outside unsubsidized loans. Delivering that money to states, 
then let states do what they think is best in order to achieve 
the type of outcome that they have in Indiana.
    Imagine being able to say to an eighth grade student, ``If 
you are responsible, if you work hard in high school, we will 
guarantee that you can go to a 4-year public college of your 
choice within your state, at the very least, without incurring 
any new debt. Or have it with an interest-free loan or with a 
cap on your debt.'' That type of promise is possible. Students 
who have the talent, desire and drive to pursue a secondary 
education should be able to do so without being hindered by 
inability to pay.
    That was Senator Pell's vision 40 years ago. I still think 
it is right today.
    [The statement of Mr. Dannenberg follows:]
    
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    Chairwoman Foxx. Thank you, Mr. Dannenberg.
    Mr. Heath, you are recognized for five minutes.

  STATEMENT OF RICHARD C. HEATH, DIRECTOR, STUDENT FINANCIAL 
            SERVICES, ANNE ARUNDEL COMMUNITY COLLEGE

    Mr. Heath. Chairwoman Foxx, Ranking Member Hinojosa and 
members of the committee, I am pleased to be here today to 
present this testimony. On behalf of my institution, Anne 
Arundel Community College, on behalf of the 17 professional 
financial aid staff at my institution, and the nearly 6,000 
Pell Grant recipients we are currently serving. We are happy to 
engage with the committee on how we can improve the Pell Grant 
program, especially in the areas of increased flexibility for 
non-traditional students, encouraging completion, to finding 
and identifying the neediest students, and eliminating fraud 
and limiting abuse.
    With almost 1,200 community colleges nationwide and 
millions of Pell recipients, these topics are of high 
importance and extremely relevant to our institutions and 
students today. Increased flexibility for non-traditional 
students: many non-traditional students determine their best 
option is to take less than 12 credits because of family and 
work responsibilities. The Pell grant should be flexible enough 
to pay for those credits only. Currently, if a student is 
eligible for the maximum Pell grant, but is registered for nine 
credits, he receives the same amount of Pell as the student who 
registers for 11 credits.
    Students in this scenario are using up their Pell lifetime 
eligibility used, but not earning the most credits allowed. 
This penalizes the non-traditional student who often is not 
able to attend full-time. More flexibility in this area would 
be a win-win. For the non-traditional student, they would be 
pursuing their educational goals at a pace that fits their 
other time commitments, and the taxpayer would not be paying 
for credits that are not yet earned.
    Encouraging completion: Maryland has responsibility passed 
the College and Career Readiness and College Completion Act of 
2013, or known as SB-740. A good summary and an FAQ on this 
initiative can be found at the website for the Maryland 
Association of Community Colleges. This initiative takes 
significant steps to better prepare Maryland students for 
college and encourages completion once they get there. There 
are similar initiatives in other states, but there are still a 
large number of states with no such progress.
    Colleges have data that indicate that students who need 
more than two developmental classes have a significant drop in 
program completion. And it follows that the more developmental 
classes required, the more the program completion rate drops. 
Maryland law SB-740 attempts to decrease the need for 
developmental education on the college level, simplifying the 
process for defining and identifying the neediest students. We 
know who the neediest students are, and we can identify them as 
early as middle school and certainly by grades 10 through 12, 
as there is a means test in place to identify those who qualify 
for subsidized meals in the public schools.
    The recommendations noted in my written testimony are part 
of a report from the NASFAA reauthorization task force, of 
which I was a member. The seven recommendations that I have 
highlighted would have a positive impact on college access 
through all the Title IV programs, and allow students who have, 
or whose families have, already demonstrated high needs to 
auto-qualify for maximum federal aid, and would reduce the need 
for a separate financial aid application or, at the very least, 
further reduce the number of questions aimed at determining 
financial ability to pay.
    In the interest of time, I direct you to those seven 
recommendations in my written testimony which, if adopted, 
would make a significant contribution to defining and 
identifying the neediest students.
    Eliminating fraud and eliminating abuse: I begin with the 
premise that aid administrators are committed to ensuring that 
all students legitimately pursuing higher education have access 
to the funding they have been determined to be eligible to 
receive. At the same time, aid administrators have the 
responsibility of preventing those who are not eligible from 
receiving any amount of financial aid.
    Pell, like other federal programs, is subject to fraud. 
Compared to other programs, fraud in the Pell Grant program is 
relatively minimal in terms of numbers of cases and dollar 
amounts. Financial aid administrators responsible for awarding 
Title IV funds are at the core of attention, somewhere between 
making the process simple and quick for students while asking 
enough questions to determine eligibility and prevent fraud. 
Eliminating the possibility for fraud--that is, students or 
potential students acting with criminal intentions to access 
federal funds using either fraudulent information or the stolen 
identity and information of someone else--is of the highest 
concern to financial aid administrators across institutional 
types and mission goals.
    Our goal is to eliminate fraud in the programs while, at 
the same time, assisting the vast majority of students who are 
pursuing their educational goals legitimately. Identity theft 
is a global problem and in a category by itself. Along with 
identity theft, aid administrators are cognizant of the 
attempts to submit documents that are fraudulent to support a 
student's claim of having little or no income, academic 
attainment for high school and/or college, medical 
documentation to support SAP appeals, exaggerated family size 
or number of family members in college, residency status, and 
other document types that determine eligibility for federal 
funds.
    The Department of Education has been highly cooperative and 
responsive to our concerns and has taken steps over the last 
few years to help institutions take preventative action, 
including systemically identifying files that have unusual 
enrollment patterns, significant use of Pell Grant eligibility, 
and high amounts of loan debt. Ed then electronically notifies 
the financial aid office and a follow-up is conducted to 
determine if they are, in fact, who they say they are, or if 
they are legitimately pursuing appropriate educational goals, 
or if they are someone trying to take advantage of the system 
and misuse federal funds.
    In the written portion, I have--
    Chairwoman Foxx. Mr. Heath, Mr. Heath, I am going to ask 
you if you can wind up, please. You are almost two minutes 
over.
    Mr. Heath. Some of recommendations have been implemented at 
Anne Arundel, but yet we still see numbers of students that 
attempt to fraudulently obtain federal aid.
    [The statement of Mr. Heath follows:]
    
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    Chairwoman Foxx. Thank you very much.
    I want to now recognize the chairman of the higher 
Education and Workforce Committee, Mr. Kline, for five minutes.
    Mr. Kline. Thank you, Madam Chair. Thank you to the 
witnesses for being here, your quite excellent testimony.
    Dr. Robinson, I am trying to understand how your idea of--
looking at your testimony--we would require students to have 
taken the ACT or the SAT and to meet threshold scores based on 
GPA. So I listened carefully to your testimony. You talked 
about how you have a greater success rate if they have had a 
rigorous high school education and so forth. But I don't 
understand how this would work for the millions of what we are 
still calling ``non-traditional students,'' people going back 
to the community college or for-profit school or something like 
that to get a particular skill.
    They haven't thought about rigorous high school or SAT, ACT 
for maybe years. And by the way, I agree with the chairwoman 
that we ought to find another term beside non-traditional 
student, since the majority of college students now are in 
higher education are non-traditional. So how would that work?
    Ms. Robinson. I think it would be best to only apply those 
standards to students coming directly out of high school, and 
there should be alternative standards for the new traditional 
student, the part-time student. Additionally, I think there 
should be ways for students who have perhaps not achieved, in 
high school, what they find later in life themselves to be 
capable of, to find an alternative way to achieve standards. 
For example, after one semester of satisfactory academic 
progress in a community college, they become re-eligible, even 
if they weren't under rigorous high school standards.
    Mr. Kline. So if they had the low SAT, ACT they would have 
to go that first semester not qualifying for a Pell grant. But 
if they demonstrated, then, academic capability they would be? 
I am--
    Ms. Robinson. Exactly.
    Mr. Kline. Okay.
    Ms. Robinson. Giving students a second chance.
    Mr. Kline. Okay. That was my other question. Excellent.
    Mr. Draeger, I am interested in--``intrigued by'' might be 
a better word--the Pell Well idea. Could that be too costly for 
the government to administer this thing?
    Mr. Draeger. The cost is a good question. The way the Pell 
Well would really work is, you are telling a student upfront 
how much in dollars as opposed to percentages, which is what we 
do now, they would qualify for. And percentages based on full-
time enrollment don't translate well for most students; dollars 
make sense. In the long run, in over a five or 10-year 
projection, I am not sure that it would cost any more. Because 
you are telling them a lifetime eligibility limit based on what 
Congress recently did, which was shrink it from 18 semesters to 
12.
    So while an outlay may be more in year one, over a five-
year or 10-year period I am not sure cost would go up. Because 
we are just using a dollar amount as opposed to a percentage, 
which is what we use now.
    Mr. Kline. Okay. Again, thank all the witnesses. Really 
helpful as we are trying to move forward to a reauthorization 
of the Higher Education Act. I think this is our 11th or 12th-
something hearing to try to grapple with a lot of these issues. 
A lot of it has been focused on financial aid in the large, and 
specifically Pell grants and loans, and how do we do loans and 
all of those things, because it is central to the issue of 
getting people access to an affordable education. And it is 
doggone confusing.
    So, again, thank you very much for your input here today. 
And, Madam Chair, I will yield back.
    Chairwoman Foxx. Thank you, Mr. Chairman, for also being a 
great role model. And one person at maybe not our last hearing, 
but recently, has suggested that we use the term ``contemporary 
student.'' So that is one of the suggestions that has been put 
out there. But we are looking for an alternative to using non-
traditional, since the non-traditional are now 75 percent of 
students.
    I now recognize Mr. Hinojosa for five minutes.
    Mr. Hinojosa. Thank you. Mr. Dannenberg, as you stated in 
your testimony, the maximum Pell now covers less than a third 
of the average tuition at a public 4-year institution due to 
the rising college costs. In light of the diminishing 
purchasing power of the Pell grant, now the lowest since its 
inception, could you discuss the reliance of Pell recipients on 
federal student loans?
    Mr. Dannenberg. I am sorry? Can you repeat that? Would I 
discuss what?
    Mr. Hinojosa. Could you discuss the reliance of Pell 
grants--
    Mr. Dannenberg. Nine out of 10 Pell Grant students assume 
student loans. It is twice the rate of non-Pell Grant students. 
As you know, the average student who completes a 4-year degree 
does so at some $27,000 in debt.
    Right--we used to have a situation where grants were the 
base of student financial aid packages, and loans were 
supplemental. Now we have a situation where loans are the base 
of financial aid packages and grants are supplemental. That 
diminishes students' ability to take on certain occupations 
when they leave, and it has a very real impact--particularly on 
students of certain demographic groups when it comes to loan 
aversion, debt aversion and the idea of even going to higher 
education, much less going to a school that is a good fit.
    Mr. Hinojosa. I agree with you. You indicated also that 60 
percent of the African-American, and 51 percent of Latino 
undergraduates rely and depend on the Pell grants. Thus, could 
you elaborate on the importance of Pell to minority students?
    Mr. Dannenberg. Yes, that is absolutely correct. There have 
been a number of studies--Tony Carnevale at Georgetown 
University is probably the leading academic on this--that 
indicate the United States is going to be in desperate need of 
more students, more workers with postsecondary certificates and 
degrees, where those students have to come from are low-income 
and minority populations, in particular Latino and African-
American.
    Reducing the Pell grant will have an effect on college 
access for low-income students, a disproportionate impact on 
African-Americans and on Latinos. We should be increasing our 
investment, not decreasing it.
    Mr. Hinojosa. I want you to elaborate on the 
recommendations that you listed on addressing the Pell funding 
gaps.
    Mr. Dannenberg. Sure. As I mentioned, I think we should 
pursue targeted spending reductions that are directed at 
institutions as opposed to needy students. This committee, 
Congress, has dealt with repeated Pell Grant shortfalls and 
funding gaps in recent years. Almost all of those funding gaps 
and shortfalls have been filled with student benefit cuts. We 
need to stop doing that. Instead, focus on spending reductions 
that are targeted at institutions or revenue enhancements.
    I have listed a number of possible revenue enhancements. 
One of my favorite ones has to do with the outstanding federal 
family education loan volume. There are about $400 million in 
outstanding federal family education loans, FEL loans. Every 
time one of those loans is paid off early or converted to the 
direct loan program the government saves money. We should be 
incentivizing.
    We should be authorizing the secretary of education to buy 
down that debt--from borrowers, from lenders, wherever--get rid 
of that debt. Save funds, drive those funds into the Pell Grant 
program. The New America Foundation estimates $17 billion over 
10 years can be saved that way.
    Mr. Hinojosa. I thank you.
    Dr. Robinson, in your remarks you spoke about revising the 
return to the Title IV rules. When a student withdraws from 
college prior to completion of a term, the former student and 
her institution generally must return a portion of the 
disbursed federal financial aid; Title IV aid, which includes 
Pell Grant grants. I wonder if you have compared that 
recommendation with the what we call ``for-profit colleges and 
universities,'' which often times recruit those who were not 
college-ready and somehow get them started. They get the Pell 
grant and they quit very quickly.
    In fact, the numbers that I have seen indicate that 25 
percent of the money available for Pell grants is used up by 
only 10 percent of the students going to college through the 
for-profit colleges. What if they had to return 90 percent of 
the money that they receive from a Pell grant of, let's say, 
$6,000 because the student dropped out early. Can you discuss 
that with me?
    Ms. Robinson. I haven't looked at that specifically, but I 
think making sure that students are accountable regardless of 
the type of institution that they attend is very important. I 
think that there are many programs that provide a model for how 
to do that. I mentioned one in North Carolina, Central 
Piedmont. And I think that there should be incentives for 
institutions to make sure that the students who begin actually 
complete.
    Mr. Hinojosa. Now, let the record show that I question the 
amount that the for-profit colleges are returning to us when 
the students drop out.
    Thank you.
    Chairwoman Foxx. Thank you, Mr. Hinojosa.
    Mr. Walberg, you are recognized for five minutes.
    Mr. Walberg. I thank the chairman, and I thank the 
committee for being here.
    Mr. Draeger, interested to see that you spent some time in 
East Lansing. It is an exciting place to be, especially with 
this Saturday coming up. I say that knowing that the University 
of Michigan is in the room, as well. Proud of both.
    Great game this weekend with Ohio State.
    I appreciate your perspective. And especially dealing with 
financial advisors and managers of institutions. If the 
criteria for Pell eligibility were made more rigorous, how do 
you think institutions would respond to this change? And how do 
you think this might affect persistence specifically of the 
students?
    Mr. Draeger. There is a tension between the eligibility 
requirements for financial aid and simplicity; making it simple 
enough that students, needy students, will apply for financial 
aid. In the past, that tension has been greater than it is 
today because we rely so much on technology. Almost 100 
percent--not quite, but almost 100 percent--of people who apply 
for financial aid today do it through an online application 
that allows them to skip by questions that don't apply for 
them.
    So if you are truly needy, qualify for federal means-tested 
benefits or other ways that we are identifying that you are 
truly needy, you can import information from the IRS, or you 
are given a pass through the majority of the FAFSA questions. 
So that tension that existed in the past doesn't truly exist 
today.
    So if we moved the period of time that students have to 
apply back a little bit, we could ask more complicated 
questions and use skip logic that would still allow needy 
students to pass through the FAFSA very quickly but still get 
to some rigorous questions for those students who are sort of 
on the cusp to find out if they are truly needy or have some 
financial strength that is not currently reflected in the 
federal needs analysis formula.
    I think schools would welcome that move.
    Mr. Walberg. Would you say that that would also add to the 
expectation of success, ultimately, and the outcome for a 
student completing as opposed to just accessing the education?
    Mr. Draeger. I am not sure that there is research that 
shows the link between federal student aid eligibility, at 
least in terms of financial strength of a family and 
completion. What would mean more to success is moving back that 
application period so that students would have a clearer idea 
and confidence of their financial aid package to know how much 
money they would have to attend college. That would have a 
meaningful difference in persistence and completion.
    Mr. Walberg. Mr. Heath, earlier this year I had the 
opportunity to hear testimony from the inspector general of the 
Department of Education that pointed out that of the $32 
billion that will be spent on Pell this year, nearly $1 billion 
of that will be going to individuals that should not receive 
it. What you have instituted at Anne Arundel Community College 
to discourage and prevent the potential for waste, fraud and 
abuse sounds interesting, from your testimony.
    Could you expand upon that? And are there other tools that 
may be helpful to consider in reauthorizing the Higher 
Education Act?
    Mr. Heath. Yes. One of the primary things that we did 2 
years ago was implement an affirmative daily attendance 
process. And we tied that process with our disbursements. So if 
a student is registered full-time, 12 credits right now, before 
that money will disburse--before the Pell money disburses to 
their student account--our process goes over to check to see if 
that student has, in fact, started attending the class that the 
aid is going to be paying for.
    If they haven't had attendance recorded, that aid does not 
move. So we have closed the loophole between students 
registering for class, they were eligible for the money--
    Mr. Walberg. The student is fully aware of that, as well.
    Mr. Heath. The students are fully aware of that. We 
publicize that. And every semester, as you might imagine, we do 
have a faculty once in a while that doesn't record attendance 
and the student comes in wanting to know where their money is. 
So it is a way to close that gap.
    The other thing that we have done is, for all of our 
students that are only online, we have a process that we run 
prior to disbursing funds that gives us a list of all those 
students.
    We compare addresses. So if we were to see multiple 
students coming from the same address, we would not disburse 
money. We would do a further check. We haven't found that yet. 
We have found a husband and wife, or a father, son or something 
like that. But we haven't found multiple students coming from 
the same address. But we do have that process in place now.
    Mr. Walberg. I thank the chairwoman. My time has expired.
    Chairwoman Foxx. Thank you very much.
    Mr. Loebsack, you are recognized for five minutes.
    Mr. Loebsack. Thank you, Madam Chair. Thanks for having 
this important hearing today. And I do want to thank all of you 
for being here today and offering some possible solutions to 
sort of tightening up the program, making sure that we don't 
have waste, fraud and abuse.
    I do want to emphasize Mr. Dannenberg's first point, which 
I think was tread lightly. This is something--I just think we 
have to be very, very careful that we continue to have a 
program that provides access to these low-income students when 
we--sure, we all want to wring out waste, fraud and abuse. We 
all want to make sure that these folks are held accounting, 
that they are not taking advantage of the system.
    We have all heard stories about that in the past. Myself, 
many members here have heard me talk about how I grew up in 
poverty myself. I had a single mother, parent, who had an 11th 
grade education. Like you, Mr. Dannenberg, first-generation 
college student. I wouldn't have been able to get to college 
had it not been for my friends, actually, who came from 
different family situations and took all this very seriously. 
So I sort of determined what I was going to do based, in no 
small measure, on my relationships with my friends.
    But I was able to take advantage of programs like this to 
go to Iowa State University. The last thing I want to see is 
these programs be eviscerated in one way or another. So I think 
it is important that we do tread lightly, that we keep in mind 
what the ultimate goal here is. And that is to make sure that 
students who don't always have the most advantageous 
backgrounds have access to college--a college education. Not 
only for their own sake, but for the sake of our country, for 
the sake of the competitiveness of the United States of 
America.
    I think we have to keep that big picture in mind, as well. 
And also, we have talked a little bit about the skills gap. 
Community colleges, we all know, are extremely important in 
this country. In the state of Iowa, the governor and others 
have quite rightly pointed out and identified the skills gap, 
and how community colleges are going to be very important in 
educating folks so that they can get into those mid-level 
skilled jobs. And community colleges are absolutely critical on 
that front, as far as I am concerned.
    I taught at a small college, Cornell College, for 24 years. 
Important college in terms of educating folks. But community 
colleges really are the key. I call them the intersection, if 
you will, between education and workforce development. The 
principal--not the only, but the principal--intersection. So we 
have to be careful also that we not so restrict the environment 
out there for these students who want to go to these community 
colleges.
    I understand we have to tighten it up, but we have to be 
very careful, too, that we tread lightly. And I just have one 
question for you, Mr. Dannenberg. You mention on page three of 
your testimony that--your written testimony that you lament the 
fact that the year-round Pell Grant program--something that I 
championed, as a matter of fact, a number of years ago, that 
that has gone by the wayside, in no small measure to try to 
restrain the cost of the Pell Grant program.
    Can you talk to us a little bit about the effects of that? 
Because you mentioned it kind of in passing, more than anything 
else, on page three.
    Mr. Dannenberg. Sure. I think, first of all, the 
institutions that are affected more than any other institution 
by ending what has been called ``Second Pell'' or ``Summer 
Pell'' are community colleges and historically black colleges 
and universities in particular. And the situation is that a 
number of students are coming in under-prepared academically. 
Forty-odd percent are having to take at least one developmental 
course.
    So before the credit-bearing work they are having to learn 
at the post secondary level what they were supposed to be 
exposed to in high school, which is why we should have a 
college career-ready course of study for all students at the 
high school level. But because they are behind, they are then 
behind at the end of their first year. They are not on track to 
graduate on time.
    So what was happening over the summer--and it was expensive 
because this affects so many students--is that they were 
catching up. So that when they began their second year they 
were actually going to be second-year students instead of a 
second-year student who has only 14 credits and is really, in 
effect, a first-year student or 12 credits. Second Pell, or 
Summer Pell, was having an access impact, particularly at 
community colleges and historically black colleges and 
universities. And they are hurting as a result of its 
reduction, not to mention the needy students who are affected.
    Mr. Loebsack. Thank you. And I want to thank all of you for 
your testimony, and thanks for indulging me. I normally don't 
take up this much of the 5 minutes with my own speech, if you 
will. But I do think it is really, really critical that we keep 
in mind that we have to have a balanced approach here and that 
we have to tread lightly and that we cannot cut these programs 
to the bone, where it is actually going to deprive students who 
are willing to take the initiative and the personal 
responsibility, which I think we all value, to invest 
themselves in these programs so that they can be better 
students, so they can be better citizens.
    Thank you. Thank you, Madam Chair.
    Chairwoman Foxx. Thank you, Mr. Loebsack.
    Dr. Heck, you are recognized for five minutes.
    Mr. Heck. Thank you, Madam Chair. And thanks, thank all of 
you for being here today. Like Mr. Dannenberg, I am the first 
in my family to go to college, and also was a maximum Pell 
Grant recipient, and understand the importance of Pell Grants 
in helping students achieve their dreams. And it is why, when 
we were having the debate on student loan interest rates, I 
introduced amendments that would redirect some of the savings 
into funding Pell Grants.
    And while it may be semantics--we talk about federal 
financial aid making college more affordable--I always say it 
makes it more accessible. It doesn't necessarily make it more 
affordable because it doesn't really address the reasons that 
tuition and fees have increased by 538 percent since the early 
1980s, almost twice as fast as health care costs and nearly 
four times--four-and-a-half times as fast as inflation.
    And so what I want to know is, what are doing to really try 
to address the costs of a postsecondary education? Some have 
theorized that we are in this circular loop of we increase 
financial aid, which then somehow results in higher tuition and 
fees because there is more money available, and then we have to 
increase financial aid to keep up with those higher tuition and 
fees, which keeps this cycle going. I would ask if you believe 
in that theory and what your opinions are as to why the cost of 
a postsecondary education have outstripped inflation so much 
over the last couple of decades.
    Do you want to start, Mr. Draeger?
    Mr. Draeger. It is very simple to come to the conclusion 
that as we pour more financial aid--and frustrating, as we pour 
more financial aid into the system, the cost of college 
continues to increase. But I think the first thing we have to 
look at is the difference between the cost of providing the 
education and the price that students and families pay. So the 
cost of providing education, if you went back over the--since 
the 1980s has run fairly parallel with inflation. But if you 
look at the price that students and families have been paying, 
it has been running more than double the rate of inflation.
    In such a complex environment and system, where there are 
so many different subsidies at the state level through 
appropriations, the primary driver that we have seen in 
tuition, or price increases, isn't because the cost of 
providing the education has gone up so much. It is that state 
and local governments have been disinvesting in higher 
education. So whereas 40 years ago states were covering 65 
percent of the cost of higher education through a subsidy, 
through appropriations, today they are covering more around 30 
to 35 percent.
    And so the burden of paying for college has gone from the 
public pooling together at the state and local level to 
individual families. And the way they are doing it is primarily 
through loans.
    Mr. Heck. Anyone else care to jump in?
    Ms. Robinson. I would say that that is part of the picture, 
but certainly not--doesn't explain the entire picture. It 
doesn't explain why Duke University is $50,000 now. Private 
universities have been increasing their costs and their tuition 
to students at the same time as public universities. So I think 
that there is something going on with federal aid fueling and 
enabling universities to increase their tuition. The research 
that has been done shows that Pell grants are not largely a 
part of that. It is mostly an effect of student loans.
    And I think that one possible change that could be made to 
the formula determining how much aid students get for both 
loans and Pell Grants could be replacing the cost of attendance 
with the median cost of college. Because right now, by using 
the cost of attendance in a formula, a student will get more 
aid by attending a more expensive university. So that formula 
is helping to feed the ever-increasing costs.
    Mr. Heck. Mr. Dannenberg?
    Mr. Dannenberg. So a few quick points. First, I agree with 
Dr. Robinson that there is a big difference between grant and 
loan aid in terms of its impact on tuition inflation. There is 
no evidence that increases in Pell Grants are driving increases 
in tuition. Pell Grants have been cut in the past and tuition 
has still gone up.
    The main reason tuition is going up is that we have a 
relatively finite supply of providers; we have very high demand 
that is often irrational, under-informed, and, I am afraid, too 
often irrational; and you have states and institutions that 
take advantage of that high demand by cutting their own aid and 
shifting responsibility to students in the form of heightened 
loans.
    Justin is right that a key is to maintain, if not grow, 
state aid for higher education in order to slow the growth in 
public college tuition and fees. As I said in my testimony, we 
argue that there is ample opportunity for this committee, not 
to mention other committees, to target existing programs 
outside of Pell, consolidate those funds, give them to states, 
give them to governors, create another Tommy Thompson out 
there, or tell Jerry Brown or whoever to do--any governor out 
there to maintain an outcome when it comes to college 
affordability. You guys can empower them to do that.
    Mr. Heck. Thank you.
    Thank you, Madam Chair. I yield back.
    Chairwoman Foxx. Thank you.
    Mr. Bishop, you are recognized for five minutes.
    Mr. Bishop. Thank you very much, Madam Chair. And thank you 
for holding this series of hearings. I think they have been 
very helpful and very informative. And I want to thank our 
panel of witnesses.
    I just want to pick up from the last line of questioning 
and answers. We have had multiple witnesses come before this 
committee--Republican witnesses, Democratic witnesses--to 
testify on the impact, real or imagined, of availability of 
federal student financial aid relative to increase in costs. 
And almost without fail, they have all testified that there is 
no connection between federal student financial aid programs 
and the extent to which costs are increasing.
    And, Mr. Draeger, what they almost all testify to is that 
the principal driver of college costs is what you just said, 
that is to say the retreat from supporting public education on 
the part of the states and local communities. So I think we 
have to assess Pell, we have to assess other Title IV programs. 
But we ought to assess them based on our actual experience. And 
I think to continuously put into the mix of our assessment what 
is essentially a canard--which is that federal student aid is 
driving increase in cost--is not helpful and doesn't help us 
assess the future of these programs as we must.
    And I know this hearing is about the future of Pell. I want 
to focus on the current status of Pell and current law. Current 
law is that Pell will be exposed to sequestration with the next 
academic year. That could result in a cut to Pell of as much as 
7 percent. And, Mr. Draeger, from the vantage point of your 
national organization, and Mr. Heath, from the vantage point of 
your community college, what impact would a 6, 7 percent 
reduction in Pell--some $2.5 billion--what impact would that 
have on the students, Mr. Heath, that you deal with every day?
    Mr. Heath. Yes, that really is a good--it is a good 
question, Mr. Bishop. What we expect is going to happen, the 
student that is fully Pell-eligible, with a zero EFC, 7 percent 
reduction certainly is going to hurt them. It will still pay 
for all of their classes at Anne Arundel, but it will reduce 
the amount that they have for books. The more troublesome 
students are the ones that are getting kind of a little bit of 
Pell, kind of the mid-Pell range or right on the cusp of Pell. 
Those students will certainly increase the borrowing that they 
are going to do in order to make up for the shortfall.
    Mr. Bishop. Okay. Thank you, Mr. Heath.
    Mr. Draeger?
    Mr. Draeger. It exacerbates a regressive policy of pushing 
low-income students into loans. That is the best case scenario. 
The worst case is they stop out or drop out entirely. And the 
other issue with budget funding is it pushes up against 
deadlines where, once again, students and parents do not have a 
sure picture of how much they are getting in financial aid when 
they are trying to make college-going decisions this next 
winter and spring.
    Mr. Bishop. Just to be clear, I just think it is important 
that we absolutely ought to focus on the future. But we can't 
lose sight of the present. The present is that Pell is exposed 
to up to a 7 percent reduction as a result of sequestration. 
Over a 2-year period, if we don't fix sequestration, SEOG will 
go down by $90 million, and College Work-Study will go down by 
$130 million. I would imagine those would be tough cuts for 
your students to absorb. Is that correct?
    Mr. Heath, I am sorry.
    Mr. Heath. Yes, that is--
    Mr. Bishop. Thank you. Another issue that this committee 
has looked at and is an idea that seems to have good--great 
currency on Capitol Hill is the idea of one grant, one loan, 
one work--under the heading of ``simplification.'' 
Simplification has a somewhat seductive allure to it but, Mr. 
Draeger, has NASFAA taken a position on one grant, one loan, 
one work?
    Mr. Draeger. Institutions like the idea and simplicity of 
one grant, one loan. But they also like, and students need, the 
campus-based programs; the idea of work-study and--
    Mr. Bishop. And that is my principal concern. One grant, 
one loan by definition eliminates campus-based programs. And I 
can see where it would be more simple for the individuals you 
represent, the financial aid officer. I think we would all 
agree we are much more interested in making it more simple for 
students as opposed to the financial aid officer, with all due 
respect.
    Mr. Draeger. Absolutely. And schools need the campus--the 
flexibility of the campus-based programs to help meet needs. So 
if you have a student getting full Pell, and that only meets 35 
percent of the cost of attendance at a 4-year public, the 
additional input of campus-based aids can make up a significant 
difference in meeting the rest of the cost of attendance.
    Mr. Bishop. Okay.
    Mr. Heath, would you concur with that?
    Mr. Heath. Yes, I do.
    Mr. Bishop. Okay. Thank you very much.
    Madam Chair, thank you. I yield back.
    Chairwoman Foxx. Thank you, Mr. Bishop.
    Mrs. Brooks, you are recognized for five minutes.
    Mrs. Brooks. Thank you, Madam Chairwoman. I would like to 
just start out with you, Mr. Draeger. I am from Indiana, and I 
was pleased to see that you mentioned the Indiana 21st Century 
Scholar program. And as we talk about the federal government's 
responsibility and the state's responsibility, can you just 
expand, you know, for this hearing a bit more about the 21st 
Century Scholar program and the success that we have seen in 
Indiana for a long period of time?
    Mr. Draeger. These state programs like 21st Century 
Scholar, studies have shown that the one thing that they do 
very well is tell students and families up front that there is 
money available to them in a commitment if they meet certain 
criteria at the secondary level. So is it easier? The anecdote 
that we come down to from our members is, is it easier for 
students to say I can't afford to go to college, or is it 
easier for them to say--just say college isn't for me, or 
algebra or pre-calculus isn't for me?
    And what we find is that if you make a commitment of 
funding to students and families, that they will then take 
rigorous studies at the secondary level to prepare themselves 
for college, not take remediation or have to take remedial 
courses and then move through it a good persistence and 
completion rate which is, ultimately, one of the things we want 
out of the Pell Grant program.
    Mrs. Brooks. And that program starts at the middle school. 
That is where they are educated about what that opportunity is 
for beyond high school. And that, then, helps them set the 
path. Is that not right?
    Mr. Draeger. That is right. So they are informed very 
early, they are given the promise. And then the second part of 
that is they need the commitment. So it is not only telling 
them that it is available, but then actually coming through 
with the dollars to make it available.
    Mrs. Brooks. And are any other states doing any programs 
like that that you are aware of, and what kind of success have 
they had? And I know that, you know, we have had just thousands 
and thousands of students--I think we have had over 100,000 
students--participate in the 21st Century Scholar program. But 
that requires a state commitment, as well. And are any other 
states even contemplating it?
    Mr. Draeger. Although not identical, the other large state 
promise program has been the Georgia Hope scholarship. And 
although it has gone through some eligibility changes in recent 
years, Georgia Hope is another program that has shown that if 
you promise students early and parents early that it will 
change secondary school behavior to help prepare them for 
college.
    Outside of the state level, there are a lot of communities 
that also have promise programs. So going back to Michigan, 
there is a Kalamazoo Promise program and other local promise 
programs for residents in those localities.
    Mrs. Brooks. Thank you.
    I would like to ask Mr. Heath--shifting direction a 
moment--I was at our state's community college in Indiana, Ivy 
Tech Community College, and when we talked about attendance, 
and I find it interesting that Anne Arundel does take 
attendance, which I think is a novel concept for colleges as I 
understand. How is that they--the students, or the teachers, or 
the professors actually take attendance?
    Mr. Heath. We had our programmers develop an online process 
for them that ties in to the rest of our student system.
    Mrs. Brooks. And so when students come in to the actual 
classroom, there actually is an attendance process as they sit 
in the seat.
    Mr. Heath. There is.
    Mrs. Brooks. And is that some--how long has that process 
been in place?
    Mr. Heath. Just about two years now.
    Mrs. Brooks. Okay. And I assume that is because, as we have 
seen in a lot of colleges--that after that census cutoff date 
there actually is a period of time, isn't there, when students 
would disappear?
    Mr. Heath. Yes.
    Mrs. Brooks. Until this attendance process.
    Mr. Heath. Yes, that is true.
    Mrs. Brooks. Do you think we ought to use that as an 
innovative way to ensure that students aren't just taking the 
loan money, which we do know--and if you talk to students and 
professors they have seen it happen.
    Mr. Heath. Well, we certainly have found at Anne Arundel 
that that was one of the best ways to--you know, to monitor 
that. When this subject came up two years ago, with the 
negotiated rulemaking session for--on program integrity issues, 
as you might imagine there were a large number of organizations 
and schools that pushed back against the concept. So the 
Department of Ed stopped short of mandating it. Community 
colleges took a look at it, not just Anne Arundel, and saw that 
it was, in fact, a good way to--you know, to move forward.
    Mrs. Brooks. Do you have any idea roughly what it cost Anne 
Arundel to implement a program like that? Are there many costs 
to it?
    Mr. Heath. No, I was never informed as to what that cost 
for programming was. I know that except for a few faculty it 
was very well received by the majority of faculty on our 
campus.
    Mrs. Brooks. Any other comments from the other panelists 
about--well, I see my time is up--about the integrity issues?
    Madam Chair, I will yield back. Thank you.
    Chairwoman Foxx. Thank you, Mrs. Brooks. I think we have 
the opportunity--we can ask the panel members to submit 
information to us after the hearing on that issue. So we will 
be happy to look into that.
    Mr. Holt, you are recognized for five minutes.
    Mr. Holt. Thank you, Madam Chair.
    Let me get a few facts straight. First, Mr. Draeger, I 
believe you have said that the current Pell grant is about a 
third of the cost of attending a public institution. Going back 
three-and-a-half decades, more then three-and-a-half decades, 
it was about--nearly three-quarters of the cost of attending a 
public institution. Is that correct?
    Mr. Draeger. Correct.
    Mr. Holt. Mr. Dannenberg, I have here some figures for 
Rutgers University that shows that the state appropriations 
going to Rutgers are--is less--the dollar amount is less now 
than it was, well, 20 years ago. And, in fact, over the last 
more than two decades it has gone from 65 percent of the cost 
being paid by the state and 35 percent being paid out of 
tuition and fees to just the opposite. Are those figures 
typical of states around the country?
    Mr. Dannenberg. That is consistent with national trends.
    Mr. Holt. So Pell grants are more important than ever, but 
significantly smaller. So now let me get to the kind of the big 
picture here. Is it established that the cost to a student is 
the greatest determinant of attending college? Mr. Dannenberg 
or Mr. Draeger?
    Mr. Draeger. Yes, the number one reason that students cite 
for not attending or dropping out is cost, financial concerns.
    Mr. Holt. Okay. Now, as I hear from corporate planners and 
economists, we need more, not fewer, college-educated workers 
in this country. Does any of you know any estimates by 
economists of the benefit to our economy of having half a 
million, one million, ten million more college-educated 
workers? Mr. Draeger?
    Mr. Draeger. Well, I don't have those numbers at my 
fingertips. Economists have done that work. We would be happy 
to submit for the record. And the other point I would make is, 
not only have they cited the benefits societally and 
individually for people completing an education, but even going 
to some college has economic benefit for a community and an 
individual.
    Mr. Holt. So even if there is a dropout rate that is higher 
than we would like for Pell recipients, getting them into 
college has benefits to you and me and our constituents.
    Mr. Draeger. Yes. And there is a question to be asked here. 
To be eligible for a Pell grant you have to be enrolled in 
the--a program that is leading to some sort of certificate or 
degree. But there are instances where if there are dollars 
lacking in workforce development or training--that some 
students have no intention of completing a certificate or a 
degree. Their intention is to take a few courses to be able to 
increase--
    Mr. Holt. Well, I mean--you know, some of the discussion 
today has dealt toward waste and fraud and the effects of 
college aid on reducing individual initiative, and the 
preparation of those who receive Pell grants and particularly 
for those who are on the short end of the privilege gap.
    But I don't want to lose the big picture here of what we 
are debating. It was determined nearly four decades ago that it 
was very much in the national interest to help people go to 
college. Just as it was determined several decades before that, 
when the GI Bill was passed, that it was in the national 
interest, in dollars and cents, to help people go to college.
    So my question is, are we even close to a shrinking 
marginal return on the number of--on the benefit we get from 
those people who will be incentivized to go to college because 
of Pell grants? Are we even close to getting a shrinking 
marginal return? Mr. Dannenberg, you looked like maybe you 
wanted to address that.
    Mr. Dannenberg. The short answer is we are not even close. 
The difference in annual earnings between someone with a 
bachelor's degree versus simply a high school diploma is over 
$20,000 a year. That translates into $5,000 in tax payments per 
year.
    Mr. Holt. So national deficit, or not, or maybe especially 
if we have a national deficit, spending money on Pell grants is 
a good investment for our taxpayers. Would you go that far?
    Mr. Dannenberg. Yes, I was going to correct you and say it 
is not spending, it is an investment. You are absolutely 
correct.
    Mr. Holt. Thank you.
    Chairwoman Foxx. Thank you very much. Mr. Messer, you are 
recognized for five minutes.
    Mr. Messer. Thank you. I appreciate this opportunity. A 
fascinating conversation. I am going to focus at the beginning 
on the testimony of Dr. Robinson. But I think that this hearing 
is very important because it highlights--as you highlight in 
your testimony--the importance of now moving as a nation away 
from a philosophy towards higher education that focuses only on 
access and starts to look at success. I am a product of Pell 
Grants, could not have gone to college--graduated from Wabash 
College--without Pell Grants.
    Grew up in a single parent family. And understand, because 
I have lived, the importance of these degrees. But, of course, 
the world has changed a lot in the last 40 years. I would say 
the federal financial aid system is one of the great success 
stories in the history of the federal government. I mean, when 
our goal was access we have provided access to higher education 
for people in this country like never seen before. The 
challenge is, is that when these programs started 40 years ago 
access was enough.
    If you looked at income potential of someone who had just a 
little time in college, even one year, your income potential 
was higher. Of course, today that has changed. If you don't 
graduate with a degree, and a degree that adds value to 
society, your income won't be higher. Plenty of people are even 
graduating with degrees that make their income no higher. So we 
now have to move from a system that provides access alone to 
one that incents success so that we are making people's lives 
better.
    Because, of course, while this has all happened costs have 
gone up, too. So people are now leaving if they don't get a 
degree, most often with debt, too. Where you could argue that 
they are literally worse off than they had been had they not 
just had that access. What I have seen--I am a sort of a 
product of the education reform efforts in K through 12 in 
Indiana. And we saw our graduation rate, over a period of 6 
years, improve by 15 percent through a series of reforms; 
really, a lot of hard work from teachers, principals, parents, 
students.
    But a set of reforms that gave them those tools. Chief 
among them, I found, was the measuring of graduation rate. We 
used to have, as a society--we measured--to be counted as a 
dropout, as you would all probably know, you had to enter in 
your senior year and then not--drop out during that year. We 
started, as a country, to measure from freshman to senior year. 
And what I found in Indiana is that, once schools saw that real 
graduation rate, they were quick to the table to bring their 
own innovative reforms. And we have made a lot of change.
    So, Dr. Robinson, if you could expand just a little. I 
think measuring success rates, graduation rates, of Pell grants 
would give us an opportunity to see where we are, and then 
develop policies that not look to reduce what we spend in Pell 
grants but look to better spend that money in ways that leads 
students to success.
    Ms. Robinson. Absolutely. One of my frustrations has been 
how very difficult it is to get information about the success 
rates of Pell Grant students. Federal data on that topic comes 
out about once every 10 years. And recently, in North Carolina 
we have seen more information forthcoming. The University of 
North Carolina system just published that information. And I 
think from that we are actually going to be able to move 
forward and see what works and what doesn't.
    I would absolutely like to see graduation rates published 
so that we can move to focusing on how we can make sure that 
students get from that access to success. I think one way of 
doing that is requiring--right now, universities have to 
disclose, but they don't have to report the information to 
IPEDS. And I think that that would be a necessary step so that 
we have the information available to the Department of 
Education has the information available to answer more of the 
outstanding questions about what helps Pell recipients become 
successful.
    Mr. Messer. Yes, thank you.
    And Dr. Heath, my next question. I was very intrigued by 
your comments about the need to increase flexibility for non-
traditional students. If I were to make another observation in 
what has changed in 40 years is, you know, we have a system 
very focused on the sort of four homecomings, kids showing up, 
18-year-olds with a backpack. That is not many of our students 
in today's world. Could you talk a little bit more--expand on 
your discussion of providing flexibility for non-traditional 
students?
    Mr. Heath. Well, as, you know, it has been already noted 
here, the non-traditional student, or contemporary student, if 
you will, 75 percent of students now are going part-time. So 
while many of us think that limiting the months of Pell or 
semesters of Pell that a student could get was really a good 
move, within that we now are seeing that part-time student 
actually getting hurt because their eligibility is being used 
up quicker because they really should only be taking nine 
credits. It is not good for a student to take 11 credits when 
they really should only be taking nine. Because their schedule, 
you know, is such that their time commitments require more 
family time, more work time.
    So we don't want to see them using up that lifetime 
eligibility quicker than what they really should be. So that is 
one of the things that we are concerned about.
    Mr. Messer. Okay, thank you.
    Madam Chairman, I yield back.
    Chairwoman Foxx. Thank you very much.
    Ms. Bonamici, you are recognized for five minutes.
    Ms. Bonamici. Thank you very much, Madam Chairwoman and 
Ranking Member for holding this hearing today, and the 
important tool for increasing college access and Pell Grants. 
And I, like many others on the committee, worked my way through 
community college, college and law school with a combination of 
grants, loans and work-study. So I truly appreciate the 
importance of what we are discussing today, and believe that 
every student should have that access regardless of his or her 
socioeconomic status.
    And Pell grants were really founded as the basis of our 
federal financial aid system. So this is, again, an important 
topic we are talking about. I want to go back to the discussion 
about the disinvestment by states in higher education. My alma 
mater, University of Oregon, now gets about 5 percent of its 
funding from the state. So I am going to ask Mr. Dannenberg, I 
agree with your concerns about that, the issue of state 
funding. And how has that specifically affected students' 
reliance on the Pell program? I understand that it affects 
reliance on the need for more financial aid, but on Pell 
particularly.
    Mr. Dannenberg. It has obviously had a tremendous effect on 
students' reliance on the Pell Grant program, making Pell more 
essential than ever when it comes to low-income student access. 
I think the other thing to keep in mind is that when states cut 
back funding for individual institutions the individual 
institutions then change the nature of their aid to students. 
They start emphasizing non-need-based aid instead of need-based 
aid in order to try and attract in students who are able to pay 
at least something.
    So Pell faces a double hit. First, it is more important 
because states are pulling back from institutions and therefore 
tuition is going up. And second, the institutions are also 
responding by shifting from need-based aid to non-need-based 
aid.
    Ms. Bonamici. Thank you. I also really think we need some 
innovative thinking. Oregon, of course, is studying the Pay 
Forward, Pay Back program. I am really interested in seeing 
what happens with that study. And, Mr. Draeger, you talked 
about the Pell Promise. How would such a program be implemented 
successfully, and what support would be needed from the federal 
government if we were to do something like that at the federal 
level?
    Mr. Draeger. The benefits of the Pell Promise we have 
talked about, from the federal level I think very little would 
need to change except that it could be modeled on something 
like we do with Social Security today, where you are given a 
statement along the way letting you know how much money would 
be available to you--that piece of knowledge, then, supposedly 
is empowering people to hopefully make wise decisions during 
their career for retirement--something similar in higher 
education.
    So that based on the fact that somebody is already taking, 
utilizing, some state or federal means-tested benefit, we know 
they are low-income--and longitudinal 5-year study that NASFAA 
conducted, which is included in my written remarks, showed that 
for our neediest students their income levels don't change 
greatly from middle school to high school to college.
    If you are poor, unfortunately odds are you are going to 
continue to be poor when you go into college. We could identify 
them early, notify them early and, hopefully, effectuate 
positive outcomes in secondary school.
    Ms. Bonamici. That is great. Thank you.
    Dr. Robinson, in your testimony you mentioned that it is 
your belief that only ``very low-income students,'' and that 
was your phrase in your testimony, should receive Pell grants. 
So if, in fact, the proposals that you suggest were in effect, 
then more students--what would they do? Drop out, or not start 
college, or take on more loan debt? What would happen to all 
the students who are currently eligible who wouldn't be 
eligible under your proposals?
    Ms. Robinson. Those students would do a combination of 
things in order to achieve some kind of higher education. Some 
of them might choose less costly institutions, some of them 
might in fact take out loans. But the reason behind that 
proposal is that the limited research that is available shows 
that for those students they actually respond better to loans 
than they do to grants that they do not have to pay back.
    Ms. Bonamici. And I wanted to follow up on that because you 
did have--you mentioned limited research. Do you know how many 
students were studied in that particular study? Because that 
was intriguing, when you said that, actually, middle-income 
students don't benefit from Pell grants. I found that quite 
surprising.
    Ms. Robinson. I will have to go back and look at that for 
you. I don't have the figure offhand.
    Ms. Bonamici. Thank you.
    And, Mr. Dannenberg, do you have thoughts on what would 
happen if, in fact, we limited Pell grants to very low-income 
students, and more students would have to rely on loans?
    Mr. Dannenberg. Yes. First of all, it is important to keep 
in mind that community colleges are like the great secret of 
the American higher education system. Over 40 percent of all 
students are going to community colleges. So the idea that 
students are going to go to less expensive colleges, when they 
are already going to very inexpensive colleges, flies in the 
face of the data. What is going to happen is students will drop 
out. They will go from full-time status to part-time status. 
And if they do go from full-time status to part-time status 
they will be much, much, much less likely to complete.
    Ms. Bonamici. All right, thank you. And I see my time has 
expired.
    Thank you.
    Chairwoman Foxx. Thank you.
    Mr. Thompson, you are recognized for five minutes.
    Mr. Thompson. Madam Chair, thanks for hosting this hearing. 
And to the witnesses, thank you for bringing your expertise 
here. Obviously, you know, probably even 10 years ago talking 
about, you know, the typical student has changed, I think, 
dramatically. And I think it will continue to evolve, where I 
know when I went to college, my cohort, we were largely--it was 
18-to 22-year-olds, something like that, that was on campus and 
pursuing an education.
    But then today it is determining how do we make these 
programs flexible enough to meet people's educational needs at 
every point in their lifetime, because it is not where you 
start, it is where you end up. And the key to that success is 
education. So it is--we need a dynamic program, there is no 
doubt about that. I wanted to come back to a couple points in 
the testimony, start with Mr. Heath. What percentage of 
students at your community college and/or nationally require 
remedial education?
    Mr. Heath. I don't have that number readily available. I do 
know that I have been told that it is a relatively high number. 
But in context, some of those students are testing into 
remedial math. And one of the reasons is that they were really 
good students in high school, and by the time they got to grade 
10 or 11 they had taken all the math required and so they were 
taking nothing in grade 12. And when they went to do the 
testing they were showing that they needed a developmental 
class in order to take college-level algebra. So there is some 
context there, but it is a fairly high number.
    Mr. Thompson. Yes. I just spent some time in southern 
Arizona at a--actually, a military installation, talking with 
the officers in charge of the educational system there. And 
they are training soldiers and officers. And remediation is a 
big part of what they do there, as well. So it is across the 
board. Any idea of how much of the Pell fund that we use for 
remediation at this point?
    Mr. Heath. No, but we do know that students can take up to 
30 credits of, or the equivalent of, remedial courses, and Pell 
grants will pay for it. But normally, students are stopping out 
far short of that because they just are not able to continue 
and to pass the courses.
    Mr. Thompson. Mr. Draeger, you look like you had your hand 
on the buzzer.
    Mr. Draeger. About one in three college students today are 
taking remediation nationally; 50 percent of students at 
community colleges are remediating and just about a third, or 
around 20 to 30 percent, in 4-year schools. Pell Grants cannot 
be used solely for remediation. So they can take remedial 
course work if it is integrated into a program. And as Rich 
pointed out, there is a cap on how much remedial education can 
be taken through the Pell Grant. So while it may be a--not an 
insignificant dollar amount, it is not unlimited, by any means.
    Mr. Thompson. Okay. Dr. Robinson, your testimony talks 
about shifting the definition of full-time student from 12 to 
15 credits as an option to encourage college completion. And 
the benefits there are kind of obvious. Obviously of reducing 
the overall role of debt in terms of get a--to earn your return 
on investment sooner with your education degree. It is not the 
degree that is of value, it is the return on investment that 
comes from it.
    Just thoughts on what impact that--would this have, given 
on non-traditional students, kind of reflected on where I see, 
obviously, our educational system needs to be: them being more 
flexible at different parts throughout a person's lifetime or 
on, specifically, Pell-eligible students.
    Ms. Robinson. I think the significant impact comes in 
looking at how you go from that 15-hour point. And I think the 
way that you prorate for hours after that makes a big 
difference. I think Mr. Dannenberg mentioned that you pay the 
same for nine and 11. I think the prorating on that should 
actually be the 11 and nine, 10; all of those are prorated as a 
percentage. So students are using the money as they are taking 
courses, and not having to pay for time they are not taking.
    And I think it also should be coupled with the Pell Well 
concept so students can go over summer. The main point in going 
from 12 to 15 is that if someone is currently full-time at 12 
hours, that person would be much better off to be 12--full-time 
at 15. So that they, as you said, don't have debt, or don't 
have six years of debt or five years of debt when they do come 
out.
    Mr. Thompson. And my last is actually just a request of all 
the panelists. Anyway, the key part to this is developing 
financial literacy among students and parents so that they are 
choosing paths with a return on investment. That they have that 
in the end. So I would just ask if you could submit to the 
committee any thoughts or any recommended research that you 
have seen on how do we increase financial literacy among 
probably most specifically that traditional--what has been--I 
don't think it is traditional anymore, but that post-high 
school, postsecondary into college. That would be very helpful. 
Thank you.
    Thank you, Chairwoman.
    Chairwoman Foxx. Thank you, Mr. Thompson.
    Mrs. Davis, you are recognized for five minutes.
    Mrs. Davis. Thank you, Madam Chair. And thank you to all of 
you for being here. I certainly feel like a great example of 
someone who went to UC system far too many years ago. When I 
talk to students and tell them what I paid for--it wasn't even 
considered tuition then, basically--they are shocked by that. 
And it is a shift of 75 percent help essentially to students 
versus today less than 25. And so that is why many, many 
students do have to look for other sources of income.
    I wanted to ask you, Dr. Robinson, a little bit--your 
comment. And I know that my colleague asked earlier. But I 
wasn't sure what you base the claim that Pell grants to 
moderate--you said middle class students, I think, $30 to 
45,000 or so. I was not sure that that is always middle class 
in everybody's mind. But whether they are less likely to 
graduate. So what is the causal relationship there?
    Ms. Robinson. Sorry. It is based on the beginning 
longitudinal study that the federal government puts out. And it 
appears that the causal relationship is that in that income 
group they are more responsive to money that they will have to 
pay back. The knowledge that they have a loan that they will 
have to pay back at the end makes them more likely to graduate. 
The authors of the study are--
    Mrs. Davis. For students who--
    Ms. Robinson. For those who have $5,000 to $50,000 range. 
The authors of the study only speculate on causation. They note 
that this is research that really can't establish a causal 
pattern, only a relationship. But that is what they found, 
based on their research.
    Mrs. Davis. I wonder if anybody else would like to comment, 
Mr. Dannenberg? How does that stack up?
    Mr. Dannenberg. I think one of the most interesting pieces 
of research out there on the effect of need-based aid on low-
income students was done by Sara Goldrick-Rab and a series of 
others published by the National Bureau of Economic Research. 
They ran a control study, which is very rare. Basically, they 
looked at Pell students who were getting a supplemental need-
based aid program through--in Wisconsin, and those who were 
not. And what they found was that for a thousand dollars in 
additional need-based aid to Pell students those students were 
going to return for a second year of study at a rate of 3 to 
4--a little over 4 percent higher. So the point is that 
increased investment increases the likelihood of retention and, 
therefore, progression-completion.
    Mrs. Davis. Is there is a sense, too, that the community is 
counting on those students in some way? I mean, does the fact 
that students feel perhaps that it is a little more accessible 
and more valued that they have a contribution to make to give 
back?
    Mr. Dannenberg. I think that is especially true with the 
promise programs that Justin was referencing. But since I am 
giving him applause, I also want to criticize the idea that we 
can just give students in eighth grade a statement of how much 
financial aid they will get, and that that will drive them to 
school. It is not enough. Americans overestimate the cost of 
higher education.
    What Indiana does is much better. So what Indiana does is 
provide a guarantee that you can go to school debt-free or 
tuition fee-free. A number isn't enough. It needs to be a 
concept.
    Mrs. Davis. Okay. One of the things that you mentioned 
earlier was that rather than targeting the students, that you 
target the schools in terms of making some of the changes that 
need to be done. And also, there are loans outside of Pell that 
we need to deal with. Could you be a little more expansive 
about that, and are there some ideas out there now that are 
really out of the box thinking that we are not--people talk 
about, but we are not quite willing to move forward on?
    Mr. Dannenberg. Yes. First of all, you are absolutely right 
with respect to institutions. And I think that has been a big 
area we have neglected as witnesses: the importance of 
institutional role. Not just when it comes to financial aid and 
increased need-based aid versus non-need-based aid at the 
institution. But what an institution does makes a tremendous 
amount of difference when it comes to completion. We see 
similar institutions with a similar student body that get 
dramatically different results.
    So one of the outside of the box ideas is that in any 
effort to provide funds to the states, the states try and hold 
institutions accountable for their performance with low-income 
students in terms of increased completion. San Diego State is 
one of the better schools in the country, as a matter of fact, 
when it comes to completion among low-income, under-represented 
minority students as compared to their peer institutions.
    Mrs. Davis. Yes. And a lot of that is based on the number 
of support systems that are built in, and using mentors and a 
whole host of other community organizations. I appreciate that.
    Thank you very much.
    Chairwoman Foxx. Thank you very much.
    Ms. Wilson, you are recognized for five minutes.
    Ms. Wilson of Florida. Thank you, Madam Chair, for holding 
this hearing today. The federal Pell Grant program is a 
lifeline for more than 9 million students every year. The 
program can make the difference between a life of poverty and a 
good, meaningful middle class career. The Pell Grant program is 
also a lifeline for America's economy. For African-American and 
Latino students, education is the only--the only--stepping 
stone out of poverty. There are very few dollars to inherit 
from the family trust. There are very few African-Americans and 
Latinos that can save enough to send their children to college. 
So the Pell grant is key.
    We need more students to undertake higher education in 
order to close the skill gap and boost productivity. But so 
many families are struggling to cover rising cost. While some 
exaggerate the funding gap with regard to Pell, the fact is 
that the program has been cut by more than $50 billion and is 
projected to remain stable. It is very important to note that 
40 percent of the growth in Pell Grant costs since 2009 has 
been due to the increased number of Pell-eligible students in 
this period of high unemployment, not due to policy changes.
    What this says to me is simple. We can reduce the cost of 
the Pell Grant program by getting Americans working again. Once 
we get Americans working again, we will have fewer enrollees 
with fewer families requiring assistance. So this Congress has 
to turn back to its regular focus on jobs. Now, I have a few 
questions for all of our witnesses.
    While there is a great deal of focus on completion pressure 
and non-traditional school year models, taking classes in the 
summer months is often impossible for low-income students who 
support themselves and other family members. What is a 
reasonable number of semesters for which someone should be 
eligible for Pell, taking into consideration the factors that 
impact low-income students, especially Latinos and African-
Americans?
    Mr. Draeger. So from our perspective, the aggregate limit 
may not be off. Six years of full-time eligibility may not be 
the wrong number. What we would advocate for is more 
flexibility that students, so students could enroll on an 
ongoing basis. So instead of reaching a summer term, or 
semester, and saying I have no more Pell Grant eligibility, and 
I am going to stop out, which then increases the likelihood of 
them not returning, that they could continue to stay 
continuously enrolled by providing them, again, a well of Pell 
funds.
    Mr. Dannenberg. There has been a lot of talk about the 
contemporary student, which I think is a good term as well. The 
contemporary bachelor's degree recipient gets their degree in 
five years, not four. So when we talk about 150 percent of 
time, six years, that is 150 percent of time working off of an 
old, antiquated calendar of four years to a bachelor's degree. 
It is now five years to a bachelor's degree, so I think we need 
to ask ourselves whether we should be pulling back even further 
on the amount of eligibility that students have for Pell in 
terms of time or dollars.
    Ms. Wilson of Florida. Okay. We have talked a lot about 
this investment from the states. I would like to find out what 
you think can be done to ensure that this investment in higher 
education funding on the state level does not continue to erode 
the purchasing power of the Pell grant. What can be done to 
help with that?
    Mr. Dannenberg. I am looking at Congressman--
    Ms. Wilson of Florida. Okay.
    Mr. Dannenberg. I am looking at Congressman Tierney because 
he is the champion of a maintenance-effort provision that 
appeared in the College Access Challenge Grant, which is a 
small grant program. There was also a maintenance-effort 
provision that appeared in the American Recovery and 
Reinvestment Act for Higher Education Funding. And states were 
responsive, particularly to the AARA maintenance-effort 
provision, because there is such a substantial amount of 
funding. That is the problem with CACG is that it is too small.
    What can be done? The feds can provide a substantial amount 
of funds to states and institutions in order to leverage 
increased support for higher education, either in terms of 
maintaining state investment or push on the institutions to 
keep costs down. And you can do that by targeting funds outside 
of the Pell Grant program, outside of unsubsidized loans.
    Ms. Wilson of Florida. Anyone else? Any incentive idea to 
incentivize states to invest more in their colleges?
    Dr. Robinson, you said that--I would like for you to 
elaborate further on the limited studies that show that some 
low-income students respond better to loans than to grants. 
What, in your experience and research, have you found to be the 
impacts of higher debt burdens on persons' purchasing power, 
well-being and lifetime career prospects?
    Chairwoman Foxx. Ms. Wilson, I am going to ask Dr. Robinson 
if she would submit her response to you in writing--
    Ms. Wilson of Florida. Oh, I am out of time.
    Chairwoman Foxx. Since you are out of time. And I would 
commend to you the study that Dr. Robinson has offered, 
entitled ``Pell Grants--Where Does All The Money Go?'' You 
may--I am sure she will make available to you a copy of that. 
And it has a great bibliography in it, too.
    Mr. Tierney, you are recognized for five minutes.
    Mr. Tierney. Thank you very much.
    Mr. Dannenberg, let me start off where you were talking 
earlier. Because we did have a go at trying to put a 
maintenance of effort provision into the Higher Education 
Opportunity Act and the stimulus on that, with some effect from 
all the reports that we have out there. But you are right, the 
CACG is very, very small as a set-off on that, and we had quite 
a fight just to get that. It was difficult to identify 
something that would be meaningful to put at risk for schools 
to not maintain their effort.
    So when I look at your comment in here about the Education 
Trust having 10 offsets to finance a flexible state and 
institutional fund for needy students to be given some sort of 
guarantee, can you explain a little bit more? Maybe use an 
example of what of any of those 10 ideas were, and how that 
would work?
    Mr. Dannenberg. Sure. We have identified grants, loans and 
tax benefits that could be reduced. Let me start with the low-
hanging fruit: tax benefits. The Hope Scholarship Tax Credit 
used to limit out at $120,000 in family income. That is 80th 
income percentile nationally. The Obama administration, which I 
worked in, expanded the higher education tax benefits markedly. 
And I think that has been a laudable accomplishment.
    But it also increased the income level at which people can 
get an American Opportunity tax credit, formerly Hope, all the 
way up to $180,000. So we went from the 80th percentile to the 
95th percentile. You know, why are providing tax benefits--and 
that is some $7 billion a year--to folks who are in the top 
income quintile? Why is it that Mitt Romney can get a 520--I 
have three 529s. But why can Mitt Romney get a 529 which has 
all kinds of tax benefits attached to it, when we have students 
who are in desperate need of Pell grants? So those are two on 
the tax side. But I think there are others in this committee's 
jurisdiction.
    Mr. Tierney. So you have to find some way to get that money 
back to education as opposed to the general treasury. So if we 
can work on that. All right, that is an interesting concept, 
but we may follow up with you if you have no objection on that, 
to look at some of those other areas.
    The other is, you know, the financial incentives to 
borrowers and owners that have FFEL loans to get them to 
convert their debt to a direct loan on that basis. Have you 
worked out the specifics as to how you think that program would 
work?
    Mr. Dannenberg. Actually, the Department of Education had 
administered a small similar program that allowed borrowers who 
had both FFEL loans and direct loans to combine them and 
consolidate them into the direct loan program, and gave them a 
lower interest rate in doing so. What I am suggesting is, 
essentially, that effort much, much more aggressively 
implemented by the secretary.
    Where he went to students who have existing FFEL loans now, 
sizeable amounts, and said, ``Look, pay--consolidate into the 
direct loan program. We will cut your interest rate, we will 
give you cash back, we will lower your principal. And you, the 
student, will benefit and us, the taxpayer--the federal 
government--will benefit because we won't be paying out as much 
in subsidies on these old loans.'' Frankly, which a lot of 
providers would like to get off their books because they no 
longer have the same incoming stream of new federal family 
education loans.
    Mr. Tierney. Thank you on that.
    And lastly, one of you mentioned at one point, and I will 
defer to your memories on that, the cost of books for students. 
Mr. Hinojosa and Mr. Miller and I recently filed some 
legislation trying to get the textbook materials more 
accessible to students through online provisions and otherwise 
that would reduce the cost. Does anybody want to speak to the 
impact on students for what is now a pretty high cost of 
textbooks?
    Mr. Heath. Yes. The cost of the textbooks definitely has, 
you know, increased over the last number of years. It keeps 
going up every year. Most institutions that I am familiar with 
have a variety of ways that students can get those books. We 
implemented a process a couple of years ago where they can 
actually rent the textbooks. So we always have a buy-back 
provision so they can bring the textbooks back. When they are 
done at the end of the semester, we buy them back. They can 
rent them.
    They also have the opportunity, of course, to, you know, 
purchase their textbooks online from a--you know, non-college 
provider. The problem that we have right now that we haven't 
been able to solve is for those community college students that 
want to buy their books electronically and actually providing 
them money up front so that they can get those textbooks 
electronically. And we have resisted doing that because we 
found historically when we provided money up front--that is, 
before the class is actually started--students took the money 
and didn't show up for class.
    So trying to balance that--you know, that issue, you know, 
is an ongoing problem for us.
    Mr. Tierney. Thank you.
    I yield back.
    Chairwoman Foxx. Thank you, Mr. Tierney. I now yield myself 
five minutes.
    Dr. Robinson, taxpayers deserve to know if their hard-
earned money is being spent appropriately by the federal 
government. Your testimony talks about the lack of data points 
to show how Pell Grant students are faring in college. And we 
have talked a lot about this issue. Several members have raised 
questions. But could you share with us what specific data 
points should be added into the law during the upcoming 
reauthorization to help provide us with better information on 
how Pell Grant students are doing?
    Ms. Robinson. I think the first fix is to enforce what was 
already started in 2008 with the higher education 
reauthorization. Go from disclosure of Pell Grant graduation 
rates at the institutional level to actually requiring that to 
be reported to IPEDS. Disclosure is only minimally useful if it 
becomes difficult for researchers and for the Department of 
Education to get data on a wide-scale basis. And it is that 
wide-scale data that we need in order to do any kind of 
methodological look at how Pell students are doing.
    Secondly, I think that the beginning postsecondary 
education longitudinal data are extremely important. I think it 
would be very nice if that could be done more often. Right now, 
we are still looking at data that begins in 2003-2004. And from 
what I can tell, we can't expect any new data for quite some 
time. Seeing that data maybe every five years would be 
considerably more helpful than the rate at which we see it 
right now. Because it is that longitudinal data that tracks 
students over time that allows us to see what happens from the 
moment a student enters to where they are four, five, six or 10 
years later.
    And I think most importantly, that data must be 
transparent. The Department of Education obviously needs to be 
able to look at the data. But outside organizations, from 
NASFAA to the Pope Center, to individual institutions and 
schools of education, can add a lot of insight to the arguments 
about Pell if they have access to meaningful data.
    Chairwoman Foxx. Thank you very much.
    Mr. Draeger, can the reforms you talk about in your 
testimony--Pell Promise, Pell Well and Super Pell--be 
implemented without dramatically increasing the cost of the 
program? How can we ensure that the program does not continue 
to grow at the rates we have seen over the past five or six 
years?
    Mr. Draeger. We have already seen the cost of the Pell 
Grant program leveling out. And so partly because of a partial, 
or slow, recovery and partially because Congress has rolled 
back some of the eligibility criteria that it had originally 
implemented five, six, seven years ago. And in my written 
remarks I have included an appendix of those eligibility 
changes. The reforms that we have put forward we don't believe, 
over a five or 10-year period of time, would cost dramatically 
more, because Congress has already put in place limitations on 
the full extent to which students can utilize a Pell Grant.
    And what we are talking about is now making that Pell Grant 
information available to students much earlier, and giving them 
more flexibility so that that contemporary student can use them 
for an innovative--in an innovative learning model program, a 
competency-based program, or on an ongoing basis until they 
have exhausted eligibility.
    Chairwoman Foxx. Thank you very much.
    Mr. Heath, how can the federal government assist 
institutions in preventing fraud, while easing the burden on 
financial aid offices?
    Mr. Heath. Well, I think that they can continue to do what 
they started to do about 18 months ago when this was becoming 
more of a problem nationwide. The follow up with the students 
that show up on our records when they come in is extensive. But 
what we have found in that follow up is that many of those 
students were not really legitimate students. That is, the 
transcripts that came in from other colleges, when they finally 
turned them in, showed little or no academic progress 
whatsoever.
    So they can continue to do what they put into place, but 
certainly require every college that has large numbers of 
students that are moving from school to school to make sure 
that those records that they get in have been thoroughly 
reviewed. And those that are not progressing academically when 
they are changing schools, that the eligibility for financial 
aid simply is not there coming through the door. That is, they 
would have to come in and establish their own academic record 
at that college.
    Chairwoman Foxx. Thank you very much.
    I want to thank all of our witnesses here today. You are a 
distinguished panel, and we very much appreciate your taking 
the time to appear before the subcommittee today. And you have 
given us a lot to think about, a lot to read. Your testimony is 
pretty expansive, the written testimony. There is a lot to read 
and to consider.
    Mr. Tierney, do you have some closing remarks?
    Mr. Tierney. Well, I do, Madam Chairwoman. On behalf of the 
ranking member, I just also--and the other members of the 
panel, I want to thank you for your efforts here today, for the 
work that you prepared in advance and your testimony. And I 
suspect, your availability in an ongoing basis to help us sort 
of formulate some policies on that. The ranking member and the 
other members want to let you know that we want to strengthen 
the Pell Grant program.
    We want to continue to expand affordability and 
accessibility to college. And hopefully, both sides of the 
aisle will work towards strengthening the Pell Grant program 
and that affordability and make it a top priority for Congress. 
So with your efforts and your help we will be able to move in 
that direction. And thank everyone for their work on this 
hearing.
    Chairwoman Foxx. Thank you, Mr. Tierney.
    Most of my colleagues have made comments about having come 
from low-income families, worked their way through college, 
some of them utilizing the Pell Grant. I think any of us who 
have been involved in higher education understand the value of 
the Pell Grant program. I will one-up my friends a little bit 
by saying not only did I come from an extremely low-income 
family--I worked my way through school--but I worked with 
students who received Pell Grants. I was around in 1972, when 
the BEOG program started, and I remember it very well.
    I was working with Upward Bound students and low-income 
students at Appalachian State University. I ran a special 
services program and a program for disadvantaged Appalachian 
and African-American students. So I am very well aware of the 
value of financial aid, and particularly the Pell Grant 
program. So I know we all want to strengthen the program so 
that it is available to the truly needy students. Because there 
are students out there who need it, and there are students who 
can benefit from the program, and who can benefit our culture 
as a result of attending higher education.
    We want to utilize these hearings to highlight the problems 
or concerns that exist, and figure out ways we can update the 
federal laws to ensure they are keeping up with how our 
universities are educating students. So today, I have noticed a 
plethora of dueling statistics--maybe more than usual--in our 
comments. So I want us to keep in mind how we utilize 
statistics to define the problems that exist.
    Several of you have discussed how the buying power of Pell 
Grants has decreased significantly over time. Yet according to 
figures calculated by the Congressional Research Service, the 
Pell Grant covers approximately 72 percent of the published in-
state tuition and fees at 4-year public institutions.
    We know that it covers more than enough of the cost of fees 
and tuition at community colleges. I think we can all find 
statistics to help us define our arguments and our points. We 
just need to make sure that we understand the context in which 
the statistics are being used. And I think as we go through 
with further hearings and looking at these programs, we will do 
our best to make sure that we have data. And I think all of 
you, especially Dr. Robinson, has pointed out the need for us 
to get reliable information. And that is something I am very 
much interested in, and I think all of us are, again, so that 
we can make sure the truly needy students are getting the help 
they need.
    So again I thank everyone for being here, my colleagues on 
both sides of the aisle. And there being no further business, 
the hearing is adjourned.
    [Additional submission of Mr. Hinjosa follows:]

 Prepared Statement of the American Indian Higher Education Consortium

    On behalf of the nation's 37 Tribal Colleges and Universities 
(TCUs), which collectively are the American Indian Higher Education 
Consortium (AIHEC), we write to commend the Subcommittee for examining 
ways to strengthen the Pell Grant Program and appreciate the 
opportunity to share the perspectives of the TCUs and the students they 
serve.
    TCUs are open enrollment institutions that were created in response 
to the higher education needs of American Indians/Alaska Natives and 
generally serve very low income, geographically isolated populations 
that have no other means to access education beyond the high school 
level. TCUs have become increasingly important to educational 
opportunity for Native students offering high quality, culturally 
relevant higher education opportunities to encourage American Indians/
Alaska Natives to overcome the barriers they face to higher education.
    The importance of Pell Grants to TCUs and TCU students simply 
cannot be overstated--More than three quarters of TCU students receive 
Pell Grants. At $100 per credit hour, tuition rates at TCUs are among 
the lowest in the nation, but the cost of attending any college is not 
``affordable'' to students with average annual incomes of less than 
$18,000 without meaningful and stable federal assistance.
    Pell Grants are the bedrock of the student aid programs and must 
provide a stable source of funding for low-income students. The maximum 
Pell Grant has increased in recent years, but various shortfalls, 
budget debates, proposed and impending cuts to the program would 
prevent it from being described as ``stable'' for TCUs students that 
rely on this funding to pursue higher education goals. Protecting Pell 
from ongoing Congressional budget debates and offering measures of 
certainty in funding would help Native students realize their 
postsecondary education aspirations.
    At this hearing and others from the ``Keeping College within 
Reach'' series, the Subcommittee has heard numerous proposals to 
simplify the financial aid process and make selecting and paying for 
postsecondary education more consumer friendly. TCUs are leaders in 
promoting accessible postsecondary options for American Indians/Alaska 
Natives and would welcome new policies and programs designed to 
increase awareness of higher education and financial aid opportunities. 
However,
    AIHEC member institutions are also concerned about unintended or 
unforeseen consequences of major changes to the student aid programs. 
As the Committee further develops proposals to reform the Title IV 
programs, we ask that you be mindful of the potential impact of policy 
changes to TCUs and seek the counsel of TCUs, through AIHEC, to ensure 
federal programs are leveraged to the maximum benefit of Indian 
Country.
Remediation & ``Contemporary Students'' at TCUs
    Chairwoman Foxx and others on the Subcommittee have commented on 
the need to replace the term ``non-traditional student,'' noting these 
students are now the norm in higher education and suggesting the term 
``contemporary student'' may be more appropriate. TCUs commend the 
Subcommittee for this realization. However, if designed improperly or 
without adequate review, proposals aimed at reducing spending on Pell 
Grants and bringing further accountability to recipients could result 
in greatly reduced postsecondary educational opportunities available to 
`contemporary' students. For example, at a time when the nation is 
focused on increasing not just access but completion rates for 
America's college students, a recent budget agreement immediately 
reduced Pell Grant eligibility from 18 to 12 semesters, with no phase-
in or grandfathering component for current recipients. This resulted in 
some students finding themselves ineligible for further Pell Grants and 
therefore unable to complete their degree programs. Though 12 semesters 
of eligibility may seem sufficient for so-called traditional students, 
this limit can be highly restrictive for students who need remediation.
    A recent survey of placement test results at TCUs indicate that 64 
percent of incoming students required remedial math, 78 percent 
required remedial writing, and 60 percent required remedial reading. 
Though student aid funds cannot be used exclusively for remediation 
coursework, they can be used for remedial work on the path toward a 
degree and can require as much as one full year of a student's Title IV 
eligibility. The federal government should recognize that effective, 
well-funded remediation programs are essential to improving higher 
education access and success rates among low-income students and 
provide extended eligibility for students completing these courses as 
part of a degree or certificate program. Restricting eligibility for 
remedial or developmental courses is no way to recognize contemporary 
students.
    ``Sometimes, our students come in unprepared for college work. They 
use up quite a bit of their Pell [Grant eligibility] taking 
developmental courses, so we might encourage them to transfer without a 
degree so they'll still have some of their Pell [Grant] for attending 
the four-year college,'' said David Yarlott, President of Little Big 
Horn College, Crow Agency, MT. ``We'd like to have those increased 
degree (completion) numbers, but we have to think of our students' 
needs first.''
    As Congress considers HEA reauthorization and the Administration's 
efforts to rate colleges, the Committee should be mindful of 
limitations on certain program measures such as graduation rates. 
Though program accountability is critical, it is incredibly important 
that federal policy not punish colleges and universities for ``thinking 
of our students' needs first.''
Summer Pell
    Pell Grant eligibility for more than two semesters of coursework, 
or ``summer Pell,'' was another casualty of a recent budget debate. For 
three years this change in policy appeared to be working as summer 
enrollments were up at TCUs, community colleges, four-year colleges and 
universities, and even for-profit institutions. The elimination of 
summer Pell has and will continue to restrict the opportunities 
available to contemporary students.
    In a cruel irony, the loss of summer Pell will have less of an 
impact at some TCUs due to sequestration. Faced with significant cuts 
in federal funding, many TCUs had to eliminate summer programs this 
year. For instance, Sitting Bull College, located on the Standing Rock 
Sioux reservation in North Dakota and South Dakota had to address a cut 
of nearly $1 million, which forced the college to close its doors this 
past summer. The campus closure not only prevented the offering of 
college courses, it also eliminated programs for high school and middle 
school students, which of course meant the elimination of several 
months of income for many of those that are employed at the college.
Additional Information on Tribal Colleges and Universities
    TCUs are public institutions of higher education chartered by their 
respective tribal governments, including the ten tribes within the 
largest reservations in the United States. They operate more than 75 
campuses in 15 states--virtually covering Indian Country--and serve 
students from well more than 250 federally recognized Indian tribes. 
TCUs vary in enrollment (size), focus (liberal arts, sciences, 
workforce development/training), location (woodlands, desert, frozen 
tundra, rural/isolated reservation, urban), and student population 
(primarily American Indian). However, tribal identity is the core of 
every TCU and they share a common mission of tribal self-determination 
and service to their respective community.
    These academically rigorous, culturally appropriate institutions 
engage in partnerships with federal agencies and other universities 
nationwide to support research and education programs that focus on 
issues such as sustainable agriculture, water quality, climate change, 
wildlife population dynamics, behavioral health, and diabetes control 
and prevention. The majority of faculty, teaching staff, and 
administrators hold a master's or doctoral degree. Dedicated faculty 
and staff often serve double-duty as counselors and mentors in addition 
to their teaching and administrative roles.
    TCUs provide many services to help students stay in school and 
complete their studies, such as personal and career counseling, 
mentoring, tutoring, wellness programs, child care, lending of laptop, 
and transportation and housing assistance. Many support distance 
learning involving state-of-the-art learning environments. Community 
members often take advantage of the TCU libraries and computer labs, as 
well as a range of community service programs, such as business 
incubators and health and wellness events and workshops.
    Tribal Colleges and Universities are providing access to high 
quality higher education opportunities to many thousands of American 
Indians/Alaska Natives and non-native students, as well as essential 
community services and programs to many more. Keeping the Pell Grant 
program vital and strong is vital to the continued postsecondary 
success in Indian Country.
    For additional information on TCUs, we recommend Subcommittee 
members and their staff review The AIHEC AIMS Fact Book as it provides 
an in-depth profile of TCUs and the students they serve. It is included 
with this statement as an appendix. The report is available online: 
http://www.aihec.org/resources/documents/AIHEC-AIMSreport--May2012.pdf
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    [Whereupon, at 12:01 p.m., the subcommittee was adjourned.]

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