[House Hearing, 108 Congress]
[From the U.S. Government Publishing Office]
H.R. 3039, THE EXPANDING OPPORTUNITIES IN HIGHER EDUCATION ACT OF 2003
=======================================================================
HEARING
before the
SUBCOMMITTEE ON 21st CENTURY COMPETITIVENESS
of the
COMMITTEE ON EDUCATION
AND THE WORKFORCE
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED EIGHTH CONGRESS
FIRST SESSION
__________
September 11, 2003
__________
Serial No. 108-31
__________
Printed for the use of the Committee on Education and the Workforce
Available via the World Wide Web: http://www.access.gpo.gov/congress/
house
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______
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COMMITTEE ON EDUCATION AND THE WORKFORCE
JOHN A. BOEHNER, Ohio, Chairman
Thomas E. Petri, Wisconsin, Vice George Miller, California
Chairman Dale E. Kildee, Michigan
Cass Ballenger, North Carolina Major R. Owens, New York
Peter Hoekstra, Michigan Donald M. Payne, New Jersey
Howard P. ``Buck'' McKeon, Robert E. Andrews, New Jersey
California Lynn C. Woolsey, California
Michael N. Castle, Delaware Ruben Hinojosa, Texas
Sam Johnson, Texas Carolyn McCarthy, New York
James C. Greenwood, Pennsylvania John F. Tierney, Massachusetts
Charlie Norwood, Georgia Ron Kind, Wisconsin
Fred Upton, Michigan Dennis J. Kucinich, Ohio
Vernon J. Ehlers, Michigan David Wu, Oregon
Jim DeMint, South Carolina Rush D. Holt, New Jersey
Johnny Isakson, Georgia Susan A. Davis, California
Judy Biggert, Illinois Betty McCollum, Minnesota
Todd Russell Platts, Pennsylvania Danny K. Davis, Illinois
Patrick J. Tiberi, Ohio Ed Case, Hawaii
Ric Keller, Florida Raul M. Grijalva, Arizona
Tom Osborne, Nebraska Denise L. Majette, Georgia
Joe Wilson, South Carolina Chris Van Hollen, Maryland
Tom Cole, Oklahoma Tim Ryan, Ohio
Jon C. Porter, Nevada Timothy H. Bishop, New York
John Kline, Minnesota
John R. Carter, Texas
Marilyn N. Musgrave, Colorado
Marsha Blackburn, Tennessee
Phil Gingrey, Georgia
Max Burns, Georgia
Paula Nowakowski, Chief of Staff
John Lawrence, Minority Staff Director
------
SUBCOMMITTEE ON 21st CENTURY COMPETITIVENESS
HOWARD P. ``BUCK'' McKEON, California, Chairman
Johnny Isakson, Georgia, Vice Dale E. Kildee, Michigan
Chairman John F. Tierney, Massachusetts
John A. Boehner, Ohio Ron Kind, Wisconsin
Thomas E. Petri, Wisconsin David Wu, Oregon
Michael N. Castle, Delaware Rush D. Holt, New Jersey
Sam Johnson, Texas Betty McCollum, Minnesota
Fred Upton, Michigan Carolyn McCarthy, New York
Vernon J. Ehlers, Michigan Chris Van Hollen, Maryland
Patrick J. Tiberi, Ohio Tim Ryan, Ohio
Ric Keller, Florida Major R. Owens, New York
Tom Osborne, Nebraska Donald M. Payne, New Jersey
Tom Cole, Oklahoma Robert E. Andrews, New Jersey
Jon C. Porter, Nevada Ruben Hinojosa, Texas
John R. Carter, Texas George Miller, California, ex
Phil Gingrey, Georgia officio
Max Burns, Georgia
------
C O N T E N T S
----------
Page
Hearing held on September 11, 2003............................... 1
Statement of Members:
Kildee, Hon. Dale E., a Representative in Congress from the
State of Michigan.......................................... 6
McKeon, Hon. Howard P. ``Buck'', a Representative in Congress
from the State of California............................... 2
Prepared statement of.................................... 5
Statement of Witnesses:
Chin, George, University Director, Student Financial
Assistance, City University of New York.................... 24
Prepared statement of.................................... 26
Flores, Antonio, President and Chief Executive Officer,
Hispanic Association of Colleges and Universities.......... 14
Prepared statement of.................................... 16
Heller, Donald E., Associate Professor and Senior Research
Associate, Center for the Study of Higher Education,
Pennsylvania State University.............................. 9
Prepared statement of.................................... 11
Moore, David G., Chairman and Chief Executive Officer,
Corinthian Colleges, Inc................................... 27
Prepared statement of.................................... 29
H.R. 3039, THE EXPANDING OPPORTUNITIES IN HIGHER EDUCATION ACT
----------
Thursday, September 11, 2003
U.S. House of Representatives
Subcommittee on 21st Century Competitiveness
Committee on Education and the Workforce
Washington, DC
----------
The Subcommittee met, pursuant to notice, at 9:33 a.m., in
room 2175, Rayburn House Office Building, Hon. Howard P. (Buck)
McKeon, presiding.
Present: Representatives McKeon, Keller, Osborne, Cole,
Carter, Gingrey, Burns, Kildee, Tierney, Wu, McCollum, Owens,
and Hinojosa.
Staff present: Kevin Frank, Professional Staff Member;
Alexa Marrero, Press Secretary; Catharine Meyer, Legislative
Assistant; Deborah L. Samantar, Committee Clerk/Intern
Coordinator; Kathleen Smith, Professional Staff Member; Liz
Wheel, Legislative Assistant; Mark Zuckerman, Minority General
Counsel; Ellynne Bannon, Minority Legislative Associate/
Education; Maria Cuprill, Minority Legislative Associate/Labor;
Tylease Fitzgerald, Minority Staff Assistant; Ricardo Martinez,
Minority Legislative Associate/Education; Alex Nock, Minority
Legislative Associate/Education; and Joe Novotny, Minority
Legislative Assistant/Education.
Chairman McKeon. Good morning. Happy to see you all here
this morning. I don't know if you have had the opportunity to
turn on the TV or the radio this morning, but there are lots of
reminders of 2 years ago, just about a half-hour earlier. I
think it would be fitting if we paused for a moment of silence
in remembrance of those who lost their lives then and since, in
defense of our freedom.
[Pause.]
Chairman McKeon. Thank you. I'd like to ask ranking member
Kildee if he would lead us in the Pledge of Allegiance. All
stand, please.
Mr. Kildee. I pledge allegiance to the flag of the United
States of America, and to the republic for which it stands, one
nation, under God, indivisible, with liberty and justice for
all.
Chairman McKeon. Thank you very much. A quorum being
present, the Subcommittee on 21st Century Competitiveness of
the Committee on Education and the Workforce will come to
order.
We are holding this hearing today to hear testimony on H.R.
3039, the Expanding Opportunities in Higher Education Act of
2003.
Under Committee Rule 12(b), opening statements are limited
to the Chairman and the ranking minority member of the
Committee. Therefore, if other members have statements, they
will be included in the hearing record.
With that, I ask unanimous consent for the hearing record
to remain open 14 days to allow member's statements and other
extraneous material referenced during the hearing to be
submitted in the official hearing record.
Without objection, so ordered.
STATEMENT OF HON. HOWARD P. ``BUCK'' McKEON, CHAIRMAN,
SUBCOMMITTEE ON 21st CENTURY COMPETITIVENESS
Good morning, again. Thank you for joining us this morning
to hear testimony regarding H.R. 3039, the Expanding
Opportunities in Higher Education Act of 2003.
Last night we finished voting at about 10 or 10:30, and
because of that, we have no votes scheduled for today, and
unfortunately, because of that, we have many members I'm sure
that have gone home. Otherwise, I know we would have a full
dais here, because all the members of the Committee are very
interested in what we are doing in higher education. I'm sure
they would be here if it weren't for that.
This legislation, introduced by my friend and colleague,
Representative Tom Cole, breaks down existing barriers and
opens the doors of postsecondary education a bit wider to all
students, especially low income and minority students.
I appreciate our witnesses taking the time to discuss this
legislation with us today and look forward to a productive and
open discussion.
With the passage of the Higher Education Act in 1965, the
Federal Government made great gains in affording our nation's
students the opportunity to pursue postsecondary education. In
our knowledge based economy, it is more important than ever to
remove road blocks to innovative ideas and methods of providing
education to students seeking to pursue their dream of access
to and completion of a postsecondary education.
We must all open our minds to the advancement of technology
in pursuit of those goals, and while reviewing the past in
making future decisions, recognize that times have indeed
changed, and we must change with them.
We must promote advancement in distance education, clarify
the treatment and classification of educational institutions,
and simplify the methods used to determine a student's
financial need for student aid purposes.
H.R. 3039 strives to accomplish this by improving access,
expanding opportunities and removing unnecessary and outdated
barriers within the Higher Education Act, all while maintaining
the integrity and security of the student aid programs.
This legislation strengthens and extends student support
programs and enhances the ability of minority serving
institutions to meet the needs of their students.
First, this bill amends current law by combining the now
separate definitions of ``institutions of higher education''
under one section within the law. The definitions do not
change, other than in one area I will talk about in a minute.
The bill simply combines the existing definitions, and it does
so without changing any of the safeguards currently within the
law. This combined definition will allow more institutions the
opportunity to apply for competitive grants within the HEA and
thereby better serve more students.
Congress has made tremendous strides over the years to
improve access to higher education, while at the same time
ensuring that the poorly performing institutions of the past no
longer are able to participate.
Institutions themselves have done a good job over the years
in monitoring the conduct and administrative capability of
other institutions. No one wants to return to the past of high
student loan default rates or bad institutions providing
substandard education. This bill does not allow those events to
reoccur.
As mentioned earlier, the bill makes one change to the
existing definition of an eligible institution, that is the
repeal of a requirement known as the 90/10 rule. Current law
requires only for-profit institutions to demonstrate that at
least 10 percent of the revenue they receive is derived from
sources other than Title IV funds.
Unfortunately, this rule may actually force these schools
to raise their tuition as many of them serve fully federally
funded students in our nation's most impoverished areas.
There are also questions as to the application of this rule
and whether the sources of funds considered ``derived from
Title IV funds'' is fair and accurate. Do we want to terminate
high quality institutions solely because their ratio may be 89/
11?
H.R. 3039 also enhances access to distance education
programs. Current law prohibits colleges and universities from
having more than 50 percent of their students enrolled in
distance education programs and does not allow them to offer
more than 50 percent of courses through distance education.
This rule thwarts the efforts of many from pursuing higher
education, including working adults, urban residents,
minorities, and others.
By repealing this rule, but ensuring that accreditors are
monitoring the quality of these programs, more students will
gain access to postsecondary education. Some have said that if
we repeal this rule, the Title IV student aid programs will be
at risk.
In a report recently released by the U.S. Department of
Education in reviewing the distance education demonstration
program currently in law, it says, and I quote ``The Department
has uncovered no evidence that waiving the 50 percent rules, or
any of the other rules for which waivers were provided, has
resulted in any problems or had negative consequences. Three
years of experience working with the demonstration program
participants indicates that the potential risk to Title IV
student financial assistance programs has more to do with the
financial viability and administrative capability of the
institution than with the mode of delivery in which the
education is offered.''
Furthermore, this bill strives to provide minority students
with additional educational opportunities. The bill provides
additional assistance to allow minority serving institutions to
develop and enhance their internet and technological
capabilities.
H.R. 3039 also simplifies the grant process for tribally
controlled colleges and universities, as well as Alaska Native
and Native Hawaiian serving institutions.
These changes for minority serving institutions will
buildupon the work we accomplished earlier this year with the
Ready to Teach Act, a bill which made improvements to the
nation's teacher training programs.
In that legislation, because we recognize the importance of
minority serving institutions among the institutions training
the teachers of tomorrow, we provided for the establishment of
centers of excellence for teacher training programs at high
quality minority serving institutions. These centers of
excellence would strengthen and improve teacher preparation
programs at minority serving institutions including
historically black colleges and universities, Hispanic serving
institutions, tribally controlled colleges or universities,
Alaska Native serving institutions, or Native Hawaiian serving
institutions.
In addition, the centers of excellence would provide an
opportunity to increase teacher recruitment and development at
minority serving institutions, and provide assistance in the
form of scholarships to help provide for the cost of completing
a teacher preparation program.
Recognizing that we must continue to support programs that
provide quality educational services to students from low
income families where neither parent graduated from college,
H.R. 3039 enhances support services to expand opportunities for
low income individuals.
It increases the minimum grant levels to the TRIO program
and builds upon the High School Equivalency Program (HEP) and
the College Assistance Migrant Program (CAMP) to augment
services to migrant or seasonal farmer workers and their
families.
This bill also includes bipartisan legislation I recently
introduced, H.R. 2956, the Financial Aid Simplification Act, to
examine and simplify the current need analysis formula and
financial aid forms that all students applying for aid must
complete. This will go a long way in expanding access, as the
complex formula and forms can very often intimidate students
and their families, discouraging them from ever even beginning
the process.
The bill also makes many enhancements to the Higher
Education Act too numerous to mention here, that will improve
programs, make necessary technical changes and enhance
services.
As we continue our work to re-authorize the Higher
Education Act, providing students with access to a quality
higher education remains our central goal. We must remove
unnecessary barriers, improve and simplify programs and
processes and allow these critical programs to reach their full
potential to serve students and help them reach their
educational dreams.
I hope we can all work together to do what we know is right
for the students and families we want to assist and not allow
substance and policy to fall victim to politics.
I look forward to the comments and recommendations that our
witnesses may have.
It is great working again with Mr. Kildee on this process.
We had a good process in 1998, and I am hopeful that we can
have that same kind of rapport and process as we go forward on
this.
[The prepared statement of Mr. McKeon follows:]
Statement of Hon. Howard P. ``Buck'' McKeon, a Representative in
Congress from the State of California
Good morning. Thank you for joining us this morning to hear
testimony regarding H.R. 3039, the Expanding Opportunities in Higher
Education Act of 2003. This legislation, introduced by my friend and
colleague, Representative Tom Cole, breaks down existing barriers and
opens the doors of post-secondary education a bit wider to all
students, especially low-income and minority students. I appreciate our
witnesses taking the time to discuss this legislation with us today and
look forward to a productive and open discussion.
With the passage of the Higher Education Act in 1965, the federal
government made great gains in affording our nation's students the
opportunity to pursue postsecondary education. In our knowledge based
economy, it is more important than ever to remove road blocks to
innovative ideas and methods of providing education to students seeking
to pursue their dream of access to, and completion of, a postsecondary
education. We must all open our minds to the advancement of technology
in pursuit of those goals and, while reviewing the past in making
future decisions, recognize that times have indeed changed and we must
change with them. We must promote advancement in distance education,
clarify the treatment and classification of educational institutions
and simplify the methods used to determine a student's financial need
for student aid purposes.
H.R. 3039 strives to accomplish this by improving access, expanding
opportunities and removing unnecessary and outdated barriers within the
Higher Education Act, all while maintaining the integrity and security
of the student aid programs. This legislation strengthens and extends
student support programs and enhances the ability of minority serving
institutions to meet the needs of their students.
First, this bill amends current law by combining the now separate
definitions of ``institutions of higher education'' under one section
within the law. The definitions do not change, other than in one area I
will talk about in a minute. The bill simply combines the existing
definitions, and it does so WITHOUT changing any of safeguards
currently within the law. This combined definition will allow more
institutions the opportunity to apply for competitive grants within the
HEA and thereby better serve more students.
Congress has made tremendous strides over the years to improve
access to higher education, while at the same time ensuring that the
poorly performing institutions of the past no longer are able to
participate. Institutions themselves have done a good job over the
years in monitoring the conduct and administrative capability of other
institutions. No one wants a return to the past of high student loan
default rates or bad institutions providing substandard education. This
bill does not allow those events to reoccur.
As mentioned earlier, the bill makes one change to the existing
definition of an eligible institution, that is the repeal of a
requirement known as the 90/10 rule. Current law requires only for-
profit institutions to demonstrate that at least 10 percent of the
revenue they receive is derived from sources other than Title IV funds.
Unfortunately, this rule may actually force these schools to raise
their tuition as many of them serve fully federally-funded students in
our nation's most impoverished areas. There are also questions as to
the application of this rule and whether the sources of funds
considered ``derived from Title IV funds'' is fair and accurate. Do we
want to terminate high quality institutions solely because their ratio
may be 89/11?
H.R. 3039 also enhances access to distance education programs.
Current law prohibits colleges and universities from having more than
50 percent of their students enrolled in distance education programs
and does not allow them to offer more than 50 percent of courses
through distance education. This rule thwarts the efforts of many from
pursuing higher education, including working adults, urban residents,
minorities, and others. By repealing this rule, but ensuring that
accreditors are monitoring the quality of these programs, more students
will gain access to postsecondary education. Some have said if we
repeal this rule, the Title IV student aid programs will be at risk. In
a report recently released by the U.S. Department of Education in
reviewing the distance education demonstration program now in law, it
says:
``The Department has uncovered no evidence that waiving the 50
percent rules, or any of the other rules for which waivers were
provided, has resulted in any problems or had negative
consequences. Three years of experience working with the
demonstration program participants indicates that the potential
risk to Title IV student financial assistance programs has more
to do with the financial viability and administrative
capability of the institution than with the mode of delivery in
which the education is offered.
Furthermore, this bill strives to provide minority students with
additional educational opportunities. The bill provides additional
assistance to allow Minority Serving Institutions to develop and
enhance their internet and technological capabilities. H.R. 3039 also
simplifies the grant process for Tribally Controlled Colleges and
Universities, as well as Alaska Native and Native Hawaiian serving
institutions.
These changes for Minority Serving Institutions will build upon the
work we accomplished earlier this year with the Ready to Teach Act, a
bill which made improvements to the nation's teacher training programs.
In that legislation, because we recognize the importance of Minority
Serving Institutions among the institutions training the teachers of
tomorrow, we provided for the establishment of Centers of Excellence
for teacher training programs at high quality Minority Serving
Institutions. These Centers of Excellence would strengthen and improve
teacher preparation programs at Minority Serving Institutions including
Historically Black Colleges and Universities, Hispanic Serving
Institutions, Tribally Controlled Colleges or Universities, Alaska
Native Serving Institutions, or Native Hawaiian Serving Institutions.
In addition, the Centers of Excellence would provide an opportunity to
increase teacher recruitment and development at Minority Serving
Institutions, and provide assistance in the form of scholarships to
help provide for the cost of completing a teacher preparation program.
Recognizing that we must continue to support programs that provide
quality educational services to students from low-income families where
neither parent graduated from college, H.R. 3039 enhances support
services to expand opportunities for low-income individuals. It
increases the minimum grant levels to the TRIO program and builds upon
the High School Equivalency Program (HEP) and the College Assistance
Migrant Program (CAMP) to augment services to migrant or seasonal
farmer workers and their families.
This bill also includes bipartisan legislation I recently
introduced, H.R. 2956, the Financial Aid Simplification Act, to examine
and simplify the current need analysis formula and financial aid forms
that all students applying for aid must complete. This will go a long
way in expanding access, as the complex formula and forms can very
often intimidate students and their families, discouraging them from
ever even beginning the process.
The bill also makes many other enhancements to the Higher Education
Act too numerous to mention here, that will improve programs, make
necessary technical changes and enhance services.
As we continue our work to reauthorize the Higher Education Act,
providing students with access to a quality higher education remains
our central goal. We must remove unnecessary barriers, improve and
simplify programs and processes and allow these critical programs to
reach their full potential to serve students and help them reach their
educational dreams. I hope we can all work together to do what we know
is right for the students and families we want to assist and not allow
substance and policy to fall victim to politics. I look forward to the
comments and recommendations that our witnesses may have.
I will now yield to Mr. Kildee for any opening statement that he
may have.
______
Chairman McKeon. I now yield to Mr. Kildee for his opening
statement.
STATEMENT OF HON. DALE E. KILDEE, RANKING MEMBER, SUBCOMMITTEE
ON 21st CENTURY COMPETITIVENESS
Mr. Kildee. Thank you, Mr. Chairman. I wanted to start by
joining Chairman McKeon in remembering those who were lost 2
years ago on September 11. The nation has gone through and
continues to go through the aftermath of this terrible tragedy,
and I join Chairman McKeon and the other members of the
Subcommittee in expressing our deep felt sympathy for the
families and victims of September 11 and their continued
recovery.
Despite this somber day, I am pleased to be joining
Chairman McKeon in today's hearing on H.R. 3039, and I would
particularly like to welcome a longtime friend of mine, Dr.
David Moore, who was the president of Mott Community College in
Flint, and followed with a very distinguished career in the
military, and now he is chairman and CEO of Corinthian
Colleges.
David, we were neighbors and friends, compadres there in
Flint, Michigan, and it is good to have you here, and we look
forward to your testimony.
H.R. 3039 represents the second part of the Committee's
efforts to re-authorize the Higher Education Act. I am looking
forward to the testimony of today's witnesses and hope that we
can use your insight to make this legislation better.
H.R. 3039 has many positive aspects, but also several
provisions which concern me, but I am convinced that as in
1998, when Buck McKeon and I wrote the last reauthorization,
that we are going to do it again this year.
We have some problems that we are trying to work out, but
we used to do that in 1998 by having breakfast about once a
month, every 3 weeks, and reaching an agreement. We would not
let the staff come to the breakfast. They worried a lot while
we were there at that breakfast making agreements. We would
come out and say here is what we agreed and you put it
together.
I am sure knowing the two of us and knowing we are anxious
to have a good higher education bill, that we are going to
really work hard to bring a bipartisan bill. We do our best
work when we work in a bipartisan manner.
On the positive side, I welcome the bill's provisions to
simplify the process of applying for student financial aid that
has been championed by Congressman Ronald Manuel working with
our Chairman.
These provisions should ensure that more of our
disadvantaged students have access to the financing necessary
to obtain a postsecondary education.
In addition, H.R. 3039 strengthens the High School
Equivalency Program, HEP, and the College Assistance Migrant
Program, CAMP, by expanding mentoring, guidance, child care,
and transportation services to migrant and seasonal farm
workers.
The bill's provisions to strengthen the TRIO program are
also important improvements.
While these positive aspects are worthy of note, several of
the bill's provisions make me at this time unable to support
this legislation in its current form, but this is a bill in
process and a bill in progress.
First, the legislation merges the two existing definitions
of ``institutions of higher education.'' This change can dilute
an already meager pot of funds for minority serving
institutions. I want to look at that very closely. This could
literally take funds away from Hispanic serving institutions
and other institutions which serve some of the most
disadvantaged students. I am sure we can study that together.
Second, the bill repeals the 90/10 rule. The current
provision requires that proprietary institutions derive at
least 10 percent of their revenue from non-Federal sources.
As many of you know, this provision was adopted as one of
the means to control some fraudulent activity in the 1980's.
While I recognize that the 90/10 provision is not written in
stone, I think we should examine it very carefully to make sure
that we keep the purpose in mind, and I think there is room for
really active and productive discussion on this, Mr. Chairman.
Third, the bill does not ensure adequate accreditation and
fiscal oversight for distance education programs. And again, we
have discussed this at length.
If Congress does decide to lift the so-called 50 percent
rule, we must ensure that distance education programs receive
additional oversight for the accreditation process and meet a
higher standard of fiscal accountability.
I believe that H.R. 2193 introduced by Congressman Andrews
and myself is a good step toward ensuring that these goals are
met.
Any changes in this area must be very carefully examined,
and we intend to do that.
This legislation should also be improved by the inclusion
of a program to strengthen and establish graduate degree
programs at Hispanic serving institutions. This initiative
would greatly improve the access of disadvantaged students to
graduate degree programs.
While I know the majority was considering this initiative,
it is not included in the introduced version of H.R. 3039, and
I hope we can secure its inclusion during our efforts on this
legislation.
As the Committee proceeds with consideration of this
legislation in the coming weeks, it is my desire and
expectation to resolve our differences. I hope this Committee
will come out with as fine a product as we did in 1998, and I
look forward to working with not only my colleague but my
friend, the Chairman of this Committee, Mr. McKeon.
Chairman McKeon. Thank you, Mr. Kildee. We now will
introduce our witnesses. The first witness will be Dr. Donald
Heller. Dr. Heller is currently an associate professor and
senior research associate at the Center for the Study of Higher
Education of Pennsylvania State University.
He also serves as a faculty member for the Harvard
Institutes for Higher Education. Previously, Dr. Heller served
as an assistant professor of education at the University of
Michigan.
Additionally, he has authored and co-authored numerous
books and journal articles, including ``Condition of Access,
Higher Education for Lower Income Students'' and ``State
Financial Aid, Need, Merit and Access to Higher Education.''
Next will be Dr. Antonio Flores. Dr. Flores has served as
president and chief executive officer of the Hispanic
Association of Colleges and Universities since 1996.
Previously, he was director of programs and services at the
Michigan Higher Education Assistance Authority and the Michigan
Higher Education Student Loan Authority.
Dr. Flores currently serves as chairman of the Board for
the Balti Adilante Leadership and Scholarship Fund, and the
Hispanic Association on Corporate Responsibility.
Then we will hear from Mr. George Chin. Mr. Chin has served
as the university director for financial aid at the City
University of New York since 1981. Prior to his current
position, he worked in the financial aid office at St. Francis
College and the State University of New York at Stoneybrook.
Mr. Chin has also served as the president of the New York
State Financial Aid Administrators Association and the Eastern
Association of Student Financial Aid Administrators.
And finally, Mr. David Moore. Mr. Moore is the chairman and
chief executive officer of Corinthian Colleges, Inc. Throughout
his career, he has been the president of various institutions,
including the National Education Corporation, Inc., the DeVry
Institute of Technology in Los Angeles, and Mott Community
College in Flint, Michigan, as Mr. Kildee mentioned. Mr. Moore
also served a distinguished career in the United States Army
where he received the rank of colonel.
Welcome, each and every one of you. We appreciate you
taking the time and being here and look forward to hearing your
testimonies.
Before we begin, I think you understand how those lights
work. When they come on, it will be green. After 4 minutes,
yellow. And after one minute, it will be red and your time is
up.
Your full testimony as you have sent to us will be included
in the record, and we look forward to hearing from each of you,
beginning with Dr. Heller.
STATEMENT OF DONALD E. HELLER, ASSOCIATE PROFESSOR AND SENIOR
RESEARCH ASSOCIATE, CENTER FOR THE STUDY OF HIGHER EDUCATION,
PENNSYLVANIA STATE UNIVERSITY
Dr. Heller. Thank you, Mr. Chairman. Mr. Chairman and
members of the Subcommittee, thank you for the invitation to
address the Subcommittee on the Expanding Opportunities in
Higher Education Act of 2003.
I will take my brief time today to comment on four aspects
of this proposed legislation which include: implementing a
single definition for ``postsecondary institution;'' the repeal
of the 90/10 rule; the repeal of the 50 percent rule, and
simplifying the Federal student aid programs.
First, I urge you not to implement a single definition for
all postsecondary institutions. The existing law distinguishes
between public and private non-profit colleges and universities
which are eligible for Title III and Title V institutional
assistance, and for profit institutions, which are not eligible
for these programs.
For almost 40 years, this distinction has served well for
both the institutions and the public. Non-profit colleges and
universities have important public service missions that are
not shared by for profit institutions. For profit institutions
also are not held to the same accountability standards as are
their non-profit counterparts.
In an era of limited Federal resources, it makes little
sense to open up the Title III and V programs to a broader
array of institutions, thus diluting the assistance to colleges
and universities that have born the blunt of the recent
recession.
The amount of money available in Title III and V is very
limited, and many of these programs have grown little in recent
years. For example, the $80 million available in the
strengthening institutions program, which benefits colleges and
universities enrolling large numbers of Federal aid recipients,
has changed little in the last 8 years.
In order to ensure that these limited funds are used most
effectively to assist this nation's neediest students, I would
urge Congress not to eliminate the dual definition law.
The 90/10 rule dictates that a proprietary institution must
receive no more than 90 percent of its revenue from Federal
sources in order for the students to qualify for Title IV
assistance.
I can think of no good reason for eliminating this rule at
this time. As a for profit with a mission that is not as
restrictive as that of public and non-profit colleges and
universities, these institutions have the flexibility to
develop revenue sources to supplement those available through
Title IV. I believe that eliminating this provision of the law
will potentially open the door to more fraud and abuse in the
Title IV programs, without doing anything to improve
educational opportunity for disadvantaged students in this
nation.
I do encourage Congress to examine ways to ease the burden
of the 50 percent rule, while not eliminating it entirely
without appropriate study and deliberation.
The use of technology in both distance and classroom based
instruction holds great promise for broadening access to
postsecondary education. It is important to ensure that Federal
regulations do not get in the way of innovation.
In the last reauthorization, as the Chairman mentioned,
Congress mandated that the Department of Education conduct a
demonstration project to examine whether this rule can be
eased. Over 100 higher education institutions have participated
in this project.
While the Department has begun and done some analyses of
the results, I would suggest that Congress request the
Department or another party to conduct a thorough evaluation of
the project in order to determine if and how this rule should
be eased, while still ensuring that Federal student aid is
dispersed efficiently and effectively to the nation's needy
students.
Section 401 of this legislation calls for a study to be
conducted by the Advisory Committee on Student Financial
Assistance, on how the qualification for Title IV assistance
can be simplified. I strongly encourage you to include this
provision in the legislation.
Research indicates that applying for Title IV aid has
become a complex process, and is one that is a barrier to
college access for low income students.
A well designed study conducted by the Advisory Committee
in conjunction with outside experts can help inform Congress
and the Department on ways to improve how data about families'
financial circumstances are collected, and how those data are
used to determine eligibility for Federal assistance.
Another provision of the bill calls for the Secretary to
notify students who qualify under Federal means tested aid
programs, such as the school free and restricted lunch or food
stamps, of their eligibility for Pell grants. This is an
excellent idea, and I would encourage Congress to go even one
step further and examine ways not just to notify students of
their eligibility for assistance, but to make an actual
commitment of such aid earlier in their high school or even
middle school careers.
Research has consistently demonstrated that the earlier
students can prepare both academically and financially for
college, the more likely they will enroll.
There are a number of programs out there that have
demonstrated the ability of programs like this to work for poor
students, and I would be happy to talk more about those during
the question period.
This reauthorization is a particularly important one. In
contrast to 1998, when higher education benefited from flush
coffers and a robust economy, many colleges and universities
today find themselves facing constrained resources and
increasing demand.
If the No Child Left Behind Act is successful in graduating
even more disadvantaged students from high school and preparing
this for college, then the demand for higher education will
increase even further.
The role of the Federal Government in ensuring
postsecondary education opportunity is critical in an era when
other parties have been unwilling or unable to shoulder their
burden.
I want to thank the Subcommittee again for the opportunity
to address these issues, and I would be happy to take any
questions after my colleagues have had a chance to testify.
Thank you.
[The prepared statement of Dr. Heller follows:]
Statement of Donald E. Heller, Associate Professor and Senior Research
Associate, Center for the Study of Higher Education, The Pennsylvania
State University, University Park, Pennsylvania
Thank you for the invitation to address the subcommittee on the
Expanding Opportunities in Higher Education Act of 2003. My name is
Donald E. Heller, and I am an education professor at The Pennsylvania
State University. My comments today represent my views on portions of
this legislation, based on the research I and other scholars have
conducted on federal aid and its impact on postsecondary students and
institutions.
The reauthorization of the Higher Education Act of 1965 is always a
critical juncture for higher education, and this reauthorization is
particularly important. The fiscal conditions facing most states and
the nation as a whole have placed great constraints on the resources
available for funding higher education institutions and students. Most
observers believe the situation is unlikely to improve in the near
future; thus, the decisions made by Congress during reauthorization
will be vital to the future of American higher education.
The United States is universally recognized as having the best
system of higher education in the world. Part of what has created this
reputation is the existing level of competition among the more than
6,000 postsecondary institutions in the nation, competition that
benefits the more than 16 million students enrolled in these Title IV-
eligible institutions. Most students, regardless of their academic
interests or geographic location, have some form of choice available to
them when they are contemplating their postsecondary plans. But those
choices are often limited by the financial and other resources
available to those students and their families. It is because of these
constraints that the federal role in funding higher education students
and institutions is so critical.
I will take my brief time today to comment on four aspects of the
proposed legislation: 1) implementing a single definition for
postsecondary institutions; 2) repeal of the 90/10 rule governing
institutional receipt of federal funds; 3) repeal of the 50 percent
rule governing institutions enrolling students in distance education
programs; and 4) simplifying the federal student aid programs.
Single Definition for Postsecondary Institutions
I urge you not to implement a single definition for all
postsecondary institutions in the nation. The existing law
distinguishes between public and private, non-profit colleges and
universities--which are eligible for Title III and Title V
institutional assistance--and for-profit institutions--which are not
eligible for these programs. For almost 40 years this distinction has
served well both the institutions and the federal government. Public
and private non-profit colleges and universities have important public
service missions and obligations that are not shared by for-profit
institutions. For-profit institutions also are not held to the same
accountability standards as are their public and non-profit
counterparts. In an era of limited resources at both the federal and
state levels, it makes little sense to open up the Title III and V
programs to an even broader array of institutions. This would dilute
the potential of the programs to assist many colleges and universities
that have borne the brunt of the recession.
There are a number of accountability measures that affect public
and private non-profit colleges and universities in ways distinct from
for-profit institutions. Public colleges in most states are subject to
reporting and accountability regulations from state higher education
boards that go above and beyond the minimal reporting required of all
licensed postsecondary institutions in the state. In addition, freedom
of information laws in many states provide a mechanism for the public
to access information about subjects as diverse as salaries,
presidential searches, and compliance with federal, state, and local
laws. Financial information about private non-profit colleges is
available via their Internal Revenue Service 990 forms. Information
about for-profit institutions, in contrast--particularly if they are
not publicly-held--is not as readily available to students and their
families.
Another important distinction that this subcommittee should keep in
mind when debating the creation of a single definition for
postsecondary institutions is that of access to capital markets. For-
profit institutions have unlimited access to private capital markets
(both borrowing and equity) that is not available to public and private
non-profit colleges and universities. While the latter institutions can
sometimes take advantage of access to specialized debt markets through
the issuance of tax-free bonds, the amount of borrowing available in
these markets is limited, and these colleges and universities have no
access to equity markets.
The amount of money available in the Title III and Title V programs
is very limited, and many of these programs have grown little in recent
years. For example, the roughly $80 million available in the
Strengthening Institutions Program--which benefits colleges and
universities enrolling large numbers of federal aid recipients--has
changed little in the last eight years. In order to ensure that these
limited funds are used most effectively to assist this nation's
neediest students, I would encourage Congress not to eliminate the dual
definition laws.
Elimination of the 90/10 Rule
The 90/10 rule dictates that a proprietary institution must receive
no more than 90 percent of its revenue from federal sources in order
for its students to qualify for Title IV assistance. I can think of no
good reason for eliminating this rule. It is more than reasonable to
expect a for-profit institution to demonstrate its ability to compete
in the higher education marketplace without being more than 90 percent
dependent upon revenue from federal sources. As a for-profit, with a
mission that is not as restrictive as that of public and non-profit
colleges and universities, these institutions have the flexibility to
develop revenue sources to supplement those available through Title IV.
I believe that eliminating this provision of the law will potentially
open the door to more fraud and abuse in the Title IV programs, without
doing anything to improve educational opportunity for disadvantaged
students.
Repeal of the 50 Percent Rule
I would encourage Congress to examine ways to ease the burden of
the 50 percent rule, while not eliminating it entirely without
appropriate study and deliberation. This rule restricts the number of
distance education courses that can be offered and the number of
students enrolled in them in order for students to be deemed eligible
for Title IV grants, loans, and work study assistance. The use of
technology in both distance and classroom-based instruction holds great
promise for broadening access to postsecondary education as well as for
changing the ways that faculty teach and students learn. While we still
have much to understand about how to use technology most effectively in
higher education, it is important to ensure that federal regulations do
not get in the way of innovation and experimentation. Let me use an
example from my own institution.
Each semester, thousands of students take courses at Penn State's
World Campus, one of the nation's largest and most well-respected
distance education programs. Finding ways to simplify the awarding of
federal Title IV funds to students enrolled there would help Penn State
ease the delivery of funds to more low- and middle-income students
around the country who could benefit from the World Campus courses and
programs. In addition, as our own residential students who are Title
IV-eligible enroll in World Campus courses, it becomes an
administrative burden to monitor the distribution of their student aid
between World Campus courses and traditional term-based courses for
which the current regulations are written. Regulations that better
address the unique benefits and methods for education delivered through
technology, and easing the constriction of the 50 percent rule, will
encourage further expansion of higher education programs and courses to
more and more people.
In the 1998 reauthorization of the Higher Education Act, Congress
mandated that the Department of Education conduct a demonstration
project on distance education to examine whether the 50 percent rule
can be eased. Currently, over 100 higher education institutions are
participating in the demonstration project. While the Department has
issued some preliminary reports to Congress on the status of the
demonstration project, I suggest that Congress request the Department
or another party to conduct a thorough evaluation of the project in
order to determine what worked well and what has not worked as
effectively. The results of such an evaluation could help determine if
and how the 50 percent rule should be eased, while still ensuring that
federal student aid is disbursed efficiently and effectively, and helps
accomplish the goals of promoting equity and opportunity in higher
education.
Simplifying the Federal Student Aid Programs
Section 401 of the Expanding Opportunities in Higher Education Act
of 2003 calls for a study to be conducted by the Advisory Committee on
Student Financial Assistance on how the qualification for federal Title
IV assistance can be simplified. I strongly encourage you to include
this provision in the legislation. Applying for Title IV aid has become
a complex process, one that taxes the resources and capabilities of
many students and their families. Research on college access indicates
that information about the federal financial aid programs and how to
apply for them is a barrier for low-income students.
The Advisory Committee is the ideal organization to conduct such a
study because of its role in advising both the Congress and the
Secretary of Education on student financial aid matters. I believe that
a well-designed study conducted by the Advisory Committee in
conjunction with outside experts can help inform Congress and the
Department on ways to improve how data about families'' financial
circumstances are collected, and how those data are used to determine
eligibility for federal assistance. Such a study can help establish how
best to balance the twin goals of program effectiveness and efficiency.
Another provision of the bill calls for the Secretary of Education
to notify students who qualify under federal means-tested aid programs,
such as free lunch or food stamps, of their eligibility for Pell
Grants. This is an excellent idea, and I would encourage Congress to go
even further and examine ways not just to notify students much earlier
in their school careers of their eligibility for federal Title IV
assistance, but to make an actual commitment of such aid (conditional,
of course, upon their enrollment in a Title IV-eligible institution).
Research has consistently demonstrated that the earlier students can
prepare both academically and financially for college, the more likely
they will enroll.
There are excellent programs that make such an early commitment of
financial aid, and they have been found to be successful in promoting
the college attendance of low-income students. Indiana's Twenty-First
Century Scholars program is an outstanding example of a state that
makes an early commitment of publicly-funded financial assistance for
college to low-income students. Seventh and eighth grade students in
the state have to pledge the following:
Graduate with an Indiana High School Diploma from a
charter school, freeway or other Indiana school accredited (or seeking
accreditation) through Performance Based Accreditation (PBA) by the
Indiana Department of Education.
Achieve a cumulative high school GPA of at least 2.0 on a
4.0 scale (a ``C'' average).
Not use illegal drugs or alcohol, or commit a crime.
Apply for admission to an eligible Indiana college,
university or technical school as a high school senior.
Apply on time for state and federal financial aid
(Indiana Twenty-First Century Scholars website, http://
scholars.indiana.edu/stepup.xml)
In return, the state commits to pay up to four years of tuition at
any public institution in the state the student attends, or an
equivalent amount at an Indiana private institution. This assistance is
in addition to any federal, institutional, or private aid for which the
student qualifies. In addition to the tuition grant, the Twenty-First
Century Scholars program also provides academic support to the students
while enrolled in middle school, high school, and college, and has a
parent involvement component.
The unique aspect of this program is that it makes a commitment of
tuition assistance to students as early as their middle school years.
There are no qualifiers or caveats; as long as the student adheres to
the pledge, the Indiana legislature has committed to appropriate
sufficient funds to pay for the student's tuition for four years. A
recent independent evaluation of the program concluded that,
``Participation in the Scholars Program improved postsecondary
opportunity for low-income students. This study confirms that the
program played a role in the substantial gain in college access in the
1990s in Indiana'' (Lumina Foundation for Education, Meeting the Access
Challenge: Indiana's Twenty-first Century Scholars Program).
Conclusion
As I stated earlier, this reauthorization of the Higher Education
Act of 1965 is a particularly important one. In contrast to the last
reauthorization in 1998, when higher education institutions enjoyed the
benefit of flush state coffers and a robust economy, many colleges and
universities today find themselves facing constrained resources in an
era of increasing demand. More and more students are knocking on our
colleges'' doors, driven both by the demographics of the baby boom echo
as well as the increased need for some form of postsecondary training
in order to be successful in today's labor markets. If the No Child
Left Behind Act is successful in graduating more disadvantaged students
from high school and preparing them for some form of postsecondary
training, then the demand for higher education will increase even
further in the near future.
The combination of constrained resources and increasing demand
leaves low-income students in peril. The fiscal crisis has forced many
higher education institutions to cut back on course offerings and
institutional financial aid at the same time they are raising tuition
prices. The role of the federal government in ensuring postsecondary
educational opportunity is critical in an era when other parties have
been unwilling or unable to shoulder their burden.
I want to thank the subcommittee again for the opportunity to
address these important issues facing Congress. I would be happy to
take any questions you may have.
______
Chairman McKeon. Thank you.
Dr. Flores?
STATEMENT OF ANTONIO FLORES, PRESIDENT AND CHIEF EXECUTIVE
OFFICER, HISPANIC ASSOCIATION OF COLLEGES AND UNIVERSITIES
Dr. Flores. Buenos Dias. Good morning. Thank you, Chairman
McKeon, Ranking Member Kildee, Representative Hinojosa, and all
the distinguished members of the House Subcommittee on 21st
Century Competitiveness, for allowing me to testify on behalf
of the Hispanic Association of Colleges and Universities, also
known as HACU.
I am honored to appear before you in support of H.R. 3039,
the Expanding Opportunities in Higher Education Act of 2003, as
it relates to Hispanic serving institutions or HSIs, introduced
under the leadership of Representative Cole.
Although the initial version of H.R. 3039 leaves out a
series of vital recommendations concerning HSIs and Hispanic
American success in higher education, HACU applauds the
Subcommittee's inclusion within the expanding opportunities
bill of the removal of onerous and unnecessary regulatory
burdens on HSIs.
The bill would eliminate a 2-year wait out period between
Title V applications. It will also remove the 50 percent low
income assurance requirements in the current definition of
HSIs.
These changes will enhance HSIs and align them much better
with other minority and developing institutions supported in
the Higher Education Act.
We know that the 50 percent documentation requirement for
low income students is really a redundant requirement and it
creates a second class citizenship status for HSIs if kept in
the law.
Likewise, allowing institutions to maintain continuity
between grant cycles is critical to the development of those
institutions that receive awards from Title V.
We want to also applaud your continued support for HBCUs,
historically black colleges and universities as well as tribal
colleges and universities, sister institutions of HSIs.
We also commend the bill's provisions that substantially
enhance urgently needed college preparatory programs and
college retention initiatives. These measures will provide very
important benefits to Hispanic Americans. Hispanics make up the
nation's youngest and largest ethnic population. Hispanics also
suffer the lowest high school and college graduation rates of
any major population group.
These reasons, we believe, are sufficient for Congress to
consider awarding the same advantage points under TRIO
competitions to HSIs as those granted to other institutions
already in these programs.
It is only fair to level the playing field for these
programs as well as HSIs are concerned.
Please allow me to also address the following critical
omissions within the bill that directly impact on HSIs. Title V
remains the chief means for targeting Federal funds to HSIs,
which remain largely under funded for the concentrated largest
number of Hispanics in higher education today.
You probably know that HSIs represent only 7 percent of all
institutions in the country, yet graduate more than 60 percent
of all the Hispanics in 2 year and 4 year degree programs.
Hispanics are already contributing more than one of every
two new worker joining the American labor force, and by the
year 2025, Hispanics will represent one of every two new
workers joining the labor force in our country.
Clearly, Hispanics will have a dramatic impact on our
country's future economic success, national security, and
global leadership. Yet, HSIs who serve the largest
concentrations of Hispanic higher education students, receive
only half the Federal funding on average per student compared
to all of the degree granting institutions. This is exacerbated
when we take into account the fact that the numbers of HSIs
will increase by at least 50 percent within the next 5 years
because of dramatic demographic shifts in the country.
This funding crisis for our HSIs must be addressed, and
unfortunately, the bill in its present form does not do so.
Therefore, first, I urge you to include in this measure an
increase in authorized funding levels for HSIs under Title V to
$465 million, to adequately meet the present needs of our
historically under funded HSIs.
Second, we must afford our largest population the
opportunity to acquire the advanced skills and knowledge
required to build a better future for our nation. This bill
does not address this. Less than 5 percent of Hispanics obtain
a graduate or professional degree. I urge you to include within
this important legislation the authorization of $125 million
for a new Part B under Title V to increase and improve graduate
education for Hispanics.
Finally, we also respectfully urge you to consider the
other recommendations highlighted in our written testimony.
I would be remiss if I were not to mention our objection to
making for profit institutions under the same definition as
non-profits, as proposed in this version of the bill. This will
dilute the scarce resources available to non-profit HSIs by
adding at a minimum 107 new for profits to the current 249 HSIs
that already are really under funded, because numerous other
legislative acts authorizing funds for higher education in
other agencies reference definitions under this law, we believe
that those resources will also be impacted negatively for non-
profits.
Mr. Chairman and distinguished members of the Subcommittee,
I'm very grateful for this opportunity to present this
testimony and I will welcome any questions you might have.
Thank you.
[The prepared statement of Dr. Flores follows:]
Statement of Antonio Flores, Ph.D., President and CEO, Hispanic
Association of Colleges and Universities
Executive Summary
Thank you, Chairman McKeon, Representative Hinojosa, and other
distinguished members of the House Subcommittee on 21st Century
Competitiveness for allowing me to testify on behalf of the Hispanic
Association of Colleges and Universities (HACU). We applaud your
tireless efforts to enhance access and educational opportunity,
particularly in higher education, for all citizens and deserving
residents of our great nation.
I am honored to submit written testimony in support of H.R. 3039,
the Expanding Opportunities in Higher Education Act of 2003, with
respect to its proposed changes for Title V, Hispanic Serving
Institutions (HSIs). I take this opportunity to urge you to incorporate
into this bill the series of specific recommendations transmitted by
HACU on June 10, 2003, to members of Congress on the impending
reauthorization of the Higher Education Act of 1965 (HEA), as amended.
A copy of the ``HACU Public Policy Priorities for HEA Reauthorization''
is appended to my testimony for the official record of this hearing.
HACU applauds H.R. 3039 for addressing some of our recommendations,
but we are disappointed that the bill does not take into consideration
the following amendments recommended by HACU on behalf of the HSI
community:
1. To authorize $50 million ``and such sums as may be necessary''
under Title II for eligible HSIs to expand teacher education programs
of high quality in academic areas of urgent national need.
2. To increase the authorized funding level for HSIs under Title V
to $465 million ``and such sums as may be necessary'' to meet the
pressing needs of exceedingly under funded HSIs and new HSIs emerging
within the next five years.
3. To authorize $125 million ``and such sums as may be necessary''
for a new Part B under Title V for increased and improved graduate
education at HSIs.
4. To authorize $50 million ``and such sums as may be necessary''
for a Technology Enhancement Program that would close the ``digital
divide'' at HSIs.
5. To authorize under Title VI $30 million annually ``and such
sums as may be necessary'' for an Institute for Pan-Hispanic
International Studies through HSI consortia and $20 million for a
Hispanic International Scholars and Fellows program.
6. To authorize $45 million ``and such sums as may be necessary''
to create a graduate fellowship program that would involve HSIs and
non-HSIs in partnerships to increase Hispanic participation and success
in areas of national priority.
We thank you for the modest enhancements for HSIs included in H.R.
3039, but urge you to consider the above recommendations as described
in greater detail and supported by compelling analyses in the appended
document to this testimony.
At a time when more than one of every three new workers joining the
American labor force today is Hispanic, we cannot afford to continue
neglecting the educational needs of this growing population that is
projected to add one of every two new workers in the nation by 2025. As
we envision the future of America's population in the 21st Century, it
is imperative to recognize that failing to educate the fast-growing
Hispanic population would have disastrous economic and social
consequences for the entire nation. We are talking about one-half of
America's future workforce.
As the youngest, fastest-growing, and now largest ethnic population
in the nation, Hispanic Americans are mindful of their enormous
historic role in advancing economic prosperity and social progress. The
more Hispanics are called to assume leadership roles in government, the
military, the business community, and civic life in general, the more
their higher education is a requirement.
Nearly 50 percent of the 1.8 million Hispanics in higher education
are enrolled at HSIs today, and a higher percentage of them are
projected to enroll at HSIs in the years ahead. Consequently, the
current 219 HSIs are increasing their absolute members and proportion
of Hispanic students from year to year. Furthermore, given the rapid
Hispanic population growth, HACU projects that nearly 100 more HSIs
will emerge within the next five years. In other words, within the next
HEA reauthorization cycle, HSIs are expected to surpass the 300 mark.
Regretfully, the authorized and appropriated funding levels for
HSIs under Title V of the HEA have been inadequate at best to meet the
capacity-building needs of these institutions that are the backbone of
Hispanic higher education. Data from the Integrated Postsecondary
Education Data System (IPEDS) of the National Center for Education
Statistics (NCES) documents that HSIs, on average, receive 50 cents per
student for every federal dollar that the rest of the higher education
community gets. This blatant inequity must be addressed without delay.
In the year 2000, the U.S. Bureau of the Census reported that the
median age of Hispanics was 26, compared to 36 for all other groups and
to 39 for non-Hispanic whites. Likewise, it projected the near doubling
of the Hispanic population under the age of 18 between 2000 and 2020,
compared to a 6 percent increase for African Americans and an actual
decline of 5 percent for non-Hispanic whites. As of today, nearly one
of every five students in K-12 education is Hispanic, but historically
only one of every 10 who started kindergarten graduated from college.
These compelling statistics demand that Congress and the Federal
administration ensure that funding and support for HSIs and for the
higher education success of Hispanic Americans be increased
dramatically, now!
Because of the history of neglect that HSIs and Hispanic Americans
have endured for so long, HACU is especially concerned about the
proposed definitional changes of H.R. 3039 that would make for-profit
institutions potentially eligible for the already meager funding
appropriated for HSIs, especially in light of the projected increase in
the number of non-profit HSIs. We urge you to reconsider this aspect of
H.R. 3039, for, if enacted, it would further erode the weak federal
support available to current HSIs.
Chairman McKeon and distinguished members of this House
Subcommittee, I applaud your commitment to the enhancement of HSIs and
Hispanic higher education. Your championing of this national priority
clearly demonstrates foresight and wisdom because the very future of
our nation hangs in the balance.
Thank you again for inviting me to testify on HACU's behalf.
Gracias!
Introduction
The Hispanic Association of Colleges and Universities (HACU) is the
national voice of Hispanic-Serving Institutions and Hispanic higher
education. Incorporated as the champion of Hispanic success in higher
education in December of 1986 with 18 charter members, HACU has grown
rapidly over the years to its current total membership of 350 strong,
including HSIs. Figure 1, below, illustrates its membership growth.
[GRAPHIC] [TIFF OMITTED] T0136.001
Under HACU's advocacy, Congress first recognized HSIs in the
amendments of 1992 as a national resource for federal support under
Title III of the HEA. However, it was not until the 1995 fiscal year
that the first appropriation of $12 million for HSIs was included in
the federal budget. In the HEA amendments of 1998 the authorized
funding level for HSIs was increased under a new Title V and the actual
appropriations also begun to increase. Figure 2, below, documents
annual appropriations for HSIs.
[GRAPHIC] [TIFF OMITTED] T0136.002
It is worth noting that in fiscal year 1995, only 131 HSIs were
designated as eligible for Title III funding as per a 25% Hispanic FTE
criteria approved by Congress. Currently, 242 HSIs are designated by
the U.S. Department of Education as eligible for funding under Title V.
Because the amounts appropriated annually are insufficient to provide
funding to all HSIs, they compete for limited funds under multi-year
grant cycles of 5 years, but only about 50 percent of them receive
competitive grants.
Compared to other national higher education associations and to
other higher education institutions, HACU and HSIs are very young but
very strong. Their strength is fueled by the explosive demographic
expansion of the youngest, fastest-growing, and largest ethnic
population in the nation. In this sense, HACU and HSIs are driven by a
vision of America's future that is richly diverse and yet inclusive,
rather than by a past that was oppressive and discriminatory. This is a
vision for a bright future rooted in a well-educated and competitive
American workforce.
The following sections articulate how to make this vision a
reality. They summarize much of the content presented in the ``HACU
Public Policy Priorities for HEA Reauthorization'' of June 10, 2003.
Title II
The request of $50 million under Title II for eligible HSIs
reflects the national crisis that is a grim reality at many K-12
schools across the nation: the lack of qualified teachers to serve the
rapidly growing cohorts of children and youth, particularly Hispanics
and other students of color. The following table provides evidence of
the Hispanic student population growth in the largest metropolitan
areas of the country.
[GRAPHIC] [TIFF OMITTED] T0136.003
Conversely, less than five percent of the K-12 teachers nationwide
are Hispanic, compared to almost 20 percent of Hispanic students in all
K-12 schools.
Title IV
Student support service programs under this title, such as TRIO
programs, are critical to the educational attainment of low-income and
under-educated populations. We urge your support for HACU's
recommendations in its appended publication, but especially for the
fair inclusion of HSIs in TRIO grant competitions to close the
educational gaps between Hispanics and other populations. HSIs and
other minority-serving institutions should be granted the same number
of points as those given to other institutions for ``prior experience''
in TRIO competitions.
In addition to family income, parents'' educational attainment,
especially the mother's, is a major predictor of student outcomes. From
1974 to 1999, the educational attainment gaps between Hispanic and non-
Hispanic mothers increased significantly, as documented by Table 2
below.
[GRAPHIC] [TIFF OMITTED] T0136.004
Having a mother who has less than a high school education, living
in a family on public assistance programs, living in a single-parent
home, and having parents whose primary language is a language other
than English are considered reliable predictors of children's future
academic and socioeconomic outcomes by a major report on Hispanics of
April 2003, ``States and Trends in the Education of Hispanics'' by the
U. S. Department of Education. About 7 out of 10 (71 percent) children
entering kindergarten from Hispanic families have one or more of these
four risks factors.
Yet in 1994, according to the NCES's PEQIS online data summaries,
only 13 percent of Upward Bound participants were Hispanic, compared to
49 percent African Americans and 29 percent non-Hispanic Whites. Given
their high risk of educational failure, Hispanics should have a much
greater participation rate in all TRIO programs through HSIs that serve
their communities.
Title V
Title V remains the chief vehicle for targeting federal funds to
historically under-funded HSIs. During the last reauthorization cycle
five years ago, Congressman Hinojosa introduced the landmark ``Higher
Education for the 21st Century Act.'' Passage of that Act led to new
recognition for the strategic importance of the nation's HSIs to our
economic strength and national security under a new Title V of the HEA
addressing undergraduate education needs.
The landmark Expanding Opportunities bill should build upon those
improvements and include a first-time graduate education component to
Title V. Without the complement of graduate education opportunities,
Hispanic Americans and HSI will remain relegated to second-class
status.
HACU supports this new bill's amendments, which will surely lay the
foundation under ``such sums as may be necessary'' provisions to win
progressively higher appropriations in each of the next five years of
the reauthorized HEA to ultimately bring parity in federal funding for
HSIs.
HACU specifically is advocating that undergraduate funding for HSIs
under Title V be increased to $465 million per year ``and such sums as
Congress deems necessary'' for the authorized cycle of years following
reauthorization of the HEA.
HACU specifically recommends that the authorization level for
graduate education funding for HSIs under Title V be set at $125
million ``and such sums as Congress deems necessary'' for each year of
the HEA cycle.
HACU is in full support of those provisions of the Expanding
Opportunities bill that remove the two-year wait-out and ``50 percent
lower-income'' provisions from existing Title V language.
The 50-percent low-income assurance requirement applies only to
HSIs, and not to any other group of Minority-Serving Institution. This
requirement creates an unfair burden on HSIs. It is also onerous, since
this requirement demands information not normally collected by any
degree-granting institution.
The current two-year wait-out period between applications for Title
V grants undermines the intent of Title V to enhance the quality and
access of higher education opportunities for HSIs and the students
served by HSIs.
The current two-year wait-out is inherently destructive in forcibly
dismantling effective programs in midstream for an unnecessary two-year
period before HSIs with Title V grants can again compete for another
Title V grant. There simply is no logic to this requirement; yet, the
costs in hampered progress of urgently needed Title V programs are
immediate and profound.
This unnecessary requirement will prove especially drastic as early
as federal Fiscal Year (FY) 2004, when the first round of five-year
Title V grants will expire, forcing many dozens of higher education
institutions throughout the country to dismantle their programs for the
two-year wait. The need to eliminate this two-year wait-out requirement
is urgent and compelling.
HACU also calls upon the committee to add an articulation component
to the Expanding Opportunities bill to allow two-year/four-year
articulation initiatives to be eligible for Title V grants.
Against a backdrop of chronically low high school and college
graduation rates suffered by Hispanics, two-year colleges often are the
critical point of entry for Hispanic higher education students. Indeed,
more than 50 percent of all Hispanic higher education students attend
community colleges.
However, the sheer volume of well-documented reports on the need
for diversity in higher education and for great minority attainment of
advanced education degrees calls for a new emphasis on assisting
Hispanic and other under-represented minority student populations to
succeed in completing two-year degree programs, and to seek and
ultimately obtain four-year degrees. Supporting greater articulation
between two-year and four-year institutions under Title V is necessary
for this bill to achieve the desired effect of increasing the number of
Hispanics obtaining baccalaureate degrees and pursuing post
baccalaureate education. It is also fundamental to almost every other
component of this bill.
Title VI
Colleges and universities in the United States welcome on their
campuses more than five hundred thousand foreign students, but only 11
percent are from Latin America, including a meager 2 percent from
Mexico. Conversely, more than one hundred fifty thousand American
college students go for study abroad, more than two-thirds of them to
Western Europe, nearly one-half to England alone, and the remaining
one-third to all other countries. Less than 5 percent of all the
American students abroad are Hispanic. These data clearly document the
pressing need to incorporate HACU's proposals for new funding for HSIs
and Hispanic Americans to participate in international education
programs.
The $50 million combined request for fellowships, institutional
collaboration, and Institute for Pan-Hispanic International Studies
would strengthen our national security and enhance our global economic
competitiveness. It is a modest investment that could yield invaluable
returns to our nation. These funds would result in a much higher rate
of Hispanic student participation in studies abroad, increased numbers
of other non-Hispanic students at HSIs going to study in Latin America
and the Caribbean, greater numbers of Latin American and Caribbean
students coming to study at HSIs, and quality scholarly work and
institutional development across national boundaries throughout the
Americas and the Caribbean.
Title VII
HSIs should be supported to reach out to comprehensive research
universities for greater articulation and transfer of Hispanics from 2-
year to 4-year and from the latter to advanced research and graduate
programs of national need. The $45 million in combined funds for
programs and fellowships can bridge HSIs and comprehensive research
institutions of international renown. This is of critical importance to
the nation and to diversity at the most selective and well-endowed
higher education institutions.
In Conclusion
HACU's recommendations for amendments to the HEA, especially for
changes to Titles II, IV, V, VI, and VII are all grounded in our best
national interest for a well-educated and trained workforce, an engaged
citizenry, and cost-effective approaches to economic and social
progress.
HSIs, as the backbone of a Hispanic higher education, require much
greater federal support and funding to achieve their missions of
educating and training the fast-growing cohorts of new students,
particularly Hispanic Americans that represent the best hope for a free
and prosperous America in the 21st Century and beyond.
Congress has a unique opportunity to correct the federal neglect of
past generations of undereducated Hispanic children and youth. The
nation cannot afford to continue ignoring its own future. Congress
should rise to the occasion and embrace HACU's recommendations for the
good of the country.
______
[An attachment to Dr. Flores' statement follows:]
HACU and Reauthorization of the Higher Education Act
Policy Priorities for 2003-2004
HACU is requesting that the 108th Congress enhance the level of
support for HSIs and Hispanic higher education through the impending
HEA amendments, including institutional development, graduate education
and technology support under Title V; teacher education/teacher quality
provisions under Title II; financial aid and related immigration
provisions under Title IV; inclusion of HSIs and Hispanics in
international education provisions under Title VI; and targeting
Hispanics for greater participation in graduate and professional
programs, as well as HSIs for competitive grants under Title VII, Part
B.
HACU's priorities for the reauthorization of the HEA evolved from
three main streams: (1) a national survey of HSI presidents and key
institutional leaders, (2) a series of six regional HSI/HEA public
forums, and (3) staff analyses of substantive data reports. The
feedback, comments and suggestions, as well as findings that emerged
from these three sources were crafted into a draft report outlining
HACU's priorities. This document was then posted on the HACU Web site
where it generated additional input that was incorporated into the
final HACU draft.
Title II:
HACU recommends creation of a new section under Title II
that will authorize $50 million ``and such sums as Congress deems
necessary'' for eligible HSIs to create new and expand current teacher
education programs of high quality standards in those areas where
Hispanics students show greater underachievement (e.g., math, science,
technology, etc.), as documented by national, state and local reports.
This new section under Title II will support competitive grants
addressing all PK-12 areas of education.
HACU recommends that this new section allow funding of
consortia and partnerships between HSIs and Associate HSIs
(institutions with 10% Hispanic enrollment or at least 1000 Hispanic
students, to be defined under Title V: see p. 4 below), for the
preparation of Hispanic teachers to meet national, state and local
needs.
HACU recommends that this section also authorize
collaboration between PK-12 schools and HSIs, Associate HSIs and any
other eligible applicants for grants funded by relevant parts or
sections of Title II. These grants are intended to better prepare
teachers for those communities and sections of the country where
Hispanics and other minority population are congregated in larger
numbers.
Title IV:
HACU recommends doubling the amount of the authorized
maximum Pell Grant within the multiyear cycle of the HEA
reauthorization, and assuring adequate funding levels for needy
students by making the Pell grant an entitlement at a level comparable
to the 80/20 ratio originally in place when first initiated.
HACU recommends substantial increases in the percentage
of all direct federal grant monies, versus loans, to college students
to prevent students from graduating with a high loan debt, preventing
students from continuing education.
HACU recommends the creation of an adequately funded
state challenge-grant program with new federal aid dollars, as a
complement to the Pell Grant Program.
HACU recommends other financial support mechanisms for
Hispanic achievement in higher education. These mechanisms include
discontinuing all federal student loan-origination fees, fixing the
maximum interest rate at or below the current level or prime rate
(whichever is lower), and forgiving accumulated federal loan debt of
graduates who choose to work for HSIs.
HACU recommends that the authorization level for TRIO be
increased to $1.7 billion for fiscal year 2005 ``and such sums as
Congress deems necessary'' for each of the four succeeding fiscal
years.
HACU recommends that HSIs and other minority-serving
institutions be granted the same number of points as those received by
other institutions for ``prior experience'' in TRIO grant competitions.
HACU recommends that the authorization level for GEAR-UP
programs increase to $425 million for each of the five years of the HEA
and any additional funds ``which Congress may deem appropriate and
necessary.
HACU recommends migrant program funding of $75 million
``and such sums as Congress deems necessary'' as an annual funding base
for the entire HEA cycle.
HACU recommends providing long term immigrant students,
who have successfully completed a secondary school program of study or
its equivalent and has been physically present in the United States for
a continuous period of not less than five years, with eligibility or
federal financial aid programs.
Title V:
HACU recommends that the funding level for HSIs under
Title V specifically directed at infrastructure enhancement for
undergraduate programs at 2 and 4-year institutions be increased to
$465 million per year ``and such sums as Congress deems necessary'' for
the authorized cycle of years following the reenacting of the HEA.
HACU recommends the elimination of the two-year wait out
period for HSIs between grant completion and new application cycles.
Currently the two-year wait out period is in direct opposition to the
intent of Title V to enhance the quality and accessibility of HSIs.
HACU also recommends that the ``50% percent low-income''
assurance requirement be eliminated from the funding criteria of Title
V: this requirement applies only to HSIs among minority-serving
institutions and creates an unnecessary and costly administrative
burden.
HACU recommends the creation of a new section under Title
V of the HEA to be identified as Part B, Graduate Education to be
authorized at $125 million ``and such sums as Congress deems
necessary'' for each year of the HEA cycle.
HACU recommends $30 million authorized for each year of
the HEA cycle ``and such sums as Congress may deem necessary'' for the
creation of a new section under Title V Part D of the HEA to be known
as the Technology Enhancement Program for HSIs.
HACU recommends the creation of a new category of HSIs to
be known as ``Associate HSIs'' for institutions that do not meet the
eligibility criteria for HSI designation.
Title VI:
HACU recommends the creation of a new section under Title
VI to be authorized for $30 million per year ``and such sums as
Congress may deem necessary'' for the establishment of an Institute for
Pan-Hispanic International Studies under the auspices of a consortium
of eligible HSIs.
HACU recommends establishing a new section under Title
VII to be authorized for $20 million per year for the HEA cycle, ``and
such sums as Congress deems necessary'' to support the ``Hispanic
International Scholars and Fellows'' program.
Title VII:
HACU recommends that $10 million be authorized ``and such
sums as Congress deems necessary'' to create a graduate fellowship
program under Title VII of HEA to establish partnerships between HSIs
and non-HSIs for increased Hispanic student enrollment and success in
graduate and professional programs.
HACU is also recommending that Congress authorize $15
million per year of the HEA cycle, ``and such sums as Congress deems
necessary'' to support a ``HSI Fellowship Program'' under Title VII,
Part A, Subpart 5 of the HEA.
HACU recommends that Congress authorize $20 million per
year of the HEA cycle, ``and such sums as Congress deems necessary'' to
support an HSI/FIPSE program within Part B of the ``Fund for the
Improvement of Postsecondary Education'' of the HEA.
______
Chairman McKeon. Thank you.
Mr. Chin?
STATEMENT OF GEORGE CHIN, UNIVERSITY DIRECTOR, STUDENT
FINANCIAL ASSISTANCE, CITY UNIVERSITY OF NEW YORK
Mr. Chin. Good morning. Thank you for this opportunity to
talk to you this morning about the financial aid simplification
aspects of H.R. 3039. As mentioned before, I've worked in this
business a while, and in addition, I have the honor of serving
my financial aid colleagues as the national chair elect of the
National Association of Student Financial Aid Administrators
this year.
After working in this business for about 30 years, I think
I probably have a little bit of perspective on some of these
provisions, but let me start with just kind of going through a
high level overview of what happens with the EFC determination.
Fundamentally, we look at a family's total income, and then
we subtract out what are viewed as mandatory expenses for
living, taxes, state taxes, and we arrive at a remaining income
number, and then we look at assets, and determine whether the
family might be able to use some of those assets for college.
We total these up, and then we take a chunk of that and say,
the family maybe should spend this for college.
That EFC is what drives a lot of the financial aid process
because then we derive financial need from that by subtracting
that EFC from the cost of attendance, and in our business, our
daily job is then to try to find enough money to fill that
need, so that the student can afford to go to college.
The EFC formula can really be viewed as a model to try to
determine what a family can pay, but as in any model, we have
to find some balance between the complexity of the model and
how accurate it is or how well it reflects what real life is,
and life is fairly complicated.
There are economists who would sit there and say that the
current model is probably not complex enough because it relies
on a snapshot of a family's ability to pay for college, when a
family's ability to pay for college is built up over a number
of years, and Dr. Sandy Baum from Skidmore, I think, lays out
the case fairly well in a publication NASFAA put out a number
of years ago, ``Primer on Economics for Financial Aid
Professionals.'' We would be glad to make some copies available
for people to look at and get a little more detail about her
discussion about that.
On the flip side of this, there are students and parents
who fill out the form and do view it as complicated, and too
complex, because there are a lot of questions, and the form is
long. There is some vagueness from the definitions of the data
elements.
I think Congress has tried to address this somewhat in the
past by looking at the Higher Education Act and creating a
simplified needs test and a zero formula to try to walk some
students through the process a little better, a little quicker,
and maybe in a little less confusing manner, and the Department
has undergone some efforts in the past to simplify the form by
reformatting the questions, moving things around.
All these things have worked to some degree, and we still
sit here today and say, well, isn't there a better way to do
it.
I think this bill takes a pretty good stab at moving
forward to try to push that along a bit.
People have always suggested, and I think even this bill
suggests, that there are ways for people to file only selected
parts of the form, and with today's technology, there are many
people who have suggested that you could put a smart form on
line which would essentially guide a student to the right
section of the form and streamline the process.
My concern about that coming from where we are is that
access to internet services is not yet universal, and like most
things in life, those who are less well off have less access,
so the very people we may be looking to help may be the ones
that are not able to take advantage of kind of the
technological advance in the process.
I think there are some really nice things in the bill. You
proposed linking the eligibility to filing the simple needs
test to other means based programs, and in our business,
sometimes we sit there and say, how many times does a student
have to prove they are poor. I think it's a nice concept. My
concern about that is occasionally we read these stories about
fraud in some of the other programs, and I would not want that
to bleed over into our programs. I think the Inspector Generals
take a dim view of any thought of fraud.
I think we have to kind of look at that fairly carefully. I
think it is nice and important for the advisory committee to
take a comprehensive look at these formulas because they are
old. They are showing their age. The world has changed.
The basis for which we built some of these components need
to be looked at. We need to look at whether building a lot of
the process on the tax code is appropriate, because that has
gotten more complex.
I think it is good, and I think you have directed the
Committee to look at simplifying it, but the caution is as we
talk about models, you have this tradeoff in complexity and
accuracy, and when you start reducing elements, you may make
the model less accurate and have more concerns and be less
sensitive to families in different circumstances.
In our business, our trademark words are ``fairness'' and
``equity.'' We would like to maintain that.
Although I heard last night they did something on the
Senate floor, but as an example of some of the things that need
to be looked at, the state tax tables. The Department has gone
and adjusted the tables as the law directs them to do, but we
also know that the Federal income tax data is not comprehensive
in collecting information on all the different types of local
taxes students and families pay. We may need to look at a
different means of building those tables off better models or
better data.
My line on that is we took sales tax out as an income tax
deduction in the 1980's, so at the very least, the Federal
income tax data does not reflect sales taxes, which are fairly
significant for many people.
I think it is wise on the part of the Committee to tell the
Advisory Committee to look at program integrity and program
intent and the cost of it because at some point, you have to
have something that fits into the framework of the programs.
Just to kind of say our task is to reduce elements without
looking at the broader picture would not result in a product
that is terribly helpful to us.
I thank the Committee for putting forth this effort. I hope
we can all work collaboratively. I hope the Advisory Committee
works collaboratively with us to come out with a good product
at the end of the day. I will field any questions you may have
when Mr. Moore gets done with his testimony.
Thank you.
[The prepared statement of Mr. Chin follows:]
Statement of George Chin, University Director - Student Financial
Assistance, City University of New York
Introduction
Mr. Chairman and members of the Subcommittee on 21st Century
Competitiveness, I thank you for the opportunity to testify today on
the financial aid simplification aspects of the Expanding Opportunities
in Higher Education Act of 2003. I am George Chin and I am employed by
the City University of New York (CUNY) which has an enrollment of over
200,000 students at 19 colleges in the system. I also currently serve
the National Association of Student Financial Aid Administrators as the
National Chair-Elect of its board of directors for the 2003-2004 year.
I offer my comments based on a view built on thirty years of work in
student financial aid at CUNY and other institutions.
Purpose and Fundamentals of EFC determination
I think it would be useful to briefly review a few fundamentals
about need analysis to set a framework for considering changes in the
methodology and process. Historically, the measurement and analysis of
family finances has been done to arrive at an expected family
contribution (EFC) as an indicator of what the family could reasonably
be expected to contribute toward the total cost of attending college.
Simplistically, this assessment involves three major steps.; The first
step is determining the discretionary income available to the family by
subtracting ``mandatory'' expenses such as federal and state taxes, and
a reasonable living allowance from the total income. The second step
measures the net family assets to see if it is reasonable to expect
some contribution from these amounts. The final step is to add the
amounts determined from the first two steps, and assess a portion of
the resulting discretionary income. The outcome of this calculation is
called the Expected Family Contribution or EFC.
What challenges do we face in a review of the need analysis process?
In a technical sense, the EFC formulas could be viewed as a
predictive model to determine the financial ability of a family unit to
pay for college. In that context, we are challenged to the balance
between complexity, accuracy, and, in this case, equity. In looking at
the current set of formulas, essentially based on decades-old work,
many would make the case that the current model is too simple.
Economists, such as Dr. Sandy Baum of Skidmore College, would say that
the current process, which relies on a financial snapshot, does not
reliably measure a family's ability to pay for college because it is
insufficiently precise. A more complex model is necessary to gain
greater precision. While time does not enable me to detail economic
underpinnings the current Federal Methodology, you can find a more
thorough review of these issues in the NASFAA publication Primer on
Economics for Financial Aid Professionals written by Dr. Baum.
On the other hand, for many students, the application process is
viewed as too complicated because of the length of the FAFSA form and
the definitions of the data elements used for the analysis. In the
past, efforts have been made to shorten the process for applicants
through a simplified needs test and an auto-zero calculation based on
income and tax filing status. Efforts have also been made to change the
format of the application and reduce the number of questions to
facilitate accurate completion but often by moving data elements onto
worksheets. However, even these attempts have not been as successful as
one would hope.
Suggestions have been made that applications can be filed on-line
using smarter forms with logic embedded to ask only those questions
that are relevant for a particular applicant and his/her family. While
this is feasible on a technological basis, it unfortunately may not
significantly enhance the process for many high need applicants who
have limited access to internet-based services
Moving Forward
First, a brief comment on the proposed simplified needs test
improvements. We appreciate the addition of recipients of means-tested
federal benefit programs to the population eligible for the simplified
needs test and the zero expected family contribution formulas. We hope
that a mechanism for authenticating the receipt of these benefits is
also part of this process to prevent fraudulent use of this provision
and to ensure that federal student aid funds are provided to those who
truly need them.
Given the aged framework of the current formulas, it is appropriate
and necessary to have the Advisory Committee on Student Financial
Assistance comprehensively review the need analysis formula and the
associated application design and process to facilitate easier and
better student access to the financial aid programs. Given the
complexity of the issue, we appreciate the stated consideration of
program intent, integrity, and cost as well as the impact on the
distribution of awards.
The desirable outcome is to have a fundamentally sound set of
formulas consistent with the underlying program rationale and sound
economic underpinnings. In this context, the charge to the Advisory
Committee can result in that outcome if the focus is on the entire set
of programmatic concerns rather than predominantly on a goal of simply
reducing the number of data elements and shrinking the form.
For example, the case can be made that a reduced set of data
elements can still have a fairly high correlation with the net outcome
derived from a larger set of data elements. However, the result of
fewer data elements may be less sensitivity to the overall financial
state of the family. If this is true, it may be less equitable and may
as types of income or assets are eliminated from consideration, lead to
higher program costs. The end result is that it could be extremely
difficult to distinguish needy families from those who have the means
to pay. This could inappropriately increase the applicant pool thereby
diverting scarce dollars away from the students the programs were
designed to serve.
It is clear the underlying allowances and offsets in the formulas
need to be reviewed to determine the relevancy of the allowance and the
means of updating them. Certainly, the recent discussion of the
updating of the state and other tax allowance table would suggest a
comprehensive review, as called for in the bill, is timely. Further,
recent press about the effect of dependent student earnings on aid
eligibility should be reviewed to determine the right offset and
taxation rate of the net income after offsets.
We understand that the task for the Advisory Committee is complex
and appreciate the directive for the use of a forms design expert and
consultation with interested parties . We hope that this consultation
ensures that the needs of all of the partners in the delivery system
can be addressed. For example, a vastly simplified federal application
could have the unintended consequence of complicating the whole process
if states or institutional partners find it necessary to use a separate
application to deliver funds according to their statutory structure. A
system that requires multiple applications could create even greater
barriers for high need students.
It is difficult to disagree with an effort to seek simplification,
ease the process for students, and communicate better with students to
assure them of their potential eligibility for Federal Pell Grants. We
hope the result of the study maintains fairness, equity and
effectiveness for the use of the student aid programs.
Thank you for the opportunity to appear before you today. I would
be pleased to answer any questions you may have.
______
Chairman McKeon. Thank you.
Mr. Moore?
STATEMENT OF DAVID G. MOORE, CHAIRMAN AND CEO, CORINTHIAN
COLLEGES, INC.
Mr. Moore. Good morning, Mr. Chairman, members of the
Subcommittee. I am David Moore, chairman and CEO of Corinthian
Colleges, which is one of the largest private capital funded
postsecondary education companies, with 125 colleges and 17
corporate training centers in the U.S. and Canada. We serve
over 50,000 students. Our colleges are members of the Career
College Association, and I am pleased to speak on behalf of its
members.
Our colleges serve the large and growing segment of our
population seeking education to become job ready and to advance
their careers in today's demanding economy. These are mostly
working adults trying to balance careers, family, and personal
obligations to get the education they need to advance in the
workforce.
Our colleges offer diploma and certificate programs, as
well as associate's, bachelor's and master's degrees. We have
also begun to offer fully on line education programs.
We are especially proud of our high rate of graduate
placement, 82 percent.
I am pleased to support the Expanding Opportunities in
Higher Education Act of 2003. It takes several important steps
toward achieving the goals of increasing access,
accountability, affordability and quality.
I will focus my remarks on the single definition of an
``institution of higher education,'' elimination of the 90/10
requirement, and distance education reforms. We believe these
changes are about students, not institutions.
With regard to the single definition, the proposed changes
in the bill are another step in an evolutionary process that
Congress began 5 years ago. The proposal is not radical. It
simply recognizes that the landscape of higher education is
changing.
The key point is that today's student population is
different from a generation ago, when the current definitions
were created. Most students today are not traditional. That is
they are not individuals who graduate from high school, go
immediately to a 4-year college, and depend on their parents
for financial support. Seventy-three percent of today's
students are non-traditional. They are working adults that
Corinthian and other proprietary schools serve.
All institutions, whether they are proprietary, public or
non-profit, are changing to meet the needs of these students.
It is the proprietary schools, however, that are especially
geared toward giving them the preparation they need to advance
in the workforce. This, together with the growth that career
schools have experienced makes it appropriate and timely to
move toward a single definition.
With regard to the elimination of the 90/10 rule, again, we
strongly support the proposal in this bill. The rule had a
dubious premise. It has not been implemented coherently, and
most importantly, it is a prime example of the law of
unintended consequences.
The 90/10 rule creates the wrong incentives. It pushes
institutions away from serving the most in need of financial
aid, especially the poor, minorities and women. In fact, the
relatively heavy usage of financial aid puts a school at risk
of violating 90/10. The risk will only go up if proposals to
increase Pell grants, increase loan limits to front load Pell,
or equalize loan limits are adopted.
Faced with this risk to their survival, it is hardly
surprising that schools would change admission programs and
location away from those types of students and toward appealing
to more affluent students who can pay their own way, yet that
is absolutely contrary to the goal of increased access to the
Higher Education Act.
Another fundamental contradiction that 90/10 creates
involves the goal of affordability. With Title IV aid limited,
one way that a school can raise its non-Title IV revenues is
simply to increase tuition. This, of course, is completely
contrary to everybody's goal of making colleges more
affordable.
The time has come to end this misguided requirement.
Finally, with respect to distance education, the need for
reforms to make financial aid more available to students who
wish to pursue higher education on line is well established.
The findings of the Web-Based Commission in H.R. 1992
passed in the House in the last Congress shows the time is
right for change. I would like to especially draw your
attention to the Department's second report on the distance
education demonstration program that was just released.
The Department has found no evidence that waiving the
current restrictions on distance education in the Act has had
any negative consequences. It has also called for the law to be
amended to expand distance education opportunities for
students. It urged that the quality of distance education, the
key point about these programs, be assessed by accrediting
agencies.
We agree that an accreditation based approach should be
used to allow on line education programs to be Title IV
eligible. The Expanding Opportunities Act takes this approach.
Mr. Chairman, there are many other positive features of
this bill, such as the proposals for financial aid
simplification. The three reforms that I have addressed are
good reasons to support it, and I am pleased to do so.
Thank you for your time.
[The prepared statement of Mr. Moore follows:]
Statement of David G. Moore, Chairman and Chief Executive Officer,
Corinthian Colleges, Inc.
Mr. Chairman and Members of the Subcommittee, thank you for the
opportunity to testify about the Expanding Opportunities in Higher
Education Act of 2003. I am David G. Moore, Chairman and Chief
Executive Officer of Corinthian Colleges, Inc. Corinthian was founded
in July 1995, and today is one of the largest for-profit postsecondary
education companies in the United States. We are active members of the
Career College Association (CCA) and have participated in the
development of its legislative positions. As I will show below, the
number, breadth and diversity of Corinthian's colleges allow us to
speak on behalf of the interests of CCA's members.
Corinthian's colleges serve the large and growing segment of our
population seeking to acquire career-oriented education to become more
qualified and marketable in today's increasingly demanding workplace.
We offer programs at a range of levels of education to serve the needs
of these students, including diploma and certificate programs, and
degree programs at the Associate's, Bachelor's and Master's levels. Our
focus is primarily in healthcare, business, technology and criminal
justice. We operate 80 colleges and two continuing education centers in
21 states, and 45 colleges and 15 corporate training centers in seven
Canadian provinces. Additionally, Corinthian offers programs
exclusively online for students seeking Bachelor's and Associate's
degrees in business, criminal justice and accounting, and Master's
degrees in business administration and criminal justice. In particular,
our FMU Online programs offered through our Florida Metropolitan
University are serving primarily adult students who must concurrently
manage careers, family and personal lives to gain the education and
training they need.
We have achieved great success in helping students to become job
ready and advance their careers in today's competitive economy. This is
shown by the increase in our total student population to over 50,000
and our high rate of graduate placement--82% of our graduates are
employed within six months of graduation in the field for which they
have been trained.
My own background includes experience in both for-profit and public
higher education. Prior to helping found Corinthian, I served as
president of National Education Centers and of DeVry Institute of
Technology in Los Angeles, CA. From 1980 to 1992, I worked at Mott
Community College in Flint, MI, where I served as President for eight
years. Prior to joining Mott, I had a 20-year career in the U.S. Army,
retiring at the rank of colonel.
At the first hearing held by the Education and the Workforce
Committee on the reauthorization of the Higher Education Act, Chairman
Boehner outlined four guiding principles--accessibility,
accountability, affordability, and quality. We agree with these goals,
and believe that the Expanding Opportunities in Higher Education Act of
2003 takes a number of important steps toward achieving them. In my
testimony, I will focus on three important aspects of the proposed
legislation--the single definition of an institution of higher
education, the elimination of the 90/10 requirement, and the reforms
relating to distance education.
I. Single Definition of Higher Education Institution
The Expanding Opportunities Act would strike the sections in the
Higher Education Act (HEA) that continue to provide for disparate
treatment of for-profit institutions as compared to public and non-
profit institutions. It would create a new consolidated section in the
HEA on the definition of an institution of higher education.
Corinthian and other career colleges support these changes. They
represent further steps in a direction that Congress began five years
ago in the last reauthorization in recognition of changes that were
occurring in higher education. Those trends have continued and
accelerated so that it increasingly makes little sense to perpetuate
distinctions that are rooted in history. Changing student demographics
and the goals of our society for postsecondary education support the
additional steps that the Expanding Opportunities Act would now take.
In the Higher Education Amendments of 1998, Congress transferred
all definitions of an institution of higher education from four
different sections of the HEA to two sections in a new Title I. This
transfer and consolidation recognized that the purpose of all such
institutions is to provide access to higher education. Furthermore, the
transference and consolidation made plain that the same core
requirements applied to all institutions--authorization by a state in
which the institution operates, accreditation by an agency recognized
by the Secretary of Education, and certification of eligibility to
participate in the Title IV student financial assistance programs by
the Department of Education. Nonetheless, distinctions between for-
profit institutions, on the one hand, and ``traditional'' institutions,
on the other hand, continued.
The Expanding Opportunities Act takes another step in an
evolutionary process. It is not a radical step, but rather a
recognition that the landscape of higher education has substantially
changed. This change can be described in a variety of ways, but most
tellingly it is revealed by the changes in demographics and purposes of
students who pursue higher education. As the National Center for
Education Statistics reported recently, today's undergraduate
population is different from a generation ago. The ``traditional''
undergraduate--an individual who earns a high school diploma, enrolls
full time in college immediately after finishing high school, depends
on parents for financial support, and either does not work during the
school year or works part time--is now the exception rather than the
rule. In 1999-2000, just 27 percent of undergraduates met all of these
criteria. Thus, 73 percent of all undergraduates were in some way
``nontraditional.'' 1
---------------------------------------------------------------------------
\1\ NCES, Nontraditional Undergraduates, Findings from the
Condition of Education 2002.
---------------------------------------------------------------------------
These students are older, have family and work responsibilities,
and are concerned with preparation for entry into the work force or
advancing their careers. Most institutions of higher education,
including nonprofit and public institutions, have modified their
program offerings in recognition of this fundamental shift. For-profit
institutions from their inception, however, have addressed the needs of
this nontraditional population, and prepared and certified them as
ready for entry and advancement in the work force. As a result, career
colleges comprise 46 percent of all postsecondary institutions and 38
percent of all Title IV--eligible institutions. They are roughly evenly
divided between degree and non-degree granting institutions, and enroll
approximately 1.3 million students annually. 2 The
maturation of for-profit career institutions, of which Corinthian's
colleges are a prime example, and the way that they match the needs of
a changing student population, affirm that the perpetuation of
distinctions among institutions of higher education can no longer be
justified.
---------------------------------------------------------------------------
\2\ Career Training Foundation, A Profile of Career Colleges and
Universities 4-5 (2003).
---------------------------------------------------------------------------
The movement toward a true single definition of an institution of
higher education is appropriate and timely. Indeed, it could be argued
that the bill does not go as far as it should as it preserves a two-
year rule applicable only to for-profit institutions, continues to
treat for-profit foreign institutions separately, and restricts for-
profit institutions from funding sources for institutional purposes.
Nevertheless, the proposed amendments will encourage institutions
funded by private capital to fill the needs of our society's modern
work force.
II. Elimination of 90-10 Rule
As a result of the consolidation and revision of the definition of
an institution of higher education, the Expanding Opportunities Act
would eliminate the requirement that for-profit institutions have no
more than 90 percent of their tuition revenues derived from the Title
IV programs. We strongly support the elimination of this ``90-10
rule.'' The 90-10 rule had a dubious premise to begin with, has failed
to be implemented coherently and, most importantly, has had pernicious
effects that undermine the public policy goals of the student financial
assistance programs.
The hypothesis supporting the enactment of the 90-10 rule and its
predecessor, the 85-15 rule, was that students'' willingness to pay
some portion of their own money would be an indication of the quality
of for-profit institutions. At best, this was an unproven supposition.
The rule never purported to examine the quality of these institutions
directly; instead, it relied upon an inference about student payments
that could just as easily have been explained by other factors--
particularly socioeconomic status. The 90-10 rule also involved a
second-guessing of the decisions of accrediting agencies that have the
responsibility for assessing educational quality in the Title IV
system. This has proven unwarranted since, as a recent report by the
Inspector General has shown, the agencies that principally accredit
for-profit institutions have been more focused on assessing student
achievement than those agencies that accredit public and nonprofit
institutions. 3
---------------------------------------------------------------------------
\3\ Final Audit Report, ED-OIG/A09-C0014 (July 2003).
---------------------------------------------------------------------------
On its face, the 90-10 rule appears to be simple. The statute
states that a proprietary institution must have ``at least 10 percent
of the school's revenues from sources that are not derived from funds
provided under Title IV, as determined in accordance with regulations
prescribed by the Secretary. 4 The regulations developed by
the Department of Education, however, are complex. Many of the
provisions in these regulations and the Department's interpretations of
them are counter-intuitive and unsupported by the statute. For example,
the Department has created a presumption that any Title IV funds
disbursed or delivered to a student are used to pay the student's
tuition, fees and other institutional charges, even if the student has
received and used non-Title IV funds for those purposes. 5
This presumption, in other words, turns the 90-10 rule on its head. A
rule designed to ensure that students use at least some non-Title IV
funds, in fact, counts Title IV funds first and diminishes the
importance of non-Title IV funds in making the 90-10 calculation. Non-
Title IV funds are disadvantaged or not counted in other ways as well.
For example, funds paid to the institution from tuition savings plans
established by students and their families pursuant to Section 529 of
the Internal Revenue Code may not be counted. This is clearly the
students'' own money, and yet the Department's regulations do not
recognize these funds. Nor are institutional funds used to match Title
IV funds under the Perkins and SEOG programs recognized. 6
In all of these instances, non-Title IV funds are utilized by
students--again, the ostensible purpose of the 90-10 rule--but the
Department's regulations and interpretations focus on maximizing the
counting of Title IV funds.
---------------------------------------------------------------------------
\4\ HEA Sec. 102(b)(1)(f).
\5\ 34 C.F.R. Sec. 600.5(e)(2).
\6\ See Id. Sec. 600.5(e)(3).
---------------------------------------------------------------------------
It must also be recalled that the 90-10 rule is highly punitive.
Institutions must notify the Department within 90 days of the end of
their fiscal year if they fail to satisfy the rule, including the
Department's unexpected interpretations of it, and they then lose their
eligibility to participate in the Title IV programs completely.
7 There are no opportunities for correction or remediation,
and the Department has no authority to impose liabilities or fines as
is the case in other instances where institutions may be found in
noncompliance with the numerous and often complex provisions of the HEA
and Department regulations.
---------------------------------------------------------------------------
\7\ Id. Sec. 600.5(f),(g).
---------------------------------------------------------------------------
The 90-10 rule as implemented by the Department of Education,
therefore, is full of traps for the unwary, and the effects of failing
to meet it are draconian. Has it nonetheless succeeded as a reform
measure? The answer is that it has clearly not. Other reforms have had
a far greater impact in removing substandard institutions from the
Title IV system. In fact, the 90-10 rule has had a number of unintended
adverse consequences.
First and foremost, the 90-10 rule creates disincentives for
institutions to serve those most in need of student financial
assistance, especially the poor, minorities and women. These are the
groups who most heavily use need-based grant assistance, particularly
Pell Grants, to gain access to higher education. Institutions are
precluded from denying access to this financial aid for students who
qualify. A study commissioned by CCA demonstrates that the 90-10 ratio
of an institution is not a measure of its quality but rather a
reflection of the number of students in need that it serves; the more
students who are in need, the greater is the institution's 90-10 ratio.
8
---------------------------------------------------------------------------
\8\ American Economics Group, The 90-10 Rule: Impact on Career
Colleges 14, 16 (September 2003).
---------------------------------------------------------------------------
The heavy usage of such Title IV aid puts an institution at risk of
violating the 90-10 rule. This risk will increase dramatically if
proposals to increase the Pell Grant authorization and loan limits, to
front-load Pell Grants, or to equalize loan limits are adopted. An
institution facing the risk of losing its eligibility to participate in
the student financial assistance programs, and unable to deny financial
aid to students who qualify, would have no choice but to consider
changing its location or the programs offered to appeal to potential
enrollees who are able to pay tuition and fees from their own funds.
The study commissioned by CCA suggests that this is precisely what has
happened. While Title IV funds pay all costs for about 31 percent of
the students who attend career colleges, Title IV funds pay almost none
of the costs for approximately 25 percent of these students.
9 This suggests that many institutions have reoriented their
missions and programs away from students who are most in need of
assistance--the very students the Title IV aid programs are designed to
serve in order to promote access to higher education. In this critical
way, therefore, the 90-10 rule is inconsistent with, and defeats the
purpose of, promoting access and the public policy goals of the Higher
Education Act.
---------------------------------------------------------------------------
\9\ Id. at 9, 15.
---------------------------------------------------------------------------
The 90-10 rule also undercuts the aim of improving the
affordability of higher education. Very simply, the rule creates
incentives for institutions to seek funds that are not covered by
financial assistance under Title IV. Since Title IV aid is limited
under the HEA, principally by statutorily prescribed loan limits and
authorizations for Pell Grants, an institution can obtain additional
non-Title IV revenue by raising its tuition and fees. This, of course,
cuts completely against a solution to what has rightly been described
as a crisis in college costs. 10 The 90-10 rule, however,
creates just such an incentive. 11 Moreover, raising tuition
and fees in order to achieve 90-10 compliance exacerbates the problem
that I previously noted, i.e., that the 90-10 rule pushes institutions
away from serving economically disadvantaged student populations.
---------------------------------------------------------------------------
\10\ The College Cost Crisis, A Congressional Analysis of College
Costs and Implications for America's Higher Education System.
\11\ Id. at 3.
---------------------------------------------------------------------------
In sum, the 90-10 rule has an unproven and dubious premise. Its
implementation has created regulatory complexity and anomalous
interpretations. And, most importantly, the 90-10 rule has created
incentives that undercut the goals of access and affordability that
underpin the student financial assistance programs and the goals
rightly articulated by Chairman Boehner for this reauthorization. The
time has come to end this wrong-headed experiment in public policy and
to eliminate the 90-10 rule from the HEA.
III. Distance Education
The Expanding Opportunities Act takes another crucial step to
expand access to higher education by reforming outdated and outmoded
provisions of the HEA that restrict the availability of financial
assistance to students enrolled in online courses of study. The bill
would sever the link that has allowed restrictions on correspondence
education--the ``50 percent rules'' --to be applied to educational
programs delivered by telecommunications. It would create an
accreditation-based system for assessing the quality of online
educational programs in order to make them eligible to participate in
the Title IV programs. And, it would remove restrictions that have
disadvantaged non-degree certificate and diploma programs of study. We
support all of these reform measures. They are timely, well-founded,
and carefully constructed to balance expansion of access with
protections of the integrity of the student financial assistance
programs.
The need for the reforms contained in the Expanding Opportunities
Act is now beyond question. The case for such reforms was made by this
Subcommittee and the Committee on Education and the Workforce two years
ago when, based upon the findings of the Web-Based Education
Commission, the Internet Equity and Education Act of 2001 was passed.
12 We commend Vice Chairman Isakson for his leadership on
this issue.
---------------------------------------------------------------------------
\12\ H.R. 1992; Internet Equity and Education Act of 2001, H. Rep.
No. 107-225, 107th Cong. 1st Sess. (2001) citing The Power of the
Internet for Learning, Report of the Web-Based Education Commission
(2000).
---------------------------------------------------------------------------
As the Web-Based Commission found, online learning is one of the
most promising developments to have occurred in higher education over
the past decade. It leverages the power of technology to enrich
learning and create new educational opportunities. A substantial and
growing body of research demonstrates that online instruction produces
quality learning outcomes comparable to, and perhaps even better than,
traditional education programs. Literally millions of students,
especially working adults, will have higher education opened to them.
13
---------------------------------------------------------------------------
\13\ Id. at 1-13.
---------------------------------------------------------------------------
Since the House of Representatives passed H.R. 1992, other
developments have confirmed that the time is ripe for changes to the
HEA to foster online education. Senator Michael Enzi (R-WY) chaired a
hearing a year ago in which, among other things, the General Accounting
Office (GAO) presented testimony on the growth of distance education,
its expansion of access to older students in the workforce, the
important role that accrediting agencies play in reviewing distance
education programs, and the need to modify restrictions that limit
eligibility for student aid. 14 Senator Enzi, Senator
Bingaman and other co-sponsors have now introduced S. 1203, which would
use an accreditation-based approach to make online education programs
Title IV--eligible. 15 Corinthian and other institutions
with an interest in online education supported this bill as well as a
similar bill, H.R. 2913, introduced by Congressmen Kildee and Andrews
on July 25, 2003.
---------------------------------------------------------------------------
\14\ GAO, Distance Education, GAO-02-1125T (September 26, 2002).
\15\ 149 Cong. Rec. S. 7494 (June 5, 2003).
---------------------------------------------------------------------------
In July of 2003, the Department of Education released its Second
Report to Congress on the Distance Education Demonstration Program.
16 Significantly, the Department reported that it had
uncovered no evidence that waiving the current restrictions in the HEA
and the Department's regulations that impede distance education had
negative consequences. On the contrary, the Department stated that
``[b]ased upon the experience gained to date through the demonstration
program, and the trends that are evident in the development of distance
education generally, the Department recognizes the need to amend the
laws and regulations governing Title IV student financial assistance in
order to expand distance education opportunities. 17 The
Department's report also notes that it has become evident that there is
``a great deal of confusion'' about how to interpret the existing
restrictions, especially the interplay between institutional and
student eligibility. 18
---------------------------------------------------------------------------
\16\ Second Report to Congress on the Distance Education
Demonstration Program (July 2003).
\17\ Id. at iv.
\18\ Id. at 5.
---------------------------------------------------------------------------
As to policy direction, the Department stated that there is a
growing consensus that the 50 percent rules need to be revised or
eliminated, and that the quality of distance education programs should
be assessed through the same accreditation process that governs on-
campus programs. 19 In fact, accrediting agencies, such as
those that accredit Corinthian's schools, have developed standards and
procedures that address the special issues raised by distance education
and that are even more rigorous than the bill would require.
20 The Department's conclusions are supported by the
findings of a recent survey conducted by Babson College and the Sloan
Consortium which found that most chief academic officers and university
presidents believe that Internet-based courses are already at least
equivalent to lecture hall courses in educational quality. This survey
also found a substantial increase in the number of online students to
more than 1.6 million--11 percent of those enrolled in postsecondary
institutions. Public and for-profit institutions are particularly
seizing the opportunities presented by online education. 21
---------------------------------------------------------------------------
\19\ Id. at 20.
\20\ Accrediting Commission of Career Schools and Colleges of
Technology, Standards of Accreditation, Section XI; Accreditation
Reviews, Distance Education Programs.
\21\ Seizing the Opportunity, The Quality and Extent of Online
Education in the United States, 2002 and 2003.
---------------------------------------------------------------------------
These developments amply support the reforms on distance education
in the Expanding Opportunities Act. The bill appropriately severs the
linkage between telecommunication courses and correspondence courses,
and focuses the 50 percent restrictions where they were originally
intended--on correspondence education. The heart of the bill's approach
to distance education is in section 102. This would make a distance
education program eligible for the Title IV programs if it is offered
by an institution that has been evaluated and determined to have the
capability to effectively deliver distance education programs by an
accrediting agency which is recognized by the Secretary and has
evaluation of distance education within the scope of its recognition.
The accrediting agency would achieve such recognition by demonstrating
that it has standards appropriate to the evaluation of distance
education. In particular, the accrediting agency would have to assess
measures of student achievement specific to programs offered through
distance education. It is now well-recognized, based upon the
developments that I have described, that the key consideration relevant
to distance education is quality assessment, and that accrediting
agencies are the appropriate entities to make those assessments. Thus,
the accreditation-based approach of the Expanding Opportunities Act
provides the right solution with appropriate safeguards to ensure that
accrediting agencies effectively serve as the gatekeepers to expanding
access through this mode of educational delivery.
Finally, the bill addresses section 484(l) of the Higher Education
Act to remove unwarranted disadvantages applicable to certificate and
diploma programs. Using additional 50 percent rules, section 484(l)
currently equates these programs to correspondence education and thus
prevents student eligibility even if an institution is eligible to
offer online programs. 22 As the Department stated in its
most recent report, these additional restrictions have created
confusion. More fundamentally, there is no reason why an online
certificate or diploma course of study is like a correspondence program
when a degree program delivered online is not. Indeed, certificate and
diploma programs hold special promise for working adults who wish to
pursue new competencies and credentials so that they may advance their
careers with current and future employers. Thus, removing the linkage
of online certificate and diploma programs to correspondence is also a
beneficial feature of the Expanding Opportunities Act.
---------------------------------------------------------------------------
\22\ HEA Sec. 484(l)(1).
---------------------------------------------------------------------------
IV. Conclusion
The Expanding Opportunities Act would take many other positive
steps. For example, the proposals for financial aid simplification--the
study of the feasibility of simplifying the needs analysis methodology
and the simplified needs test improvements--are valuable and should
lead to the more efficient delivery of aid to students. However, the
proposals on the single definition of an institution of higher
education, elimination of the 90-10 rule and reform of the HEA
provisions that impede online education are particularly critical, in
our view, and we urge their adoption.
______
Chairman McKeon. Thank you very much.
Mr. Moore, in your testimony, you talked about the 90/10
rule. How do you respond to those who say the changes in this
bill specific to distance education, 90/10, and the
institutional definition combination will lead to an increase
in fraud and abuse in the student aid programs?
Mr. Moore. Fraud and abuse is a legal issue, and those who
lie, cheat, and steal should be prosecuted and dealt with. The
last thing that any of us want in this industry is any excuse
to abuse the Federal financial aid or use of those funds.
We fully support and will continue to support any measures
that will reduce fraud and abuse. However, our point is that we
need to be focused on measures that are actually doing that,
not circumstantial evidence that really has nothing to do with
fraud and abuse.
The IG and the state laws have adequate mechanisms in place
to discover fraud and abuse, and in the case of the
institutions within our corporation, we have 13 full time
internal auditors that do nothing but program reviews, similar
to the Department of Education. We have an SFA audit that is
completed by an independent outside auditor. We have a big four
auditing firm that looks at our financial aid.
The state audits us. The guarantee agencies audit us, and
from time to time, the Department of Education audits us.
It is hard to believe that with all that auditing, there is
much opportunity for fraud and abuse. There is an opportunity
for mistakes, however. If you look at the stack of bureaucracy
that we have to work through every year to administer the
financial aid program, you understand why 30 cents on every
dollar of Federal financial aid goes just to the administration
and protection of those funds.
We whole-heartedly support trying to reduce the paperwork
support, but I do not see any correlation at all between the
changes that are being proposed here and an opportunity for the
growth of fraud and abuse.
Chairman McKeon. With regard to changing of the definitions
to include all schools under one definition, I visited some
propierty schools in New York, some of them have been in the
family business for 100 years. Yet, they are denied the
opportunity to compete for certain funds, just because of these
definitions.
Why would we exclude schools like that? Why do you see that
in combining these definitions? How would you see that as a
move forward?
Mr. Moore. Actually, there are two pieces of that issue.
One is an administrative issue that really has more to do with
you folks than with us. Today, every time you make a change to
some piece of the Higher Education Act, your staff has to go
back through all the pieces of legislation and find the
individual references to proprietary schools versus traditional
schools, and make those corrections.
History has shown that is a human endeavor, and with it
comes a lot of error. From time to time, pieces get left out.
In the last legislation, there were a number of times when the
Committees had to go back at the last minute and try to find
pieces of the legislation that inadvertently got left out. The
single definition will relieve that issue.
Second, we are dealing with students, not with
institutions. The purpose of these funds is to provide an
opportunity for students to go to school. There should be no
difference between a student who is attending one of my schools
in Florida, Metropolitan University in Tampa, and a student
that is going to a Florida State school across the street. They
are both capable of going to school and are both tax paying
citizens. They should not be prejudiced against simply because
one is going to one institution versus the other.
There has been a fair amount of hyperbole about our reading
of the special set-asides that have been put in place over the
years to protect a certain class of students.
The fact is that all of those programs are grants that have
to be applied for. There are no entitlements in any of those
funds. The likelihood that we have schools who meet the basic
eligibility for most of those grant funds is slim. On the other
hand, should one of our schools meet those requirements and
successfully get through the grant application process, I do
not find any justification to support denying that student
access to those funds simply because of the school they are
attending. That is a pretty fundamental issue in this country
in terms of providing access and not discriminating against
citizens who are seeking any number of activities, certainly to
include higher education.
Chairman McKeon. Thank you very much. Mr. Kildee?
Mr. Kildee. Thank you, Mr. Chairman. I appreciate the
testimony of all our witnesses here.
We seem to have three areas where we are going to have to
make some decisions here. One is the single definition, the 90/
10, and the 50 percent. I think probably we will have greater
success or maybe more immediate success on the 90/10 and the 50
percent.
The 90/10 came in because we had some outrageous things
happening out there, and this is one of the remedies, and maybe
most of those institutions that were outrageous have gone by
the wayside by now. I am willing to look at the 90/10.
I think we have to recognize new technology, too. Distance
learning is probably going to be a very growing thing and a
very effective way of educating.
David, if you and maybe if we have time, Dr. Heller, could
respond to how you feel modification or elimination of the 90/
10 and modification of the 50 percent distance learning will
help you better serve your students.
Mr. Moore. Let me start with the 90/10 rule first. At the
present time, legislation requires that any student that is
eligible for Federal financial aid has to be granted to them.
We concentrate on providing diploma level schools in the
inner city. That is the bread and butter of what our
corporation is doing. At the present time, if a typical 24 year
old minority female, head of household, appears at our door
step to go to school, chances are she will be eligible for 100
percent of her tuition and fees and some living expenses
through Federal programs. However we are being told that
because of the 90/10 rule, we either cannot enroll her since
she cannot pay the 10 percent, or we are in jeopardy of having
to close the institution because we have enrolled a student who
is the most needy of students, because they cannot come up with
the 10 percent of their tuition.
Today, we require every student who attends school to pay
at least $25 a month while they are there. That may not seem
like much to us, but for some families, that is an awful lot of
money. That still does not meet their 10 percent rule.
We are continuously faced with how to serve the population
for which we have created this school to serve. We are in the
inner cities and we believe we can make a difference there.
However, we end up with the contradictory nature of the
legislation on the one hand that says you must give that
student everything they are entitled to. On the other hand, if
we do it, the Federal Government is going to close your school.
That is a classic case of unintended consequences. I do not
believe that was Congress' intent when the 90/10 rule was put
in place.
Today, it serves no purpose. I would argue that the premise
of it was dubious to begin with. If in fact the purpose was to
nail the fly by night's and the bad actors, I think there were
other ways to do that. I do not think the 90/10 rule had any
effect on them.
The fact is that any well run institution can avoid the 90/
10 rule, but what we end up doing is penalizing the students to
do that. From an effective point of closing down bad schools,
it is not going to have an effect. It certainly is not going to
catch fraud and abuse, but what it does do is make it more
difficult for companies who are in the inner city to try to
provide those services to poor students.
Mr. Kildee. The 50 percent rule, you just feel this is a
means to really better educate students, it's a new
technology--
Mr. Moore. Let me talk about on-line programs just in
general for a moment, if I could, philosophically. On line
learning will always be second choice. A student always learns
better sitting in a classroom with an instructor. It is no
different than what is going on right here. This could have
been done by teleconference. It could have been done by
telephone, but the Members of Congress are going to learn more
about the issues looking at us and watching us, watching how we
avoid your pointed questions, whatever the point may be, none
of which will happen through distance education.
The point is, however, for a lot of students, second choice
is their only choice, and there are hundreds of thousands of
students out of that 75 million adults that have never been to
college, who have never had any postsecondary training, that's
the only way they will ever get access to it.
To deny those students access to Title IV when their
brethren can get to an actual campus and go to school without
restrictions seems counter-intuitive, once again, to everything
we are trying to do with education in this country.
We do not have a lot of students that are doing on line. We
use it as a hybrid program for the most part in my corporation,
although we have totally on line, but the students that are
enrolling in the totally on line program are people that are in
circumstances that they cannot get to a campus to take classes.
There is no justification to deny that person access to a
quality education, and I believe that is the point and that is
the concern we all have, whether we are up there with you or
down here where we are, to ensure that on line program is the
same quality that the on the ground program is.
In our case, they are absolutely interchangeable. Same
faculty. Same classes. Same curriculum. Same textbooks. We
encourage every student to take some of their program on line.
A student may take, when they do their own triage, they take
what they think is simple on line. They take the hard stuff in
the classroom. Eventually, they are going to sit back in a
classroom, and if they did not get the basic skills on line,
they are not going to make it through.
We cannot afford to enroll and have a student that we do
not believe we can graduate and most importantly, put to work
at the end of the day, because that is the business we are in.
We are in the business of jobs, of putting America to work, and
particularly those Americans who for whatever reason do not
have access to traditional schools.
Mr. Kildee. Thank you very much. I appreciate your clarity.
I will just make a comment because my time has run out. My main
concern about the single definition is the effect it may have
upon the minority serving institutions, which we have tried to
give special care and concern to, and that is my main concern
on the single definition.
My time has expired. Thank you. Thank you, Mr. Chairman.
Chairman McKeon. Thank you. Mr. Osborne?
Mr. Osborne. Thank you, Mr. Chairman. Thank you all for
being here today.
I must admit to a little confusion here on two issues, the
common definition and the 90/10 rule, that Dr. Heller and Mr.
Moore somewhat diametrically oppose, and I understand Dr.
Heller's concerns, I guess, on the common definition. I guess
you are fearing dilution of funds? Is that primarily it? Mr.
Moore, could you tell me quickly why you favor common
definition? I know you mentioned it, but it did not process
real well with me.
Mr. Moore. Sure. Let me see if I can be a little more
succinct. The principal reason for the common definition is to
clear up and make simpler your legislative process. Right now,
if you make a change in legislation concerning higher education
or postsecondary education, your staff has to go through a long
stack of existing legislation to find all the references and
make those changes, and that often does not get done, and
unintentionally, things get left behind. That is point No. 1.
Point No. 2 is in those rare cases, and right now, out of
over 4,000 proprietary schools, we can only identify 31 that
even meet the minimum requirements to be eligible for these
special programs. Should in fact a school be able to meet all
of those requirements and successfully get through the grant
process, I think we would argue those students should not be
denied access to those funds.
On the other hand, this is about students. This is not
about a money grab. This is not about an attempt to open up
Title III funds to our schools. In fact, it came as a surprise
to me that the single definition would open up Title III,
because we never considered using those funds, and I seriously
doubt that we would.
Mr. Osborne. Thank you. Dr. Heller, on the 90/10 rule, I
think I understand Mr. Moore's arguments for supporting it
might raise tuition. Could you again review for me why you
oppose the 90/10 rule?
Dr. Heller. Certainly, Congressman Osborne. I think the
primary concern I have is over the issue of accountability. As
I said in my testimony and went into more detail in my written
testimony, the nation's public and private not for profit
institutions are held to a number of accountability standards
that for profit institutions are not held to today.
Let me give you a few examples of these. I know
accountability is certainly an issue that this Committee is
concerned with, but the standards I am going to be talking
about are standards that are already in place and have nothing
to do with Federal regulations.
For example, most public higher education institutions are
held to reporting accountability standards by state higher
education governing and coordinating boards that go well beyond
the minimum thresholds for reporting that are required of all
licensed postsecondary institutions in the state, including for
profit institutions.
Private not for profit institutions have a public service
mission and are accountable to the public in ways that for
profit corporations simply are not.
I will give you an example. You can go to a web site and
get the IRS Form 990 on private not for profit organizations,
including colleges and universities, and you simply cannot get
that level of information, financial and other information,
about for profit corporations, particularly if they are
publicly held.
The accountability issue is my main concern about 90/10.
Mr. Osborne. Thank you. Dr. Flores, you mentioned funding
and weak Federal support for HSIs, I think, in your testimony,
and yet in 1996, I think $10.8 million was available for these
funds, and in 2004, it is $93.5 million. That is a 766 percent
increase. I notice that you are requesting $465 million, which
is almost five times as much as now being appropriated.
Can you explain the reason for this disparity and why you
are saying this is a weak Federal commitment, and why you feel
this increase would be desirable?
Dr. Flores. Sure. Thank you, Mr. Osborne.
I would like to just point out a few important facts that
create a context for my response. First of all, Hispanic
serving institutions currently receive only about 50 cents for
every dollar per student then the rest of the higher education
institutions in the country get from all the Federal sources
combined.
In terms of Title V funding itself, at the present time,
less than one-half of all the eligible institutions for
participation in the Title V grant program receive any funding
because there is not enough money to provide grants to every
one of them.
In addition, we already have reviewed data that indicates
that within the next 5 years, non-profit HSIs will increase by
no less than 100 more HSIs serving the students throughout the
country.
Of course, when you add up all those facts, then we have a
picture very clearly of very severe under funding of our
institutions. When we compute what is needed to bring about
parity for those institutions as they continue to grow and
serve rapidly growing numbers of students, that is what we
calculated would be minimally required to bring about equity
for those institutions at this time.
Those were the kinds of numbers that we used to compute
that was the correct amount to request from Congress.
Mr. Osborne. Thank you. My time has expired. Mr. Chairman,
thank you.
Chairman McKeon. Ms. McCollum?
Ms. McCollum. Thank you, Mr. Chair.
I have been listening carefully to the testimony as well as
reviewing it. I think some of the language that is being used
here is rather interesting. In terms of industry versus
institution.
When I think of an industry, I think of a creation of
something that is trying to create a profit. I think what Mr.
Moore is describing is a profit for the business, and it is
also something that is going to be profitable and worth
something to the student.
When I hear the word ``institution,'' I hear something that
is created not only to better enrich the individual's life, but
something that creates a legacy, something that is part of a
community that builds up public character, not only for today,
but for tomorrow. It becomes a tradition, it is embedded. It is
a value. It is a goal. It is part of its mission.
I am concerned that if we are to change this, we look at
what we are doing very carefully. I have many institutions in
my district. They have very specified missions as to what they
are trying to accomplish just from their presence, as well as
the mission and the goal that they would like to see the
students who graduate know the direction.
I think it is easiest to stay with what you know. I will
use a women's college, which we are not talking about, the
College of St. Catherine. Its goal and its mission is to create
hope and opportunity not only for the community at large, but
to instill that as part of a mission that a student takes
forward.
I trust that my friends and colleagues here will correct me
if I am wrong, but the tribal college that I am familiar with
in my district instills as part of its mission hope and
opportunity for the community at large, as well as for that
individual to be successful and achieve the American dream,
something which many minorities in our country feel is a
struggle to attain.
When we talk about changing the 90/10 rule, I look at how
will that affect that hope and opportunity, that justice, that
quite often minorities in our country find very difficult to
achieve.
These colleges came to be for a reason. These institutions
came to be for a reason, and that is because mainstream America
was not offering that, and I do not know if we are at that
level of color blindness yet, that our institutions know on a
large scale quite often how to reach out to minority students.
The other reason why I am very concerned about changing the
rule on this is there were a couple of rules that were changed
that had to do with the way grants are issued, many grants
which come out of the oversight of this Committee, and I am
going to give you two examples.
We had grants that had been going to the Urban League to
reach seniors, particularly minority seniors, whether they were
African American, Hispanic, Latino, Somali, working with those
seniors. Proven track record. Letters of accommodation.
We had another group called Clues, and they work with
mental health issues, especially with the Hispanic community in
my district. Huge successes. Letters of accommodation. You're
doing a great job.
Well, as we went forward with faith-based education, the
Urban League saw its senior program totally eliminated. Clues
has seen their mental health reach totally being disrupted
because of cuts in funding.
With Dr. Heller's point and to Dr. Flores' point, I would
like to ask you gentlemen, if there is no guarantee that the
basic level of funding is in place for these institutions, what
harm do we do by diluting a few dollars that are out there?
I am out of time, Mr. Chair, so you can submit it to me in
writing, gentlemen, and I will get it in the record. Thank you.
Chairman McKeon. Thank you. Now the author of the bill, Mr.
Cole.
Mr. Cole. Thank you very much, Mr. Chairman.
I am going to start with you, if I may, Dr. Heller, because
I would really like to probe a little bit into your concerns
about the definition.
In your response to Congressman Osborne, and you did not
get a chance to elaborate, so that is what I want to do here,
it appeared to me--and in your comments, your main concern was
simply it is going to dilute--open up, frankly, to more
competition for a very limited pool of funds. I think that is a
very legitimate point.
On the other hand, is that the thrust of your opposition,
we simply are going to spread what we would say is too small an
amount of money over too great an area, or are there other
specific things that concern you?
Dr. Heller. It is a few issues, the issues of dilution of
the funds, as you point out. It is the issue of accountability
and differences in accountability among different types of
institutions in the nation, and it is also the point that
Representative McCollum just brought up about the differences
in missions among postsecondary institutions in this country.
It is those three areas that I have concerns about going to a
single definition.
Mr. Cole. Go with me a little bit further in this. I would
turn around and say if we are trying to help students that are
the neediest students, the ones that are most disadvantaged, we
want to maximize the choices that they have available to them
so they can pick an area that they think or an institution that
they think meets their needs, and would we want to empower as
many institutions as possible to pursue that type of student?
Dr. Heller. I would argue, Mr. Cole, that right now we have
a great deal of competition in postsecondary education markets
in this country, and I think a lot of people who argue that the
United States has the world's best system of higher education
would say it is precisely because we have that kind of
competition. In many other countries, students graduate from
high school and a very small percentage are chosen for college
and they are told where they are going to go and what they are
going to study.
In this nation, students have over 6,000 Title IV eligible
institutions to choose from, and most students, other than
those in perhaps the most rural areas, have a great number of
institutions to choose from already, no matter what it is they
want to study, and now with the explosion of distance
education, even students in rural areas have an opportunity to
choose from a broad range of institutions.
That is why I don't think that changing the current law and
going to a single definition will really help in terms of
access and participation in college for the neediest students.
I think that aspect of higher education is there. The
competition is there. I think there are other barriers facing
needy students right now.
Mr. Cole. Wouldn't that be a decision for the student to
make, not for us to make for the student?
Dr. Heller. Well, the reality is that this Committee and
the Congress has a lot of responsibility and a lot of authority
to make decisions about funding, both in the Title IV programs
in funding for students, and in the Title III and V programs in
funding for institutions. I think Congress has to maintain that
authority, and there are decisions that have to be made, and I
would be very cautious about opening up the regulations, going
to a single definition and returning us to an era where perhaps
these funds were not spent as efficiently and effectively as
they were and are being spent, I think.
Mr. Cole. I am going to ask you a question on another
aspect of your testimony, and I would like you to elaborate a
little bit. You were sort of cautious about the 50 percent
rule, but obviously, willing to entertain the idea of perhaps a
modification.
Could you elaborate, tell me what kind of modification you
were really thinking about there that might still satisfy your
concerns and yet move us into a more flexible and open
situation?
Dr. Heller. My main concern about going somewhat cautiously
and easing the 50 percent rule is the demonstration project, as
I said, has had about 100 institutions in it, and it has been a
very well operated program.
There are a couple of aspects of that that we need to keep
in mind. Those 100 institutions are very carefully hand chosen
by the Secretary for participation in that program. I would be
very cautious about extrapolating from the experiences of 100
institutions and just eliminating the rule and opening up
distance education--funding for students in distance education
in institutions that have more than 50 percent of students who
are in distance education, to all 6,000 Title IV eligible--
Mr. Cole. Do you have a specific change? You are clearly
willing to entertain the idea of some change. What kind of
change would you entertain?
Dr. Heller. Well, I think perhaps the best way to go is to
have the Secretary--give the Secretary the responsibility and
authority to allow institutions to apply and then to choose
institutions for participation in the program, and rather than
going to the extreme of just opening it up and saying anybody--
any institution that right now is Title IV eligible--
Mr. Cole. You would feel comfortable giving the Secretary
the flexibility--giving the authority to review and make those
decisions?
Dr. Heller. Yes, with appropriate oversight; absolutely.
Mr. Cole. Sure. I know I do not have too much time left.
Mr. Moore, let me ask you, since you guys are sort of on
opposite points of this view.
In your institution, are there a large number of students
currently that you think don't have access to you because of
things like the definition difference that we have?
Mr. Moore. Yes, sir; absolutely. Again, there are 75
million adults that have no postsecondary training, 35 million
that have not completed a bachelor's degree, we have over 100
million adults in this country that require postsecondary
training that do not have access to traditional institutions,
and through a combination of the traditional role of
traditional schools, traditionally doing what they have
traditionally done, they need to be traditionally encouraged to
traditionally continue to do that.
That is going to take care of about 20 percent of the adult
population. That is where the bulk of the funding goes. Almost
95 percent of all Federal funding goes to serve that 20 percent
of the population.
It is the other 80 percent of the population that somebody
must step up and serve. That is what we are particularly
attuned to. I am not suggesting that traditional schools should
change their mission or change what they are doing. I am not
particularly suggesting that you change and give us any
particular advantage. We are not asking for additional funds.
We are not asking for different funds. We are not asking to be
treated any differently than anybody else.
All we are asking is that we not be treated any differently
than anybody else is, simply because of the student body we
serve, which is the overwhelming majority of the American
citizens.
Mr. Cole. I believe my time is up. I yield back, Mr.
Chairman. Thank you.
Chairman McKeon. Thank you. Mr. Hinojosa?
Mr. Hinojosa. Thank you, Mr. Chairman.
Chairman McKeon, I would like to thank you and Ranking
Member Kildee for holding this important hearing today.
The Higher Education Act is all about expanding
opportunities. I would also like to thank all the witnesses for
joining us this morning. I especially appreciate Dr. Flores'
testimony on behalf of Hispanic serving institutions.
I would like to echo his encouragement that we include a
long overdue graduate program for Hispanic serving institutions
in the bill that we eventually report out of Committee.
I hope, Mr. Chairman, that we can continue to move forward
in a bipartisan manner on this issue.
I would also like to commend Congressman Cole and Chairman
McKeon for making many of the needed improvements to several of
the exemplary programs, such as HSI Title V, Part A, to HEP and
GEAR-UP and also to TRIO.
Many of these changes have been advocated by the Hispanic
Education Coalition and others. They are certainly a step in
the right direction.
However, I share many of the witnesses' reservations,
concerns about the unified definition of an ``institution of
higher education,'' and I share their concerns of the proposed
elimination of the 90/10 rule.
I remember only too vividly the abuses of the proprietary
sector nearing the late 1970's and the early 1980's, when I was
on the Texas State Board of Education, and we wound up in Texas
eliminating at least 60 percent of the proprietary schools
because of the fraud and what they were doing to education and
especially to our students.
Many of the victims of the fraud and abuse in the student
aid programs were Hispanics. They were not provided access to
higher education, but rather access to debt without a means to
pay for it.
I would hope that we could continue to discuss whether for
profit businesses should receive Federal institutional
development dollars.
The witnesses have pointed out the under funding of
institutions of higher education such as HBCUs, HSIs, tribally
controlled colleges and universities, and many others who are
the ones who are recruiting and helping get minorities into
higher education.
How can we ensure that we never return to proprietary
school abuses of those periods of the 1970's and 1980's?
Finally, I would like to ask Dr. Flores to share with the
Subcommittee why HACU and our nation's Hispanic communities
believe it is critical that we establish a post-baccalaureate
program for HSIs. Also, why we cannot afford to wait another 6
years until the next reauthorization of higher education in
2009.
Dr. Flores. Thank you, Mr. Hinojosa.
We reported in our written testimony that less than 5
percent of all the graduate degrees earned in the country are
earned by Hispanics. We have a tremendous deficit with respect
to graduate education opportunities for our young students and
adults.
At the same time, our HSIs need to expand their capacity to
create or develop new programs for graduate education, because
this is where the overwhelming majority of our students are
concentrated. More than 60 percent of all the students
attending higher education today attend an HSI, and yet, many
of those HSIs don't have graduate programs or have very limited
graduate programs.
There is obviously a national deficit involved in expanding
opportunities for young people and adults to go into graduate
programs because the institutions themselves need to be
enhanced, and for most faculty appointments and high level
appointments and administrative positions in higher education,
people need to have Ph.D's or graduate degrees, as credentials
for admission to those jobs. They also, of course, need to go
into the corporate community and serve in leadership positions
that require MBAs and other kinds of graduate and professional
degrees.
The nation as a whole is in tremendous need of improving
opportunities for graduate education and to wait another 6
years would seem to prolong the agony of our community.
Mr. Hinojosa. If the Chairman will yield, yesterday, we
heard testimony in the Select Education Committee about the
need for teachers and professors at the university level
because we are expecting another 2.5 million students to get
into colleges and universities, and without professors, we
cannot handle that demand, and naturally, it seems to me that
we have to address the shortage of the professors and they have
to get into the Master's and Ph.D. programs in order to teach
in colleges.
I thank you for your response.
Dr. Flores. Thank you.
Chairman McKeon. Thank you. Mr. Keller?
Mr. Keller. Thank you, Mr. Chairman. Mr. Chairman, let me
ask you some questions regarding the student work penalty. I
read your written testimony, and you thought that was something
that was worthy of being studied.
I put language in this bill to have the Advisory Committee
on Student Financial Assistance study it, and for those folks
not familiar with this issue, I may briefly describe it, and
then ask you for your opinions.
The University of Central Florida in my area costs about
$12,000 to go to. If we provide a student with a $4,000 Pell
grant, a low income student, that is enough to pay for his
tuition, books and fees, but he has to come up with the other
$8,000. If he's an ambitious kid, and he gets a part time job,
and he makes $8,000, guess what, he has just lost his Pell
grant.
His choices, go take out a loan for $8,000, and when you
graduate from college 4 years later, you have $32,000 in
student debt, as our Chairman likes to say, you have a mortgage
without a house.
My first question to you is as someone who is in the
financial aid arena, do you believe the student work penalty is
a problem that needs to be addressed?
Mr. Chin. I might not characterize it--I think it is an
issue that needs to be reviewed and looked at in terms of--I
hesitate to use the word ``tax,'' but I mean, how much of a
student's earnings is to be directed to their expected
contribution toward college?
The current process takes an offset of $2,500-$2,600 out of
the wages, and then we subtract out income taxes and Social
Security taxes, and then we assess half of the remaining income
that is left over as part of the expected contribution.
This falls back into the need analysis in the sense that we
look at prior income as a snapshot of the student's or the
family's ability to pay. You tend to look at that as kind of
the snapshot is something that would be ongoing, and you say
that is what the student can earn or the family will earn, and
you expect a certain piece of it.
Mr. Keller. Let me stop you before you go too far down the
line. I just gave you a real life scenario. You would not
characterize that as a problem?
Mr. Chin. It's a problem with how you treat earnings. If
you look at the current process, when you look at a student's
wages, we exclude--back out the need based wages they make,
because we say we gave that to the student to earn toward their
course of attendance. On need based aid, we do back those wages
back out.
Mr. Keller. I think we back out about $2,400.
Mr. Chin. We back out $2,400 as an initial offset against
any non-need based wages before we begin to go through the rest
of the process, but on the FAFSA form itself, there is an
exclusion--say we happen to give the student a work study job
for $8,000.
Mr. Keller. Right.
Mr. Chin. To fill that need, assuming the student had
$8,000 worth of need. When he files the form the following
year, your tax return says you earned $8,000, but we know
$8,000 of it was a need based set of earnings, so on the FAFSA
form, they take that back out so that for need analysis
purposes, the net income from that $8,000 work study job is
zero.
It doesn't impact their Pell grant eligibility because the
wages have been netted down to zero as a function of netting
that excluded set of wages out.
The issue is the difference in how we treat need based
earnings that we have awarded to the student versus wages the
student may have earned on their own, and I think that is kind
of a conceptual thing that needs to be resolved in this
comprehensive review of the analysis and how wages, whether
they are need based or non-need based, get handled in the
process.
One of the tough things about building models is reading
the intent. In some cases, we can read the intent pretty well
and say, yes, the student intended to use that for education,
and in other cases, it may not be. That is what makes the
process--
Mr. Keller. Let me ask you this, because I am getting real
short on time. One of the proposals is instead of giving him
credit for $2,400 that they can earn without having it count
against them, give them say credit for $5,000 they can earn
without having it count against them.
Some think that is a good idea. The down side of that is it
costs $460 million extra. What are your thoughts on that
proposal?
Mr. Chin. I think our fundamental thought about this is in
this review of need analysis, we have to go through and find a
sound economic rationale for some of these allowances, and
whether it is $2,500 or $5,000, right now it is probably
someone's estimate with updated inflation over the years, and I
think when Congress gets through this, what they probably need
to go through is say, all right, what is the cost of working,
what is the cost of ancillary expenses associated with working,
that clearly are not available to students, what part of their
wages they earn may be attributed to a period of non-
enrollment, and you might net that out.
I think there is a thought process to go through to
establish what the appropriate level is, but it fits into our
general picture that those are the things that need to be
reviewed, and they are not easy.
Mr. Keller. Thanks.
Chairman McKeon. Thank you. Mr. Tierney?
Mr. Tierney. Thank you, Mr. Chairman. I thank the witnesses
for their testimony today.
Dr. Heller, you mentioned during your testimony the idea of
earlier in the process determining for students in junior high
school or high school their eligibility and giving them some
notice and promise on that.
Would you expand on that for us?
Dr. Heller. Certainly, Congressman Tierney.
Let me give you the example that I didn't have time to talk
about in my oral testimony.
The State of Indiana has a program called the Indiana 21st
Century Scholars Program, and I have summarized this in my
written testimony. This program is targeted at low income
youth. I believe the standard is families with children about
150 percent of the poverty level and below. It is certainly
below the maximum Pell grant income eligibility.
What the State of Indiana has done has been to make a
commitment to these students when they are in seventh or eighth
grade, that they will fund the full cost of their college
tuition at any public institution in Indiana, or a private
institution, in an equivalent amount of what the public
institution is, for 4 years, if these students agree to do the
following: they have to graduate from an Indiana high school
with a GPA of at least 2.0 or a C average, which is a very
reasonable merit standard, we can all agree.
They have to agree to not use illegal drugs or alcohol.
They have to apply for admission to a college in Indiana, and
they have to apply for state and Federal aid.
If the students take all those steps, the State has
committed and will commit to them as early as when they are 14
or 15 years old, to pay their tuition for 4 years.
The legislature in Indiana did this recognizing that is a
long term commitment of an entitlement, and yet the State has
done that, and I think the most important thing we know about
this program is that independent research has shown it has been
a significant contributor in improving the low income student
college access and success rate in the State.
I recognize that it is a little bit of a radical program
for some here in Washington perhaps, because of that early
commitment, but I think there are lessons that could be learned
about not just making a commitment to students of aid, but at
least starting with what this legislation calls for, which is
getting the information out there about eligibility sooner.
As I said in my testimony, I would encourage Congress to
think perhaps a little outside the box about making the kind of
commitments with Federal Pell grants that the State of Indiana
has made with its state money.
Mr. Tierney. Thank you very much. Mr. Chin, what are your
feelings about the administration's recent change in
disallowing state and local tax setoffs in the financial aid
process? Do you think that is a wise thing?
Mr. Chin. I think it was something they were clearly
authorized by statute to update and they did update them, and
the outcome was that for the most part, the individual rates in
the table got reduced, but I think, as I mentioned before, this
is one of those issues that probably falls into a comprehensive
review that the Advisory Committee will do, and what is an
appropriate means of determining that offset.
I think the current statute directs the Department to use
data from the Internal Revenue Service, and at least in my
mind, that data understates the local tax burden for students.
I think the Department followed the rules they were
supposed to follow in updating it. I think they were just put
in a position where they were directed to use data that was not
necessarily the best set of data for making that determination.
I think if the Advisory Committee goes through its analysis
and finds a better means, a better basis for determining that
state and local tax burden for the purpose of the need
analysis, then the Committee can go forth and make that
modification in the law, and maybe we will end up with a better
set of tables.
For the moment, given that we know that the data probably
understates the state and local tax burden, I think it may be a
good idea to kind of suspend that update until we get a better
handle on it.
Mr. Tierney. Thank you very much. Dr. Heller, with respect
to the 50 percent rule, should we not think about doing
something more in the accreditation so that is a factor? I
liked your idea about giving the Secretary some discretion
about which programs would qualify or not, but do we have
enough in terms of standards of what would qualify or not? Are
we doing enough in the area of accreditation of those distance
learning programs?
Dr. Heller. Because of the nature of distance education and
some of the history we have had in this country with problems
with institutions that were purely in distance education, we
used to call them correspondence schools, business, I would be
a little bit reluctant to rely only on the accreditation
process, and that is why I recommended and suggested having
some kind of special process for institutions to apply and for
review by the Department and the Secretary would provide an
extra assurance that we have the right institutions in these
programs and serving students in an appropriate manner.
Mr. Tierney. What criteria would the Secretary use if not
accreditation?
Dr. Heller. I think there would probably be additional
information. Right now, the accreditation process, as I
understand it, is a fairly high level process in terms of
institutional review, and especially with the growth of
distance education programs, accreditation is only now starting
to deal with some of the details of distance education,
particularly technology based distance education, and I think
perhaps we ought to suggest that the Secretary get out ahead a
little bit of the accreditation process and try to come up with
criteria and sets of standards that would provide the
assurances that the money is being used efficiently and
effectively.
Mr. Tierney. Thank you.
Chairman McKeon. Thank you. Mr. Carter?
Mr. Carter. Thank you, Mr. Chairman. Dr. Heller, on the 50
percent rule that we are talking about in this Internet and for
those of us like at my age, it used to be correspondence that
we were talking about, most of the universities that I am
acquainted with, and I graduated from two, and my children are
either out or going to an university right now, most major
universities have rules that the last 30 hours have to be in
the school, in the university, where they are going to graduate
from.
Take the University of Texas, without firing any shots at
them, but I think it pretty well pertains to most of the major
universities, they do not offer very many classes at night at
all, if any.
Therefore, a student who for some financial reason might
have to either transfer to a different school, have a job so
they can pay for it to finish school, they are not able to
finish at the school that they might have wanted to finish from
because there is no distance education they can use to get that
last 30 hours at the school they were enrolled in, they had to
move to a new school.
Most of them will have additional hours, and generally,
these last 30 hours, there is only one or two classes per
section that they have to have to meet their requirements to
graduate, so you are generally adding probably two and in some
instances three more years of going to school and working in
order for them to receive that degree.
This is something that I have experienced in my family, and
I know many families who have experienced that. Wouldn't each
of the universities almost have an obligation to expand the
distance education to provide a means for a savings, both by
the folks who are having to borrow the money from the United
States government and the kids who are having to put out their
own money to get through school? Isn't that the kind of
accommodation we ought to be making for our students? And how
does that fit in your view of some reluctance on expanding the
50 percent rule?
Dr. Heller. I agree, Representative Carter, that students
today, and I think Mr. Moore said this earlier, are very
different than students when we first passed the Higher
Education Act almost 40 years ago. We have many more working
adults. We have many more students who attend multiple
institutions and run into the kinds of problems that you talked
about.
I think distance education does hold great promise for
being able to reach students who because of time constraints,
geographic constraints, family constraints, can't attend a
traditional class that often meets during the day, during what
are typically working hours. And I think there are many
institutions out there--Penn State has, I think, one of the
most well-respected distance education programs on its campus
that allows students to take courses at pretty much any time
they want; they're not bound by a traditional semester
schedule, often they're self-paced, and exactly to meet the
needs of those kinds of students we were talking about.
Having said that, I would be reluctant to suggest that
Congress should get into the business of telling colleges and
universities and dictating to colleges and universities
requirements about how many hours a student has to attend that
institution to be able to qualify for a degree.
So if you are suggesting that Congress ought to take a look
at finding ways for institutions to ease up on this rule of
having to attend the last 30 hours or 25 hours, whatever it may
be, I would be reluctant to have Congress get into that
business. I think that Congress historically has given a lot of
autonomy to institutions to make decisions about academic
issues, and in my mind that's clearly an academic issue, and I
would not want to see Congress getting involved in that.
I think the marketplace, the higher education marketplace,
is responding very well--for profit institutions, not-for-
profit privates, and public institutions are responding to the
needs of these students, and I don't think that Congress needs
to look at putting in regulations that will stifle that kind of
competition and innovation that I think is going on right now.
Mr. Carter. I actually was not speaking to regulating--I'm
not somebody that believes Washington ought to regulate
anything in the level of work on what you do and running your
schools. But I think they do have an obligation, the schools
have an obligation, to offer an alternative to this basically
onerous procedure if a student if a student is forced to leave
school and they lack 28 hours to graduate, they're not able to
graduate, they have to start over at another institution closer
to home so they can finish, and add two or three more years to
their cost.
I think schools have an obligation to have long distance
methods where they can finish school at the school of their
choice.
Dr. Heller. Yes, I agree. I think that is an obligation on
the parts of colleges and universities. And I think most are
trying to respond to that.
Mr. Carter. Mr. Moore, if you don't mind, one of the
questions I would like to ask you is I run into--I used to
teach Sunday school for 20 years, and I know lots of kids that
are college-age kids over the last 20 years, and higher
education gives--one of the problems that I saw some for-profit
institutions like you represent was some of the kids were put
in the programs, they signed up, they paid a big chunk of money
to get in--most of it borrowed, if not all of it borrowed--to
get into a program that they were not well-advised to get into,
didn't have a possibility of completing. They worked at it for
usually about four to 6 months and quit and lost every dime
that they put into the programs. And they owed the money.
I've seen that on more than one occasion. What's going on
in your industry to prevent that from happening and to refund
those moneys when children are ill-placed in schools where they
ought not be?
Mr. Moore. Thank you, sir. Let me address that from two
points of view. First, a national statistic. Fifty percent of
all students who enter traditional colleges drop out in their
first year. So if we're concerned about large payments being
made to institutions and the money being lost, my suggestion is
we start with the traditional schools first. Because that's
where the greatest losses take place. Ten years later, those
drop-outs show up on our doorstep as a 28-year-old trying to
finish school.
Now let me address what we're doing. We're in the business
of putting America to work. I don't want to enroll a student
that I'm not convinced will complete the program and we can put
to work. We provide admissions tests up front to make certain
they're smart enough to get through the program, we put the
students through an intensive counseling program before we
enroll the student to make certain they understand what they're
getting into, and to make certain that they really understand
the career that they're going to go to.
The programs you're talking about were some 1200 schools
that were put out of business 15 years ago, rightfully so. I
would hope that you don't have any evidence of that kind of
behavior in the last few years, at least, and certainly not in
any of our schools.
Mr. Carter. I have heard stories, but that--thank you.
Mr. Moore. We'd love to have the evidence of those stories,
because we'll deal with them.
Mr. Carter. Thank you. My time has expired. Thank you.
Chairman McKeon. Thank you. Mr. Owens.
Mr. Owens. Yes. Gentlemen, as you are leaders in the area
of higher education, I hope you will bear in mind that we have
a war against terrorism going, which is going to absorb
tremendous amounts of taxpayers' money. And that war against
terrorism makes assumptions that higher education plays no
insignificant role.
Our Homeland Security Department has very little--pays very
little attention to higher education. It's another example of
gross mismanagement in our war against terrorism not to
understand that the first and most important weapon in the
fight against terrorism is an educated populace. An educated
populace in the general sense that people can make decisions in
a complex world that will contribute to our effort to fight
terrorism.
But in a more specific sense, we need lots and lots of
educated people at every level. The anthrax technician has not
been created yet. So a few envelopes of anthrax shut down this
capital, you know, for three or 4 weeks and shut down our
Senate building for 4 months, because there are a limited
number of anthrax technicians who know how to clean it up. God
forbid we should have a major anthrax attack of ten envelopes
sent somewhere. I mean, it's bad for first responders, we
depend on police and fire to do all the first responding, and
in a biological attack, what do police and firemen know about
rebuffing a biological terrorist attack? You need specially
trained people to do that. Maybe they should be connected to
hospitals, but the nurses can't do it and doctors can't do it;
you need another category of people.
We had a big blackout in the Northeast recently, and they
said it's not just the equipment and the supplies and the
physical infrastructure, but the people are wearing out, the
kind of people who can deal with that.
So at every level we need more educated people. There's
room for proprietary schools as well as other schools, the
traditional schools, and I'd like to see them all prosper and
all be able to make a maximum contribution. However, we are
forced, given the limited amount of funds and the fact that
instead of going forward and increasing the amount of money
we're investing in our education, we are actually decreasing
the amount. It's a blunder that we hope we can get corrected,
but until then, we have to make these gradations in terms of
where are people seeking an education, higher education, where
can they get the best quality, best value.
And I'm not the one who is going to say the proprietary
schools of America don't give a lot; I know a proprietary
school which is an excellent school, opening great
opportunities to minorities and low income students, with a 1
percent default rate. So they're doing very well.
On the other hand, I know of another school or set of
schools that's built an empire on swindling minority and low
income students. What my previous colleague mentioned, get them
to enroll, get a big loan, pay a down--have no intention of
giving them a decent education, and swindling them.
We had a big investigation some time ago and we got rid of
a lot of them, but there are some still around. And my question
is--mainly to you, I guess, Mr. Moore--given the fact you don't
have accreditation and a number of other things that
traditional non-profit schools have, what are you willing to do
to make certain that we have a better way to evaluate the good
proprietary schools versus those that still tend to swindle
students? How much transparency do you think your association
and your colleagues are willing to submit to? Let us see your
statements; you don't have to follow them in the same way as a
non-profit institution, but we ought to be able to go somewhere
and check to see your financial status, the quality of your
faculty, and--how much are you willing to put on the screen so
everybody can have a look at it when they're evaluating whether
or not this proprietary schools is really a good one?
Mr. Moore. Thank you, and thank you for the opportunity to
try to correct some of the facts.
First off, all of our schools are accredited. Most of them
are accredited by national accrediting agencies. And even the
Department of Education agrees that the national accrediting
agencies are far more strict and instill far higher levels of
discipline in terms of the school operation than the regionals
do--the regional accrediting agencies that my colleague is
talking about.
So it's simply not true that the proprietary schools do not
have the level of oversight that traditional schools do. I
think anyone familiar with the operation of both--and I've been
both places, I've run a public community college and I'm now
running a--
Mr. Owens. Well, you, yourself, said before there were some
scandals 10 or 15 years ago.
Mr. Moore. That's correct.
Mr. Owens. Massive scandals. Since then you've started
doing something different?
Mr. Moore. Well, those schools have been put out of
business, those people have been put in jail. Keep in mind that
when the Congress throws gold in the streets, bad people are
going to pick it up and run with it. And that's what happened
in the '80's. There was so much effort to try to get student
financial aid out that the money was put out without the
oversight mechanisms in place. And a lot of bad people picked
it up.
The same thing is going on at traditional schools. Every
quarter, there's a large list of traditional colleges and
universities that are sanctioned by the NCAA because fraud and
cheating is going on in their athletic programs.
Now in our schools, if that level of fraud and cheating
went on, we'd be putting somebody in jail and closing the
school.
So I think it's unfair to assume that there's a different
level of accountability that's being held for proprietary
schools versus traditional schools.
Mr. Owens. Are you willing to submit to greater
transparency in terms of your finances and--
Mr. Moore. Well, I don't know how you could be more
transparent than we are. Every quarter, we have to publicly
announce where every penny that we spent went. We're subject to
SEC accountability. We're now subject to Sarbanes-Oxley--a $3
million-plus project--just to get the accountability. I will
submit to any transparency that you submit to traditional
schools, too.
Mr. Owens. So regional accreditation, you would submit to
that, too.
Mr. Moore. Our standards are far beyond regional
accreditation. In fact, we're trying to move a group of nine
university schools in Florida to regional accreditation because
the accreditation standards are easier than they are for the
national accreditation.
Mr. Owens. Now you speak for Corinthian Colleges here, or
you speak for proprietary schools in general?
Mr. Moore. Well, I can certainly speak for myself, and I
think I can speak for any proprietary school that's in the same
situation we're in.
Mr. Owens. Well, I hope that you will find some way to
provide some leadership within your higher education community
to address the issue that I raised at the beginning. We need
more money.
Mr. Moore. That's why I'm here, sir.
Mr. Owens. Greater realization that all higher education
institutions are very much needed, and we need to open the eyes
of the administration to the fact that even something as basic
as a fight against terrorism requires that we have more people
coming out of our higher education institutions.
Mr. Moore. You'll be pleased to know that we were the first
homeland defense degree program offered in the United States--
was offered through our schools.
Mr. Owens. Thank you,
Chairman McKeon. Thank you. I want to thank the witnesses
for being here today, for your testimony. As we move forward in
this process, I'm sure we'll be reaching out to you and asking
for your input, and if you'll continue to give us that, it will
help us as we move forward to try to reauthorize the Higher
Education Act.
There being no further business now, the Committee stands
adjourned.
[Whereupon, at 11:23 a.m., the Subcommittee was adjourned.]