[House Hearing, 108 Congress]
[From the U.S. Government Publishing Office]
H.R. 4283, COLLEGE ACCESS AND OPPORTUNITY ACT
=======================================================================
HEARING
before the
COMMITTEE ON EDUCATION
AND THE WORKFORCE
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED EIGHTH CONGRESS
SECOND SESSION
__________
May 12, 2004
__________
Serial No. 108-58
__________
Printed for the use of the Committee on Education and the Workforce
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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, Staff Director
John Lawrence, Minority Staff Director
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C O N T E N T S
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Page
Hearing held on May 12, 2004..................................... 1
Statement of Members:
Boehner, Hon. John A., Chairman, Committee on Education and
the Workforce.............................................. 2
Prepared statement of.................................... 5
Grijalva, Hon. Raul M., a Representative in Congress from the
State of Arizona, Prepared statement of.................... 76
Hinojosa, Hon. Ruben, a Representative in Congress from the
State of Texas, Prepared statement of...................... 69
Hoekstra, Hon. Pete, a Representative in Congress from the
State of Michigan, Prepared statement of................... 74
Question submitted for the record........................ 77
McCollum, Hon. Betty, a Representative in Congress from the
State of Minnesota, ``Editorial: Gentrification/Too Much on
U.S. Campuses'', submitted for the record.................. 72
Miller, Hon. George, Ranking Member, Committee on Education
and the Workforce.......................................... 5
Norwood, Hon. Charlie, a Representative in Congress from the
State of Georgia, Prepared statement of.................... 76
Porter, Hon. Jon, a Representative in Congress from the State
of Nevada, Prepared statement of........................... 77
Statement of Witnesses:
Boyle, Jim, President, College Parents of America,
Washington, DC............................................. 8
Prepared statement of.................................... 12
Response submitted for the record........................ 77
Grayer, Michael, Recent Graduate, Virginia College, Jackson,
Mississippi................................................ 28
Prepared statement of.................................... 31
Letter submitted for the record.......................... 83
Martin, Dr. Dallas, President, National Association of
Student Financial Aid Administrators, Washington, DC....... 13
Prepared statement of.................................... 16
Additional statement submitted for the record............ 79
Response submitted for the record........................ 78
Reed, Dr. Charles, Chancellor, California State University
System, Long Beach, California............................. 22
Prepared statement of.................................... 25
Wasserman, Rebecca, President, United States Student
Association, Washington, DC................................ 17
Prepared statement of.................................... 21
Response submitted for the record........................ 78
Additional materials supplied:
American Medical Association, Statement submitted for the
record..................................................... 56
Corrigan, Dr. Robert A., President, San Francisco State
University, Statement submitted for the record............. 38
National Consumer Law Center, Center for Law and Social
Policy, and The Workforce Alliance, Statement submitted for
the record................................................. 41
H.R. 4283, COLLEGE ACCESS AND OPPORTUNITY ACT
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Wednesday, May 12, 2004
U.S. House of Representatives
Committee on Education and the Workforce
Washington, DC
----------
The Committee met, pursuant to notice, at 10:35 a.m., in
room 2175, Rayburn House Office Building, Hon. John Boehner
(Chairman of the Committee) presiding.
Present: Representatives Boehner, Petri, McKeon, Castle,
Ehlers, Isakson, Biggert, Osborne, Porter, Musgrave, Blackburn,
Gingrey, Miller, Kildee, Owens, Andrews, Woolsey, Hinojosa,
Tierney, Kind, Kucinich, Wu, Davis of California, McCollum,
Grijalva, Majette, Van Hollen, and Bishop.
Staff present: Kevin Frank, Professional Staff Member;
Sally Lovejoy, Director of Education and Human Resources
Policy; Alexa Marrero, Press Secretary; Catharine Meyer,
Legislative Assistant; Krisann Pearce, Deputy Director of
Education and Human Resources Policy; Alison Ream, Professional
Staff Member; Deborah L. Samantar, Committee Clerk/Intern
Coordinator; Kathleen Smith, Professional Staff Member; Kevin
Smith, Communications Counselor; Jo-Marie St. Martin, General
Counsel; Ellynne Bannon, Minority Legislative Associate/
Education; Tom Kiley, Minority Press Secretary; Ricardo
Martinez, Minority Legislative Associate/Education; Alex Nock,
Minority Legislative Associate/Education; Joe Novotny, Minority
Legislative Assistant/Education; and Lynda Theil, Minority
Legislative Associate/Education.
Chairman Boehner. A quorum being present, the Committee on
Education and the Workforce will come to order. We are holding
this hearing today to hear testimony on H.R. 4283, the College
Access and Opportunity Act of 2004. For those guests who we
don't have room for in the room, we have an overflow room
upstairs in 2257. So for those who didn't make it into the main
hearing room, it is being broadcast upstairs in the overflow.
Under Committee Rule 12(b), opening statements are limited
to the Chairman and ranking minority member. If other members
have opening statements, they will be included within the
hearing record; and with that, I ask unanimous consent for the
hearing record to remain open for 14 days to allow member
statements and other extraneous material referenced during
today's hearing to be submitted for the official hearing
record. Without objection, so ordered.
STATEMENT OF HON. JOHN A. BOEHNER, CHAIRMAN, COMMITTEE ON
EDUCATION AND THE WORKFORCE
Good morning, and thank you all for joining us today to
discuss the College Access and Opportunity Act, a bill I am
pleased to have offered last week with Chairman McKeon to
expand college access for low- and middle-income students.
I firmly believe current and future students should be our
No. 1 priority in distributing Federal higher education aid.
That was the purpose of the Higher Education Act when it was
originally enacted more than three decades ago. And the purpose
of our bill is to restore that focus as the law is
reauthorized.
Our plan will expand access to higher education for
millions of low- and middle-income students. It will do so by
strengthening Pell Grants, student aid, student access
programs, and minority serving institutions. It will reduce
loan costs, fees, and red tape for students and graduates. It
will remove barriers for non-traditional students, including
the so-called ``90-10 Rule'' that is hurting minority and low-
income students. It will empower parents and students through
``sunshine'' and transparency for consumers in college
financing and accreditation.
Millions of low- and middle-income students today face the
possibility of being denied access to higher education.
Americans overwhelmingly believe that these students and their
families should be the first in line when Federal higher
education aid is distributed. The Federal law today reflects a
different set of priorities. An increasing share of aid is
flowing not to incoming low- and middle-income students
struggling to achieve a higher education but to former students
who have already received an education and entered the
workforce. Federal law also allows lenders and banks to keep
excess subsidies they earn from student loans instead of
returning to the government so it can be used to support access
for these same low- and middle-income students.
If we truly believe college access for incoming low- and
middle-income students should be the Federal Government's first
priority in higher education aid, we will not allow these
misplaced priorities to stand.
The independent General Accounting Office recently warned
Congress that the cost of fixed interest rate consolidation
loans is ballooning, threatening to devour billions in
resources over the next 7 years that could be used to support
college access for students who haven't received an education.
To avert this problem, GAO has recommended to the Congress that
we switch consolidation loans to a variable interest rate.
Bipartisan experts have told this Committee that following
GAO's recommendation would free up $21 billion over the next 7
years that could be used to expand college access for low- and
middle-income students. If consolidation loans are left on
autopilot, the cost to low- and middle-income students will be
$21 billion in lost opportunities.
The GAO's warning has not fallen on deaf ears in this
Committee. In fact, I am pleased to say it has drawn bipartisan
concern. A majority of the members on both sides of the aisle
have either introduced, sponsored, or cosponsored bills to move
the consolidation program to a variable rate. The bill that I
have introduced with Chairman McKeon would do the same.
Unfortunately, the GAO's warning also comes during an even-
numbered year, and that brings political temptation to the
table. One of the first to fall victim was former Education
Secretary Richard Riley, who was dispatched back in March by
opponents of President Bush to attack this Committee for even
listening to the GAO's warning. His attacks were later echoed
by another Democrat party member, presumptive Democrat nominee
for President John Kerry.
Now interestingly, not long ago, these same folks were
singing a different tune. In the early 1990's, when Secretary
Riley and President Clinton designed the Direct Loan Program,
they chose variable rates for direct consolidation loans, not
fixed rates. In 1997, when President Clinton and Secretary
Riley sent Congress their plan for reauthorizing the Higher
Education Act, they proposed making all consolidation loans
variable rate. And Secretary Riley's own Department of
Education at the time said variable rate consolidation loans
would be better for borrowers.
A 1997 document issued by Secretary Riley's Department
noted, ``The interest rate on FFEL consolidation loans would be
changed to a variable rate comparable to the rate applicable to
Direct Consolidation Loans under the Clinton plan.'' It went on
to say, ``By extending the favorable terms currently available
only to borrowers of Direct Consolidation Loans to borrowers of
FFEL Consolidation Loans, these amendments would reduce the
cost for, and provide greater flexibility to, these FFEL
borrowers.''
Now with all due respect to Senator Kerry and Secretary
Riley, it would appear that some of my colleagues across the
aisle were for the idea of variable rate consolidation loans
before they were against it.
Now some have also pointed to a recent study by the
Congressional Research Service examining how borrowers would be
impacted by variable rates on consolidation loans. Proponents
claim that the CRS findings are evidence that variable rates
will increase the cost for borrowers. What they don't mention
is they are talking about a different set of borrowers. Our
bill doesn't affect anyone who currently has a consolidation
loan, and those are the people the CRS analysis examines in a
hypothetical analysis.
No one can accurately predict what the future interest
rates are going to be. What we can do is examine past history.
And new information from CRS does just that.
In a report that was issued just last week, CRS found
borrowers in 14 of the last 18 years would have fared better
under a variable rate than under the fixed rate structure
currently in place. Specifically, since 1986, the first year
that we had a consolidation loan program, borrowers most often
would have paid less in interest if their student loans had
been under the variable rate structure that we are proposing.
We also know that students today are paying the lowest
rates in history, about 2.82 percent. They are able to pay this
low rate because rates are in fact variable. In 2006, under the
current law, interest rates will be fixed for the FFEL Program
and at 6.8 percent, a rate more than double the amount students
are paying today. And opponents of our legislation support
keeping this fixed rate in tact despite the fact that costs
will double for these borrowers if interest rates stay
relatively low. The 6.8 percent rate is not a cap that some
opponents claim, it is a fixed rate that would be imposed on
all student loan borrowers for the life of the loans, locking
borrowers out of lower rates in the future.
Providing fairness for low- and middle-income students will
require more than simply reforming consolidation loans and
allowing borrowers to take advantage of variable interest
rates. The bill we have introduced also addresses concern about
excessive lender earnings on the Federal student loan programs.
The bill would eliminate excess subsidies certain lenders can
now collect and require lenders to return billions in excess
interest earnings to the Federal Government, freeing up
resources that could be better spent expanding access for
current and future students.
With tuition skyrocketing at colleges and universities
across the nation, we owe it to students and their families to
have an honest debate about the barriers to college access, and
to come together with solutions. The bill Chairman McKeon and I
have offered is an attempt to do just that. And I look forward
to today's discussion, and I am hopeful that it will pave the
way for bipartisan action in this Committee that will make a
difference for those very students that we are trying to help
get into the college and university of their choice.
With that, I would like to yield to my colleague and
friend, Mr. Miller.
[The prepared statement of Chairman Boehner follows:]
Statement of Hon. John A. Boehner, Chairman, Committee on Education and
the Workforce
[GRAPHIC] [TIFF OMITTED] T3631.001
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STATEMENT OF HON. GEORGE MILLER, RANKING MEMBER, COMMITTEE ON
EDUCATION AND THE WORKFORCE
Mr. Miller. Thank you, Mr. Chairman, and thank you for
holding this hearing today. Every 5 years, Congress has the
opportunity to rewrite the higher education laws to better
expand access to college education and to make college more
affordable for low- and middle-income students. Unfortunately,
the College Access and Opportunity Act doesn't even come close
to living up to its name.
Just at a time when millions of low- and middle-income
students and their families are struggling to cover college
costs, this bill actually forces students to pay thousands of
dollars more for their college loans, caps the maximum Pell
Grant, and fails to provide meaningful relief from rising
tuition prices.
While higher education has long served as the best
opportunity for a better life for millions, students and their
families across the country are now wondering whether they will
be able to pay for a high-quality college education. As student
tuition continues to soar, too many students are taking on huge
loan debt and working long hours that hurt their academic
studies and overall college experience or forgoing college
altogether.
Broad access to an affordable college education is not
simply a matter of individual enrichment and advancement, but
an integral component of this nation's overall economic health.
Closing the gap in college preparation rates between low- and
high-income young adults would create $250 billion in new
economic growth and $85 billion in additional tax revenue to
our nation.
Despite the need to expand access to an affordable
education, college is fast becoming a pipe dream for too many
students. States are cutting support for higher education and
pushing higher tuition and fees on to students and their
families.
In addition to budget cuts and rising prices, millions of
students are taking on high debt levels that discourage college
attendance and encourage default--which costs taxpayers
billions of dollars.
Over the past 10 years, student loan debt has nearly
doubled to $17,000 and about one-fifth of full-time working
students spend 35 or more hours per week on the job just to
cover college costs. At the same time, student aid is falling
further and further behind the cost of a college education. In
fact, last year the maximum Pell Grant was worth $500 less in
real terms than the maximum grant in 1976 and 1976.
It is imperative that we return to the original premise of
the Higher Education Act of 1965, that no college- qualified
student should be denied a college education because he or she
lacks the financial resources.
Unfortunately, while the bill before us today includes some
good provisions, such as reducing the student origination fees,
reducing some of the excessive subsidies to banks, overall it
makes college more expensive and reduces college opportunities.
The Access and Opportunity Act pushes higher prices onto
students just at the time when students need the help the most,
as tuition continues to rise and debt soars.
Despite the fact that an estimated 40 percent of all
borrowers graduate with unmanageable debt levels, the
Republican bill denies students the ability to choose to lock
in low interest rates for their student loan consolidation.
Consolidating at a low-fixed rate has made student loans that
have helped millions of low- and middle-income students manage
their debts and make ends meet, both while they are in school
and out of school.
According to an analysis by the Congressional Research
Service (CRS), eliminating this benefit will force the typical
borrower to pay $5,500 more for his or her student loans. And I
do not think you can regard the life cycle of the cost of
borrowing to these students while they are in and out of
school.
The Republican bill also caps the current authorized
maximum Pell Grant at $5,800 through 2011, despite the fact
that last year's maximum Pell Grant award was, as I said, $500
less than 1976 and 1977.
The bill raises the interest cap on student loans, a cap
which my colleagues agreed to just a few years ago. And, as a
result, millions of students will be forced to pay hundreds of
dollars more in their college loans.
It completely eliminates a key provision to protect
students and taxpayers against fraud and abuse in the student
aid program without providing additional safeguards. We all
strongly support the career colleges in the private sector in
the higher education system but for-profit institutions should
have some of their own money on the table to protect the
consumers, the students, and the taxpayers.
In addition, the bill allows limited Federal funds, which
have been reserved solely for nonprofit institutions to be made
available to for-profit entities, without increasing the funds
to this program. As a result, funding long reserved for
community colleges, Hispanic Serving Institutions and Minority
Serving Institutions will be cut.
Despite double digit increases, the bill also fails to
adequately address the tuition process.
While I support the provisions to eliminate the lender
floor rate of return on student loans to reduce excess bank
subsidies, I believe that this is only one piece of a puzzle to
return the programs to their original intent, which is to boost
college opportunities for students.
At a time of rising college costs, high unemployment and
little job growth, we should not be forcing students and their
families to pay more for college education. We should not and
we cannot afford to take this path. And I urge my colleagues to
reject this bill as it is presently drafted.
I would hope that we would be able to make sure that all
parties to the student loan community, if you will, that all of
these issues are put on the table so that we can apportion out
the cost and the savings of this program to all parties who
participated. And I look forward to this hearing.
Chairman Boehner. As you can see, we are all on the same
page now.
Before I introduce our distinguished panel of witnesses,
let me welcome back to the Committee the distinguished former
Chairman, retired Chairman of this Committee, the Honorable
Bill Goodling. Bill, welcome back.
[Applause.]
Chairman Boehner. It is my pleasure to introduce our
witnesses today. Our first witness will be Mr. Jim Boyle. Mr.
Boyle currently serves as the president of College Parents of
America, a nationwide organization dedicated to advocating on
behalf of, and serving as a resource for, the country's current
and future college parents. Mr. Boyle has nearly 25 years of
experience in politics, trade associations, media business, and
the financial services industry. College Parents of America is
a not-for-profit membership organization serving current and
future college parents through a mix of advocacy, information
resources, and access to discounts on products and services.
We will then hear from Dr. Dallas Martin. Dr. Martin
currently serves as the president of the National Association
of Student Financial Aid Administrators, an organization
composed of 3,100 institutions and 9,300 financial aid
professionals. And prior to his current role, Dr. Martin served
as director of program planning and administration for the
Division of Student Assistant Programs with the American
College Testing program, as well as serving a number of years
as a college and university administrator and educator.
We will then hear from Ms. Rebecca Wasserman. Ms. Wasserman
currently serves as president of the United States Student
Association, an organization founded in 1947, which represents
students on Capitol Hill with the White House and the
Department of Education. She is a recent graduate of the
University of Wisconsin at Madison, where she studied political
science and social welfare.
Then we will hear from Dr. Charles Reed. Dr. Reed currently
serves as the chancellor of the California State University
System, the country's largest senior system of public higher
education. He provides leadership to 44,000 faculty and staff
and 409,000 students on 23 campuses and seven off-campus
centers. Prior to his current position, Dr. Reed served as the
chancellor of the state university system of Florida.
We will then hear from Mr. Michael Grayer. Mr. Grayer
recently earned his accountant assistant diploma from Virginia
College in Jackson, Mississippi, overcoming numerous obstacles
along the way. After graduating from high school in 2000, Mr.
Grayer attended a local community college for a semester but
was forced to withdraw due to inadequate transportation and
limited financial resources. With assistance from the Federal
Student Loan Programs, Mr. Grayer enrolled in Virginia College
and earned his diploma in December of 2002. Currently he serves
as an auditor and regional manager for the Security Life
Insurance Company. He also successfully owns and operates
Maxell Communications. He is the chief executive officer of
three Subway stores and is the president and founder of Trinity
Financial Solutions, a tax preparation and accounting firm.
I want to thank all of you for your willingness to come
today, and we look forward to your testimony.
Mr. Boyle, you may begin.
STATEMENT OF JAMES A. BOYLE, PRESIDENT, COLLEGE PARENTS OF
AMERICA
Mr. Boyle. Good morning, Mr. Chairman, Mr. Miller, and
other members of the Committee. My name is Jim Boyle, and since
July 2003, I have been president of College Parents of America,
a national association with two categories of membership:
individuals, both current and future college parents, and
institutions, which generally consists of schools that we
believe we can supplement their parent relations activities.
A little over 2 years ago, when I first heard of the
existence of the association that I am now privileged to lead,
it struck me that when it came to the debate over the
reauthorization of the Higher Education Act, one group which
deserved a seat at the policy table had been ignored, namely,
parents. So that is one of the many reasons why I am pleased to
be invited to testify before you today, not only on behalf of
our members but of all current and future college parents.
Thank you for the opportunity.
Following is a summary of the views of College Parents of
America on your proposed legislation:
We strongly agree with your overall goal of making college
accessible and affordable for all Americans, consistent with
the principles of the Higher Education Act since its passage
nearly 40 years ago. While the attainment of a college
education is much more widespread today than it was in 1965, we
have reached a precarious place when it comes to Americans and
their perceptions of whether college really is possible for
all.
Across the continuum of the socioeconomic spectrum, from
the most needy to the most wealthy of Americans, a dangerous
notion is developing, a mis-perception that college is becoming
out of reach for all but the most affluent. From my personal
experience, growing up in a working class suburb of Detroit, I
understand how such a misperception can develop. I was a first
generation college student in the late 1970's, as was nearly
everyone in my neighborhood who chose to continue their post-
secondary education, not a very high percentage to begin with.
While most of my peers lived at home and attended Wayne State
University or Lawrence Tech or Oakland Community College, I was
fortunate to have a college guidance counselor to helped me to
see beyond the confines of the Detroit area, and who enabled me
and my parents to realize that financial aide made every school
in America within reach.
Through a combination of Pell Grants, institutional aid, a
National Merit Scholarship, earnings from work study and other
jobs and student loans, I was able to attend and graduate from
Northwestern University in 4 years, an experience that was
fulfilling and life-changing.
Young people growing up in Detroit, or anywhere else today,
should still know that thanks to Federal, state, and
institution-based aid, low- and middle-income students can
afford college.
There are many provisions in your bill that help families
to understand college is possible and which give them specific
tools to pursue their higher education goals. Your proposal to
make the Pell Grant available year-round is an important step
in the right direction, as is your gradual elimination of the
origination fee for student loans.
In 1981, I was a recent college graduate working as a
staffer for a California Member of Congress when that fee was
put in place as a temporary deficit reduction measure. Twenty-
three years later, the ``O'' fee is still in place, and it is
time to phase it out.
Your modest proposal of raising loan limits for first and
second year students is also a step in the right direction,
especially considering just how many years it has been since
those limits were increased. I recommend, however, that you
look at the possibility of creating greater borrower
flexibility within the context of the overall loan limit rather
than set year by year maximums. This flexible borrower account
approach would allow for better financing options if family
circumstances change while a student is in college and he or
she is forced to turn to additional personal borrowing to meet
school costs.
There are a few other provisions of the proposed bill that
I would like to touch on before hearing the other witnesses and
taking your questions.
First is your proposed new variable rate structure for
consolidation loans in order to make those loans consistent
with the structure for Stafford loans that you propose. I
suppose it would be easy for me to stay out of this crossfire
on this issue, as parents generally are not involved with their
son's or daughter's financing decisions in the post-college
years, or at least not as much as they are involved during
college. But you have been right, Mr. Chairman, as have your
colleague from the other side of the aisle, Mr. Andrews, to
make the point that the future cost of the Consolidation Loan
Program has the potential to be an enormous financial drain,
thereby inevitably putting downward pressure, or at least a
lid, on funds available to students currently attending or
planning to attend college.
I would like to touch on the issue of transparency for
college costs. I believe that families do want and need more
and better information about the rate of tuition increases in
general, the difference between sticker price and net price, as
well as statistics on those specific schools that are
successful, or not, at keeping prices low.
While the college cost issue reaches across all 50 states,
families should know that many, but not all, states have
trimmed a portion of their own budgets allotted to higher
education.
On a host of budget issues, state legislators are often
quick to point a finger at Washington and say, ``It is the
fault of Congress,'' when less than expected funding is made
available for this initiative or that. But when it comes to
support for higher education, you have every right to point out
that state support has been falling as a percentage of
university budgets for 20 years, in good economic times and in
bad. To be fair, in recent years the actual dollars of state
support for higher education have increased but so have
enrollments.
Speaking of enrollment, it is essential to note the
oncoming college attendance surge, a result of the baby boom
echo. When my sixth-grader, Griffin, who is seated here behind
me with my wife, Kelly, and younger son, Tucker, graduates, I
hope, from high school in 2010, he will be part of the second
largest graduating class in U.S. history, slightly smaller than
the class of 2009, and both larger than any in the Baby Boom
years.
This coming rise in the college-age population raises the
stakes for this year's reauthorization. Assuming you can move a
bill through this year, with accompanying action by the Senate,
it is likely under this best-case-scenario, that the
legislation will not be in force until at the earliest 2005 to
2006, which means that the policies you are looking to put in
place today will hardly affect parents of today's college
students but will instead greatly affect parents of today's
sixth through eleventh graders.
The actions you take--or not--this year will impact
American families for the next five to 6 years. And in each of
those upcoming years, more families will be affected because
the college-age population is projected to grow through at
least 2012.
Part of the transparency debate will focus on how best to
get information into the hands of parents. It seems that
whenever there is talk about this issue, the proposed solution
centers on four words: ``COOL Web site needed.'' The reasoning
seems to be that a new and improved Department of Education Web
site will be the answer when it comes to providing the college
preparatory information they crave. To those four words, I will
respond with four of my own: ``Remember the digital divide.''
It may have narrowed a bit since the last 1990's but it has not
gone away. Survey after survey reveals that those who are most
likely to need information about financial aid options are the
least likely to have it. A COOL Web site will not address this
issue.
I strongly suggest that you mandate the U.S. Department of
Education to implement a national advertising campaign,
principally utilizing the wide reach mediums of television and
radio, to accomplish two goals: provide context on the costs
and benefits of college; and to let people know about the
widespread availability of financial aid.
Many of you may have your own COOL Web sites to serve your
constituents or to promote your re-elections this fall. I am
certain that such sites are only a small part of your
communications strategy, not the be all and end all for
dissemination of key messages. When it comes to key messages on
access and affordability of college, a COOL Web site should be
seen as a means, not as an end.
That is the end of my prepared statement, and I thank you
for including me on behalf of College Parents of America in
today's hearing.
Thank you.
[The prepared statement of Mr. Boyle follows:]
Statement of Jim Boyle, President, College Parents of America,
Washington, DC
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------
Chairman Boehner. Thank you.
Dr. Martin.
STATEMENT OF A. DALLAS MARTIN, JR., PRESIDENT, NATIONAL
ASSOCIATION OF STUDENT FINANCIAL AID ADMINISTRATORS
Dr. Martin. Thank you, Mr. Chairman, Mr. Miller, and
members of the Committee on Education and the Workforce. I am
Dallas Martin, and I am president of the National Association
of Student Financial Aid Administrators. And I am pleased today
to have the opportunity to comment upon the positive changes
that H.R. 4283 makes to the Title IV student aid programs.
We recognize the Committee's charge to develop a revenue
neutral bill and appreciate the difficult choices that had to
be made to focus limited resources on current and future
college students rather than individuals who have completed
their post-secondary education. In an ideal world we would like
to address the needs of all individuals. But with limited
available funding, our highest priority as an association is to
ensure access for current and low-income and middle-income
students.
We are pleased to see that H.R. 4283 includes a number of
the student aid proposals that we and others in the higher
education community advanced. We are particularly pleased that
the bill reduces the loan origination fees for students in both
the FFEL and Direct Loan Programs, that it provides an interest
only 2 year repayment plan option for borrowers who may have
difficulty in meeting their repayment obligations. And it also
continues the authorization for all of the time-proven Title IV
student aid programs.
We are also delighted that the bill eliminates both the 30
day delay disbursement requirement and the multiple
disbursements requirement for schools with default rates of 10
percent or less. And we are also pleased that the bill
clarifies the student aid rules on drug-related offenses and
expands the use of program funds to promote financial and
economic literacy.
In addition, let me comment on several specific proposals.
NASFAA supports the change proposed in the legislation to
establish a market-based, variable interest rate for FFEL
direct and consolidated student loans.
In the recommendations that we sent you last year, we
proposed that all Stafford loans, including consolidation
loans, would continue to have a variable interest rate capped
at 6.8 percent. While H.R. 4283 retains the current 8.25 cap as
opposed to the 6.8 which we proposed, we still believe that the
change to a variable rate for all future borrowers establishes
a system that will treat all borrowers more equitably. If the
variable interest rate was currently in effect, all borrowers
would have the advantage of participating in the current low
student loan interest rate environment. Similarly, in the
future when interest rates rise, as they inevitably will, all
borrowers again will be equally affected but will never have to
pay a rate that is greater than 8.25. I would suggest that
compared to other credit instruments that this change will help
to ensure that the Federal Stafford Loan Programs provide
students and parents with the best financing option.
NASFAA is also pleased to see that H.R. 4283 increases the
annual subsidized loan limits for first and second year
undergraduate students in both the FFEL and Direct Loan
Programs. And I assume that your budgetary limitations
prevented the Committee from considering the proposals that we
advanced to make adjustments to upperclassmen and graduate and
professional students as well.
While the proposed modest increases are certainly welcome,
we would hope that the Committee as it continues work on this
bill would give careful consideration to making the annual and
aggregate loan limit changes that we support, which have been
put forth in H.R. 4102 introduced by Congressman Rob Andrews.
We also would strongly encourage the Committee to give serious
attention to the new consolidation rate structure that is
included in H.R. 4102, which would provide a variable subsidy
to borrowers based upon the relationship between the borrower's
total monthly loan payments and their total income. This change
would clearly help lower income borrowers who have high student
debt.
We would also ask that the Committee give consideration to
including H.R. 4283 two other of NASFAA's earlier
recommendations. One, which would allow individual
institutions, if it so desires, to implement lower loan limits
on a school-wide class level or academic program basis and a
second recommendation which would eliminate the provision
mandated that the school also loses eligibility to participate
in the Pell Grant program if the school loses eligibility to
participate in FFEL or Direct Loan Programs due to high
defaults.
We also note that H.R. 4283 includes a proposal to modify
the allocation of funds formula that is used to distribute
Federal funds to institutions under the campus-based programs.
This proposal is a modified version of a recommendation that
NASFAA had advanced last year. The campus-based allocation
formulas have been at the center of policy discussions over the
past 25 years and people's views on whether the current formula
should be modified depend in large part on when an institution
began participating in one of the campus-based programs and in
which state that institution is located.
Earlier modifications to the formula established a base
guarantee to provide protection to participating institutions
who had been in the program for a considerable period of time
and who had made significant institutional investments to
properly administer the programs. But the formula also
established a fair share concept that would ensure that funds
remaining after meeting base guarantees would be distributed to
institutions based upon the amount of that institution's
students' needs in relationship to the needs of students at all
other participating institutions.
Unfortunately, the rather static funding of these programs
over the past decade has prevented newer institutions which
should have benefited from the fair share formula from keeping
pace with institutions who student bodies have similar economic
enrollment profiles. The provisions in H.R. 4283 would
gradually reduce the base guarantee protection currently
granted to certain institutions, thus freeing up additional
dollars to distributed according to the fair share formula to
all eligible institutions. While this change will shift dollars
from some institutions to others over time, the provisions in
H.R. 4283 provide institutions with adequate lead time to
prepare for these changes.
We recognize that institutions across the country have
different and strongly held views on whether the current
formula should be modified. But the approach contained in this
bill will help to ensure that the monies allocated under the
three campus-based programs will be equitably distributed to
the neediest students in all participating institutions across
the country.
In conclusion, let me say while we have attempted to focus
our analysis upon the Title IV student aid provisions contained
in H.R. 4283, and we will continue to analyze the bill and
provide you with additional comments, I should also note that
there are many other significant changes included in the bill
that have a dramatic impact upon institutions of higher
education. While I don't have time or feel qualified to comment
upon many of those proposals, I would strongly encourage the
members of this Committee to carefully consider and analyze the
thoughtful comments and suggests that others in the higher
education community will undoubtedly make.
I look forward to working with the Committee and would be
happy to respond to your questions when appropriate.
[The prepared statement of Dr. Martin follows:]
Statement of Dr. Dallas Martin, President, National Association of
Student Financial Aid Administrators
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------
Chairman Boehner. Thank you, Dr. Martin.
Ms. Wasserman.
STATEMENT OF REBECCA J. WASSERMAN, PRESIDENT, UNITED STATES
STUDENT ASSOCIATION
Ms. Wasserman. Thank you. Mr. Chairman, Ranking Member, and
members of the Committee, and to all the students that were
able to be here and apparently went through a lot to get here,
I thank you for this opportunity to discuss H.R. 4283, the
College Opportunity and Access Act.
I am here today representing the United States Student
Association and the over 1 million students that we represent.
USSA is the nation's oldest and largest national student
association, representing students in D.C. since 1947.
My testimony on behalf of USSA addresses several key
provisions in H.R. 4283 that will directly impact millions of
low- and middle-income college students. While we believe that
some provisions in this bill will help students, overall we
oppose the College Opportunity and Access Act, as it will force
millions of low- and middle-income students to pay more for
college, deny free speech rights to students across the
country, and re-open the doors to fraud and abuse in our
student aid programs.
In short, this bill does not create the access or
opportunities the title claims and in fact may block students
from the doors of higher education. Most importantly, it
represents a missed opportunity for this Congress to prioritize
higher education and address the growing crisis as colleges and
universities become less and less affordable.
We do applaud Chairmen Boehner and McKeon for retaining the
current cumulative loan limits for undergraduate students. Far
too many students are taking on huge loan debt to finance their
college education. And while this provision allows students to
borrow several thousand dollars more for college, it does not
raise the limits in a careless manner. The typical
undergraduate student graduates with nearly $19,000 in college
loan debt, double that of the typical graduate in 1997.
In addition to soaring individual debt, there has been a
seismic shift in the dependence on student loans as the primary
finance mechanism to pay for college. Thirty years ago, student
loans accounted for about 30 percent of all Federal student
aid, while grants accounted for 70 percent. Today these figures
are almost reversed. Student loans account for nearly 70
percent of all Federal student aid, while grants account for
just 22 percent.
When students are forced to finance their higher education
through unmanageable student debt, there is no real access. It
continues a cycle of poverty for low-income students and limits
their ability to give back to the economy of our country
through purchasing a car, a home, or even taking a lower
paying, public interest career path.
While we are disappointed that the student loan tax, or the
origination fee, has not been fully eliminated, we do believe
that reducing this tax from 3 percent to 1 percent over the
reauthorization period is a positive step.
While USSA believes that maintaining the cumulative loan
limits and reducing the origination fees are important steps to
making college more affordable for millions of low- and middle-
income students, overall the College Opportunity and
Accessibility Act will actually force millions of low- and
middle-income students and their families to pay thousands of
dollars more for their college loans and education.
First, we are very disappointed that the Act fails to raise
the maximum Pell Grant award. Last year's maximum Pell Grant
was worth $500 less in real terms than the maximum award nearly
30 years ago. Despite the declining buying power of the grant,
rising tuition prices and the growing financial need of
students, H.R. 4283 fails to increase the maximum Pell award.
To the more than 5 million students who depend on Pell Grants
to make college possible this is a real step backwards toward
making college a reality.
We are also troubled that the Act eliminates the current
low-fixed rate consolidation benefit for student borrowers.
According to a recent Congressional Research analysis,
eliminating this benefit will force the typical student to pay
nearly $5,500 more for their college loan. Denying student
borrowers the choice to lock in a low-fixed interest rate makes
college more expensive, just as tuition levels rise, state aid
is being cut and students are facing double the loan debt they
faced just 7 years ago. As a result, H.R. 4283 will eliminate
college opportunities and make college even more expensive.
Consolidation is an important tool that helps low- and
middle-income students manage their debt and makes college
affordable. Congress should not deny student borrowers this
benefit now when they need the help the most.
While we share the concern that the cost of the
Consolidation Loan Program has the potential to increase
significantly over the next decade, we are shocked that the
leadership of this Committee has decided to bend the will of
the big lenders and deny low- and middle-income students the
choice to lock in a low-fixed interest rate.
The fact of the matter is that the big lenders that
participate in the student loan program do not like the
consolidation program because they are forced to pay fees to
participate and because it increases competition in the market,
as most students, but not all, can shop around to find the best
deal and service for their loans. Due to low interest rates in
the past few years, more and more students have consolidated
their loans, increasing the likelihood that these students will
switch lenders. The lenders that hold the lion's share of the
total outstanding student loan debt would like to eliminate the
current low-fixed rate benefit in order to do away with the
competitive market so that they can protect their portfolios
and their profit margins.
The elimination of the current low-fixed rate benefit in
H.R. 4283 comes as lenders in the student loan program continue
to earn huge profits. According to a recent issue of Fortune
Magazine, Sallie Mae is the second most profitable company in
the United States, with a 37 percent return on their revenues
in 2003. To give people context, the median return for the 500
biggest companies in the U.S. was 5 percent in 2003. In
addition, according to a U.S. News & World Report article, in
2002, Sallie Mae's chief executive, Albert Lord, pocketed
nearly $34 million in salary, bonus, and stock option payments.
It is important to remember that the student loan programs
were created to provide low-cost loans to students and to
increase access to a college education, not to set a program
where lenders take home big profits on federally subsidized and
guaranteed loans. Rather than forcing low- and middle-income
students to pay thousands of dollars more for their college
loans, Congress ought to completely eliminate excessive profits
to lenders in the student loan programs and use the savings
generated to make college more affordable for students.
We believe that the step that H.R. 4283 takes to reduce
excessive lender profits is a critically important step and
hope to see it followed by more good work to ensure that we are
spending taxpayer revenues on increasing college access, not
increasing profit margins of lenders.
It is troubling that this bill reduces excessive lender
profits and then simultaneously raises the cap on student loan
interest rates. According to projections from the Congressional
Budget Office, this change will raise student loan interest
rates and force student borrowers to pay hundreds of dollars
more over the life of their loans. At a time when so many
students and their families are struggling to pay for college,
we should not be pushing higher costs on to low- and middle-
income families.
In addition to raising the cost of college for the typical
student by thousands of dollars, H.R. 4283 will strip students
of their free speech rights on college campuses with the so-
called Bill of Academic Rights. It is incredibly problematic
for Congress to create provisions that could force our college
and university administrators in doing excessive oversight of
the official and unofficial activities of students. We cannot
have officials in Washington, D.C. regulating the content of
our classrooms. This intrusive oversight disrupts local control
and challenges the mission of educational institutions.
We are also concerned that H.R. 4283 will put the students
and the student aid programs at risk by repealing a key fraud
and abuse protection, the ``90-10'' rule that was enacted more
than a decade ago. Congressional hearings in the 1990's
documented extensive abuses in the student aid programs,
primarily by for-profit schools, which cost taxpayers billions
of dollars. Among the abuses, Congress found that schools set
tuitions at artificially high levels; closed without warning
leaving students with no degree and loan debts; disbursed funds
to ineligible students, and provided inadequate instruction.
In response to the rampant fraud and abuse, Congress
enacted a set of safeguards, including the ``90-10,'' formerly
``85-15'' rule, limited correspondence and telecommunications
courses and prohibited bonuses and incentive payments to school
employees and recruiters to stop the scams. These safeguards
have been essential to curbing fraud and abuse in student aid
programs. A full repeal of this safeguard could once again put
students and the student aid programs at risk.
Last, we support your movement toward the repeal of the
drug provision in the financial aid form, which has already
denied over 128,000 students access to Federal financial aid.
However, a partial repeal is not enough. We must pass a full
repeal to guarantee access to education for all students, and
education is the best rehabilitation.
To close, on behalf of USSA and the students who represent,
we urge you to support changes to the current law that will
make college more, not less, affordable to low- and middle-
income students. USSA supports significantly raising the
maximum Pell Grant, retaining the student choice to lock in a
low-fixed rate consolidation benefit, lowering interest rates
on student loans, protecting student autonomy and retaining
safeguards to protect against fraud and abuse in the student
aid programs.
Thank you.
[The prepared statement of Ms. Wasserman follows:]
Statement of Rebecca Wasserman, President, United States Student
Association, Washington, DC
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------
Chairman Boehner. Thank you.
Dr. Reed.
STATEMENT OF CHARLES B. REED, CHANCELLOR, CALIFORNIA STATE
UNIVERSITY SYSTEM
Dr. Reed. Chairman Boehner, Ranking Member Miller, and
distinguished members of this Committee, good morning, and
thank you for your invitation to testify.
The 23-campus California State University System is the
largest university system in the United States. We have over
409,000 students this year. Access is our mission. We award
almost 5 percent of all the bachelor's degrees in this country,
and almost half of the bachelor's degrees in California. Also,
we have a largely non-traditional student population where 20
percent are first generation college students, 40 percent come
from households where English is not the main language spoken,
and more than one-third of our students work full time. The
average age of our students is 24, and most or almost 50
percent of our students are classified as independent students.
We, the California State University System, look like the
future of higher education and what higher education is going
to look like in 2015 and beyond.
I would like to use my time this morning to briefly address
five key points from my written testimony beginning with the
Pell Grants. The Pell Grant program is essential to preserving
college opportunity for disadvantaged students and is perhaps
the single most important financial aid program in the
California state university. One hundred and sixteen thousand
of our students received over $316 million in Pell awards last
year, averaging $2,700 per student.
Both H.R. 4283 and H.R. 3180 contain provisions to allow
students to receive a second Pell Grant in a given year for
summer study. I want to thank Representative McKeon and Miller
for their support for this concept. Year-round study helps
students complete their academic degree sooner which reduces
student borrowing and allows institutions to use their
resources much more efficiently.
However, we must ensure that schools that serve the most
disadvantaged students are allowed to participate in year-round
Pell. The proposed standard of at least 30 percent of students
graduating within 4 years will not recognize institutions like
the California State University that enroll many non-
traditional students. A standard of 30 percent of students
graduating within 6 years would be a much better way to serve
these students.
Second, campus-based funding formulas. We applaud H.R.
4283's efforts to eliminate the use of a base guarantee in the
funding formula for the campus-based programs. The base
guarantee concept adversely impacts new campuses because it
uses enrollment calculations from the first one or 2 years of a
program's participation. When you start, you start small with
1,000 to 2,000 students but today we have three of those
institutions that are well over 12,000 students.
I should note that the CSU is affected by this proposal
from both ends, having added three new campuses since 1990 but
also have several campuses that would lose resources if the
base guarantee were eliminated. We have talked about this as a
group of presidents, and we support your bill. We just ask that
you accelerate that timetable. We are for fairness and we think
that the distribution ought to be based upon institutional
need.
Third, student loans. H.R. 4283 proposes to gradually
reduce student loan origination fees to 1 percent. I should
note that in the past Representative Miller has also advocated
for the elimination of origination fees. Given the importance
of these programs to CSU students, I strongly support any
movement in this direction.
H.R. 4283 would also increase the amount first and second
year students could borrow while maintaining the aggregate
borrowing caps. While we are all concerned with students'
increase in debt burden, the proposed increases would improve
overall flexibility for needy students and may reduce reliance
on more costly alternative loan programs.
Fourth, early outreach and student support. The CSU joins
the higher education community in support of TRIO and GEAR-Up
as separate and complementary programs. These programs are
vital to preparing under-represented students for college and
they reduce the need for remediation which saves students and
institutions time and money. I have spent many hours in the
classroom in the 7th grade to see our GEAR-Up program working
to help these students prepare for the future that they want to
attend college.
Fifth, Hispanic-Serving Institutions. Last but not least,
issues relating to Hispanic-Serving Institutions are
particularly critical in California, which is the home to
approximately one-third of the nation's Latino population. The
California State University supports many of the proposals of
the Hispanic Association of Colleges and Universities, and
especially one that would create a new competitive graduate
education component for HSIs under Title V.
Again, thank you for allowing me to testify this morning. I
trust that you will feel free to contact me or members of my
staff as they continue this important discussion.
Thank you.
[The prepared statement of Dr. Reed follows:]
Statement of Charles Reed, Chancellor, California State University
System, Long Beach, California
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------
Chairman Boehner. Thank you, Dr. Reed.
Mr. Grayer?
STATEMENT OF MICHAEL GRAYER, RECENT GRADUATE, VIRGINIA COLLEGE,
JACKSON, MISSISSIPPI, ON BEHALF OF THE CAREER COLLEGE
ASSOCIATION
Mr. Grayer. Mr. Boehner, Mr. Miller, and members of the
Committee, it is an honor to be with you this morning. I am
here to share my story of how I achieved the dream of a college
education.
Before I begin, I would like to state for the record that I
am only one of thousands of career college students who have
overcome obstacles to achieve educational goals. In February,
my achievements were recognized by the Career College
Association as one of the seven recipients of the First Annual
Graduate Recognition for Excellence, Achievement and Talent--or
GREAT--Student Awards. My fellow winners and I exemplify what
can be accomplished when determination, commitment, and
discipline are combined with Federal student assistance
programs.
It is a privilege to speak to you today on behalf of the
Career College Association and the more than 1 million students
educated by the for-profit education sector each year.
I was reared in a single-parent home in Jackson,
Mississippi. In the eighth grade, I was enrolled in the Piney
Woods School, a historically black boarding school in
Mississippi. After failing the ninth grade, I did eventually
graduate from high school, which, unfortunately, exhausted my
mother's financial resources. However, making the adjustment
back to my home was difficult because of the financial
situation. I enrolled in a local community college, but the
experience ended after one semester due to financial concerns
and lack of transportation.
Several months later, I landed a job at local cellular
outlet and quickly climbed the ranks to management. Then came
the horrific events of September 11th. Our company's business
declined, leading to the loss of my job. I started selling
cellular accessories to make money and eventually opened my own
cellular outlet store. The expenses were high and the revenue
was low and it also was not personally fulfilling so I decided
to go back to school because I was wasting my time and my
talent, and I needed to make a change.
While watching an ad 1 day about Virginia College in
Jackson and the programs that they offered, and due to my prior
experience, the business program which they had that focused in
accounting caught my attention. I took a leap and enrolled in
Virginia College.
Like many of my fellow Virginia College students, I
received Federal financial aid, including Pell Grants and
student loans. Without this support, I would have not have been
able to graduate from Virginia College with a diploma in
accounting. Federal student aid helps to ease the burden of
many students in my situation when they are faced with where to
go to college. I am blessed to have a family which is
supportive of all my aspirations, including college, which
helped ease some of that burden. Not every student is that
lucky. However, at Virginia College, 80 percent of my fellow
students are eligible for Pell Grants, 82 percent are
independent, and 47 percent have dependents of their own. And
more than half of the students have an expected family
contribution of zero, meaning they are completely dependent on
student aid to achieve their educational dreams.
Some current provisions of the Higher Education Act stand
in the way of assisting students like myself from achieving all
they are meant to achieve. The 90/10 rule, which requires for-
profit institutions like Virginia College to prove 10 percent
of their revenue comes from non-Federal aid, is one example. If
a school enrolls too many of the poorest students, those
students with a zero expected family contribution who could
receive a full Pell Grant and the maximum student loans, that
institution could be in violation of the 90/10 rule.
The separate definition of higher education institution
currently applied to for-profit colleges has outlived its
purposes. Students should not have access denied based on their
choice of an authorized, accredited, eligible institution of
higher education. I am an example of this. I was unable to
succeed at a community college for a variety of reasons.
Virginia College, however, offered the program and support I
needed to graduate from college.
Federal Pell Grants helped me to go to college, but Pell
Grants alone did not cover the cost of my tuition. To do this,
I also took out Federal loans. Higher Pell Grant awards would
help more students like me go to college, and enable many of
them to do so with decreased loan burden. However, for those
students who would not be eligible for an increased Pell Grant,
higher student loan amounts will help them achieve their
dreams.
Most of the students at Virginia College, including myself,
attend year-round and complete more than one academic year of
work in an award year and therefore are able to finish our
education more quickly. If we could get more than one Pell
Grant award in a single year, our loan burden would decrease.
This would be as important for those of us in a diploma program
as for those who are seeking a bachelor's degree.
I am an example of what a career college graduate can
achieve with the help of student aid programs. Since
graduating, I have been employed as a regional manager and the
head auditor for a publicly traded insurance company, Security
National Life. I am also the CFO of my stepfather's three
Subways in Jackson, Mississippi, and I am the founding
president of Trinity Financial Solutions, a tax-preparation and
accounting service that currently employs 15 individuals,
including another graduate of Virginia College.
In closing, I urge you to pass H.R. 4283, the College
Access and Opportunity Act of 2004. And I will be happy to
answer any questions you may have.
[The prepared statement of Mr. Grayer follows:]
Statement of Michael Grayer, Recent Graduate, Virginia College,
Jackson, Mississippi
[GRAPHIC] [TIFF OMITTED] T3631.012
------
Chairman Boehner. I want to thank all of our witnesses for
their testimony and their insight into the Higher Education Act
and how we can improve access for America's students.
Mr. Boyle, what do you hear as the biggest concern from
parents regarding access to higher education?
Mr. Boyle. Anxiety and uncertainty about the process. I
think even for families who are in need of financial aid, many
families are not aware that financial aid options are available
and not taking advantage of them. Guidance counselors are
wonderful people but there are not enough of them. There is
only one guidance counselor for every 491 high school students
on average across the U.S. so there is no way they can reach
everyone. And then for those who have more resources, who may
be college graduates themselves, a lot of scratching of their
heads and saying that, ``Gee, the process is so different now
than it was when I went to college,'' and not understanding and
not having a resource to turn to to guide them through the
process is frustrating to them.
Chairman Boehner. Dr. Martin, you represent financial aid
administrators, your organization gets those who jump through
the hurdles and actually apply and you get to deal with them.
But I think the point that Mr. Boyle makes is that sticker
shock is driving a lot of students and their families away from
even considering the possibility of trying to go to college.
Dr. Martin. I think, Mr. Chairman, unfortunately in the day
that we live today with the media they love to play upon the
most expensive, the highest cost institutions. And every time I
see something about college costs, it always focuses upon that
top 3 to 4 percent of institutions that are the most expensive
in the country. And many families, unfortunately, who are not
as sophisticated and maybe first generation believe that that
is the cost for all colleges. And that is not the case. We have
many fine institutions across this country, all the way from
our community colleges, state colleges, universities, public
and private, and along with financial resources that are
available from local, Federal, state and institutional monies,
that there is a way to help people to do that.
And part of it, I agree with Mr. Boyle, is simply having a
campaign so that families and students understand clearly what
is available and where to go to get straightforward
information. And I think that would be more helpful than
anything I can think of to try to raise awareness about post-
secondary education.
Chairman Boehner. Ms. Wasserman, you said in your testimony
that you were for those provisions in the bill that reduced
origination fees and for the increase in loan limits. How would
you propose paying for that, considering you don't want
consolidation loans to go to a variable rate?
Ms. Wasserman. Well, I think two things. One is, to follow
up on the questions you just asked, I think that there is some
real sticker shock, because the cost is too high for a lot of
institutions. While there is a varying level of cost to
college, I do think the reality is for a lot of working
families and a lot of first generation students the cost is too
high. So when we are looking at this reauthorization, we are
looking at it as an opportunity to really make steps to make
college more affordable and more accessible.
And so for us the reduction in origination fees is
important but keeping the fixed rate on consolidation, making
sure that when someone is applying to school, they know that
they are going to be able to attend school and graduate with
manageable debt that they can then consolidate and pay
manageable monthly payments on.
Chairman Boehner. Do you represent graduates as well?
Ms. Wasserman. This sort of attempt to separate the
students applying from the student that graduates to me just
doesn't make sense. The reality is it is the same person--
Chairman Boehner. Hello, hello.
Ms. Wasserman [continuing]. That is applying for school--
Chairman Boehner. We have Mr. Grayer right here, a
graduate.
Ms. Wasserman. Right, a graduate, yes.
Chairman Boehner. A successful graduate. Mr. Grayer, were
you able to pay your student loans?
Mr. Grayer. Say it again, sir?
Chairman Boehner. Are you able to pay and afford your
student loans?
Mr. Grayer. I pay them, but they are not manageable.
Ms. Wasserman. They aren't manageable, and that is a great
example of the reality; for a lot of us it is incredibly
difficult to be paying our loan debt. And we have to make it
more affordable for students to get through school and then
make payments on that debt and be able to support our economy,
to be buying a home, to be picking a career path that we want--
Chairman Boehner. Well, do you think that it is fair--let
me ask you this question. Do you think it is fair that
according to the GAO, if we continue the consolidation program
at a fixed rate, it is going to cost $21 billion in additional
taxpayer subsidies for graduates over the next 7 years, as
opposed to taking that $21 billion and reducing origination
fees and increasing loan limits to try to increase access for
low to middle-income students?
Ms. Wasserman. Those small provisions, reducing origination
fees from 3 percent to 1 percent, allowing flexibility in the
loan limits, I think are important, but the reality is that we
need to increase the Pell Grant. Real access isn't going--
Chairman Boehner. No, no, the question was do you think it
is fair, because this is the real issue that we are going to
get in. And for those of you that come to this Committee often,
you know that I try to speak English. And the fact is that we
have a budget-neutral environment that we are in and we are
trying to find some way to increase access for low to moderate
income students.
Now I know some of my colleges, and I have read your
testimony, Ms. Wasserman, think that every day is Christmas and
that I am Santa Claus.
Mr. Miller. Nobody thinks you are Santa Claus.
Ms. Wasserman. No.
Chairman Boehner. Santa Claus is sitting next to me, I am
sorry. The fact is that we have to make hard decisions here.
And from a fairness standpoint it seems to me that asking
graduates who may have received the Pell Grant, may have
received a student loan, may have had their interest paid while
they were in school, had a 6-month deferment of any payment
after they graduated, and were then allowed to consolidate
their loans in many cases, I think that we have done, we are
doing an awful lot for those who have been through school. And
I am trying to grapple with the issue of what is fair for
graduates as opposed to incoming students, who may not have the
financial ability to attend a college or university of their
choice.
I have gone way over my time. Mr. Miller?
Ms. Wasserman. Well, Mr. Chairman?
Chairman Boehner. Yes, go ahead, go ahead.
Ms. Wasserman. Chairman Boehner, I think it is important to
look at fairness, but I think it is also about priorities. And
the reality is that with this reauthorization we are asking,
the students are asking for higher education affordability to
be prioritized. And for that we need to not only retain the
fixed rate on consolidation, but we need to do the other things
I mentioned in my testimony, because we find money when we make
priorities. We found money for tax cuts. We found money for
other things in this Congress, and we need to make sure to find
money for higher education.
Chairman Boehner. Mr. Miller?
Mr. Miller. Thank you, Mr. Chairman. It is rather
fascinating that when we get to education we are in a budget-
neutral situation. We are not in a budget-neutral situation on
the military budget, on the agriculture budget, on the public
works budget, on the transportation budget. Nowhere else are we
on a budget-neutral situation, except when it comes to
education.
If we were in a budget-neutral situation, we wouldn't have
a $500 billion deficit this year, next year, and the year
after. So they have obviously decided that it is a higher
priority to reach in, either to the tax cuts or to the deficit,
for all of these other purposes. But it is not a high priority
for the Republican leadership here for the education of
America's young people.
So when we are told to pick and choose between students who
have graduated and students who are in school, with all due
respect to the same students, because when people make a
decision about will I be able to borrow this money, pay it
back, what is the life cycle cost of this, just like anybody in
business would, of this loan, and will I be able to become a
teacher or a nurse or a policeman or a lawyer or a doctor, all
of these things go into that calculation. And you decide yes or
no.
But you don't just all of a sudden because you have
graduated in a situation where those are no longer a matter of
concern. You borrow money over a period of time and you ask
yourself, that is why we have disclosure forms, when you borrow
money against your house, they say the total cost of this loan
is $1,800,000 and you go, ``Jeez, I didn't know this house was
worth that much.''
No, that is the cost of the loan. When you buy your car,
they tell you what the cost of the loan is. And people say,
``Oh, I don't want to pay that much, maybe we ought to be
looking at something else.''
And so the problem with this legislation is we sort of have
a half of a higher education bill. We ought to put everything
on the table. I don't know, maybe the students will think that
the 6-month deferment isn't worth as much as the consolidated
fixed rate and then make some tradeoffs. We keep picking sort
of low-hanging food or what is politically doable here, as
opposed to constructing a program that now is in the middle of
a dramatically escalating cost of higher education to students.
This bill doesn't meet that test in terms of doing that.
You have done some good things in this legislation, but we have
also left out the consideration of a whole range of issues and
topics. And when a student has to think this process is going
to cost me another $5,000, I think it is a difference in
considerations. So that is that.
I want to hear your points on the Pell Grants. I didn't
understand, Mr. Boyle, you didn't address the Pell Grant in
your oral testimony. Can you tell me where your association is?
Are you for the cap that is in this bill between now and 2011
on Pell Grants?
Mr. Boyle. I addressed the year-round Pell Grant.
Mr. Miller. I know, but are you for the cap?
Mr. Boyle. I would like to see Pell Grants higher in the
ideal world, but I think that the basic reality is--
Mr. Miller. Do you support the cap, what is it?
Mr. Boyle. I would like to see it higher.
Mr. Miller. So you don't support the cap?
Mr. Boyle. No.
Mr. Miller. OK. Dr. Martin?
Dr. Martin. I would like to see the $5,800 and say, ``Such
sums thereafter'' if we have to do it that way.
Mr. Miller. So you would not support the cap?
Dr. Martin. I would like to see the flexibility go up when
we have the funds to do it. Grants are the most important
thing. That is our highest priority has been grants.
Mr. Miller. Ms. Wasserman?
Ms. Wasserman. I don't support the caps.
Mr. Miller. Dr. Reed, Chancellor Reed?
Dr. Reed. I testified that the Pell program was the most
important program to the California State University students.
I would like to see it increased.
Mr. Miller. Again, we are in this configuration. Somehow we
can't help those students who need it the most in this
calculation. And I just think that those of us on this
Committee really have got to put together a comprehensive bill.
To put a cap on the Pell at this point when we think we are
looking at continuing escalation of these costs is just to tell
a lot of students at the bottom they are not going to be able
to make it in this situation.
We are starting to see some of this in the California
system already, are we not?
Dr. Reed. We are. We are trying to hold our costs down as
much as we can. We entered into an agreement yesterday with the
Governor that, one, that our increase in fees would be tied to
personal income increases in California, although there was an
emergency provision except when the state's budget goes down.
But then that was even capped at 10 percent.
So there is tremendous sensitivity to what you are saying,
Congressman Miller. And, as I said, the Pell is the single most
important--116,000 of our students are Pell students in the
CSU.
Chairman Boehner. Will the gentleman yield?
Mr. Miller. Yes.
Chairman Boehner. Not all of us are for increasing the
Pell. Now we have a dual process in here for those who aren't
aware that we authorize and then we appropriate. The current
authorization, maximum authorization for Pell is $5,800. We are
at $4,050 as the maximum award that is appropriated. Now for
every $100 increase in the maximum award, the cost to the
Treasury is $400 million. And as this wave of students
continues to approach, that number is going to be a half a
billion dollars for every $100 increase.
Now one of the things that you have all heard me say as
members of the Committee is that I am not for some silly
authorization level that is not realistic. I think it is
duplicity. I think what we ought to do is to try to have the
authorization numbers and the appropriation numbers as close as
possible so that people aren't misled into thinking that we are
going to do something--
Mr. Miller. Oh, we will never be misled again after the
other bill.
Chairman Boehner. Turn your microphone on.
Mr. Miller. We will never be misled again after No Child
Left Behind. Don't worry about that.
Chairman Boehner. Georgie.
Mr. Miller. Well, we won't. We now know that it doesn't
work that way. But reclaiming my time, this Committee ought to
be saying to the appropriators, to the Congress, and to the
nation, this is what an education policy should be if you are
going to take care of the wave of students, the students of
little income who are fully qualified to go to college so that
they can participate, this is what we should be doing. That is
why we are called the policy Committee.
If the appropriators don't want do this, I guess they won't
do it. If the administration, this administration, other
administrations, past administrations don't want to do it,
obviously they won't do it. But we ought to be setting forth in
law the means by which you can achieve an education policy that
addresses the full spectrum of American students and families
that are looking for this opportunity.
As I said, I think you have done good things in this bill.
I don't want this to become a partisan fight. I think this bill
is terribly important. But I don't think that we have in a
comprehensive fashion addressed all of the possibilities where
we can reapportion some of these costs in a more fair fashion.
That is all I am trying to say.
And I don't say that as throwing down the gauntlet or any
of the rest of this. I think that we have got to work our way
through it, but we have got to recognize that this landscape
has changed dramatically. A lot of it, we are struggling to
figure out how we can get the states to belly up to the bar
here with a little bit more responsibility and participation.
So this isn't meant as a broadside. It is just I think you
see some glaring problems here that are going to be huge, and
certainly in the Pell Grant area. We have got do deal with this
now. We have got to deal with it this fiscal year. I just don't
think this bill meets that test, Mr. Chairman, and it is not
because it hasn't been a good faith effort and it is not
because people haven't worked hard. I just don't think we are
there yet.
Chairman Boehner. Well, I would just suggest to my
colleague and my friend that this is the first hearing on the
first proposal. This is the beginning of what will be a very
long process.
Mr. Miller. Mr. Chairman, let me say this for the record.
This is a rather unusual experience in the Congress of late
where we actually have a bill that is in writing and then we
have people come in and publicly comment on it, and I want to
thank you for that, because I think that is the way we will end
up. All of these witnesses have varying views on different
subject matters. That is the manner at which we will arrive at
a bill where people have a chance to pull it apart, look at it,
and then hopefully, we can come back together and take this
advice.
And I would also like to ask unanimous consent to insert in
the record some statements by the president of my alma mater,
Dr. Corrigan, and the National Consumer Law Center, if I might,
who also are testifying to this particular bill.
Chairman Boehner. Without objection, so ordered.
[The information referred to follows:]
Statement of Dr. Robert A. Corrigan, President, San Francisco State
University, Submitted for the Record
[GRAPHIC] [TIFF OMITTED] T3631.027
[GRAPHIC] [TIFF OMITTED] T3631.028
[GRAPHIC] [TIFF OMITTED] T3631.029
------
Statement of the National Consumer Law Center, the Center for Law and
Social Policy, and The Workforce Alliance, Submitted for the Record
[GRAPHIC] [TIFF OMITTED] T3631.024
[GRAPHIC] [TIFF OMITTED] T3631.025
[GRAPHIC] [TIFF OMITTED] T3631.026
------
Mr. Miller. Thank you.
Chairman Boehner. The Chair recognizes Mr. Petri.
Mr. Petri. Thank you very much, Mr. Chairman. As we
struggle to find the resources to meet our obligations to help
provide access to education for students, I wonder if I could
ask the panel members to turn their attention for a minute to
the Direct and Guaranteed Student Loan Programs. About a third
of the loans are direct and two-thirds are guaranteed student
loan programs. The General Accounting Office has reported that
in a number of years, the Direct Loan Program has netted money,
not cost money to the Treasury. The Office of Management and
Budget said of the Direct Loan Program recently,
``Significantly lower direct loan subsidy rates call into
question the cost-effectiveness of the guaranteed program
structure, including appropriate level of lender subsidies.''
And on May 3rd, the Wall Street Journal reported that next
year the Direct Loan Program will, according to its analysts'
estimates, make $500 million for the Treasury and the
Guaranteed Program will cost $7 billion to the Treasury. Now if
that is anywhere near true, we have an opportunity to come up
with some money to meet some obligations in both the loan and
other areas. Would any of you care to comment on the
implications of those figures?
Dr. Martin. Mr. Petri, I am not an economist, but I have
read different reports that have been done throughout the years
about the differences between the Direct Loan Program and the
FFEL Program and which is more costly and which saves the
government money and so on. I don't have a firm answer to that
because I have read too many different things depending on the
spin that has been put on those particular reports, and I am
not smart enough to be able to break that down. I think it is a
good question that you ask.
I do think as an association we strongly support
maintaining both programs for choice. I also think that the
bill that is before us now that looks us and recaptures some of
what many of us believe are some excessive earnings out there
in the programs is a step in the right direction. I know that
my colleagues in the lending community probably aren't happy
with that provision, but I think it is reasonable and fair to
ensure that those dollars are coming back in so that we can
continue to support need-based student financial assistance.
Dr. Reed. I cannot speak for those government figures. I
can share with you, though, that in a 23-university campus, 23
campuses, we support keeping both programs. Eleven of our 23
universities are in the Direct Lending and 12 are in the
guarantee. What we have seen is better services to students
because we do have both, and we think that competition has made
both programs better. Therefore we would support both.
Mr. Petri. In that connection, the President's budget
indicated that it costs taxpayers approximately 69 cents to
lend $100 through the direct program and $10.51 to lend $100 to
a student under the guaranteed loan program. Do you think that
competition makes sense if you could get the $10?
Dr. Reed. I don't know that those are the correct figures.
I know you are quoting something.
Mr. Petri. It is just our President.
Dr. Reed. But I can tell you that both programs work. Both
programs work very well. If there are greater efficiencies, we
should really strive to get those so that we can put those
funds back into students' hands so that they can be the
beneficiaries of that.
Ms. Wasserman. Congressman, I think that that is an
important question and I don't have necessarily a better answer
to that specific question, but I do think that as we ask those
questions we need to ask why--we support Direct Lending, we
think it is a really important program--why is it being
attacked in states like New York and Oregon and California
where you see Direct Lending Programs under attack?
So I think we should be looking at how we can at least
support the Direct Lending Program as we figure out where those
monies are going and how to support both, possibly.
Mr. McKeon [presiding]. Thank you. Mr. Kildee?
Mr. Kildee. Thank you, Mr. Chairman. First of all, I would
like to acknowledge the students who are in the back of the
room for being here today. I know some of you have come at some
expense to your academic needs and your other needs. I really
appreciate it. Your presence itself today provides great
testimony to this Committee. So we deeply appreciate you being
here. Your presence is effective, let me tell you. You are
really the customers of education and we should be focusing on
you. That is our primary responsibility so thank you again.
Mr. Boehner has said that the cost of keeping the fixed
rate rather than changing it to a variable rate would cost $21
billion over 5 years, emphasizing that we should be budget-
neutral. One of the reasons that I guess we have to be budget-
neutral is that this administration and Congress, not with my
vote, gave up $2 trillion of revenue over the next 10 years, $2
trillion. That is $2,000 billion.
We are talking about $21 billion. Now you can't separate
your votes on taxes and your votes on authorizations and
appropriations. I voted against those $2 trillion in tax cuts
because I knew it would get ourselves in these types of
situations where we now have to short change students.
Now I didn't go get a lot of applause back home when I
voted against $2 trillion in tax cuts, but I think it was the
right thing to do. I think our future is students. So the $21
billion, if that is the right figure which Mr. Boehner is
using, is a small part of $2,000 billion, which we gave up in
revenue. We could certainly use some of that revenue to fund
these programs.
So always bear in mind that how a person votes on taxation
is just as important as how the person votes on authorizations
and appropriations. You can't separate the two.
Ms. Wasserman, thank you very much for being here. This
bill sets the maximum Pell Grant at $5,800 and freezes it there
for the next 6 years. That figure, $5,800, Mr. McKeon and I put
in place for this year and the reauthorization in 1998.
That was a very pleasant reauthorization in 1998. President
Clinton used that authorization room, to raise the maximum Pell
Grant from about $2,300 to $3,750. That is what it was when he
left office. President Bush has raised it during his last 3
years 50 bucks, 50 bucks. That is almost an insult, 50 bucks,
where President Clinton raised it from $2,300 to $3,750. We
gave him room, and I think we need more room. We set policy, as
the ranking Democrat of this Committee said, we set policy
here. We look at the needs and then the appropriation Committee
can say how much money we have left and how should we set our
priorities.
But can you expand upon the need to raise the maximum Pell
Grant and the effects it could have over the next 6 years for
students?
Ms. Wasserman. I think it is critical when we look at this
reauthorization, students really do look at it as an
opportunity, an opportunity to create real access. We all, I
think when we went down the line, said the Pell Grant is one of
the most important ways that we are going to create access. For
this reauthorization to keep the maximum at the same level that
it was set back in 1998 is ignoring all the realities we know
to be true. We have more students going to school, more of them
are low-income, tuition is rising, and we are going to be
shutting doors to people from going to school if we don't at
least increase the maximum and create room for the Pell Grant
in the appropriations process to get the full funding that it
needs.
Mr. Kildee. I think we asked all four witnesses, but didn't
get down to Mr. Grayer yet on raising the Pell Grant. Would you
also agree that the Pell Grant cap should be raised?
Mr. Grayer. Say that again?
Mr. Kildee. Would you also agree with the other four
witnesses that the Pell Grant cap should be raised?
Mr. Grayer. Yes, I think it should be raised.
Mr. Kildee. Thank you.
Mr. Grayer. But I would also like to state that earlier I
misunderstood the question, I do not have a problem paying my
debts.
Mr. Boyle. May I add something on the Pell Grant?
Mr. Kildee. Yes, sure.
Mr. Boyle. I think it is important for families to
recognize of course that the Pell Grant is a foundation grant
for financial aid awards. And so the people that are receiving
Pell Grants, when they receive their financial aid award, they
are receiving institution-based aid and institutions have
stepped up to the plate over the last 10 years and provided
additional funds in order to make college costs more reasonable
for families.
And so if the focus is only on Pell Grants and the fact
that they are stuck at a certain level, I think that that can
help to create a misperception by the public that that is the
only source of availability of financial aid. There are many
sources of availability of financial aid.
Mr. Kildee. But the Pell Grant is a basic fundamental help
for those students so they will not be burdened with loan debt.
Ms. Wasserman. Sadly, I think to respond to Mr. Boyle,
instead of a focus only on the Pell Grant, what we are seeing
is no focus on the Pell Grant, right? Because we are not
increasing the maximum authorization at all.
Dr. Martin. Mr. Kildee, could I also speak to this issue?
Because I understand, as someone that has watched this program
since its inception, I realize that we have always had a higher
maximum than what we have ever funded. And I understand Mr.
Boehner's concern about having a mark out there that is
unrealistic and gives false expectations. But I also think it
is important that we have to recognize that this is a
foundation program. And I do agree that we have shifted
dramatically in this country over the last 20 years from
reliance upon grants to student loans. And maybe that is the
reality of what we have to deal with.
But I would say to the Committee, and regardless of where
we set the maximum and so on, and I have my own views on that,
but let me suggest another policy decision that was a part of
our recommendation that I think also addresses and goes to what
the issue is with Pell Grants. Pell Grants is the foundation
program for the neediest students in this country. And one of
the recommendations that we had was is that at least fund the
negative EFC.
So if you have a student that their expected family
contribution is in the negative, and we currently calculated
down to $750, that student should be entitled to that
difference on that negative amount. So if they had a negative
EFC of $500, that means that that student in two semesters
would get an additional $250 the first semester and $250 the
other. That ensures that those limited increases are going to
the neediest students that are enrolled in our post-secondary
educational institutions.
Mr. Kildee. Thank you.
Mr. McKeon. Let me just real quickly ask you each a real
quick question. Would you all like a Cadillac? Mr. Boyle?
Mr. Boyle. No.
Mr. McKeon. What would you like?
Mr. Boyle. I would like a very nice Chrysler car.
Mr. McKeon. OK, we will give that to you.
Dr. Martin. Whatever gets me to where I am going.
Mr. McKeon. Would you like one?
Ms. Wasserman. Accessible education.
Dr. Reed. A Ford.
Mr. Grayer. A Cadillac.
Mr. McKeon. One very honest guy, thank you very much. I
think we are all talking the same way. We all would like to
have a whole lot of things. In fact, I guess if the human
persona, if we ever get to the point where we have everything
we want, then what are we here for then? What is our goal? What
pushes us for more?
We had a study done by the Student Financial Aid Commission
and they showed that over the last 20 years the cost of
education has been going up at four times the rate of people's
ability to pay for it. And that means that by the end of this
decade, 2 million students that we would like to provide
education for are not going to be able to get that. So what we
are trying to do, it would be nice to have unlimited funds, we
do not have unlimited funds. And the Chairman that sits in this
chair I think tried to address that situation very well. We are
given a budget, we have a number that we can work with. And
then we try to say if given that budget, where do we want to
put our emphasis? And when the Higher Education Act was passed
in 1965 the purpose was to provide access to as many people as
possible. And that is what we are trying to do.
So we are trying to put our resources on the front end
rather than the back.
Now there has been some things said about Pell Grants. You
can do a lot of things with numbers. And that philosophy of
trying to help more people have access, yes, the maximum has
been $5,800. It has not changed for the last few years. But we
have been able to give over a million kids more a Pell Grant.
So you have got two things. You can increase the maximum
and pay more to some students or you can keep the maximum the
same and give more aid to more students. But it has gone up
almost in the time I have been Chairman from $6 billion to $13
billion. That is the number. The money is there and it is
helping more students.
Chancellor?
Dr. Reed. Mr. Chairman, may I just say this. You have a
most difficult job, and I want to recognize that, because you
are trying to balance politics, reality, budgets, deficits,
taxes.
Mr. McKeon. And a war.
Dr. Reed. And a war. OK, I don't want to go there.
Mr. McKeon. Except that it was talked about--
Dr. Reed. But that is a part of your reality, OK.
Mr. McKeon. Right.
Dr. Reed. Now what I want to say for America and America's
public policy, I am very concerned, as a person that has spent
about 30 years in higher education and in politics, about what
is happening in America. What I see is if you are middle class
or better, economically a little better off, and frankly not
very smart, your chances of getting a college education are
very good. If you are real bright and economically not very
well off, you have an 80 percent chance of not getting a
college education, because you can't afford it. And there are
more and more haves and have nots in this country. And so what
your public policy debate really is is how do you balance this?
Now, I don't know. Maybe what the authorization ought to do
is to continue knowing that you are not going to fully fund
Pell at any time, but you ought to set the bar so that it
continues to move, so that there is this obligation, hope, that
you can do that. And then, as this country can afford it, you
fund what you can for the largest number of the most needy
students, because they are the ones that need access in this
country.
Mr. McKeon. We have a markup going down at the other end of
the building in the Armed Services Committee, which I also
serve on, and in that Committee we are very careful to
authorize what we think will be appropriated. We work very
carefully. Here it has had a history of not doing that at all.
I am sure at the end of the day we will probably be doing what
you suggest. My time is out and the Chairman has returned, and
I will give him back the chair.
Before I do that, could I just make one quick little--for
Ms. Wasserman, you made a comment about we are giving up our
freedom of speech. I would like you to look at the bill and
read pages 19 and 20 and if you can, for the record, find
anything in there that takes anything of freedom of speech,
would you please insert that in the record, give me an answer
in writing?
Ms. Wasserman. You want an answer in writing?
[Answer not received.]
Ms. Wasserman. I can talk a little bit about it now. I
think that the concern is that it creates this Federal
oversight of our classrooms and our activities, both official
and unofficial, and will restrict our ability--I have read the
bill, and I think that it will restrict the options and things
such as funding, who we are bringing to speak on our campuses.
I think the oversight on this is very problematic. We are
looking at the Federalization of higher education on our
campuses.
Chairman Boehner. We have a series of votes on the floor.
We are going to take questions from Ms. McCarthy, who is next
on our list on the other side. And at the conclusion of her
questioning, we will recess the Committee until approximately
1:15 for the series of votes that we have on the floor.
The Chair recognizes the gentlelady from New York for 5
minutes.
Mrs. McCarthy. Thank you, Mr. Chairman. I am hoping that as
we go through this hearing and work together, that we will be
able to accommodate an awful lot of the issues that have been
brought up today. I also want to say hello to Mr. Goodling. It
is good seeing you in the audience.
Chancellor Reed, I read your whole testimony, and with all
the things that you were saying today, your recommending
addressing the severe nursing strategy, my background is a
nurse, so we have always had this shortage, but now it is at a
crisis level we now face. By allowing mandatory loan
forgiveness for nurses serving in the shortage areas, Mr.
chancellor, I am going to be introducing a bill next week, H.R.
934, Teacher and Nurse Support Act, that encourages individuals
to enter and continue in the teaching and nursing professions
by amending the Higher Education Act to provide loan
forgiveness and loan cancellations to teachers and nurses. To
be eligible, the teachers must be employed full-time for
teachers and teaching for five consecutive complete school
years at a school that is at an under-served school district.
Nurses must be full-time nurses for five consecutive complete
years in a clinical setting or as a member of the nursing
facility at an accredited school of nursing. I will be sending
you that information. I would like your input on it.
But in your testimony also you talked about Trio and GEAR-
Up. I am very involved in those programs back at home, but I
have also been working very hard on Project Grad, which
basically is going into a school in my district that was taken
over by the state and what we are doing is partnering with
businesses. They are putting up the money for scholarships for
these kids if they keep a 2.5 average in leadership skills and
everything else like that.
When we started the program in my district 3 years ago, we
thought we would have a hard time getting these kids together
to get into this program because they have been, the only thing
I can say is they have given up hope most of the time. Now we
are seeing overwhelmingly these kids studying, raising their
marks, because they actually have a chance of thinking about
going to college and that is our step on doing that.
So I hope this Committee will also look at Project Grad. It
is working. We have programs out there that are working and we
are hoping to finally, we are starting at the high school but
we are working our way down now. But with the Trio and the
GEAR-Up programs that are already in the grade schools, we
think that in the end we are going to save an awful lot of
money, especially for the kids that need special services.
So with that, you also talked about students to pursue
course work in careers in the fields such as science,
technology, engineering, and mathematics. And I am hoping that
you might consider also having nurses in those programs. People
don't understand nursing is a lot of math and it is a lot of
science. So I think they should be qualified.
And with that, going with the Pell Grants, that is going to
be a big debate and I know that. All of us here wish that we
could have the money to make sure that every child that wants
to go to college--but I agree with you on the digital divide. A
lot of my schools in the minority area don't even have
computers in the school. Don't even have computers. So with
that--
Dr. Reed. Congresswoman McCarthy, I look forward to
reviewing and reading and commenting on your legislation. One
of the things that we have tried to do in the California State
University in the nursing area is to build partnerships with
our large hospitals who are now providing in a partnership with
us scholarships for nurses who will agree to work for that
hospital for a period of 5 years and they will forgive their 4
year nursing scholarship to our institutions. We have a $15
million agreement between Long Beach Memorial, which owns
several hospitals in southern California, and the California
State University/Long Beach. I would strongly recommend that if
the Federal Government could also be a part of this, you could
do it in a matching, partnership way.
Mrs. McCarthy. Thank you. We will look into that. Does
anyone have any comments? Great.
Chairman Boehner. The Committee will stand in recess until
approximately 1:15.
[Recess.]
Chairman Boehner. The Committee will resume its hearing on
H.R. 4283. And the Chair recognizes the gentleman from
Nebraska, Mr. Osborne.
Mr. Osborne. Thank you, Mr. Chairman. And I would like to
thank those of you for coming and thank you for sticking around
while we had this lengthy series of votes. One thing that I
would like to mention to you that has occurred to me is that
there is a real world cost of money. So if somebody is out of
school, maybe they are a doctor, maybe they are somebody who
has gone into business, and they have got credit card debt
where they are paying 15 percent. They have got a car payment
of 6 or 7 percent, house payment of 6 or 7 percent. And they
also have a student loan payment of 3.4 percent or whatever. It
doesn't take a genius to figure out which one they are going to
pay off and which one is going to ride.
And so it just seems to me that there is a basic fairness
issue here. And naturally we would like to give students a
break forever and ever. And I guess one of the solutions that I
keep hearing here is, ``Well, we just need more money,'' and
certainly that would be great.
But even if we doubled the amount of money, at some point
it seems to me we would still be making a basic choice. We
would be saying are we going to help those who have already
graduated from school or are we going to begin to help more
incoming students? At some point that is the fundamental choice
that you have to make.
And so I guess everybody on this Committee would like to
have more money available, and yet I hear complaints all the
time about the Federal deficit. And so it kind of depends on
what you are interested in. And so you want to maybe double the
amount of money spent on education but you don't want to see
the Federal deficit go above $500 billion. As a matter of fact,
you would like to see it down to zero.
Same thing is true in the military spending. Same thing is
true in Medicare. Whatever you talk about, it is the same deal.
So there is a balancing act here that is going on.
And I used to work with young people, most of whom were
from lower socioeconomic situations. And many of them were
walk-on football players. And they had to rely on Pell Grants
and they had to rely on student loans.
One of the concerns that I had that I would like to ask you
about. Let's say that you doubled the cost or the Pell Grant
from $4,000 to $8,000, do you feel that all of that would go to
the student or do you feel that it might result in higher cost
of education to some degree? I realize it is not a one-to-one
relationship, but it seems like the more the Federal Government
spends, the more rapidly the costs accelerate. And that has
been a concern. And I would like to have you comment on it.
Maybe I am totally out of touch with reality, but maybe there
is something to that.
So any or all of you that would like to comment on that, I
would appreciate hearing from you.
Dr. Martin. Mr. Osborne, I have seen a couple of analyses
previously that have asked the very question that you have just
raised, and that is, if we increase grant aid, does it
correspondingly result in an increase in the cost of education.
And the studies I have looked at would suggest that it does
not. And I think probably in large part because of what you
said, that there is not a direct correlation because it doesn't
go to all students.
I think what Mr. Boyle said earlier this morning in the
testimony is also important to note. And I think one of the
things that we have observed, and I think he correctly pointed
out, is that unfortunately in many of the states their policies
toward low tuition, particularly in public institutions have
shifted. And many of them have moved now to a policy of either
modest or high tuition along with additional student aid to try
to make up to keep access available for those students. And
while there is certainly growth in many of the state programs,
unfortunately states with the other pressures and so on, most
of them have not been able to keep up. And so that probably has
contributed as much as anything to part of the cost.
In terms of the first part of what you were talking about,
you are correct. All of us from time to time have to make very
difficult choices because we have limited dollars. We will
never have all of the money that all of us would like to have.
And therefore if we are going to have to have limited
dollars, the question is is what are the priorities? And I
think the thing we have wrestled with this within my membership
extensively. We are very, very concerned about the level of
indebtedness that many of our graduates have when they leave
our institutions. On the other hand, we also would like to
believe, and strongly believe, and there is evidence to support
this, that those students when they graduate are in a much
stronger position and are able to earn more money over a
lifetime without that education.
And so it is a very positive investment. Our main concern
is trying to make certain that with the limited funds that we
have the first priority ought to go to keep the doors open for
future students who without those funds would not be able to
enter those institutions at all and even avail themselves of
that opportunity.
I recognize, I fully recognize that when you talk about
changes or something and somebody says, ``Hey, maybe I am going
to have to pay an additional $5,000 on my loan,'' we are
talking about an amount there that is going to be amortized
over about a 20-year period. And when I figured that out, it
comes out to about $23 a month difference in terms of the
payment for that person.
Now I am sorry that that person has to do that, and all
things being equal, I would rather they don't have to. But that
is about what our average graduates were talking about in order
to ensure that we have the money at the front end to do some of
the improvements, some of the enhancements to this bill of
trying to make the loan programs fair and better, reducing the
origination fees, giving students the amount of money so they
don't have to go out and borrow through private loan programs,
through separate initiatives, giving students and addressing
issues on repayment, when they are having problems with that so
that they have got additional time. It takes money to do those
things, too. And I think that has been the focus of the bill. I
would like to see it expanded even further.
One of the things that I like very much about Mr. Andrews'
bill is also on the back end with the consolidation, he
provides some sensitivity depending on the relationship of your
student loan to your income as a debt, to kind of look at that,
to try to be sensitive. But it also doesn't allow for somebody
that is making $100,000 to suddenly lock in at a very low rate.
And so we have got to find a balance here, and I think you are
exactly correct.
Dr. Reed. Congressman Osborne, I support what Dr. Martin
says. In this country today if you are a high school graduate,
your lifetime earnings are projected by the Department of
Commerce and Labor to be about $1.2 million over your lifetime.
If you are a college graduate with a baccalaureate degree, your
earnings are going to be $2.1 million. So therefore those
earnings are about a million dollars more. If you have to set
priorities, which you do, our priority is to help those
students that are in school or are going to come to school. If
in the loan consolidation business, you are going to have some
savings, then let's put that into the students that are in
school and help them.
No. 2, back to what I said earlier, I would like to see
this Committee talk a little bit more about how can we assure
that Pell loans consolidation, whatever you are going to do,
helps the lowest income students, the students whose families
struggle the most. Now that is very difficult and ``fair'' has
lots of different definitions as to where you draw that line.
But I think that focus needs to be debated and talked about.
No, I don't think increasing Pell will drive the cost of
higher education up. There is a big spotlight on higher
education. In California I can tell you that we went almost 10
years and never increased fees a penny, actually we reduced
them 10 percent in 1997 and 1998 when I first came to
California.
Now here is America's problem: health care, corrections,
all of these competing matters, transportation in the states
are more competitive for the state revenue than they have ever
been before. Therefore, higher education has a much harder time
than they have ever had. So it has been maybe a little too easy
to shift some of the state's responsibility. It is really the
state's responsibility to pay for access to higher education
and not shift as much in fees to students as the states have
done in the last four or 5 years.
Ms. Wasserman. Congressman, I have to say that I think that
this talk about separate priorities, the students coming in the
door or the students that have graduated, again, I will say
that I don't think that it makes sense, because I think then we
are getting them in the door under false pretenses. If then
they are saddled with unmanageable debt when they leave, then
that isn't access. And pretending we are prioritizing the
ability to get people in the door, it is just a false pretense.
The reality is they won't be able to come in the door
because they are going to know that they cannot sustain those
payments when they graduate. It will discourage the same
students that are worried about applying now because of sticker
shock from worrying about how they are going to make those
payments, how they are going to get through school. And I think
that any proposals we look at, we need to look at any of the
needs analysis proposals to make sure that they are really
going to work for low-income students. So that means that if
you are making a salary of $23,000, that you are not going to
be stuck with, again, huge unmanageable payments.
Mr. Osborne. Well, my time is up and I will yield back, but
I would like to say also that the argument is true, we are in a
static economy but we are in a dynamic economy, so incomes rise
and fall, taxes, interest rates rise and fall, and it doesn't
seem to be wise to me to lock in something in a dynamic
economy.
I yield back, Mr. Chairman.
Chairman Boehner. The Chair recognizes the gentleman from
New Jersey, Mr. Andrews.
Mr. Andrews. Thank you, Mr. Chairman. I would also like to
thank the panel of witnesses for an outstanding job and for
your patience in waiting while we had a series of votes.
I have never been involved in a legislative process that
was worth doing that did not involve compromise. And I have
never been involved in a compromise that didn't make someone
unhappy about something. And I think the choice that is in
front of this Committee is whether we are going to leave the
status quo in place, which I think is unacceptable because it
is not dealing with the stress and anxiety of rising college
costs and shrinking affordability, or whether we are going to
find the most equitable and intelligent way to reach a
compromise.
I think, and I think Chairman Greenspan agreed when he was
here a couple of weeks ago, that a better choice would be for
us to extend Pell Grants and pay for it by scaling back a part
of the tax cut. Unfortunately--or fortunately, depending on how
you look at it, that is not a decision within the purview of
this Committee. What is within the purview of this Committee is
what to do about the student loan law. And I do hear consensus
on the panel today that reducing or abolishing origination fees
is a worthy goal. I think I hear consensus that expanding
options for student repayment by income contingent repayment
and other flexible repayment mechanisms is a worthy goal. I
think I hear a consensus that offering loan forgiveness to
people who go into critical professions such as nursing and
teaching is a worthy goal. All of those worthy goals, each of
those worthy goals costs money, and it is our job to balance
off how to do that.
I agree with the very difficult and controversial
proposition that switching from fixed rate consolidation to
variable rate consolidation is the right choice. I think it is
the right choice. I only think it is the right choice if the
$20 billion or so that is saved by making that switch is
dedicated to helping students. And I would choose to dedicate
it by abolishing origination fees on subsidized loans and I
would choose to dramatically expand repayment flexibility. And
I would also choose to means test the question of who gets a
fixed rate and who doesn't. I think a compromise that we need
to look at is whether certain students who have high debt and
low-income should still get a cap on the interest rate they
pay, and I think we should also look at other methods of
achieving that same goal.
One of the areas that I did hear some division of opinion
from our students or student and recent graduate I wanted to
ask them about, because I think your groups are ultimately the
ones who matter most. I think I heard Ms. Wasserman say that
she and her group are very concerned about raising borrowing
limits because it could put people further into debt. And I
heard Mr. Grayer say that he supports higher loan limits so a
student can choose to borrow more, and I assume he has to. I
think I also heard Mr. Grayer say he would rather there be more
grants but if a student has to borrow, the student has the
right to borrow.
Ms. Wasserman, why is Mr. Grayer wrong?
Ms. Wasserman. I think that we are working within a
political climate right now where we are seeing a bill right
now that has no increases in the Pell maximum, right? And under
this bill, I am looking at the prospect of raising loan limits
is really frightening at the idea of adding to the -- we are
talking an average student debt of $18,900.
Mr. Andrews. Can I give Mr. Grayer a chance to -- Mr.
Grayer, do you think that you should make the choice as to
whether to borrow more money or someone else should? Do you
think that you should make that decision for yourself or do you
think that we should do so by putting limits in the law?
Mr. Grayer. I think it depends personally on the
individual's personal financial situation, because the decision
that I will make based on my finances is not necessarily the
decision that another student may make based on their finances.
So I think then, too, when you have a difference in markets,
depending on where you are located, I think that personally I
would not give a definite answer to that question but say the
issue should be a case by case.
Mr. Andrews. Mr. Grayer also testified that he believes
that the repeal of the 90/10 rule would permit more schools to
open their doors to low-income students. And, Ms. Wasserman,
you oppose repeal of the 90/10 rule. Who is right, you or Mr.
Grayer?
Ms. Wasserman. I think it is important not to pit myself
against Mr. Grayer. Mr. Grayer has--
Mr. Andrews. But, ma'am, you took two different positions.
You pit yourself against him. Is he right or are you right?
Ms. Wasserman. I think that his story is very important
when we look at the reality; this is an important story, to
look at how someone was able to get through this college
process, which is difficult and hard to finance. And I think we
heard that. I think the repealing of the 90/10 rule, when you
look at the abuses of the past and the scams of the past, is a
dangerous step. And that we do not want our for-profit schools
entirely financed by Federal funding. I think that is what we
are saying.
Mr. Andrews. Are the students at Mr. Grayer's school
members of your association?
Ms. Wasserman. They are not.
Mr. Andrews. Did you poll the members of your association
for their position on this issue?
Ms. Wasserman. Excuse me?
Mr. Andrews. Did you poll the members, the million members
of your association, for their position on this issue?
Ms. Wasserman. We don't poll them. They vote and give their
opinion on how they feel about for-profits being federally
funded completely. And we are very worried about the abuses and
scams in the past and figuring out how to create opportunities
now.
Mr. Andrews. Right.
Ms. Wasserman. And create real access.
Mr. Andrews. Are there members of your association who are
students at proprietary schools?
Ms. Wasserman. No.
Mr. Andrews. OK, thank you very much.
Mr. McKeon [presiding]. Thank you. Mr. Ehlers?
Mr. Ehlers. Thank you, Mr. Chairman. And let me just
briefly before I get into my questions yield for a moment to
the gentleman from Georgia for a unanimous consent request.
Mr. Gingrey. I thank the gentleman and apologize for not
being here for most of this very, very important hearing, which
I am intensely interested in. Of course we are in the process
of marking up the 2005 Defense Authorization Bill, and so you
guys know how busy we are there.
Mr. Chairman, I would like to ask unanimous consent to have
a statement from the American Medical Association in support of
H.R. 4283 submitted for the record, if there is no objection.
Mr. McKeon. No objection, so ordered.
[The provided material follows:]
Statement of the American Medical Association, Submitted for the Record
[GRAPHIC] [TIFF OMITTED] T3631.014
[GRAPHIC] [TIFF OMITTED] T3631.015
------
Mr. Gingrey. Thank you, Mr. Chairman.
Mr. Ehlers. Reclaiming my time, I would like to just ask
about a feature that there has been some discussion on, and
that is the benefit for the 2 year interest only repayment
option for borrowers if they request it. And I want to evaluate
whether this is a positive or a negative thing. I will start
out with Dr. Dallas Martin, and anyone else that wishes to
answer may do so.
Dr. Martin. Mr. Ehlers, let me say that I think we find
that many times students when they first leave school are
moving to a new location, establishing a new career, there is
obviously cost associated with that of getting an apartment,
maybe buying a new wardrobe that is a little more appropriate
for your new career than what we were able to wear in college.
In many cases, students may be buying a new automobile or
something for transportation, et cetera. And then on top of
that they also have their loan payments, not to mention the
deposits that they put down for utilities and so on and moving
into a new place.
And so it is very difficult sometimes getting off to that
start. But we have found that if you give students, and
technically in the law currently there is a provision that if
you are behind you can go to the whole of your loan and talk
about forbearance. The problem is many students don't realize
that that option is available to them and so subsequently they
get into trouble, begin to default before they learn that there
was an option to help them out of this. Now they are not trying
to be irresponsible of not repaying their debt. They just don't
have the means.
And so we think that by making this up-front, making
certain that every student knows that he or she is available
for this option, doing it in a way so that they are least
paying the interest on the loan so we are not going to end up
with negative amortization, we think that that will be a
positive benefit to assist students as they are coming out,
getting established and then having the means to take over
their credit responsibilities in a reasonable way.
Mr. Ehlers. Thank you. Does anyone else wish to comment on
that?
Dr. Reed. I would say to use that very sparingly, to be
very careful, because that is just going to add additional debt
later on for the students, and so being very careful I think is
best.
Mr. Boyle. I would agree, and I think it speaks to the
issue of financial literacy, which all the studies show that
there is a tremendous degree of financial illiteracy among
college students and graduates. And so without proper
information about what interest only repayment means and advice
on that, people get themselves into trouble. And with credit
card marketing on campus, students may be doing interest only
repayment and not know it by paying just the minimum payment on
sometimes multiple credit cards that they take out and be
digging themselves into a financial hole.
Mr. Ehlers. I would just have two responses to that. First
of all, once again, to illustrate the need for some improvement
in our elementary and secondary education programs to increase
financial literacy. Second, I would be very interested to find
out whether the students' financial illiteracy is any greater
than that of the population at large. And I suspect that it is
not. That they are probably better off than many of their
parents on that score.
Dr. Martin. I would suggest, Mr. Ehlers, that if you looked
at all of the students that have taken advantage of the current
climate to consolidate their loans with such low interest
rates, it suggests to me that they are pretty savvy when it
comes to financial literacy, maybe more so than most of our
parents--not our parents, but we as parents.
Mr. Ehlers. I suspect you are right. One other comment that
I would like to enter into the record at this point on the
previous discussion. And I have served as a professor for some
22 years and frequently would have students come to me and say,
``Well, I am not sure I can continue in school.'' And I would
say, ``Why not?'' ``Well, my debt is getting too large.''
And I proceeded to give them a short sermonette to the
effect that I always encouraged them to continue in school, I
encouraged them to borrow whatever they were able to borrow
under the student loan program. I said it is the lowest
interest rate you are ever going to have and it is the best
investment you can make of any money you are ever going to
have. And once you get out of school and graduate you may have
$10,000, $20,000 in loans. That is probably the lowest debt
level that you will have for 20 or 30 years because you are
going to buy a car and you will probably owe $10,000 at least
on that, mortgage for a house, $100,000 to $300,000. It is
going to make your student loan look so minuscule by comparison
and particularly the interest rate. And it is the only
investment you can make that is going to help you pay off all
your other loans.
And I think we just have to keep that perspective here. The
student loan is the best deal that anyone can ever have because
it increases their learning power and it is a lower rate than
almost anything else. And let's not lose sight of that as we
discuss the loan picture.
Thank you, Mr. Chairman. I yield back.
Mr. McKeon. Thank you. Mr. Bishop?
Mr. Bishop. Thank you, Mr. Chairman. And let me thank the
panel for your comments here today.
I have a rather broad question, and I should say that I
come at this issue from the perspective of someone who spent 29
years as a college administrator before I came to the Congress
and I spent seven or eight of those years as the director of
financial aid. And my question is this, the fundamental premise
of this bill is that it is a revenue-neutral bill. So my
question is primarily to Mr. Boyle and to Dr. Martin and to Dr.
Reed is in terms of how we order our national priorities, do
you accept that fundamental premise? And if you don't, why have
you not come to us telling us that this is simply unacceptable?
Why have you not come to us and tell us that higher education
deserves to be a much higher priority than a revenue neutral
proposition?
And then I guess my more specific question is we have heard
two statistics. Dr. Reed talked about a well-qualified student
of limited means has an 80 percent chance of not going to
college. And a Federal commission estimated that because of
financial considerations, over four million people will not
have access to higher education over the next decade. And so my
specific question is do you believe that this bill as currently
written is going to appreciably cut into either of those
numbers? Start with Dr. Martin?
Dr. Martin. Mr. Bishop, if you take the assumption that
this bill as written being revenue neutral, does it move the
bar up to help students? The answer is, at least in looking at
the Title IV programs, the answer is yes, I think there are
some improvements. Does it go to where we would like to see it
go? Absolutely not. Do we believe that education ought to be a
higher priority in this country? Absolutely. No doubt about it.
We have talked about this for years in terms of trying to deal
with this and so on. But you and I live also in a realistic
world where there are changes in budgets and deficits and
politics and all the other kind of things that deal with it.
Let me say, though, that this Committee, which is an
authorizing Committee, and this is an authorization bill, in my
opinion there are two areas in this bill that this Committee,
if it wishes to direct more money to education, you can either
make changes along the lines of some of the other things that
we have talked about and expansion, including Mr. Andrews'
bill, on the loan programs because they are entitlements and
will be funded. You can add real benefits to students, both in
terms, conditions, limits, all the other things that you want
to debate.
You also in my opinion, while you can set a Pell Grant
authorization level at a certain level, we still have to go to
appropriations and get it. The proposal that we put forward on
the negative expected family contribution however if it was
enacted would take that money from the current appropriations
that are out there and it would least direct that to the
poorest of the poor. Those are two areas where I think this
Committee can make a difference.
Mr. Bishop. May I interrupt for a second?
Dr. Martin. Yes, you may.
Mr. Bishop. With reference to assisting the poorest of the
poor, which I would wholeheartedly endorse, how would you
characterize or what is your position on the proposal in the
bill to make at least a portion of Pell merit-based?
Dr. Martin. My association has not taken a formal position
on this, but let me give you a personal opinion, if I may.
I think all of us want to try to ensure that students in
high schools today are taking a rigorous curriculum to make
certain that they are properly prepared to pursue post-
secondary education. I think the idea of trying to recognize or
provide some benefit to those students that do that is fine.
My objection is, and while I understand that probably if
this is enacted the state Scholars Programs will grow in the
other states, but currently it is only in effect in 13 states.
If I had my choice, what I would do is I would say this is
that rigorous curriculum, which the state scholars support, and
I would say to children in high schools across this country
that if you achieve that curriculum and come out of it
regardless of what public school districts you are in or what
state or whatever, you are entitled to that additional bonus
just like everybody else. And right now it will be limited and
also you can have somebody with a minimum Pell Grant that would
be eligible for a maximum $1,000. Even under the proposal that
I have proposed of the negative EFC, the maximum that any
student could get, which are the poorest of the poor, would
only be $750, because that is where we have the negative EFC.
Dr. Reed. Congressman Bishop, one, there are many, many
good things in this bill, and so we do support this bill. And I
hope that you do that in your way of compromise. So it is a
good bill for the many good things that are in there.
No. 2, in part of my work life I was the chief of staff to
the Governor of Florida for 8 years, and that was probably the
single best education I ever received. What you are asking us
who are biased, yes, I want you to put everything that you can
in higher education. But as elected officials representative of
this nation, I also know that you have to balance that because
there are a lot of people who need health care. There are a lot
of children who need services, a lot of elderly. I want to ride
on good highways. I live in Los Angeles and you know what that
is like.
So it is a balance. What I worry about a lot is that higher
education is about second or third on everybody's list and it
is not first. Yes, I would like to see it be first because of
what I think it can do for the citizenship of this country. But
I realize that you have got to balance that and I trust you all
in that balance.
No. 2, the merit part I would oppose. The merit-based
financial aid programs in this country have grown in the last
10 years at an enormous rate. I have a record, if you want to
go back and look at it, I opposed the merit-based financial aid
program in Florida when I was chancellor. The only thing that I
can say today is all of my friends now are calling me up
saying, ``You said so, you were right. What a mistake.'' And
what it has done it has tied the hands of the legislature. And
I don't want to see you tying your hands the way those programs
were tied.
Now, coming back, figuring out what the gentleman said
earlier about how we can help the most needy students is the
most important thing that you can do because if we can help
them and help them get an opportunity to get a baccalaureate
degree, then they will help this country by paying more taxes
and contributing more to their communities.
Mr. Boyle. On the issue of merit-based versus aid based on
need, this week's Chronicle of Higher Education has a survey of
a 1,000 parents and 34 percent right now are claiming that
their families are receiving merit-based scholarships. But of
those parents who are on their way to college, doing my math
here, 72 percent expect that their son or daughter will be
getting an academic-based scholarship. And so part of I think
our collective role is to educate families that we all have
very special children but they may not be eligible for
academic-based scholarships.
And I think that returning to the system of 20 years ago
where aid is based on need and it is much cleaner and it is a
much more understandable system and if someone is able to meet
the entrance requirements of a university, then they should be
able to get the aid that they need.
Mr. Bishop. Thank you, Mr. Chairman.
Chairman Boehner. The Chair recognizes the gentlelady from
Minnesota, Ms. McCollum.
Ms. McCollum. Thank you, Mr. Chair. I have been reading the
bill so I have a couple of questions, but I think I am going to
basically direct them to the Chair to get me some information.
But I think you also might have some light to shed on these
issues.
So, Mr. Chair, I have been going through here and I have
noticed numerous, numerous reports that the colleges have to be
filling out to comply with, academic achievement, information
to the public, and there are consequences to them for not
fulfilling these reports. Many of these reports are in statute.
Some of these are an expansion to statute. And I am wondering
if we ran any kind of cost analysis on average what it is going
to cost the higher education institutions to comply with this
law?
Chairman Boehner. There are no new reporting requirements
for institutions of higher education until 2008 and only for
those institutions who have increased their tuition at more
than twice the rate of inflation for the 3 years leading up to
that.
Ms. McCollum. Thank you, Mr. Chair. Reclaiming my time,
2008, so because it is a projected increase to the colleges for
doing these reports in 2008, I am just to ignore and not have
any information on what it is going to cost the colleges?
Chairman Boehner. These are for only institutions who raise
their tuition and fees at more than twice the rate of
inflation.
Ms. McCollum. Thank you, Mr. Chair. On the GAO study,
because I wasn't part of the working group that put this bill
together--it is on page 29 of the bill--it says that ``They
shall conduct a study of policies and procedures of
institutions increasing their costs.'' That is one of the
studies I referred to. There is nothing in here I see that asks
GAO to state what the individual states have done where the
colleges are located, if they have cut their support for
financial aid or their support to the institution. And I have a
question as to whether or not under--well, are books included
in here with what is going on with textbooks? Because I hear
that from students all the time with what is going on with
their textbooks. Is that considered part of the total cost of
the education under the report?
Chairman Boehner. I think we are only looking at tuition
and fees.
Ms. McCollum. Well, you need the books to take the class. I
think maybe we need to take a look at that. And if we are
really going to be holding the colleges accountable for what is
happening or the technical schools accountable for what is
happening to their tuition, I think we have to look at what the
states are doing.
The states have been negligent for the large part, and
maybe Dr. Martin would like to expand on this some more, for
being involved. I know in my state 20 years ago, when the
Federal Government was on hard times and the state was on hard
times, we cut higher education. And they talk about all the
increases on higher education. Well, folks, all the increased
on higher education don't match what has happened in the last
20 years with inflation to higher education.
So we are not talking about where the base should be had it
never been cut. And I think that holding schools accountable
for fees that they can control is legitimate. When the state of
Minnesota cuts higher education 14 percent, the U of M is
opening its doors to the freshmen class and for those returning
6 months later, it is kind of stuck. And I don't think that
that is fair not to include that, and maybe someone from the
panel would like to elaborate on that.
Chairman Boehner. Well, if the gentlelady would yield, and
I won't take this off your time, but I agree with you entirely.
The states for the last 25 years have systematically shifted
their responsibility in higher education from themselves onto
the backs of the Federal taxpayers. And if you look at the
explosive growth both of Pell Grants and of student loans, you
will see that we are picking up a far greater share and it
hasn't slowed down at all, especially over the last 10 years.
And if you look out over the next 10 years, you will see that
the Federal Government's share of the cost of higher education
will continue to explode exponentially.
Anyone on the--
Ms. McCollum. Mr. Chair, you made my point why we need to
include it. Dr. Martin?
Dr. Martin. I think Dr. Reed made this point earlier in
terms of doing it, and he probably has more experience about
this than I do because of his position, but we have seen a
shift in terms of many states adopting policy positions that
have moved from a philosophy of several years ago of low
tuition, particularly in state-supported colleges and
universities, to modest to middle to even high tuition with the
idea that we will make the difference so that we still have
access by increasing out state aid programs. The unfortunate
part of that is is as we have gone into that policy, in many
cases the state aid has not kept up proportionately to the
other costs.
And you are right, when we cut back on that and change
that, I agree with Dr. Reed that there are a lot of competing
priorities out there in statehouses across the board. And quite
honestly higher education frequently is on the tail end of
those priorities, unfortunately. And the reason is because they
still recognize that many people will still pay the price
because of the benefits and so they can get away with raising
tuition and fees in public institutions easier than they can in
not addressing other kinds of priorities that the state has,
including many of the unfunded Federal mandates that have been
imposed on them even by the Federal Government.
So it is a balancing act. It is very, very difficult. And
we recognize it. But I would agree with you on this that if we
don't begin to pay some attention to doing this, as we keep
going in this kind of imbalanced direction, and we keep
depending only upon credit financing to do this, to finance
higher education, we are going to do a terrible disservice to
this country, and particularly when you look at the changing
demographics and the wave of people coming forward. And if we
do not spend the resources to provide education and skills to
those people, this country will lose the prominence and the
richness and many of the virtues that we have today.
Chairman Boehner. The Chair recognizes the gentleman from
Georgia, Mr. Isakson.
Mr. Isakson. Thank you, Mr. Chairman. Dr. Reed, I apologize
that I was not here to hear personally your testimony or that
of the other panelists; however, I read your testimony and I
wanted to particularly thank you for your comments with regard
to distance education. I thought you put it very succinctly
about the environment we were in in 1998 and the one we find
ourselves in today, which is a sea change.
I would like to ask you, however, are you comfortable with
the accountability and administrative procedures governing
distance education today as it now exists?
Dr. Reed. Well, if I said no I would be indicting myself.
And I don't want to do that. Yes, I am. It can get better. It
will get better, because we are kind of learning as we are
doing, and I think that that is what we will need to continue
to do. And I think, back to Congressman McCollum's first
statement, this Committee could look at all of the reporting
that is required by those of us in higher education and help
lower some of the administrative cost burdens but also keep in
place the kinds of accountability that we really need to have
and report to you so that we are responsible and accountable
for your resources.
Mr. Isakson. Thank you. I noted your comment about the
accrediting agencies, too, and although you included them in
the same statement with yourself, my observation is they have
come light years in the past two or 3 years in terms of
accreditation of distance learning and are really up to speed
now I think compared to where there was some reluctance to even
address it five or 6 years ago. Is that correct?
Dr. Reed. That is correct, and we will see that get better.
I am proud that the Western Association of Schools and Colleges
has led that effort but so have all the other regional
accrediting organizations really improved in the last couple of
years.
Mr. Isakson. And my last question, and pardon me for
concentrating just on that subject but it is one I have had a
great interest in for some time, I have felt three or 4 years
ago when we really started investigating this that this would
allow us to reach so many of what I call non-traditional
students and also had the distance learning and also had the
promise of alleviating some of the enrollment and some of the
overcrowding problems experienced in some of our colleges and
universities. Is that in fact now a reality?
Dr. Reed. That is in fact a reality. I have pushed as hard
as I can as the chancellor of the university system to see our
faculty maybe only have to have their students come to class
instead of 3 days a week, 2 days. And that other day through
the use of technology, through the lab, through video, that
they could then use that to be a part of their learning
experience and enrich what they have done. This morning I was
sharing another story about distance education. The movie
industry in California is desperate for animators. And not to
make cartoons but that is the way movies are being made. Well,
all of the industry came together and asked the California
State University to help them out and if they would contribute
money, but what they have ended up doing is contributing staff.
And so the folks at Disney, the Spielbergs, have donated
their staff, who by television, by computer, by the Web are
teaching students in San Jose today how to be animators. And
they are very successful. They are producing more animators
than some of the institutions in the LA Basin and are very
proud just because of the kinds of students that San Jose has.
So it is working and it can get better.
Mr. Isakson. Well, my last, and this is really a comment,
we were doing a lot of the stuff on the 15 percent rule and the
12-Hour rule and some of the other things that were impediments
really for distance learning. We had a lot of faculty members
at universities who were very reluctant to embrace it because
of the relationship with a student and not having the face to
face time. I recently had a professor at a university in
Georgia comment that he had fought it for so long because he
felt like it deprived students of access until he remembered
that when he got home at night he would just take his phone off
the hook and his students couldn't get him but he cannot deny
his e-mail, they can get him any time they want to.
So I thought that was an interesting comment in terms of
the faculty and student relationship.
Thank you, Mr. Chairman.
Chairman Boehner. The Chair recognizes the gentleman from
Massachusetts, Mr. Tierney.
Mr. Tierney. Thank you, Mr. Chairman. I thank all of you
witnesses for your testimony today. I apologize for missing
some of it, but I found it to be very forthcoming and direct
and helpful.
Dr. Reed, because you are involved in managing a campus I
wanted to ask you a question. We talk in this bill about
tuition hikes compared to the Consumer Price Index. I have a
little experience with higher education situations and it
strikes me that the Consumer Price Index and what it measures
in terms of products in the basket might not even be close to
what institutions experience, energy costs, security,
technology, and facilities.
I had an alternative with other members here, Ms. McCollum
and others, that would have asked the Department of Education
to establish a higher education price index that we hoped would
be more reflective of the kinds of costs that colleges and
universities experience. Do you think that is worth pursuing?
Do you think there is in fact a disparity between the CPI and
the real index that would affect colleges and universities?
Dr. Reed. I do think it is worth pursuing. I don't know
what all is included in the price index of higher education.
Mr. Tierney. But do you think it is different than the
regular--
Dr. Reed. But I do want you to know that I entered into an
agreement yesterday with the Governor of California, as my
colleague at the University of California did, where we have
agreed to tie our future fee increases to a personal income
increase of the citizens of California.
Mr. Tierney. So if I am correct, your tuition can't
increase any more than the rate of income?
Dr. Reed. Personal income.
Mr. Tierney. That was at a mean rate of income or an
average?
Dr. Reed. It is an average.
Mr. Tierney. So when Mr. Schwarzenegger makes another
movie, that thing can go up like crazy?
Dr. Reed. Yes, that is right.
Mr. Tierney. I think you got taken there. I don't want to
say anything, Dr. Reed, but you were taken to school on that
one.
Dr. Reed. And there was a provision in there if there is
some huge emergency we can increase fees up to 10 percent but
it is capped at that. But the real focus was back on the tie to
the personal income.
Mr. Tierney. Thank you. The campus-based aid issue, and I
open this up for anybody who wants to address it or whatever,
does anybody have any evidence that institutions are currently
getting any part of the campus-based aid to students who do not
have an unmet need?
Dr. Martin. No, the students that receive the campus-based
aid have to be eligible to meet the criteria, Mr. Tierney. So,
no, there is no student getting money now that is not eligible.
Mr. Tierney. That is my point. So when I read this bill I
have the real concern that it is going to result in some
students not getting the aid they need and others getting aid
that they need. And it seems like we are getting into a beg
your neighbor type of situation on that. So I just wanted to
clarify that point and make sure that we are all on the same
page.
The proprietary schools issue. There is a lot of concern
that we put in protections against fraud and abuse some time in
the 1980's because of the scandals that were out there and now
there is some indication in the National Student Loan Data
System that in 2001 reports that proprietary schools for that
year, 2001, had an overall default rate on student loans of 9
percent contrasted with a 5.3 percent for public colleges and
3.5 percent for private colleges. Should we still have a
concern about the possibility of a fraud and abuse in
proprietary schools if we abolish the 90/10 rule? And if we do
still have that concern and if we still do abolish the 90/10
rule, what other protections might you recommend we put in
place to alleviate any concern about fraud and abuse?
Dr. Martin. Mr. Tierney, I don't know about the 90/10
thing, let me make a comment about the differences I think on
the default rates. If you look at everything I have ever read
about default rates is there is a tendency of people who have
higher incomes are more likely to be able to pay their loans
off more rapidly and are less likely to default than people
that have modest means. If you look at the economic make-up of
students who are enrolled in different sectors of higher
education, there is a relationship if you looked at community
colleges or say proprietary institutions and that they probably
have a higher proportion of lower income students in their
institutions than would certain other sectors.
This doesn't mean, this doesn't mean that people that have
modest economic means are not serious or responsible about
paying back their debts. It is not an unwillingness to repay.
In many cases they find themselves after they are out with
lower paying jobs or whatever, that they don't have the
ability. And so there is a higher propensity of some of those
people not to be able to manage their debt.
Mr. Tierney. May I interject something, Mr. Chairman. Do I
have your allowance to do that? I know I am a little over my
time. But aren't we talking about the whole universe of these
students all being financially eligible to get these loans so
they are all pretty much in that financial category? So a lot
of the institutions may have more of a student, these students
we are talking about whose payment rates are being judged are
pretty much the same kettle of fish here. They are all eligible
financially for these loans so they are all pretty much in the
same circumstance. So I am not sure I follow your logic when
you compare the institutions.
Dr. Martin. I was just trying to compare, maybe I
misunderstood you, Mr. Tierney, but I understood that you were
talking about differences of what are the default rates by
sectors in post-secondary education?
Mr. Tierney. I did, but basically I think I don't draw that
to be that because a school might have a lot of wealthier kids
and than some poorer kids that that somehow leads to them not
having a payment schedule because all the kids getting the
loans are in the same economic area. It seems to me that those
protections work and even with those protections in place, we
are finding a higher default rate on these proprietary schools
because of the way they are structured than we do in the public
and the private institutions on that. And I see Dr. Reed
nodding a little bit there. You might want to help me out here
if I am not explaining it clearly enough.
Dr. Reed. Yes, I think you are correct. I think it is a
part of the due diligence and the responsibility of these
institutions and I think the more you make the information you
have public, the better. California State University, we are
mostly poor students. Our default rate is 3.7 percent. I want
it to get better. But it is something that my board pays
attention to and makes us report publicly. And I think the more
we can do that, the better.
Mr. Tierney. And do you have a comment on how we would, if
we were going to remove the 90/10 rule of proprietary schools,
how would we then ensure against fraud and abuse if they are
already higher than your institution and others like it?
Dr. Reed. I don't know.
Mr. Tierney. OK.
Chairman Boehner. If the gentleman would yield?
Mr. Tierney. Mr. Chairman wants to be a witness?
Chairman Boehner. Well, I want to be helpful. When there
were serious problems in the 1980's with certain types of
institutions, Congress slapped multiple layers of
accountability on these institutions where the abuse was coming
from. And many of us believe that 90/10 is inhibiting schools
from going into very poor neighborhoods and offering students a
chance in those neighborhoods.
And if you look around the country, you will see a lot of
institutions that were once there, in large urban centers
especially, are no longer there. And I believe and others
believe that the accountability provisions still in the law are
more than sufficient to prevent the abuse that we saw back in
the 1980's and early 1990's in that 90/10 is in fact
overlapping and redundant and frankly unnecessary.
Mr. Tierney. Reclaiming my time, and I appreciate that. I
pretty much knew what your theory was and I was sort of giving
you that in my question just for argument sake. Assuming that
you get rid of the 90/10 rule and looking at the facts of
saying either with the 90/10 rule proprietary schools aren't
doing anywhere near as well as public colleges and private
colleges, my real question what other protections do we put in
place because in my estimation the existing ones aren't enough
if the ones we put in the 1980's still aren't doing the job,
the existing ones aren't enough, what would you substitute for
the 90/10 if you wanted to get rid of the 90/10 and that was
really where I was going.
So I was almost willing to give you your argument that you
think that those might be the wrong set of situations there but
clearly something is needed to do a better job than we are
doing now. And if you take away the 90/10, I didn't know if
anybody had any suggestions of what they thought we might
replace it with in order to try to bring those numbers down.
Ms. Wasserman, you do.
Ms. Wasserman. Yes, I think I know that there has been work
by the National Consumer Law Center and the Workforce Alliance
to look at things like doing a non-partisan study to figure out
where the fraud and abuse lies because some statistics are that
just in 2003 the Department of Education's Inspector General
made public seven audits documenting serious fraud and abuse in
school administration of Federal aid. Those schools had to
return over $50 million to the Department, lenders and
students.
So there is fraud and there is abuse. And we do need to
find out more about that. I think keeping the rules that we
have, keeping the protections that we have and then doing the
research to figure out what are those other things that we can
do, are positive steps that we should look at in this
reauthorization. There are still schools that are closing. In
2002, over 100 computer training schools closed in 23 states.
Of those schools, only 25 provided advance notice. So there are
real issues, and I think we do have to make sure that students
are protected.
Mr. Tierney. I thank the witness. Mr. Chairman, I thank you
for your indulgence.
Chairman Boehner. The Chair recognizes the gentleman from
Texas. I am sorry, Dr. Reed has got to catch a plane and so,
Dr. Reed, you are excused. We don't have to go through all the
reasons, but the Chair recognizes the gentleman from Texas, Mr.
Hinojosa.
Mr. Hinojosa. Thank you, Mr. Chairman. I ask for unanimous
consent that my opening statement be allowed to be entered into
the record.
Chairman Boehner. Without objection.
[The prepared statement of Mr. Hinojosa follows:]
Statement of Hon. Ruben Hinojosa, a Representative in Congress from the
State of Texas
[GRAPHIC] [TIFF OMITTED] T3631.030
------
Mr. Hinojosa. Thank you. I am sorry to see Chancellor Reed
have to leave but I will ask my questions then to possibly Dr.
Martin and the other gentleman.
I thank you all for coming to testify today. Your testimony
in support of strengthening, actually it was Chancellor Reed
who gave testimony in support of strengthening Hispanic-serving
institutions, HSI's, establishing a graduate program for HSI's
is one of the top priorities for the Congressional Hispanic
Caucus and to the Hispanic community from West Coast to East
Coast and some of the territories.
Could you please discuss the implications for higher
education research and industry if we do not raise the level of
advanced degree attainment in the Hispanic community, Dr.
Martin?
Dr. Martin. Mr. Hinojosa, I fully support obviously trying
to make certain that we do what we can to ensure that we have
equal participation in our society from all people. And I think
to the degree, if you look at who goes on to obtain higher
education graduate professional degrees, obviously we have a
lot of under representation not only in the Hispanic community
but within some of our other minority communities in this
country.
I have long believed that anything that we can do to
strengthen that and recognize maybe some additional need-based
aid in the graduate and professional areas is important. While
this particular provision is not the topic that necessarily
falls under our association directly, I think that it is a good
idea to address this issue, to see what we can do to strengthen
those institutions and to provide that kind of support for
those individuals.
Mr. Boyle. I agree. At the suggestion of the GEAR-Up group,
we participated in Feria Educativa Fair in South Florida in
December and were literally besieged by hundreds of Latino
parents who were wanting more information about how they could
better understand the process of preparing, applying to, and
financing of college. And we at our group of College Parents of
America are actively hoping that we can secure necessary
funding to put our Web site into Spanish and to work with
partners to create a greater distribution of Spanish language
material.
Mr. Hinojosa. Well, I want to say that in the 8 years that
I have been in Congress I have seen the increases that have
occurred in trying to get more HSI's to be able to get
designated and monies so that they can do the recruitment and
tutoring and mentoring and retention and seeing how this bill
only increases the minimum grants for the HBCUs from $500,000
to $750,000, it seems like the experience I have had two or 3
years where we have been getting crumbs increases for the HSIs
that we are getting right back to where we were 10 years ago
where there was a great deal of neglect for the Latino
community, and I think that that is a serious mistake in this
legislation.
Also, I see that the question that I asked is not being
addressed in ways that will give us more professors at the
universities where we have an acute shortage of professors, and
especially Latino professors. And if we are to be able to take
care of the needs of this very fast-growing ethnic group, I
think that this legislation is lacking in order to meet the
needs of what we need for higher education and would like to
have this young lady's--sorry, I can't see your name from here,
but I would like to have your comments.
Ms. Wasserman. I think that that is a critical point and in
a bill that has this Bill of Academic Rights talking about
diverse viewpoints and intellectual pluralism being important,
for us, when we look at the bill, we are looking are what are
the ways we are going to have real increased diversity points
in our campus and that is going to be to support the increase
of Latino students on campus and that is what is attracts those
students is becoming the professors of the future. And it is
supporting HSIs, it is supporting HBCU's, it is finding ways to
support other programs that our outside of this reauthorization
process like affirmative action, that we support those programs
that we think will make the difference in who is in our
classrooms and who goes on to reach higher level degrees.
Mr. Hinojosa. Well, it seems like all of you agree but I
don't hear that you all are making a strong statement that this
bill is short of what we need for the next 6 years. And unless
you speak up, I don't see that Congress is going to wake up to
the fact that there are over 2.5 million Latino students and
another 2.5 who would like to get into college simply because
we don't have enough professors. Classes close like this once
they open them for registration because we don't have enough
professors and we have got to have Master's and Ph.D.'s to be
able to teach at the university level. So I need to hear your
community to really rise and speak up so that the shortfall
that occurs in the new reauthorization act that that gap is
closed so that we can indeed serve all those who are qualified
and wanting to go to college.
So with that, I yield back the balance of my time.
Chairman Boehner. I want to thank all of our witnesses for
your patience and our audience for your patience during our
interruption today. We appreciate your valued testimony, and I
expect that the Committee will have another hearing probably
after members return from the Memorial Day district work period
and begin to delve a little more deeply into some of these
subjects that were talked about today.
Ms. McCollum. Mr. Chair?
Chairman Boehner. Ms. McCollum.
Ms. McCollum. I would like to add in an editorial from the
Minneapolis Tribune which talks about access to higher
education.
Chairman Boehner. Without objection, so ordered.
[The provided material follows:]
Editorial from the Minneapolis Star Tribune, Submitted for the Record
by Hon. Betty McCollum
[GRAPHIC] [TIFF OMITTED] T3631.023
------
Chairman Boehner. Mr. Kildee?
Mr. Kildee. I just want to thank all the witnesses. We have
had a very good panel today. You have responded to our
questions very well. All of you have done well. I do think, Ms.
Wasserman, you responded and reacted well to tough and hard
questions on both sides of the aisle, and I commend you for
that.
Ms. Wasserman. Thank you.
Chairman Boehner. This hearing is now adjourned.
[Whereupon, at 2:30 p.m., the Committee was adjourned.]
[Additional material submitted for the record follows:]
Statement of Hon. Pete Hoekstra, a Representative in Congress from the
State of Michigan
[GRAPHIC] [TIFF OMITTED] T3631.031
[GRAPHIC] [TIFF OMITTED] T3631.032
______
Statement of Hon. Charlie Norwood, a Representative in Congress from
the State of Georgia
[GRAPHIC] [TIFF OMITTED] T3631.016
______
Statement of Hon. Raul M. Grijalva, a Representative in Congress from
the State of Arizona
[GRAPHIC] [TIFF OMITTED] T3631.013
______
Statement of Hon. Jon Porter, a Representative in Congress from the
State of Nevada
[GRAPHIC] [TIFF OMITTED] T3631.033
______
Question from Hon. Pete Hoekstra, Submitted for the Record
Please explain the primary sources of revenue and funding for your
organization.
What percentage of your budget is composed member dues? Please also
include other sources that comprise more than 10 percent of your annual
operating budget, including the approximate percentage contribution
made by each alternative source.
______
Response of Jim Boyle, President, College Parents of America, Submitted
for the Record
College Parents of America's primary sources of revenue and funding
are member dues and partner fees.
Member dues are comprised of both individual and institutional
monies. Individual members, generally parents of current or future
college parents, pay an annual fee of $36.50, or may join for up to
five years at a discounted price of $109. There are currently more than
1300 active individual members. Institutional members, generally
comprised of colleges and universities (with a handful of school
districts and/or independent secondary schools), pay an annual fee of
$495. There are currently 68 active institutional members.
Partner fees are negotiated with companies who wish to serve the
current and future college parent market, and who see College Parents
of America as a viable partner for accomplishing their objectives.
Current partner fees range as high as $90,000 per year to as low as
$495, with a share of revenue gained through the partnership always
part of the equation. There are currently 10 signed corporate partners,
with several others in negotiation.
As of June 2004, approximately 40 % of total revenues this year
have been derived from member dues, with slightly more than 60 % of
that figure coming from individuals and the remainder from
institutions. During this year to date, therefore, approximately 60 of
total revenues have been derived from fees paid by corporate partners.
______
Response of Dr. A. Dallas Martin, President, National Association of
Student Financial Aid Administrators, Submitted for the Record
In response to Congressman Hoekstra's question, NASFAA Operating
Budget for the 2003-04 fiscal year is $6,103,000.
The Association has seven primary sources of revenue and funding
which are listed below with the percentage derived from each.
Association Membership Dues-50%
Association Conference Registrations-12%
External Advertising, Exhibitors, Sponsors-18%
Association Publications and Subscription-6%
Association Training Sessions and Materials-5%
Association Investment Income-5%
Association Development Activities-4%
If you need further information, please let me know.
Sincerely,
Dr. A. Dallas Martin
______
Response of Rebecca J. Wasserman, President, United States Student
Association, Submitted for the Record
The Honorable Pete Hoekstra
United States House of Representatives
2234 Rayburn House Office Building
Washington, DC 20515
06/04/2004
Dear Representative Hoekstra,
The United States Student Association (USSA) is almost entirely
funded by dues from membership campuses through their student
governments. 59% of this year's operating budget comes directly from
campus and state student association dues. The only other income item
that is over 10% of our budget is the income received from our two
annual conferences, our National Legislative Conference in Washington,
DC and our National Student Congress held on a different college campus
each year. These two conferences'' combined revenue accounts for 24% of
our income. Overall, membership dues and conferences account for 83% of
our income.
I hope this gives some insight to the budget of our organization.
Thank you,
Rebecca J. Wasserman
President, USSA
______
Additional Statement of Dr. Dallas Martin, President, National
Association of Student Financial Aid Administrators, Washington, DC,
Submitted for the Record
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______
Letter from Michael Grayer, Recent Graduate, Virginia College, Jackson,
Mississippi, Submitted for the Record
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