[House Hearing, 109 Congress]
[From the U.S. Government Publishing Office]


 
                     PAYING FOR COLLEGE: INNOVATIVE
                 PRIVATE-SECTOR PROPOSALS TO COMPLEMENT
                RECORD FEDERAL INVESTMENT IN STUDENT AID

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

                                HEARING

                               before the

              SUBCOMMITTEE ON 21st CENTURY COMPETITIVENESS

                                 of the

                         COMMITTEE ON EDUCATION
                           AND THE WORKFORCE
                     U.S. HOUSE OF REPRESENTATIVES

                       ONE HUNDRED NINTH CONGRESS

                             SECOND SESSION

                               __________

                              May 23, 2006

                               __________

                           Serial No. 109-42

                               __________

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



 Available via the World Wide Web: http://www.access.gpo.gov/congress/
                                 house
                                   or
            Committee address: http://edworkforce.house.gov


                                 ______

                    U.S. GOVERNMENT PRINTING OFFICE
27-986                      WASHINGTON : 2006
_____________________________________________________________________________
For Sale by the Superintendent of Documents, U.S. Government Printing Office
Internet: bookstore.gpo.gov  Phone: toll free (866) 512-1800; (202) 512ï¿½091800  
Fax: (202) 512ï¿½092250 Mail: Stop SSOP, Washington, DC 20402ï¿½090001

                COMMITTEE ON EDUCATION AND THE WORKFORCE

            HOWARD P. ``BUCK'' McKEON, California, Chairman

Thomas E. Petri, Wisconsin, Vice     George Miller, California,
    Chairman                           Ranking Minority Member
Michael N. Castle, Delaware          Dale E. Kildee, Michigan
Sam Johnson, Texas                   Major R. Owens, New York
Mark E. Souder, Indiana              Donald M. Payne, New Jersey
Charlie Norwood, Georgia             Robert E. Andrews, New Jersey
Vernon J. Ehlers, Michigan           Robert C. Scott, Virginia
Judy Biggert, Illinois               Lynn C. Woolsey, California
Todd Russell Platts, Pennsylvania    Ruben Hinojosa, Texas
Patrick J. Tiberi, Ohio              Carolyn McCarthy, New York
Ric Keller, Florida                  John F. Tierney, Massachusetts
Tom Osborne, Nebraska                Ron Kind, Wisconsin
Joe Wilson, South Carolina           Dennis J. Kucinich, Ohio
Jon C. Porter, Nevada                David Wu, Oregon
John Kline, Minnesota                Rush D. Holt, New Jersey
Marilyn N. Musgrave, Colorado        Susan A. Davis, California
Bob Inglis, South Carolina           Betty McCollum, Minnesota
Cathy McMorris, Washington           Danny K. Davis, Illinois
Kenny Marchant, Texas                Raul M. Grijalva, Arizona
Tom Price, Georgia                   Chris Van Hollen, Maryland
Luis G. Fortuno, Puerto Rico         Tim Ryan, Ohio
Bobby Jindal, Louisiana              Timothy H. Bishop, New York
Charles W. Boustany, Jr., Louisiana  [Vacancy]
Virginia Foxx, North Carolina
Thelma D. Drake, Virginia
John R. ``Randy'' Kuhl, Jr., New 
    York
[Vacancy]

                       Vic Klatt, Staff Director
        Mark Zuckerman, Minority Staff Director, General Counsel
                                 ------                                

              SUBCOMMITTEE ON 21st CENTURY COMPETITIVENESS

                     RIC KELLER, Florida, Chairman

Jon C. Porter, Nevada Vice Chairman  Dale E. Kildee, Michigan
Thomas E. Petri, Wisconsin           Donald M. Payne, New Jersey
Michael N. Castle, Delaware          Carolyn McCarthy, New York
Sam Johnson, Texas                   John F. Tierney, Massachusetts
Vernon J. Ehlers, Michigan           Ron Kind, Wisconsin
Patrick J. Tiberi, Ohio              David Wu, Oregon
Tom Osborne, Nebraska                Rush D. Holt, New Jersey
Bob Inglis, South Carolina           Betty McCollum, Minnesota
Cathy McMorris, Washington           Chris Van Hollen, Maryland
Tom Price, Georgia                   Tim Ryan, Ohio
Luis G. Fortuno, Puerto Rico         Robert C. ``Bobby'' Scott, 
Charles W. Boustany, Jr., Louisiana      Virginia
Virginia Foxx, North Carolina        Susan A. Davis, California
Thelma D. Drake, Virginia            Timothy H. Bishop, New York
John R. ``Randy'' Kuhl, Jr., New     Major R. Owens, New York
    York                             George Miller, California, ex 
Howard P. ``Buck'' McKeon, ex            officio
    officio                          [Vacancy]
[Vacancy]


                            C O N T E N T S

                              ----------                              
                                                                   Page

Hearing held on May 23, 2006.....................................     1

Statement of Members:
    Keller, Hon. Ric, Chairman, Subcommittee on 21st Century 
      Competitiveness, Committee on Education and the Workforce..     1
        Prepared statement of....................................     3
    Kildee, Hon. Dale E., Ranking Member, Subcommittee on 21st 
      Century Competitiveness, Committee on Education and the 
      Workforce..................................................     4
        Prepared statement of....................................     5

Statement of Witnesses:
    Davis, Tom, owner, Davis Brothers Construction...............     7
        Prepared statement of....................................     9
    Jones, Allison G., assistant vice chancellor, California 
      State University System....................................    10
        Prepared statement of....................................    12
        Supplemental presentation, ``Early Assessment Program''..    44
    Merisotis, Jamie P., president, Institute for Higher 
      Education Policy...........................................    22
        Prepared statement of....................................    24
    Salandy, Rassan, director of university recruitment and 
      public relations, the Posse Foundation.....................    18
        Prepared statement of....................................    20

Additional Submissions:
    Baum, Sandy, the College Board...............................    40


                     PAYING FOR COLLEGE: INNOVATIVE
                      PRIVATE-SECTOR PROPOSALS TO
                       COMPLEMENT RECORD FEDERAL
                       INVESTMENT IN STUDENT AID

                              ----------                              


                         Tuesday, May 23, 2006

                     U.S. House of Representatives

              Subcommittee on 21st Century Competitiveness

                Committee on Education and the Workforce

                             Washington, DC

                              ----------                              

    The subcommittee met, pursuant to call, at 10 a.m., in room 
2175, Rayburn, Hon. Ric Keller [chairman of the subcommittee] 
presiding.
    Present: Representatives Keller, McKeon, Petri, Johnson, 
Ehlers, Tiberi, Osborne, Inglis, Price, Fortuno, Foxx, Drake, 
Kuhl, Kildee, Payne, Tierney, Kind, Wu, Holt, McCollum, Ryan, 
and Bishop.
    Staff Present: James Bergeron, Counselor to the Chairman; 
Jessica Gross, Press Assistant; Richard Hoar, Professional 
Staff Member; Lucy House, Legislative Assistant; Chad Miller, 
Coalitions Director for Education Policy; Amy Raaf, 
Professional Staff Member; Deborah L. Emerson Samantar, 
Committee Clerk/Intern Coordinator; Denise Forte, Minority 
Legislative Associate/Education; Lauren Gibbs, Minority 
Legislative Associate/Education; Joe Novotny, Minority 
Legislative Assistant/Education; and Mark Zuckerman, Minority 
Staff Director/General Counsel.
    Chairman Keller. Good morning.
    A quorum being present, the Subcommittee on 21st Century 
Competitiveness will come to order.
    We are meeting today to hear testimony on Paying For 
College: Innovative Private-Sector Proposals to Complement 
Record Federal Investment in Student Aid.
    Under committee rule 12(b), opening statements are limited 
to the chairman and ranking minority member of the 
subcommittee. Therefore, if other members have statements, they 
may be included in the hearing record.
    With that, I ask unanimous consent for the hearing record 
to remain open 14 days to allow member statements and other 
extraneous material referenced during the hearing to be 
submitted in the official hearing record. Without objection, so 
ordered.
    Good morning, and thank you all for joining us today. We 
are here to learn about how innovative private sector proposals 
can help increase college access and complement the record 
Federal investment in student aid.
    A college degree is the passport out of poverty for 
millions of American students each year. Without a college 
education, many workers today are shut out of quality, high-
paying jobs. I believe our top priority should be opening the 
doors of higher education to low- and middle-income Americans.
    That is why I am proud of the record Federal investment and 
student financial aid in recent years. Funding for Pell Grants, 
the foundation of Federal student aid, has increased 71 percent 
since 2000, up from $7.6 billion to $13 billion today. The 
maximum grant is up from $3,300 in 2000 to $4,050 today. We 
have paid down the Pell Grant shortfall and secured the program 
for years to come. With the passage of the College Access and 
Opportunity Act earlier this year, we further improved the Pell 
Grant program, the Perkins Loan program and increased college 
access for millions of American students.
    To my left, you can see a chart entitled, Strong Support 
for Pell Grant. That shows you where we are today compared to 
2000.
    You will see on the far left a bar showing that we have 
increased the overall Pell Grant funding by 71 percent, and 
that doesn't even include the additional $4.3 billion that we 
have paid to get rid of the Pell Grant shortfall.
    The middle chart reflects the maximum Pell Grant award from 
$3,300 up to 4,050. It doesn't include the extra$1,000 for the 
Pell Grant Plus Initiative, which is in this bill for the high-
achieving low-income students; and, very excitingly, also, it 
doesn't include something that we passed currently called 
Academic Competitiveness Grant, which will be available to 
students this fall. High-achieving low-income students who take 
rigorous classes in math and science will be eligible to 
receive an extra $750 their first year if they are Pell Grant 
eligible, as well as an extra $1,300 their second year if they 
are Pell Grant eligible. Now this if they decide to major in 
math and science and they can maintain a 3.0 GPA, they will 
receive an additional $4,000 their junior year and an 
additional $4,000 their senior year, above and beyond the 
original Pell Grant.
    The final graph is very telling, and that is the graph 
showing the number of Pell Grant recipients that have gone up 
from 36 percent since 2000, from 3.9 million to 5.3 million. 
And some folks say, why can't we just raise Pell Grant more 
above the $4,050? I am one of those folks. Frankly, I would 
like to see it much higher. That is the biggest number that is 
keeping us down, the dramatic increase of the number of 
students going to college. We will have an increase every year 
until 2008, which will be the record in terms of high school 
graduates. Then it will start to go down a bit, and that will 
free us up to spend a lot more money, which most of us believe 
is a wise investment.
    But the Federal Government, as much as we are doing and can 
do, can only do so much; and I know this firsthand. My mother 
had a family friendly employer who cut a check that allowed me 
to go to college, and I wouldn't have been able to go if it 
wasn't for his generous assistance as well as Pell Grant and 
students loans. That is why I am happy to be here today to 
learn about ways the private sector can help increase college 
access for our low- and middle-income students.
    One proposal we will discuss is my Family Friendly 
Employers Act, a bill to reward family friendly employers like 
my mother's who help send their employees' children to school. 
My bill allows employers to provide up to $2,500 in tax-free 
reimbursements for tuition, books and fees for their employees' 
children's education. Employees already enjoy a $5,250 benefit 
to help provide for their employees' non-job-related education. 
My bill would simply expand the first $2,500 of that benefit to 
apply to the employees' children.
    The cost of this bill would be low. Employers will be able 
to provide the first $2,500 benefit to either their employee or 
his or her children but not both. Also, the benefit applies to 
each employee's children in sum, so that an employee would 
receive the same benefit no matter the number of children.
    The Family Friendly Employers Act will encourage more 
generous businesses to invest in their companies, their 
communities and in our children's education. That is one of the 
reasons we have pretty broad bipartisan support for that bill, 
including the co-sponsorship of the ranking member of Ways and 
Means, Charlie Rangel, and support from groups as diverse as 
AFL-CIO and the American Council on Education.
    We have an excellent panel of witnesses today to talk about 
this bill and other important private-sector proposals to 
complement the Federal investment in student aid; and I want to 
thank you for appearing before the subcommittee today. I look 
forward to your testimony.
    With that, I yield to Mr. Kildee for any opening statement 
he may have.
    [The prepared statement of Mr. Keller follows:]

  Prepared Statement of Hon. Ric Keller, a Representative in Congress 
                       From the State of Florida

    Good morning, and thank you all for joining us today. We're here to 
learn about how innovative private sector proposals can help increase 
college access and complement the record federal investment in student 
aid.
    A college degree is the passport out of poverty for millions of 
American students each year. Without a college education, many workers 
today are shut out of quality, high-paying jobs. I believe our top 
priority should be opening the doors of higher education to low- and 
middle-income Americans.
    That's why I'm proud of the record federal investment in student 
financial aid in recent years. Funding for Pell Grants, the foundation 
of federal student aid, has increased 71 percent since 2000, up from 
$7.6 billion to $13 billion today. The maximum grant is up from $3,300 
in 2000 to $4,050 today. We've paid down the Pell Grant shortfall and 
secured the program for years to come. With the passage of the College 
Access and Opportunity Act earlier this year, we've further improved 
the Pell Grant program, the Perkins Loan program and increased college 
access for millions of American students.
    But the federal government can only do so much. I know this 
firsthand. My mother had a family friendly employer who cut a check to 
allow me to go to college.
    That's why I am happy to be here today to learn about ways the 
private sector can help increase college access for our low- and 
middle-income students. One proposal we will discuss is my Family 
Friendly Employers Act, a bill to reward family friendly employers like 
my mother's who help send their employees' children to school.
    My bill allows employers to provide up to $2,500 in tax-free 
reimbursements for tuition, books, and fees for their employees' 
children's education. Employers already enjoy a $5,250 benefit to help 
provide for their employees' non-job-related education. My bill would 
simply expand the first $2,500 of that benefit to apply to employees' 
children.
    The costs of this bill will be low. Employers will be able to 
provide the first $2,500 benefit to either their employee or his or her 
children, but not both. Also, the benefit applies to each employee's 
children in sum, so that an employee would receive the same benefit, no 
matter the number of children.
    The Family Friendly Employers Act will encourage more generous 
businesses to invest in their companies, their communities, and in our 
children's education.
    We have an excellent panel of witnesses today to talk about this 
bill and other private sector proposals to complement the federal 
investment in student aid. I want to thank you for appearing before the 
Subcommittee today. I look forward to your testimony. With that, I 
yield to Mr. Kildee for any opening statement he may have.
                                 ______
                                 
    Mr. Kildee. Thank you, Chairman Keller; and congratulations 
on your elevation to the chairmanship. This is, I think, your 
first hearing since that elevation; and I commend you for that. 
I have always enjoyed working with you.
    My private-sector investment in student aid is important 
and should be encouraged. Federal aid is and should continue to 
be considered as the cornerstone of college access and 
affordability.
    Pell Grants and Federal loans are the single most 
consistent resource for students struggling to pay for college 
and should be the driving force behind any conversation about 
college access and affordability.
    Earlier this year, Congress held a $12 billion heist on 
curbing student aid programs, while at the same time refusing 
to make increased investments in students by reducing interest 
rates or increasing the Pell Grant in a meaningful way.
    Along with Representative Miller, California, I recently 
introduced a bill that would reverse the rate on student aid. 
That is H.R. 5150. This bill would cut interest rates in half 
for students and parents taking out subsidized loans, the 
borrowers most in need. This bill would save the average 
borrower already saddled with $17,500 in debt about $5,600 over 
the life of their loan.
    Pell Grant, arguably the single strongest bridge to college 
access for low-income students, has seen no meaningful increase 
in the last 5 years. I commend Chairman Keller for putting 
internal pressure on his fellow committee leaders to increase 
the authorization level for Pell Grant by $200, but the 
appropriate level remains disappointingly low. Pell Grants 
today are worth $900 less in inflation-adjusted terms than they 
were in the 1975-'76 school year when I first came to Congress.
    Until we can convince the appropriators to restore the 
actual buying power of the Pell Grant to the $5,100 level 
promised by our President 6 years ago, we have not done 
anything meaningful in helping students and families struggling 
to pay for college.
    The majority claim to have increased spending on Pell 
Grants substantially since 2001. However, when making these 
statements, they fail to also disclose that Pell Grants are a 
semi-entitlement program, which means that if eligible students 
apply for Federal financial aid they automatically get a Pell 
Grant. This means that Congress and President Bush do not need 
to support a vote and have not voted to increase the overall 
spending level for Pell Grant. Instead, Congress votes on 
whether or not to increase, cut or freeze the maximum Pell 
Grant scholarship for students.
    When committee members gave the majority the opportunity to 
vote for increasing the maximum Pell Grant scholarship with 
guaranteed mandatory funds, the majority opposed the increase 
even though it was paid for through offsets coming at no 
additional costs to the taxpayers.
    Yes, overall, spending on Pell Grant is on the rise, as the 
chart indicates over there, but this is because more students 
qualify and more students are going to school. In other words, 
we have more poor students going to school that need help.
    And in Michigan that is certainly the case. Michigan's 
economy is--particularly in Flint, the old industrial cities, 
more and more poor students depend upon those Pell Grants. The 
increases in the end are not necessarily doing more to help 
individual students make ends meet but are a minimal reaction 
to the rocky economy faced by low-income working families.
    Proposals such as tax benefits and employer benefits 
overwhelmingly favor students from middle-income families, not 
low-income students who otherwise would not attend college if 
it weren't for the availability of aid.
    These benefits are important and should be encouraged, but 
they do not substantially serve to close the college access gap 
for low-income students. To this end, we must continue to 
consider Federal aid to be the cornerstone of college access.
    I would like to thank our witnesses today, all of them, for 
joining us to share their wisdom with us; and I yield back the 
balance of my time, Mr. Chairman.
    [The prepared statement of Mr. Kildee follows:]

  Prepared Statement of Hon. Dale E. Kildee, Ranking Minority Member, 
 Subcommittee on 21st Century Competitiveness, Committee on Education 
                           and the Workforce

    Thank you, Chairman Keller, for convening this hearing, and 
congratulations on your recent appointment to this Committee's 
leadership.
    While private sector investment in student aid is important, and 
should be encouraged, Federal aid is, and should continue to be, 
considered as the cornerstone of college access and affordability.
    Pell Grants and federal loans are the single most consistent 
resource for students struggling to pay for college, and should be the 
driving force behind any conversation about college access and 
affordability.
    Earlier this year, Congress held a $12 billion heist on student aid 
programs, while at the same time refusing to make increased investments 
in students by reducing interest rates or increasing the Pell Grant in 
a meaningful way.
    Along with Representative Miller, I recently introduced a bill, the 
Reverse the Raid on Student Aid Act (HR 5150).
    This Bill would cut interest rates in half for students and parents 
taking out subsidized loans-the borrowers most in need.
    This bill would save the average borrower, already saddled with 
$17,500 in debt, $5,600 over the life of their loan.
    The passage of this bill would offer real relief to students and 
families in need.
    Pell grants-arguably the single strongest bridge to college access 
for low income students-has seen no meaningful increases in the last 5 
years.
    I commend Chairman Keller for putting internal pressure on his 
fellow committee leaders to increase the authorization level for Pell 
grants by $200, but the appropriated level remains disappointingly low.
    Pell Grants today are worth $900 less, in inflation adjusted terms, 
than they were in the 1975-76 school year.
    Until we can convince the appropriators to restore the actual 
buying power of the Pell Grant-to the $5,100 level promised by our 
President six years ago-we have not done anything meaningful in helping 
students and families struggling to pay for college.
    Republicans claim to have increased spending on Pell grants 
substantially since 2001.
    However, when making these statements, Republicans fail to also 
disclose that Pell grants are a semi-entitlement program-which means 
that if eligible students apply for federal financial aid, they 
automatically get a Pell grant.
    This means that Congress and President Bush do not vote, and have 
not voted, to increase the overall funding levels for Pell grants.
    Instead, Congress votes on whether or not to increase, cut or 
freeze the maximum Pell grant scholarship for individuals.
    When Committee Democrats gave Republicans the opportunity to vote 
for increasing the maximum Pell grant scholarship-with guaranteed 
mandatory funds-Republicans opposed the increase, even though it was 
paid for though offsets, coming at no additional cost to taxpayers.
    Yes, overall spending on Pell grants is on the rise, but this is 
because more students qualify and more students are going to school-in 
other words-we have more poor students that need our help!
    The increases in the end are not necessarily doing more to help 
individual students make ends meet, but a minimal reaction to the rocky 
economy faced by low-income working families.
    Proposals such as tax benefits and employer benefits overwhelming 
favor students from middle-income families, NOT low income students who 
otherwise would not attend college if it weren't for the availability 
of aid.
    These benefits are important and should be encouraged, but they do 
not substantially serve to close the college access gap for low-income 
students.
    For this end, we must continue to consider federal aid to be the 
cornerstone of college access.
    I would like to thank our witnesses for joining us today for this 
discussion; I look forward to hearing your testimony.
                                 ______
                                 
    Chairman Keller. Well, thank you, Mr. Kildee.
    We do have a very distinguished panel of witnesses today, 
and I am eager to hear their testimony. I would like to begin 
by introducing all of our witnesses, and then afterwards I will 
recognize you individually.
    First, we have Mr. Tom Davis, who co-founded Davis Brothers 
Construction Company with his brother, Robert Davis, in 1986. 
In the 20 years that Davis brothers have been in business, Tom 
has managed the construction of projects for many clients in 
Colorado, Florida, Georgia and Louisiana.
    Mr. Davis also offers a unique benefit to his employees, 
one that allows his employees to put away money for their 
children's college education. Through this program, Tom has 
been able to assist seven students in achieving their college 
dream.
    Next, we have Mr. Allison Jones. Mr. Jones is the Assistant 
Vice Chancellor of Academic Affairs and Student Academic 
Support at California State University. In this capacity, he 
coordinates support to CSU's 23 campuses in the areas of K 
through 12 academic outreach admission, enrollment, management, 
financial aid, educational opportunity programs, student 
services, student health, transfer services, disabled student 
services and remediation. He has been with CSU since 1985.
    In 2000, Mr. Jones was appointed by the California State 
Rules Committee to the Scholar Share Investment Board. Scholar 
Share was implemented by the California Governor and 
legislature to help California families save for college. Mr. 
Jones was also selected as a trustee of the College Board in 
2005.
    Mr. Rassan Salandy is the National Director of University 
Recruitment and Public Relations at the Posse Foundation. In 
this position, he is responsible for managing press and 
developing partnerships with selective universities interested 
in recruiting students through the Posse program. Rassan is an 
alumnus of Posse and received his bachelor's degree in 1997 
from the great University of Vanderbilt, which I also happened 
to graduate from.
    He has worked as a New York City public schoolteacher under 
the New York City Teaching Fellows Program and has been 
involved with several other youth leadership development 
organizations. He holds a Master of Arts Degree in Philosophy 
from the University of Wisconsin and plans to pursue his 
doctorate in the same field.
    Finally, we have Mr. Jamie Merisotis. He is the founding 
President of the Institute for Higher Education Policy. 
Established in 1993 in Washington, D.C., the Institute is 
regarded as a premiere research and policy organization, 
concerned with higher education policy development.
    As the Institute's President, Mr. Merisotis has worked 
extensively on nearly every aspect of the Institute's work. He 
is recognized as a leading authority on college and university 
financing, particularly student aid, and has published major 
studies and reports on topics ranging from higher education 
ranking systems to technology based learning.
    Prior to founding the Institute, Mr. Merisotis served as 
the Executive Director of the National Commission on 
Responsibilities for Financing Postsecondary Education, a 
bipartisan commission appointed by the President and the 
congressional leadership.
    Now, before the panel begins, I would like to remind the 
members that we will be asking questions of the witnesses after 
testimony; and, in addition, committee rule 2 imposes a 5-
minute limit on all of the questions.
    As to the witnesses, each one of you will have 5 minutes to 
give your presentation. If your written remarks are longer, we 
will submit those in the record in total.
    Let me explain briefly the lights, which will be helpful to 
you. The green light says you have 5 minutes. Once you have 
only 1 minute left, you will see a yellow light that will 
advise you that you only have a minute left. And then, finally, 
the red light means your time has expired and we would ask you 
to wrap it up pretty shortly thereafter so we can make sure all 
the members have time to get to your questions.
    With that, let me thank all the witnesses for being here; 
and we will begin with Mr. Tom Davis.

   STATEMENT OF TOM DAVIS, OWNER, DAVIS BROTHERS CONSTRUCTION

    Mr. Tom Davis. Thank you, Mr. Chairman, Ranking Member 
Kildee and other committee members. It is an honor to be here.
    To tell you a little bit about myself, my brother and I 
started a construction company in Houston 20 years ago, Davis 
Brothers Construction. We build dormitories for universities, 
high-end apartment projects and condominiums around the 
country; and we do an average volume of about $50 million a 
year.
    I was raised on a ranch in West Texas by two hard-working, 
loving parents that sacrificed a lot to put four kids through 
college. Out of the four, I am the only one that didn't 
graduate. I didn't take full opportunity--didn't take full 
advantage of the opportunity I had. I partied too much. But 
so--and out of those--but I was raised with a strong belief 
that we owe our children an opportunity to go to college. And 
we as a family, we as a country, we as a people, we owe that to 
these kids that we have out here today.
    I am involved with three charities, all of them that have 
to do with children. The first is the Star Hope Mission in 
Houston, which is one of the largest missions of its kind in 
the country. Houston has, right now, over about 10,000 homeless 
people; and the average age of that homeless person in Houston 
is 9 years old. So there are lots of homeless kids out there 
that are starving to death.
    The other charity I work with is the Houston Livestock Show 
and Rodeo. It is dedicated to education, and each year we give 
about a little over $8 million in full scholarships to Texas 
youth.
    The third charity I am involved with is called Elves and 
More, and it is based out of Houston. It is a charity where we 
give away bicycles to children that live under the poverty 
level. Last year, we gave out roughly 21,000 bicycles; and it 
makes a huge difference to these children. It gives them 
freedom and allows them to go to school when their parents 
can't take them, stuff like that.
    But my point I am making is that, by being active in these, 
I have seen what an education does for a child; and I have seen 
what not having a college education has done. And that is my 
point.
    Because of this, my brother and I decided to start paying 
for our employees' children's college education. We have 37 
full-time employees, and now many of their children are 
reaching college age. So we pay for those that can't pay. So we 
have seven kids right now that are enrolled in college full 
time, and we monitor each one. They bring us their grades. If 
they are in trouble, we hire tutors for them; and we make sure 
that they succeed. I do everything in my power not to let them 
fail.
    The average cost is running for us about $5,000 per child 
per year. So I know that--you know, we are glad to pay for 
this. We are able. The good Lord has blessed us with a 
successful company with many employees and many fine children. 
But a lot of companies can't afford this; and your bill, 
Congressman, I think is a wonderful step in the right 
direction.
    So I encourage all of you all to pass this bill. I can't 
see how it is nothing but a slam dunk. It makes a lot of sense. 
And I think money spent in this way, you know, when we are 
spending our company money, or even if I am able to deduct it 
from my taxes, I think I am more efficient with my money than 
many other organizations are that give out moneys for 
scholarships.
    And so--but there is nothing that will make this country 
stronger than educating our youth, and I support you 
wholeheartedly. So on behalf of all of my employees and their 
children and other businesses like mine, I thank you for the 
opportunity to be here. And God bless you.
    Chairman Keller. Well, thank you very much, Mr. Davis; and 
we certainly appreciate all you are doing to make this country 
better with your innovative programs.
    [The prepared statement of Mr. Davis follows:]

  Prepared Statement of Tom Davis, Owner, Davis Brothers Construction

Introduction
    Good morning, Chairman Keller, ranking member Kildee and Committee 
Members. Thank you for inviting me here today to testify before the 
Committee about how the private sector can help expand college access. 
My name is Tom Davis and along with my brother Bob Davis, we are the 
owners of Davis Brothers Construction. We have been in business for 20 
years. We are a general contracting firm building apartments, 
dormitories for Universities, and condominiums. We do an average dollar 
volume of $50,000,000 per year.
Scholarships for the Children of Davis Brothers Employees
    I was raised on a ranch in West Texas by two hard working, loving 
parents who sacrificed much to put their four children through college. 
Out of the four children, I was the only one who did not complete his 
college education. It is the one failure in my life that I regret the 
most. The good Lord has blessed my brother and myself with a great 
company and many wonderful employees that have many wonderful children. 
Because of this and my strong belief that we owe our children an 
opportunity to attend college, my brother and myself have dedicated 
ourselves to helping children get an education.
    I am involved with three charities and they all involve children. 
The first is the Star of Hope Mission in Houston, Texas. It is one of 
the largest homeless missions in the country. The average age of the 
homeless person in Houston is 9 years of age. I served on their board 
for nine years and am still heavily involved. Another charity I am 
involved with is the Houston Livestock Show and Rodeo which last year 
gave out $8,000,000 in scholarships to Texas students. I am currently 
on their board of directors. The last charity I am involved with is 
Elves & More, a Houston-based charity that gave away 20,800 bicycles 
last Christmas to kids living below the poverty level. This is our 
fifth year of existence and we have seen a marked increase in school 
attendance because these children can now get to school on their bikes, 
get to their jobs, get to their friends house, get to Scout meetings, 
etc.
    The point I am making is that by being an active board member of 
these charities, I see first hand what happens when a child gets an 
education and I see first hand what happens when a child does not get 
an education.
    Because of these experiences working with children and because 
several of our employees have children that have reached the age to 
attend college, my brother and I decided to start paying for their 
college education. Davis Brothers Construction currently has 37 full-
time employees and as of today we have seven of our employee's children 
enrolled in college full-time. All of these kids live at home with 
their parents and Davis Brothers pays for their tuition and books. On 
the average, it is about $5,000 per child per year. This is our third 
year since implementing this program. We monitor each student by 
requiring they bring us reports during the year and if they are having 
difficulty in a class, we help by getting them the necessary tutoring 
they need to succeed. Because of the way we treat our employees and 
their children, they literally would walk through fire for us. All 
companies, large and small are nothing without their employees. The 
Family Friendly Employers Act you are considering would make a huge 
difference, not only for companies making a decision to help their 
employees with their children's education, but also in our society. I 
am of the opinion that dollars spent in this way will be much more 
effective than programs that merely give monies, because those other 
programs require large administrative overhead expenses.
    The State of Texas does not currently have any incentives that I 
know of to encourage companies to help with their employees' children's 
education.
The Family Friendly Employers Act
    I believe this bill will encourage more businesses like mine to 
invest in education and help send more kids to school. While I am happy 
to provide this benefit for my employees and their children, I know 
that some businesses simply do not have the resources to pay for it out 
of pocket. A tax incentive like the one provided in the Family Friendly 
Employers Act would encourage more businesses to help send their 
employees' children to college.
    A business is only as good as its employees. Because of what we do 
with our employees, our turnover in our employees is non-existent. 
Moral is high and the quality of work we receive from our employees is 
outstanding.
Conclusion
    In conclusion, on the behalf of my employees their children, and 
businesses like mine across the county, I encourage Congress to pass 
the Family Friendly Employers Act.
    And I will say it one more time. We owe it to the youth of this 
country.
    Thank you, Chairman Keller and other Committee Members, for holding 
this hearing on a topic so important to our nation's businesses, 
workforce and students.
                                 ______
                                 
    Chairman Keller. Mr. Jones.

   STATEMENT OF ALLISON JONES, ASSISTANT VICE CHANCELLOR OF 
ACADEMIC AFFAIRS AND STUDENT ACADEMIC SUPPORT, CALIFORNIA STATE 
                           UNIVERSITY

    Mr. Jones. Good morning. Chairman Keller, Ranking Member 
Kildee and members of the subcommittee, thank you for inviting 
me to discuss the California State University programs that 
support access to California's neediest students and the 
importance of Federal student financial aid to help achieve 
that goal. The CSU commends the committee for its attention to 
the important task of ensuring that every student who to 
chooses to do so can pursue a postsecondary education.
    Today, I would like to share with you several key outreach 
programs that CSU has developed, as well as Federal and State 
programs in which CSU is a key partner that supports student 
academic preparation and access to college.
    First of all, a slight word about CSU and who we are, to 
give you a sense of context. CSU, or the California State 
University, is the largest 4-year university system in the 
country, with 23 campuses and over 405,000 students. Our 
mission is to provide high-quality, affordable education. We 
play a critical role in preparing outstanding candidates for 
the job market not only in California but nationally.
    For instance, we confer 65 percent of all the bachelor's 
degrees in business, over half of the degrees in agriculture 
and agricultural engineering, and nearly half of the degrees in 
computer and electronic engineering. Altogether, over half of 
the bachelor's degrees in the State of California and a third 
of the masters degrees are awarded by the California State 
University.
    The students we serve are not typically the traditional 
student, the traditional 18- to 22-year-old. The average age of 
the students that we serve is 24; 44 percent of our students 
are independent from their parents; 40 percent are parents; 80 
percent have jobs and 36 percent of those work full time; 20 
percent are the first in their family to attend college; 40 
percent come from households where the primary language is a 
language other than English; and well over half of our students 
qualify for Federal financial aid.
    So we spend as an institution a great deal of time building 
bridges with our State's K-12 partners. We try to help more 
students prepare for and to succeed to enroll at the CSU, but 
particularly those students who are underserved and first-
generation college students.
    One of the most important tools that the California State 
University has developed to reach high school students is our 
Early Assessment Program. It is 3 years old. It prepares 
students for the academic rigors of college, and it reduces the 
time to the degree--to the extent that students are prepared 
academically to enter the California State University. As a 
result, it maximizes the use of both the Federal and State 
financial aid.
    The Early Assessment Program identifies students before 
their senior year--that is, students in the 11th grade--who 
need to do additional work in English and mathematics prior to 
entering the California State University. That is, they need to 
demonstrate the requisite skills expected of a graduating high 
school senior.
    More importantly, it provides an opportunity for students 
in high school to use their 12th grade year very effectively to 
master the requisite English and math skills expected again of 
a graduating high school senior, not only going in the 
workforce but entering the California State University.
    We have attached to our testimony a copy of a presentation 
which we would ask be included as part of the record. While 
this program is voluntary, nearly 200,000 students Statewide 
have taken this. It is voluntary on the part the students in 
11th grade. Nearly 70 percent of the students will take it in 
math and about 15 percent will take it in English, and they are 
using the senior year most effectively to try to increase those 
skills that they enter school without the need for remediation.
    Another important academic outreach program is our Steps to 
College poster. Members have been provided a copy of the 
poster, but it provides to information about academic 
preparation and financial aid beginning in 6th grade through 
12th grade.
    For the next wave of California students, many of whom are 
the first in their families to go to college, information and 
planning is absolutely critical. To reach out to under-served 
communities and students, the California State University has 
been working with churches throughout the State of California. 
Earlier this year, we held what we call Super Sunday in south 
central L.A. We worked with eight churches and reached over 
20,000 people. Our chancellor and president were invited to 
make presentations during the services. We handed out over 
10,000 posters to families, their students and grandparents and 
aunts and uncles. It was a very successful program.
    Foster Youth is another group of students that we are 
providing services to that are often overlooked. These 
students, as wards of the court, have special needs that we 
need to attend to.
    There is also most recently a veterans' initiative that we 
have begun with the Governor of the State of California as well 
as the military base commanders to provide access to men and 
women exiting California, in California. There are about 60,000 
veterans who are exiting California, the military, and we want 
to provide access to them.
    TRIO and GEAR UP is a very important program to us as well. 
It reduces the need for remediation. About 11 of our campuses 
are actively engaged in this, and we continue to support and we 
are pleased that H.R. 609 continues to maintain TRIO and GEAR 
UP as separate programs which we would continue to request 
occur.
    Last, financial aid. The Pell Grant continues to represent 
the foundation of the Federal student financial aid program. It 
is absolutely essential to us. We note that in H.R. 609 the 
College Access and Opportunity Act has increased the authorized 
maximum Pell Grant, and we do in fact urge the subcommittee 
members to work with Appropriations Committee to increase the 
funded award.
    Thank you very much.
    Chairman Keller. Well, thank you, Mr. Jones.
    [The prepared statement of Mr. Jones follows:]

  Prepared Statement of Allison G. Jones, Assistant Vice Chancellor, 
                   California State University System

Introduction
    Chairman Keller, Ranking Member Kildee, and members of the 
subcommittee, thank you for inviting me to discuss the California State 
University (CSU) programs that support access to California's neediest 
students and the importance of federal student financial aid to help 
achieve that goal. The CSU commends the Committee for its attention to 
the important task of ensuring that every student that chooses to do so 
can pursue a postsecondary education.
    Today, I would like to share with you several key outreach programs 
that the CSU has developed and implemented, as well as federal and 
state programs in which the CSU is a key partner: the Early Assessment 
Program (EAP), Steps to College poster, Super Sunday, foster youth 
programs, California Veterans Education Opportunity Partnerships, Math, 
Engineering, and Science Advancement (MESA), TRIO, and GEAR UP. Each of 
these programs support student academic preparation and access. I will 
conclude with a few remarks about federal and state student financial 
aid. But first, a few words about the CSU and its students.
The California State University--Background
    Few, if any, university systems can match the scope of the CSU 
system. The CSU is the largest four-year university system in the 
country, with 23 campuses, approximately 405,000 students and 44,000 
faculty and staff. The CSU's mission is to provide high-quality, 
affordable education to meet the ever-changing needs of the people of 
California. Since the system's creation in 1961, it has awarded about 2 
million degrees. We currently award approximately 84,000 degrees each 
year.
    The CSU plays a critical role in preparing outstanding candidates 
for the job market. Our graduates help drive California's aerospace, 
healthcare, entertainment, information technology, biomedical, 
international trade, education, and multimedia industries. The CSU 
confers 65 percent of California's bachelor's degrees in business, 52 
percent of its bachelor's degrees in agricultural business and 
agricultural engineering, and 45 percent of its bachelor's degrees in 
computer and electronic engineering. The CSU also educates the 
professionals needed to keep the state running. It provides bachelor's 
degrees to teachers and education staff (87 percent), criminal justice 
workers (89 percent), social workers (87 percent) and public 
administrators (82 percent). Altogether, about half the bachelor's 
degrees and a third of the master's degrees awarded each year in 
California are from the CSU.
    One key feature of the CSU is its affordability. For 2005/06, the 
CSU's systemwide fee for full-time undergraduate students is $2,520. 
With individual campus fees added in, the CSU's total fees average 
$3,164, which is the lowest among any of the CSU's comparison public 
institutions nationwide. We try to keep our costs down--and in fact 
Governor Schwarzenegger has proposed buying out a fee increase 
scheduled for this year--yet many of our students continue to have 
great financial need. Approximately half of our students receive 
financial aid.
The California State University--Its Students
    CSU students are not necessarily the traditional 18- to 22-year-
olds. A recent survey of CSU students revealed the following about 
students enrolled at the CSU:
     The average undergraduate age is 24,
     About 85 percent are commuters,
     44 percent are independent from their parents,
     Nearly two in five have dependents,
     Four out of five have jobs, and 36 percent work full time,
     About one in five is in the first generation in their 
family to attend college,
     40 percent come from households where English is not the 
main language spoken, and
     54 percent of CSU students are students of color.
    The CSU prides itself on its ability to provide college access to 
students across California's increasingly diverse population. The CSU 
provides more than half of all undergraduate degrees granted to the 
state's Latino, African American and Native American students.
    Additionally, CSU students are closely connected and committed to 
the communities in which they live. More than 185,000 CSU students 
participate in community service annually, donating nearly 30 million 
hours, the minimum wage equivalent of $200 million.
Public/Private Partnerships
    Public-private partnerships are vital for higher education. In 
today's economy, higher education is more important than ever. 
According to the Census Bureau, a college graduate's lifetime earnings 
($2.1 million) are almost double that of a high school graduate. But a 
higher degree is more than just a ticket to a better job. It can 
improve the economic situation of both individuals and their 
communities. That's why it is in everyone's interest--communities, 
businesses, and educators--to help students succeed in school and 
pursue the highest degree they can. In fact, we cannot state this fact 
strongly enough: The future success of our country's economy is 
inextricably linked with the educational attainment of our students.
    Given this conviction, the CSU recently sought to measure its 
impact, economic and otherwise, on California's businesses and 
communities. A comprehensive study of the CSU and its campuses found 
that CSU-related expenditures create $13.6 billion in economic 
activity, support 207,000 jobs and generate $760 million in state taxes 
in a year. The report also found that the state of California reaps a 
four-fold benefit from every dollar it invests in the CSU. This study 
further cemented our belief that the CSU's work is tightly bound to 
that of our local communities and economy. Essentially, we see 
ourselves as building bridges--building continuity across the spectrum 
from education, to the economy and workforce, to the community.
K-12 Partnerships
    A good place to start this discussion is at the very beginning of 
the education-workforce continuum, in the public schools. Given that 
the public schools are the source of nearly all CSU students, the CSU 
spends a great deal of time building bridges with our state's K-12 
partners. Specifically, we have been reaching out to middle and high 
schools to try to help more students prepare for and get ready to 
succeed in college.
    When we say that 54 percent of the CSU's students are students of 
color, it may sound like a large number, but that's not necessarily the 
case when you look at the students who are in the pipeline. Right now, 
approximately two-thirds of our state's K-12 students are students of 
color. CSU believes the future of higher education in this country 
depends on its ability to reach those students of color and students 
from traditionally underrepresented groups whom we have not yet 
reached.
Early Assessment Program
    One of the most important tools the CSU has developed to reach high 
school students is the Early Assessment Program, known in California as 
simply the ``EAP.'' CSU created this early assessment of college 
readiness program in collaboration with the California Department of 
Education and the State Board of Education. It provides 11th grade 
students a 'snapshot' of their mathematics and English/language arts 
proficiency. The test incorporates the CSU's placement standards into 
the California Standards Tests for English and math.
    The EAP identifies students--before their senior year--who need to 
do additional work in English and/or mathematics prior to entering the 
CSU. The EAP informs students, families, and high schools of a 
student's readiness for college-level work in these subjects. Most 
importantly, it provides an opportunity for the high school to work 
with the students while they are enrolled in 12th grade to help them to 
master the requisite English and math skills expected of a graduating 
high school senior. Attached to this testimony is a copy of CSU's 
PowerPoint that provides more detail about the three key components of 
the EAP: (1) early assessment in 11th grade in English and mathematics, 
(2) supplemental high school preparation in 12th grade, and (3) teacher 
professional development designed to equip high school English and 
mathematics teachers with the tools necessary to ensure student mastery 
of the content standards. Although the EAP is voluntary, over 186,000 
students took the EAP test last year.
``Steps to College'' Poster
    Another important outreach effort is our ``Steps to College'' 
poster. For the next wave of California's students, many of whom are 
the first in their families to go to college, planning information is 
critical. The CSU created this popular poster, which describes for 
middle and high school students (grades 6 -12) and their families the 
steps they need to take to prepare and apply for college and financial 
aid. The poster, which has served as a model for similar publications 
at universities from Nevada to Pennsylvania, won a silver medal in the 
CASE Circle of Excellence International competition.
    For the last six years, we have distributed copies of the poster in 
English and Spanish to middle and high schools throughout California. 
Last year, we partnered with Boeing to create additional English/
Spanish versions of the poster and expand the distribution to local 
libraries and youth organizations. We also partnered with three Asian 
newspapers to print and distribute copies of the poster in Chinese, 
Korean, and Vietnamese.
Community Partnerships
    Over the past year, CSU has held town hall meetings with African-
American, Hispanic, and Vietnamese communities to discuss how 
collectively we can better reach out to and serve students in those 
communities. We are continuing to meet with working groups from these 
and other traditionally underrepresented communities to help them to 
maximize their chances for success in higher education by providing 
information on how to prepare academically and financially for college. 
We are sharing with these communities the value of a CSU education as 
the bridge to economic opportunity and professional success. In 
addition to providing information to students and their families, the 
CSU is providing an opportunity to inform leaders and members of these 
communities about CSU's role and impact on educating African American, 
Hispanic, and Vietnamese students. These activities are building long-
term partnerships with African American, Hispanic, and Vietnamese 
community leaders who work with and influence the youth in their 
respective communities.
Super Sunday
    For example, CSU is working with churches in the Los Angeles Basin 
that serve large African-American congregations in an effort to 
increase the pool of African-American students, particularly male, to 
be eligible to attend a four-year university. Earlier this year, we 
held ``Super Sunday'' at West Angeles Cathedral and other churches in 
the Los Angeles area to provide information for students and their 
families about college. We went to eight churches and reached over 
20,000 people. We handed out the ``Steps to College'' poster to about 
10,000 parents, grandparents and students. Our follow-up has created a 
contact person at every church who is dedicated to college knowledge 
and college preparation. Previously only one church had a contact 
person for higher education. In the near future, we will be holding 
similar events in the Oakland area.
    We have also partnered with the Tomas Rivera Policy Institute and 
Sallie Mae on a large grant to support ``Kids to College,'' aimed at 
helping sixth graders in underserved communities learn what it takes to 
get to college.
Foster Youth
    In 1996, the California Legislature called upon the CSU and the 
California Community Colleges (CCC) to expand access and retention 
programs to include outreach services to emancipated foster youth in 
order to encourage their enrollment in a CSU or a CCC. The CSU and the 
California Community Colleges were asked to review housing issues and 
to provide technical assistance to assist those prospective foster 
youth students in completing admission applications and financial aid 
applications for students who voluntarily disclosed their status as 
emancipated former foster youth.
    The Independent Living Program (ILP), administered by the 
California Department of Social Services (CDSS) through the local 
county social services departments and through the CCC, enables 
eligible foster youth to achieve self sufficiency prior to leaving the 
foster care support system by providing independent living skills 
assessments and providing services based on them. The ILP coordinators 
work with local area CSU campuses and county foster youth programs to 
provide outreach and student services. At the request of Chancellor 
Charles B. Reed, CSU campuses developed programs that addressed the 
special needs of foster youth enrolling on their campuses, including 
special attention to counseling foster youth about housing 
opportunities available on campus and in the local community during the 
summer preceding enrollment, Thanksgiving vacation, winter recess, and 
spring break.
    CSU Fullerton's Guardian Scholars Program is a representative 
example of activities in which many CSU campuses are engaged. The 
program is committed to supporting ambitious, college-bound students 
exiting the foster care system. CSU Fullerton provides a comprehensive 
program that contributes to the quality and depth of the student's 
university experience. It serves as a resource for young adults by 
assisting in their development and equipping them with the educational 
and interpersonal skills necessary to become self-supporting, community 
leaders, role models, and competent professionals in their selected 
fields.
    Difficult situations and backgrounds have left some foster care 
youth with significant hardships in their lives. Many of these young 
people have overcome these challenges. Their academic performance in 
high school has qualified them to meet CSU Fullerton admission 
standards. As wards of the court, these foster care youth become 
emancipated at age 18 and are forced to make a difficult transition to 
adulthood often without traditional family support. By awarding a five-
year scholarship, the Guardian Scholars program provides the 
opportunity to change individual lives and make dreams come true.
    Each fall semester CSU Fullerton endeavors to admit ten new 
students into the Guardian Scholars program with an ultimate goal of 
reaching fifty scholars in the program at one time. In addition to all 
annual fees, academic tuition, textbooks and supplies, the program 
provides support to emancipated foster youth such as an orientation to 
university life, year-round, on-campus housing, on-campus student 
employment opportunities, one-to-one counseling, peer and faculty 
mentoring, financial aid application assistance, assistance with off-
campus employment in career fields, and post-graduation career planning 
and assistance.
    The Guardian Scholars program is a working partnership between the 
private sector and public agencies designed to achieve significant 
synergies which allow us to support our students effectively and cost-
efficiently. CSU Fullerton, the Orangewood Children's Foundation, 
public agencies, and private citizens create a powerful team dedicated 
to assisting deserving foster youth to achieve their dreams of a 
college education, realize true independence and reach their full 
potential. We urge Congress to encourage these types of programs on a 
national level.
California Veterans Education Opportunities Partnership
    The CSU has pledged to work with Governor Schwarzenegger and 
California's military base commanders to reach out to military men and 
women who are on active duty and who are exiting the service to 
facilitate their transition to college. Last month, the Governor 
announced the formation of the Veterans Education Opportunities 
Partnership, which will create a model for veterans' education by 
developing an academic outreach, admission, and enrollment plan that 
targets and assists the approximately 60,000 California veterans 
exiting military service each year. The partnership consists of senior 
administration officials, military leaders, and leaders of the CSU, UC, 
and the CCC system. The partnership will seek to work cooperatively to 
provide education opportunities to veterans who are California 
residents or who are stationed in California at the time of their exit 
from the military.
    The total active U.S. Military force includes 1.42 million men and 
women of whom 160,000 (11.2 percent) come from California. 
Approximately 175,000 active duty men and women are stationed in 
California. An additional 25,000 serve in the Reserves. The Montgomery 
GI Bill education benefit is the number one reason American men and 
women enter the U.S. military. Therefore, each member of the military 
pool of over 200,000 men and women serving in California is a potential 
candidate for admission to one of California's 109 California Community 
Colleges, 23 CSU campuses, and 10 UC campuses.
    Approximately 60,000 of a pool of over 200,000 men and women exit 
military service annually. According to the U.S. Department of Defense, 
the average age of exiting Veterans is 25.3 years. Eighty-four percent 
are male, and sixteen percent are female. Ninety-six percent of exiting 
Veterans are enrolled in the Montgomery GI Bill, but only fifty percent 
are using their Montgomery GI Bill benefits. The CCC, the CSU, and the 
UC represent education opportunities for exiting Veterans, both for 
California residents and for service members stationed in California.
    A Memorandum of Understanding implementing the California Veterans 
Education Opportunities Partnership will be signed by the Governor 
Arnold Schwarzenegger, Chancellor Charles B. Reed for CSU, President 
Robert C. Dynes for UC, and Chancellor Mark Drummond for the California 
Community Colleges. The MOU will implement California's vision to be 
the leader in becoming ``Veteran friendly'' for college and university 
education. California will become the model state for Veteran education 
and will ensure Veterans who are California residents or who are 
stationed in California at the time of their exit from the military 
access to California colleges and universities.
MESA (Math, Engineering, and Science Achievement)
    Since 1970, MESA's academic development programs have supported 
educationally disadvantaged students to encourage them to excel in math 
and science studies and to graduate with degrees in engineering, 
science, and technology. MESA tries to reach economically and 
educationally disadvantaged students. This program involves the CSU, 
University of California (UC), California Community Colleges, 
Independent Colleges, and industry partners. It is funded by the 
California legislature, corporate contributions, and grants.
    The MESA Schools Program serves middle and senior high school 
students throughout California to introduce them to math and science. 
MESA supports their mastery of these content areas in an effort to 
encourage them to enroll in college in math-based majors. This program 
partners with teachers, administrators, school district officials, and 
industry representative to provide an academic enrichment model. The 
MESA Community College Program supports community college students so 
they will transfer to four-year universities as majors in math, 
engineer, science, and technology. The MESA Engineering Program centers 
provide support to educationally disadvantaged students at four-year 
colleges to attain engineering or computer science baccalaureate 
degrees.
    Seventy-seven percent of MESA students successfully complete 
Algebra I before the 10th grade. More encouraging, fifty-four percent 
complete the CSU and UC college preparatory high school course pattern 
consisting of fifteen courses. Of MESA high school graduates, fifty-
seven percent enrolled in college as math, science, or engineering 
majors.
    Nine of nineteen MESA pre-college sites and eight of ten MESA 
engineering programs are located on CSU campuses. Fifty-seven percent 
of MESA's pre-college students were served by centers located on CSU 
campuses, and for the past five years, over twenty-five percent of MESA 
high school graduates have enrolled at a CSU campus. Nearly fifty 
percent of MESA community college students transferred to CSU campuses.
TRIO and GEAR UP
    ``The California State University joins the education community in 
full support of the GEAR UP program, which is vital to preparing 
underrepresented students for college, encouraging persistence and 
ultimately graduation. Skills gained through the GEAR UP program will 
reduce the need for remediation, saving students and institutions time 
and money. This is a program we can all be proud of for what it does 
for students.''

            California State University Chancellor Charles B. Reed.

    Gaining Early Awareness and Readiness for Undergraduate Programs 
(GEAR UP) was authorized in the Higher Education Amendments of 1998 to 
provide low-income middle school students the skills, encouragement, 
and academic preparation needed to enter and succeed in high school and 
postsecondary education through partnerships between schools, 
universities, the private sector, and community organizations. GEAR UP 
provides six-year grants to states and partnerships to strengthen 
academic programs and student services at participating high-poverty 
middle and high schools. Grantees serve an entire cohort of students 
beginning no later than the seventh grade and follow the cohort through 
high school. GEAR UP funds are also used to provide college 
scholarships to low-income students.
    Eleven CSU campuses have been designated as the fiscal agent for 
GEAR UP Partnership Grants totaling over $112 million since the 
inception of the program in 1999. These partnerships include at least 
one low-income middle school and at least two other partners. CSU 
campuses are also participants in other partnership grants for which a 
local school district is the fiscal agent. For example, four CSU 
campuses are participating in five 2005 partnerships: CSU Long Beach is 
a participant in a partnership grant awarded to the Bellflower Unified 
School District; CSU Northridge, with two partnership grants awarded to 
the Los Angeles Unified School District (LAUSD); CSU Dominguez Hills, 
with LAUSD; and San Diego State University with Sweetwater Unified 
School District.
    An example of a successful GEAR UP program at CSU East Bay is 
Successful Options for Academic Readiness (SOAR). The campus received a 
$2.808 million federal GEAR UP Partnership Grant to promote access to 
and success in higher education for low-income students enrolled in 7th 
grade in 14 of Oakland's middle schools. SOAR consists of fours strands 
that will affect the needs of the middle school students: an academic 
strand, a parent strand, a partnership strand, and a systemic change 
strand. In addition to the partnership grants received by CSU campuses, 
California was awarded a second State GEAR UP Grant for a total of $21 
million over six years, having just completed administering its first 
six-year grant totaling $30 million that was awarded in 1999. A total 
of 196,000 low-income students in 187 middle schools in 80 school 
districts have been served by California GEAR Up. The number of schools 
represents 15.6 percent of all middle schools in California. The number 
of students represents 31 percent of all students who attend a low-
income middle school in California. California receives the largest 
amount of GEAR UP resources of any state.
    An important outcome of GEAR UP is the documented increases in 
student academic preparation. California GEAR UP middle schools have 
offered more college preparation classes, and the number of students 
taking college preparatory courses has grown.
     Participating GEAR UP middle schools have increased the 
number of college preparatory sections in English/Language Arts by 54 
percent; Mathematics, by 46 percent; Science, by 24 percent; and Social 
Sciences, by 92 percent;
     20 percent more students are enrolling in Algebra in 
middle schools;
     64 percent of the students are enrolled in advanced 
mathematics courses in high school; and
     48 percent of the students are taking Honors level courses 
in English in high school.
    GEAR UP is distinct from other federal and state initiatives. This 
program employs partnerships committed to serving and accelerating the 
academic achievement of cohorts of students through their high school 
graduation. GEAR UP partnerships supplement rather than supplant 
existing reform efforts, offer services that promote academic 
preparation and the understanding of necessary costs to attend college, 
provide professional development, and continuously build capacity so 
that projects can be sustained beyond the term of the grants.
    The CSU notes that the Higher Education Act (HEA) reauthorization 
legislation, which originated in this subcommittee and recently passed 
the House, maintains TRIO and GEAR UP as separate programs, and CSU 
thanks you for that. The CSU joins the higher education community in 
support of both the TRIO and GEAR UP programs and proposes that these 
important programs be expanded to serve an increased number of 
disadvantaged and low-income students. The TRIO and GEAR UP programs 
are vital to preparing underrepresented students for college, 
encouraging persistence and ultimately graduation. Skills gained 
through the TRIO and GEAR UP programs reduce the need for remediation, 
saving students and institutions time and money. While these programs 
complement each other, each has a unique purpose and method, and each 
serves a unique cohort of students. Accordingly, the CSU supports 
keeping these two programs distinctly separate and complementary.
    In the spirit of today's topic to encourage more public-private 
partnerships to complement federal investment in student aid, the CSU 
proposes three modifications to the TRIO and GEAR UP programs. First, 
the TRIO program should be expanded to include community-based 
organizations with experience in serving disadvantaged youth. Second, 
incentives should be created within both programs to encourage middle 
schools and high schools to form partnerships with colleges to develop 
college preparatory programs for disadvantaged students. Third, 
incentives within these programs should be created to encourage and 
prepare underrepresented students to pursue coursework and careers in 
fields such as science, technology, engineering, and mathematics (the 
``STEM'' fields).
Federal Financial Aid
    Pell Grant Program--The Pell Grant program continues to represent 
the foundation of federal student financial aid programs. As the most 
need-focused federal student aid program, a strong Pell Grant program 
is essential to closing the gap in college enrollment and completion 
that exists between low-income students and their more affluent peers. 
A continued commitment to the Pell Grant program, and to increases in 
the maximum Pell Grant award, are essential to ensuring access for 
disadvantaged students. Across the CSU System, 116,000 students receive 
$318 million in Pell Grant awards. The average CSU Pell Grant recipient 
receives $2,724 per year from the Pell Grant program, and Pell Grants 
account for 19 percent of the funds awarded to CSU students. On behalf 
of CSU students across California, I would like to thank the members of 
the Committee for that support. I also note that HR 609, the College 
Access and Opportunity Act, increased the authorized maximum Pell Grant 
award. I would urge members of the subcommittee to work with the 
Appropriations Committee to increase the funded maximum award.
    In addition, there continues to be a need for a year-round Pell 
Grant. Year-round study enables students to complete their academic 
degree in less time than might otherwise be required. This reduces the 
amount of time that a student spends in school, saves the student money 
(and reduces borrowing), and permits more efficient use of campus 
facilities and resources at a time when those resources are being 
stretched due to increasing enrollments and tight state budgets. 
Increasing enrollment demand will be a national trend for the 
foreseeable future, and we fully expect a number of institutions to 
utilize a year-round calendar as a resource management strategy. Such a 
move may also increase student persistence and graduation from college.
    The CSU strongly endorses the subcommittee's efforts to provide 
additional Pell Grant funds to students for year-round study. On behalf 
of the CSU, I also want to thank you for including specific provisions 
which will allow students at the CSU and at other institutions serving 
large numbers of non-traditional students to participate. Finally, I 
would also note that probably the most beneficial year-round Pell grant 
provision, both for students and for institutions, would be to permit 
utilization of Pell Grants for students who enroll for summer study in 
order to complete their remaining degree requirements, even if they do 
not need to enroll full-time, rather than having them enroll for an 
entire term in the subsequent academic year. Such a provision should be 
open to students at any Title IV eligible institution.
    Campus-Based Programs--The Campus-Based programs (Perkins Loans, 
Federal Work-Study, and Supplemental Educational Opportunity Grants 
(SEOG)) are vital to the CSU's efforts to attract, retain, and graduate 
disadvantaged students. Unique to these programs is the flexibility 
they provide to financial aid administrators to package aid awards to 
best meet the needs of their students. In addition, these programs 
require an institutional match, which leverages the federal investment 
to provide even more aid to more students. The CSU knows that these 
programs work, and joins the higher education community in urging 
increased funding for them. In addition, we thank you for continuing 
the Perkins Loan program, and again ask members of the subcommittee to 
work with the Appropriations Committee to fund the Perkins Loan capital 
contribution.
California Financial Aid
    California is unique in that its Governor and Legislature enacted a 
state grant entitlement program in 2000. This historic financial aid 
program opened university doors for thousands more students. By taking 
this bold step, California announced to all financially needy students 
that if they earn the grades and are eligible for college, they are 
assured a state grant to help pay the entire cost of CSU fees as well 
as fees at the UC and grants to offset part of the tuition at other 
eligible California colleges.
    Because of fiscal constraints in 2000, however, some provisions 
were included in the authorizing language restricting entitlement 
grants to students under the age of 24. Because of this restriction, 
the state also implemented a Competitive Cal Grant program with a 
limited number of grants. Recently, legislation was introduced in the 
California Legislature to expand further the eligibility for Cal Grant 
Entitlement awards by increasing the eligibility for the entitlement 
grant from 24 to 27 and by doubling the number of competitive grants.
Summary
    All of these partnerships, and many, many others at our campuses, 
do more than simply enrich our existing programs. They serve as 
launching pads from which we are able to create new initiatives and 
ideas, and they allow us to identify and meet the ever-changing needs 
of our state's vital industries. The end result is better preparation 
of students who are ready to enter the working world, filled with 
current and relevant knowledge that will allow them to ``hit the ground 
running'' in their chosen fields. It is these graduates who will form 
the basis for our future workforce, and our nation's future economic 
success.
    Thank you again for taking the time to hear about the CSU system 
and its public/private partnerships. Thank you also for your support 
for the federal student financial aid programs that are so important to 
CSU students. I will be glad to answer any questions you might have, 
and look forward to working with you in the future.
                                 ______
                                 
    Chairman Keller. Mr. Salandy.

STATEMENT OF RASSAN SALANDY, DIRECTOR OF UNIVERSITY RECRUITMENT 
           AND PUBLIC RELATIONS, THE POSSE FOUNDATION

    Mr. Salandy. Good morning and thank you for inviting the 
Posse Foundation to testify before this distinguished group. My 
name is Rassan Salandy, and I am the Director of University 
Recruitment for the Foundation.
    The Posse Foundation began back in 1989 because of a 
student who said I would have never dropped out of college if I 
had my posse with me. Now, back in the '80's, posse was sort of 
a cool term. Unfortunately, it no longer is. But the idea is 
basic, you know, a group of friends going off to school that 
can provide a support network for each other.
    So that is exactly what the Foundation proceeded to do, 
which was locate students, multi-cultural, and place them in a 
multi-cultural team of 10 or so to be a network of support and 
also be catalysts of change on campus.
    To date, we have sent over 1,500 students off to college. 
They have won over $142 million in college scholarships, and 
they are persisting at a rate of 90 percent.
    Let me say that again. They are persisting at a rate of 90 
percent, which I am sure most of you know is well above the 
national average.
    We have got three goals. The first goal is to expand the 
pool from which top and selective universities recruit 
students. The second goal is to transform campus environments 
so they can become more welcoming places to students from all 
backgrounds. And, finally, we want to provide the kind of 
support our students will need to graduate and take on 
leadership positions in the workforce.
    So, to accomplish that, the program is divided into four 
parts. We have got a screening process, we have got an 8-month 
pre-collegiate training program, a 4-year on campus program and 
a career program; and, if I have time, I would like to talk 
about each of these in turn.
    The interview process, what we have got--what we use is a 
tool called the Dynamic Assessment Process, dynamic because it 
places students in an interactive situation. It allows us to 
really zero in on those students who show exceptional 
leadership qualities and academic promise. It is a tool that 
has worked for us.
    Beginning from--so if a student is selected for a Posse 
scholarship, beginning from January all the way through to 
August, 8 months, every week they meet for 2-hour weekly 
workshop sessions with their peers and posse staff to work on 
issues related to leadership development, academic 
preparedness, team building and cross-cultural dialog.
    Once on campus, they hit the campus--they hit the ground 
running, really. They continue to meet weekly with their peers 
in group meetings and also with a mentor that is established by 
the universities we partner with to get advice. We as a Posse 
staff also make visits to the campuses to check in with campus 
liaisons and mentors and our students.
    There is also a program component called the campus 
PossePlus Retreat, which is an effort to bring the larger 
campus community into the dialog and conversation that is 
taking place within Posse cohorts.
    Once students graduate and even during their time, we also 
have a career program that does what you think a career program 
ought to do, which is provide assistance in writing resumes and 
how do you conduct yourself in an interview. But we have also 
managed to develop some pretty incredible partnerships with 
high-profile companies and organizations that offer our 
students internships and other career-enhancing opportunities.
    So I hope what is becoming obvious about the program and 
what is unique about it is how comprehensive it is. It starts 
with the student in their high school years, and it follows 
them through to graduation and even into the workforce, and I 
think that is what make the Posse Foundation program unique.
    There are thousands and thousands of students whom programs 
like Posse could reach with increased governmental support to 
institutions of higher education. What we are seeing time and 
time again is that, even with scholarship awards, many students 
are struggling to make ends meet. Without Federal funding, 
programs like ours cannot grow or work on a large scale. The 
selective universities and colleges with whom we work are 
dependent on Federal funding, the Federal funding they receive, 
in order to recruit a diverse socioeconomic student body.
    Our partner institutions financially support our students 
as much as they can, but if they have to fully fund or to fund 
in great proportions every poor kid who qualified, they 
couldn't afford a program like Posse.
    In summary, what we are able to do for the urban students 
we serve, a student population that is really high need, 
depends critically on the financial aid packages that our 
university partners are able to offer our students.
    Thank you.
    Chairman Keller. Thank you, Mr. Salandy.
    [The prepared statement of Mr. Salandy follows:]

     Prepared Statement of Rassan Salandy, Director of University 
         Recruitment and Public Relations, the Posse Foundation

The Posse Mission
    Posse started because of one student who said, ``I never would have 
dropped out of college if I had my posse with me.'' The Posse 
Foundation, founded in 1989, identifies public high school students 
with extraordinary academic and leadership potential who may be 
overlooked by traditional college selection processes. The Foundation 
extends to these students the opportunity to pursue personal and 
academic excellence by placing them in supportive, multicultural teams 
(``Posses'') of 10 students. Posse recruits outstanding student leaders 
in Boston, Chicago, Los Angeles, New York, and Washington, D.C and 
sends them to some of the top colleges and universities in the country. 
This year alone, over 6,500 students competed for 305 slots. Posse has 
become a highly selective program whose reputation continues to grow. 
Nevertheless, there is still much room for growth.
    Posse's partner universities and colleges award Posse Scholars 
four-year, full-tuition leadership scholarships. Currently, Posse has 
partnerships with 24 competitive colleges and universities. They are: 
Babson, Brandeis, Bryn Mawr, Bucknell, Carleton, Claremont McKenna, 
Centre, Colby, Denison, DePauw, Dickinson, Franklin & Marshall, 
Grinnell, Hamilton, Lafayette, Middlebury, Oberlin, Pomona, Trinity, 
Union College, University of Illinois-Urbana-Champaign, University of 
Wisconsin-Madison, Vanderbilt, and Wheaton. These incredible 
institutions work together with Posse to provide students the support 
they need to become outstanding leaders.
    The Posse Foundation has three goals. Posse aims to 1) expand the 
pool from which top colleges and universities can recruit outstanding 
young leaders from diverse backgrounds, 2) help these institutions 
build more interactive campus environments so that they can become more 
welcoming institutions for people from all backgrounds and 3) ensure 
that Posse Scholars persist in their academic studies and graduate so 
they can take on leadership positions in the workforce. Moreover, The 
Posse Program achieves its goals through four program components: 1) 
The Dynamic Assessment Process (DAP), 2) an eight-month Pre-Collegiate 
Training Program, 3) a four-year Campus Program, and 4) Posse's Career 
Program. What follows is a description of each of these components.
Recruitment
    From September to December each year, Posse conducts the Dynamic 
Assessment Process (DAP), a unique evaluation method designed to 
identify young leaders who might be missed by traditional admissions 
criteria, but who can excel at selective colleges and universities. 
Using non-traditional forums to evaluate potential, DAP offers students 
an opportunity to demonstrate their intrinsic leadership abilities, 
their skill at working in a team setting, and their motivation and 
desire to succeed. DAP has proven to be an extremely effective tool for 
identifying outstanding young leaders. In a three-part process, 
including large group and individual interviews, Posse staff and 
university partner administrators ultimately select a diverse group of 
10 students for each college or university, thus forming a ``Posse.''
Pre-Collegiate Training
    From January to August of their senior year in high school, Posse 
Scholars meet weekly with staff trainers and their Posse peers for two-
hour workshops. The Training Program consists of workshops that address 
four areas: 1) team building and group support, 2) cross-cultural 
communication, 3) leadership and becoming an active agent of change on 
campus and 4) academic excellence. The goal of the training program is 
to prepare Scholars for leadership roles on campus and for the high-
level academic expectations of their colleges.
The Campus Program
    Posse continues to offer support to Scholars once on campus. The 
Campus Program works to ensure the retention of Posse Scholars and to 
increase the impact of the Scholars and the Program on the college 
campus. Posse staff members visit each university four times a year for 
meetings with Posse Scholars, campus liaisons, and on-campus mentors. 
Each mentor meets weekly with the Posse as a team and with individual 
Scholars every two weeks during the first two years in college. In 
addition, Posse facilitates an annual weekend-long PossePlus Retreat 
attended by members of the larger student body, faculty, and 
administration, with the goal of discussing an important campus issue 
identified by Posse Scholars.
The Career Program
    The Career Program-which consists of an internship component, 
career services, and an alumni network-supports Posse Scholars as they 
transition from being leaders on campus to becoming leaders in the 
workforce. Posse plays an integral role in the professional development 
of these young people by providing them with the tools and 
opportunities necessary to secure highly competitive and career-
enhancing internships and jobs. One of the ways Posse achieves this is 
by partnering with exceptional companies and organizations, both 
nationally and abroad.
Accomplishments
    Since 1989, Posse has sent over 1,500 students to selective 
colleges and universities across the country. Posse Scholars have won 
over $142 million in scholarships and are persisting in their studies, 
graduating at a rate of over 90 percent-a rate significantly higher 
than the national average. Moreover, Posses are having a dynamic effect 
on campus. Posse Scholars are joining and assisting existing student 
organizations, sometimes helping more tentative groups to feel more 
comfortable voicing their concerns and achieving their goals. They are 
establishing new student-run organizations on campus that continue 
after they graduate. In fact, over 70 percent of Posse Scholars found 
new campus organizations or go on to become presidents of already 
existing ones. Posses also help to increase the numbers of Latino, 
African American, Asian, and other students from diverse backgrounds in 
the student populations at Posse partner institutions by helping to 
make the campus more appealing to students from all backgrounds. The 
benefits of the program extend well beyond the success rates of 
individual scholars.
Long-Term Goals
    Posse currently has over 300 alumni and, as mentioned above, is 
partnered with 24 highly selective universities and colleges. By the 
year 2020 The Posse Foundation expects to be operating out of 10 
cities, partnered with approximately 80 universities, and boasting an 
alumni network of over 7,000. Posse is an organization driven by the 
belief that more can be done to identify students with exceptional 
promise and academic ability. These are extraordinarily talented and 
motivated young people who, if just given the opportunity, will excel.
The Posse Concept
    The concept of a Posse works for both students and college 
campuses, and is rooted in the belief that a small, diverse group of 
talented students (a Posse) carefully selected and trained, can serve 
as a catalyst for increased individual and community development. As 
the United States becomes an increasingly multicultural society, Posse 
believes that the leaders of this new century should reflect the 
country's rich demographic mix, and that the key to a promising future 
for our nation rests on the ability of strong leaders from diverse 
backgrounds to develop consensus solutions to complex social problems. 
The primary aim of the Posse Program is to cultivate these leaders of 
tomorrow.
                                 ______
                                 
    Chairman Keller. Mr. Merisotis.

 STATEMENT OF JAMIE P. MERISOTIS, PRESIDENT, THE INSTITUTE FOR 
                    HIGHER EDUCATION POLICY

    Mr. Merisotis. Thank you very much, Mr. Chairman and 
Ranking Member Kildee, Chairman McKeon and members of the 
subcommittee. Thank you for the opportunity to be here.
    Improving access to higher education continues to be one of 
the most important contributions that the Federal Government 
can make to our national well-being. But I believe that we now 
stand at a critical juncture and face a great risk of creating 
a society cleaved along very distinct lines, those who are able 
to go to and complete college and those who are not.
    According to the Census Bureau, while 75 percent of high-
income students enter college today, only 31 percent of low-
income students do. Federal Advisory Committee on Student 
Financial Assistance Data clearly show that limited financial 
aid and declining affordability is already prohibiting hundreds 
of thousands of college qualified high school graduates from 
attending college.
    So the discussion about Federal policy and paying for 
college must focus on making educational opportunities possible 
for those who otherwise would not do so. It is not simply that 
it is the right thing to do, but it is that it is in our 
collective economic and social self-interest to do so.
    As the chairman has already noted, workers who have gone to 
college have low unemployment rates; and projections show 
almost all of the future job growth is in fields that require a 
college education. The significantly higher earnings for 
college graduates result in more government revenue that 
supports our national defense, economic development and Social 
Security. Increasing the number of college graduates also saves 
millions of dollars in avoided social expenditures every year 
as a result of improved health, reduced crime and reduced 
welfare and unemployment.
    Unfortunately, it is not hard to look at the recent Federal 
policy environment for higher education and conclude that there 
has been very little attention paid to the public good that 
higher education contributes to our society. The debate over 
the Higher Education Act reauthorization, the President's 
budget and the disappointing $12 billion in cuts made in the 
reconciliation bill last year all suggest that this Congress is 
focused on the belief that individuals are the primary 
beneficiaries and therefore should shoulder the burden of 
paying, adding to what the Chronicle of Higher Education 
recently said is a growing divide between the haves and the 
have-nots.
    I believe it is imperative to focus Federal policy in this 
area on four key issues:
    First, we must invest in need-based student aid as the best 
and most effective way to promote access to postsecondary 
education. The maximum Pell Grant today pays for less than half 
of the average price of attending a public 4-year institution 
compared to what it paid for in 1980. There has been no 
substantial increase in the Pell Grant maximum over the last 5 
years, even as college prices continue to rise at a rate higher 
than inflation and family incomes. While more money is being 
spent on the Pell Grant program, the overwhelming reason is 
simply that more students qualified, that is there are more 
poor people who are eligible for the program.
    Meaningful increases in support for the Pell Grant program 
should be a centerpiece of efforts to make a college 
opportunity possible. We also need to look hard at student 
loans. They are critical in mitigating some of the effects of 
rising tuition, but they also have the potential negative 
effect of increasing student debt.
    One way to meet these seemingly divergent goals is to 
increase loan limits modestly for first and second year 
students, while also developing new opportunities for students 
to receive a low interest rate that reflects our commitment to 
their future and the benefits that they will provide to us as a 
society.
    On the other hand, strategies such as increasing tax 
benefits to reduce tuition expenses will have little if any 
affect on the populations most in need of further access to 
higher education. Many low-income student do not qualify for 
tuition tax benefits, and there is no evidence that tax 
benefits increase postsecondary education enrollment, a key 
reason to invest limited taxpayer resources.
    Second, we must decisively and unequivocally support 
increased investment in Upward Bound, Talent Search and GEAR UP 
as essential components of our national access strategy. These 
critical programs serve as key vehicles for improving the 
higher education prospects for low-income, first-generation and 
disabled students, as Mr. Jones has already noted. Nearly one-
third of all low-income high school graduates who actually 
enroll in college have been served by a Federal TRIO program, 
an incredible record of achievement.
    The fundamental problem for Upward Bound, Talent Search and 
GEAR UP is not under performance. It is a simple fact that 
limited funding has allowed them to serve less than 10 percent 
of the eligible populations.
    Third, we must strengthenthe capacities of minority serving 
institutions to educate the Nation's emerging majority 
populations. Tribal colleges, Hispanic-serving institutions and 
historically black colleges represent some of the Nation's most 
important but underserved postsecondary resource. Given that 
they serve a high proportion of under prepared and 
underfinanced students, we must make minority serving 
institutions central to our overall strategy of improving 
student access and success.
    Finally, we must engage the private sector in this campaign 
to help students go to college, but only as a complement, not a 
substitute to the critical support provided at the Federal 
level.
    As chairman-elect of Scholarship America, the Nation's 
largest private-sector scholarship organization, I know well 
that the more than $3 billion in scholarship aid provided by 
local communities, businesses and employers is important to 
those who receive it. But a significant proportion of private 
aid is not need based, and low-income students and minorities 
are less likely than more affluent students and whites to 
receive private support.
    It is important to emphasize that private aid is not a 
substitute for government investment in need-based financial 
aid and can't ever replace what is our essential Federal role 
of equalizing opportunity for students with needs. In these 
times of increasing concern about homeland security, global 
competitiveness and national economic growth, investing in 
increased Pell Grants, reduced interest on student loans, 
increased support for TRIO programs and minority serving 
institutions and increasing encouragement of private-sector 
investment and grant aid are key strategies that can make a 
difference in the lives of today's most marginalized and 
underserved students.
    Thank you very much.
    [The prepared statement of Mr. Merisotis follows:]

   Prepared Statement of Jamie P. Merisotis, President Institute for 
                        Higher Education Policy

    Chairman Keller and Ranking Member Kildee: Thank you for this 
opportunity to appear before you.
    It has taken centuries for our nation to construct the higher 
education system of today. Step by step, the country has built public 
and private universities, then sought to widen their reach through 
legislation like the Morrill Act (1862) that promoted ``the liberal and 
practical education of the industrial classes''; the GI Bill (1944) 
that provided educational benefits to World War II veterans; the Truman 
Commission and its support for community colleges; of course the Higher 
Education Act of 1965 that seeded today's federal student aid system; 
and the Pell Grant (1972) program that created federal grants for low-
income students.
    As each successive change has opened the doors to higher education, 
something equally if not more important has happened at the same time: 
the value of a college degree-indeed, the need for a college degree-has 
grown even faster. But we now stand at a critical juncture. We face a 
great risk of creating a society cleaved along a very distinct line: 
those who were able to go to and complete college, and those who were 
not. It is true that we have always had these two groups in our 
society. But in the future this division will be far more stratifying, 
far more oppressive for those without a college degree, than we have 
seen historically.
    So who are we really talking about? According to date from the U.S. 
Census Bureau, while 75% of high-income students enter college today, 
only 31% of low-income students do. Federal Advisory Committee on 
Student Financial Assistance (ACSFA) data clearly show that limited 
financial aid and declining affordability is already prohibiting 
hundreds of thousands of college-qualified high school graduates from 
attending a four-year institution in 2002, and over 40 percent of those 
students will not enter postsecondary education at all. Students with 
the highest test scores from the lowest socioeconomic group attend 
college at the same rate as students with the lowest test scores from 
the highest socioeconomic group.
    The same story holds true for enrollments of students of color. Of 
traditional age students who go to college after graduating from high 
school, college enrollment rates are about 10 percentage points higher 
for whites than for African Americans or Hispanics. These gaps are even 
wider for adult and so-called non-traditional students.
    We also need to consider the question of where students are 
enrolling. Former Princeton University and Mellon Foundation President 
William Bowen's data shows that only 11 percent of students at 
selective public and private institutions come from families in the 
lowest income quartile (about $27,000 a year and under) and only 6 
percent are first generation students.
    So the discussion about federal policy and about haves and have-
nots, is about so much more than having and not having. A fundamental 
premise of our democracy is on the line, and the democratic ideals upon 
which our higher education system was founded are being undermined. 
While the nation's attempt to provide equal opportunity to all of its 
citizens has been halting at best, it has at least made progress over 
the past century. If we start to go backwards-shutting more and more 
people out of the opportunity afforded by higher education-we risk 
creating groups that are bitterly divided and undermining the balance 
that creates a nation's sense of shared interest. These groups are our 
fastest growing, and therefore most important, in the battle for our 
nation's economic and social well-being.
    Research conducted both by my organization, the Institute for 
Higher Education Policy, and many other independent research groups 
demonstrates the dramatic benefits of the investment in higher 
education. These benefits have economic, social, public, and private 
dimensions. For example, statistics show that U.S. workers over the age 
of 18 with a high school diploma earn an average of $27,280 annually, 
while those with a bachelor's degree who earn an average of $51,194, or 
nearly double. Over the course of a lifetime, those with a bachelor's 
degree earn an average of almost one million dollars more than those 
with a high school diploma. Workers who have attended college also tend 
to have low rates of unemployment, and analyses of job growth and 
employer demands typically suggest future job growth will be 
increasingly concentrated in fields that require a college education. 
One analysis found that in 1996, 62 percent of people working in the 
nation's most elite jobs-meaning the managers and professionals with 
the highest earnings-held a baccalaureate degree, and an additional 24 
percent had some college experience.
    Economic benefits also flow to society, on both a national and a 
regional basis. Higher earnings for college graduates result in more 
revenue for government coffers through increased tax collections. In 
addition, increasing the number of college graduates would save 
millions of dollars in avoided social costs every year, as a result of 
improved health, reduced crime, and reduced welfare and unemployment. 
For example, social costs for a 30-year-old White non-Hispanic woman 
with a college degree average $800 per year less than the costs for one 
with only a high school diploma. The social costs saved for 30-year-old 
Black and Hispanic women with a college degree is even greater, 
averaging $2,500. Experts estimate that the nation's Gross Domestic 
Product (GDP) would increase by $231 billion-creating $80 billion worth 
of new tax revenues-if college participation for students of color were 
raised to the same level as for non-Hispanic Whites. State and federal 
budget deficits may discourage policymakers from investing more 
taxpayer money into any area, but higher education provides a 
significant return on that investment.
    Social benefits of postsecondary education also accrue to 
individuals and to the public. For example, people with more education 
tend to have greater health/life expectancy. In 2004, 93 percent of 
people age 25 and older who had attained a bachelor's degree described 
their health as good, very good, or excellent, compared to 82 percent 
of people whose highest level of education was a high school diploma. 
Public benefits from higher education include reduced crime rates, 
increased civic participation, and more charitable giving and 
volunteerism. For example, in 2004, 36 percent of people age 25 and 
older who had earned a bachelor's degree or higher reported they had 
ever volunteered for or through an organization, compared to 21 percent 
of people whose highest level of education was a high school diploma.
    Given these benefits, the American public generally sees the need 
for at least some college education. A 2003 survey found that 87 
percent of respondents thought a high school graduate should continue 
on to college instead of starting a job, 37 percent said that a college 
degree is necessary for success, and 76 percent felt that college is 
more important today than it was ten years ago.
    Unfortunately, it's hard not to look at the recent federal policy 
environment for higher education and come to a sobering conclusion; 
namely, despite this evidence, the reality is that there has been very 
limited attention paid to the demonstrable public good that higher 
education contributes to our society. The debate over HEA 
reauthorization, the President's budget, recent trends in funding of 
programs, and the disappointing $12 billion in cuts made in the 
reconciliation bill last year all clearly indicate that this Congress 
is focused narrowly on the belief that individuals are the primary 
beneficiaries and therefore should shoulder the burden of paying. Even 
with the veritable mountain of data that has been amassed to 
demonstrate that higher education does much more than simply provide 
individuals with greater earnings capacity, what we are spending most 
of our federal policy energy on is getting more for less, squeezing so-
called inefficient institutions, and improving opportunities for middle 
income families, adding to what the Chronicle of Higher Education 
recently said is a growing divide between the haves and the have-nots.
    It's also increasingly apparent that politics has trumped policy 
when it comes to higher education. With the exception perhaps of the 
deliberate strategy being taken by the National Commission on the 
Future of Higher Education appointed by Secretary Spellings, there has 
been virtually no effort to have a reasoned public debate about higher 
education and its importance to the nation. There has been no serious 
effort to understand what happens if we leave more and more of our 
fastest growing and must vulnerable populations behind. This is not the 
way it has always been, despite our persistent cynicism in Washington. 
Funding for education, support for student opportunity-these have been 
hallmarks of bipartisan, collaborative efforts in the Congress, even in 
deeply partisan times in our past history-in 1998, during the Clinton 
impeachment debate, in 1980, with the Iran hostage crisis and crippling 
inflation, and in 1972, during what was then the beginning of the end 
for President Nixon.
    Sometimes we get so caught up in the details of the policy debates-
speaking a language that anyone outside of the small circle of policy 
technicians would find bewildering and nonsensical-that I think we lose 
sight of some of the simplest, most straightforward strategies. So here 
are just a few ideas about what I think needs to be done:
    First, we must invest in need-based student aid as the best and 
most important way to promote access to postsecondary education. In the 
early 1990s, a bipartisan federal commission called the National 
Commission on Responsibilities for Financing Postsecondary Education 
(for which I served as Executive Director) issued a widely-circulated 
report called Making College Affordable Again. The legislation creating 
the commission, authored by Senator Jeffords of Vermont in the late 
1980s, noted that the purchasing power of aid had been rapidly 
declining through the decade of the 1980s, leading to increasing 
concerns about access to postsecondary education. In commenting on the 
legislation, Senator Jeffords noted, ``Without affordable postsecondary 
education, without national support for meaningful access for able 
students to take advantage of higher education opportunities, we will 
not be able to accomplish any of the objectives that we strive for as a 
nation and a leader of nations.'' The final report of the commission, 
issued in 1993, recommended several important improvements to federal 
student aid, many of which have subsequently been enacted. But the 
Commission's major recommendation-to guarantee access to higher 
education for all students, based on a sliding subsidy scale tied to 
financial need-remains elusive. Regrettably, many of the commission's 
concerns regarding affordability and accessibility resonate even more 
profoundly with students and families more than a decade later.
    I firmly believe that investment in need-based financial aid is the 
best and most important contribution that the federal government can 
make to keeping the dream of a college education a reality for all 
Americans. The declining purchasing power of federal aid continues to 
be a critical barrier to access to higher education. The maximum Pell 
Grant today pays for less than half of the average price of attending a 
public four-year institution compared to what the maximum Pell Grant 
paid for in 1980. There has been no substantial increase in the Pell 
Grant maximum over the past five years, even as college prices continue 
to rise at a rate higher than inflation and family incomes. While more 
money is being spent on the Pell Grant program, the overwhelming reason 
is simply that more students qualify-that is, there are more poor 
people who are eligible for the program. Meaningful increases in 
support for the Pell Grant program should be a centerpiece of efforts 
to make college opportunity possible. Let's not pretend that these 
efforts to do more with less, or to do less with less, will do anything 
to dramatically narrow the opportunity gaps. Significant investment is 
the only thing that has worked in the past, and it's what needs to be 
done now.
    We also need to look hard at student loans. Loans are not a 
preferred method of paying for college. But they are a reality in 
today's world of college financing. The key is to simultaneously 
increase loan limits for some students to mitigate some of the effects 
of rising prices while also limiting the potential negative effects of 
increasing student debt. One way to meet these seemingly divergent 
goals is to increase loan limits modestly, especially for first and 
second year students, while also developing new opportunities for 
students to receive a low interest rate that reflects our commitment to 
their future and the benefits that they will provide to us as a 
society.
    On the other hand, strategies such as increasing tax benefits to 
reduce tuition expenses will have little if any effect on the 
populations most in need of further access to higher education. Many 
low income students do not quality for tuition tax benefits-only about 
a quarter of the Hope and Lifetime tax credits go to students with 
adjusted gross incomes less than $30,000-and there is some evidence 
that many eligible students do not claim the tax benefits, especially 
those from minority groups. Perhaps most importantly, there is no 
evidence that tax benefits increase postsecondary education enrollment-
a key reason to invest limited taxpayer resources.
    Second, we must decisively and unequivocally support programs such 
as Upward Bound, Talent Search, and GEAR UP as essential components of 
our national access strategy. These critical programs serve as key 
vehicles for improving the higher education prospects of low-income, 
first-generation, and disabled students. The programs provide a 
continuum of services from pre-college to pre-graduate level study for 
the nation's low-income, first-generation, and disabled students. In FY 
2006, the $828 million in funding for TRIO programs supported more than 
850,000 students in over 2,700 distinct TRIO programs. Yet despite this 
support, less than 10 percent of the eligible populations are served by 
TRIO programs.
    There are a total of seven TRIO programs. The pre-college programs 
include Talent Search, which provides counseling and information about 
college admissions requirements and student financial aid to young 
people in grades six through 12, and Upward Bound, which works with 
students starting in the 9th grade to provide instruction in 
literature, composition, mathematics, and science on college campuses 
after school, on Saturdays and during the summer. In addition, Upward 
Bound Math Science helps students from low-income families to 
strengthen math and science skills, frequently providing research 
opportunities for underrepresented students, while Veterans Upward 
Bound provides intensive basic skills development and short-term 
remedial courses for military veterans to help them successfully 
transition to postsecondary education.
    At the college level, Student Support Services programs provide 
tutoring, counseling, and supplemental instruction to help students 
stay in college through the completion of a degree, and in the case of 
community colleges, assist them in the transfer process. The Ronald E. 
McNair Post-Baccalaureate Achievement programs are designed to 
encourage low-income students and minority undergraduates to consider 
careers in college teaching as well as prepare for doctoral study. 
Students who participate in this program are provided with research 
opportunities and faculty mentors. Finally, the Educational Opportunity 
Centers located throughout the country primarily serve displaced or 
underemployed workers from low-income families with incomes.
    For the last two years, the Upward Bound, Talent Search, and GEAR 
UP programs have inexplicably been proposed for elimination as part of 
the President's budget. Given their importance to the populations most 
in need of college access-nearly one-third of all low-income high 
school graduates who actually enroll in college have been served by a 
TRIO program-we must not only be categorically opposed to the 
elimination of these programs, but we should also support significant 
funding increases in each of these programs and not allow the diversion 
of funding from these proven programs to support other education 
initiatives.
    Third, we must strengthen the capacities of minority-serving 
institutions (MSIs) to educate the nation's emerging majority 
populations. Tribal Colleges and Universities (TCUs), Hispanic-Serving 
Institutions (HSIs), and Historically Black Colleges and Universities 
(HBCUs) and other predominantly Black institutions represent some of 
the nation's most important but underserved postsecondary education 
resources. Combined, more than 1.8 million students are educated by 
these institutions. Most MSIs have taken on the responsibility for 
educating students who traditionally have been denied access to 
adequately funded K-12 schools, especially low-income, educationally 
disadvantaged students. As institutions that play a major role in 
educating the nation's emerging majority populations, HBCUs, HSIs, and 
TCUs are integral to the country's potential and promise. Given that 
these institutions educate the populations that are the fastest growing 
in the nation, it is clear that MSIs must be recognized as a leading 
voice for underrepresented populations.
    I believe that several important steps could be taken to strengthen 
the capacity of MSIs. One is to expand both the appropriation and 
authorization levels of Titles III and V to ensure the continued 
development and growth of MSIs. Additional funding is required for MSIs 
to reach a level of financial stability that ensures the students 
enrolled at these institutions receive the same quality academic 
programs offered by majority institutions.
    Congress also could take steps to encourage improvements in the 
infrastructure and application of information technology at MSIs. The 
digital divide between better-funded and endowed majority universities 
and MSIs has impeded MSIs' ability to deliver state-of-the-art programs 
in information technology-related areas. The Minority-Serving 
Institutions Digital and Wireless Technology Opportunity Act represents 
an enormous opportunity in this area. The legislation addresses an 
array of needs at MSIs by providing for both equipment and training, as 
well as allowing MSIs that are more advanced in their use of technology 
to partner with and mentor their peers. Moreover, the bill addresses 
systemic disenfranchisement by providing a means for partnership 
between MSIs and K-12 schools.
    Investment in programs such as the Model Institutions for 
Excellence (or MIE) program, a ten-year NSF- and NASA-supported 
initiative that provided significant support to just six MSIs, can 
serve as a model for much more significant investment. The MIE schools 
concentrate on the recruitment and retention of students in the STEM 
fields (Science, Technology, Engineering, and Mathematics), counseling, 
academic enrichment, encouraging students to attend graduate school, 
and enhancing the education of their students. The results achieved by 
these six MIE schools has been impressive and could be replicated at 
other minority-serving institutions, and indeed at non-MSIs, in a way 
that could substantially improve our nation's capacity in these 
critical areas.
    Fourth, we must engage the private sector in this campaign to help 
students go to college, and to tell the story about the payoff of 
investing in higher education, as complements-not substitutes-for the 
critical support provided at the federal level. When Secretary of 
Education Spellings met with college presidents, government officials, 
and business leaders last year as a prelude to the establishment of the 
Commission on the Future of Higher Education, the discussion focused on 
improving higher education's capacity to enhance the nation's workforce 
and global competitiveness. Well, one way that the nation clearly does 
this is by helping students-the nation's future workforce-through 
financial aid. Last year, we released the first-ever national study on 
the role of private scholarship aid in the overall financing equation, 
called Private Scholarships Count, and found that private scholarships 
are an important part of the college financing equation, for numerous 
reasons.
    Private aid is already a significant piece of the student aid pie. 
We estimate that private aid totaled more than $3 billion in 2003-04, 
or 7 percent of all college grants awarded. Seven percent of 
undergraduates received private scholarships with an average value of 
just under $2,000, 5 percent of graduate students received private 
scholarships averaging just over $3,000, and 10 percent of professional 
students-students in fields like medicine and law--received an average 
of slightly more than $5,000 in private scholarship aid. So clearly, 
private aid is not something trivial--more than $3 billion a year makes 
private aid more than three times the size of the well-known federal 
Perkins Student Loan Program, and about one half of the entire support 
provided by all 50 states for student aid.
    But perhaps equally as important as how much private aid exists is 
what it is used for. We found that private scholarships often 
complement the federal, state, institutional, and other aid that is 
given. One way they do this is by targeting primarily middle income 
students with support that improves their choice of institution. They 
also are useful in targeting support for diverse groups of students-
ranging from foster children to students with unique academic talents 
to students who are deeply involved with their communities.
    I think the private sector's commitment and support for helping 
students go to college should be better recognized and understood as a 
valuable complement to federal aid, but never as a way of supplanting 
the critical federal support. One specific way to do this is via the 
Leveraging Educational Assistance Partnership (LEAP) program, which 
encourages state governments to provide state tax dollars to assist 
students in their states to gain the critical benefits of postsecondary 
education. This program could be enhanced to leverage a much greater 
amount of aid for students if it were used to stimulate not just state 
dollars for student aid, but significantly increased private sector aid 
in each state as well. For example, in the state of Washington the 
legislature has provided small challenge grants to communities to 
encourage the creation of local scholarship fundraising chapters. As a 
result over 100 new volunteer-supported, community-based scholarship 
chapters are now raising money each year to help their local students 
pursue college, university, or vocational education. The current LEAP 
legislation could be modified to reward those states where significant 
increases in student aid are produced by working in partnership with 
local community-based scholarship providers. This idea dovetails nicely 
with the important recommendations of ACSFA in its partnership proposal 
that has been included in the Senate HEA reauthorization bill under 
consideration at the Committee level.
    It is important to emphasize, however, that private aid is not a 
substitute for government investment in need-based financial aid. 
Private aid plays an important role in meeting specific needs of middle 
income students and special populations and plays a useful role in 
supporting institutional choice. But it cannot ever replace what is the 
essential federal role of equalizing opportunity for students with 
financial need. The example set last year with the $12 billion in cuts 
to federal student aid is a disturbing development at a time when 
increasing access to higher education has clearly become a national 
security and economic competitiveness priority. Pell Grants and other 
federal need-based aid programs are the single most important and 
consistent resource for students struggling to pay for college, and 
should be the driving force behind any national conversation about 
college access and affordability.
    In these times of increasing concern about homeland security, 
global competitiveness, and national economic growth, investing in what 
we know works best-federal support for students who otherwise wouldn't 
be able to go to college-is absolutely essential. Major investment in 
Pell Grants, reduced interest on student loans, increased support for 
TRIO programs and minority-serving institutions, and increased 
encouragement of private sector investment in grant aid are key 
strategies that can make a difference in the lives of today's most 
marginalized and underserved students. That is, in my view, the best 
way that the federal government can achieve the goals of prosperity, 
security, and harmony for all Americans.
    Thank you for this opportunity to be here. I would be pleased to 
answer any questions you may have.
                                 ______
                                 
    Chairman Keller. I want to thank all of the witnesses for 
their testimony, and I will begin by recognizing myself for 5 
minutes. Let me start with Mr. Davis.
    One of the major employers in my area in Orlando and a 
hotel owner told me that the big benefit he sees from the 
Family Friendly Employer Act is that, while the existing IRS 
Tax Code allows him to put his employees through college and 
allows him to write that off, it doesn't allow him to put their 
children through and write that off. In fact, the janitors and 
maids who work in his hotels, frankly, don't want to go to 
college, but they have 17-year old kids in high school who very 
much do, the next generation.
    As someone who owns a construction company, have you seen a 
similar experience in that and is that why you are involved in 
helping put seven of your employees' kids through college?
    Mr. Tom Davis. That is exactly the reason. Our employees, 
you know, they don't want--they have already--they either had a 
chance when they were young to go to college--none of our 
employers have asked or have a desire that I know of to go to 
college, but all of their children do, and it is very important 
to them. And they--probably most of our field people, you know, 
that we are helping make $35,000 a year, and they have five 
kids and a house and a car note, and they just can't do it.
    So--but it is the kids that need the money. It is not the 
employees. I mean, we would pay for employees if they wanted to 
go, but none of them have asked.
    Chairman Keller. Well, thank you.
    Mr. Jones, I am intrigued by your Super Sunday Initiative 
when you went into, I guess, eight different churches and parts 
of L.A., that a lot of times their young people don't go to 
college and you let them know about the opportunities. One of 
the things that struck me is I believe in the California system 
it is only about 2,500 bucks a year for the tuition, and I 
would imagine a lot of folks don't go to college or try to go 
to college because they don't think they could afford it.
    Is part of your outreach and your Super Sunday Initiative 
to let people know what is out there and that it can be 
afforded through various grants and opportunities like you 
provide?
    Mr. Jones. Yes, Mr. Keller. It is multi-phased, actually. 
The myth is largely that education is outside the reach of low-
income families because of costs.
    So, first of all, we want to be sure that families are 
aware not only of the cost--and the fees for the State 
university--you are correct--are about $2,500 a year. There are 
still books and supplies, transportation, room and board, all 
of the other expenses; and when you total that together we are 
talking about a cost of attendance, on average, even for our 
system, of around 12 to $13,000 a year.
    Families need to know that financial aid is available, Pell 
Grant is the foundation for that. The State of California has 
Cal Grant Entitlement, one of the first in the Nation to have 
an entitlement State grant program; and the California State 
University trustees have dedicated $200 million for that. But 
the key is the academic preparation as well. Students need to 
know about college, not just financing but what does it take to 
be eligible in terms of meeting the academic expectations.
    Chairman Keller. Do you find that, meeting with those 
20,000 people and passing out your 10,000 posters, that a lot 
of folks didn't know what financial aid options were out there?
    Mr. Jones. Oh, I can guarantee you they did not know. No 
matter what we do, no matter what publicity, I think everybody 
at the table will tell you that is engaged in this--and I have 
been doing this for 37 years--no matter what efforts we make 
there is still a misunderstanding, a mystique that surrounds 
the cost and financing; and getting the message out of is 
critical.
    Chairman Keller. Mr. Salandy, sounds like the Posse program 
is an excellent program, a great track record, 1,500 students 
in college, 90 percent staying in school. I see that you have 
various universities that partner up with you, including your 
own alma mater, Vanderbilt. Tell me how that would work in 
terms of--let's say someone has been selected as one of the 
recipients of the 305 Posse slots and they want to go to 
Vanderbilt. Do you meet with the financial aid people at 
Vanderbilt to help them get a more attractive package or do you 
all cut the check for the very expensive tuition at Vanderbilt? 
How does that work?
    Mr. Salandy. The interesting thing about the program, we 
don't fund our students, and we don't give them a penny. It all 
comes from the universities with whom we partner. So a student 
who is nominated for a Posse scholarship and actually, I 
suppose, gets into Vanderbilt, let's say, Vanderbilt funds that 
student's entire tuition, that tuition portion of his or her 
college experience.
    Chairman Keller. That is as a result of a relationship you 
have established with the folks at Vanderbilt?
    Mr. Salandy. Right. So we have 24 partner institutions like 
Vanderbilt who say, you know, these are students we think are, 
you know, great kids, and we think they will be a huge benefit 
to our campuses. There are also students that are very often 
nontraditional that might be overlooked by traditional 
recruitment processes. So that is where the value and the 
benefit of working with Posse comes in.
    Chairman Keller. OK, Mr. Merisotis--I am sorry. My time has 
expired. I didn't get to my question to you. But let me 
recognize the ranking member, Mr. Kildee.
    Mr. Kildee. Thank you very much, Mr. Chairman.
    First of all, I would like to thank Mr. Davis for wishing 
God's blessing upon us. We certainly need it individually and 
collectively, and I deeply appreciate that.
    It is great to see in the audience George Conant, who used 
to serve on this committee, well-respected on both sides of the 
aisle and now with the California State University system. 
Welcome back, George.
    Let me address a question to Mr. Merisotis. In your 
testimony, you discuss both how increased access to college 
would benefit our economy and how reduced interest rates would 
increase that access. I know that from 1945 when in my side of 
town in Flint, Michigan, the first people to go to college were 
those who had a GI bill of rights. Because no one went to 
college in the east side, but the GI Bill of rights really made 
that available.
    As I mentioned earlier, Mr. Miller and I have introduced a 
bill which would cut the interest rates in half for subsidized 
student and parent loans; and I think we can all agree this and 
other programs would make college more affordable for many 
students. But could you expand on how this would be available 
investment in our economy, especially with the growth of the 
global competition?
    Mr. Merisotis. Well, the lower interest rates I think, Mr. 
Kildee, are an excellent example of our investment in those 
students, because we reduce the expenses that they will accrue 
over time as well as what they will need to repay on their 
loans afterwards.
    The prospect of debt and indeed the real consequences of 
student debt are enormous in today's society. They not only 
influence whether or not students go to college. They influence 
where they go to college, what happens when they are there, and 
what choices they make after college, what kind of job to take, 
where to live, what kind of lifestyle to lead.
    So it is a very important investment I think for us as a 
society because we are investing in our own collective well-
being. By that I mean that those individuals who get the 
college education, those individuals who choose the jobs that 
are most productive in our economy, are going to benefit all of 
us as a society because of the fact that they attended college 
and benefited from what is, frankly, a modest level of 
Government subsidy.
    Mr. Kildee. I can recall when my father and mother had five 
children and they could pick one of their children to go to 
college and, for some luck of the draw, I was the one. That is 
a terrible choice for parents, but I felt my brothers and 
sisters were at least or more intelligent than I, but they--my 
father did not have the resources. So there is a role for 
Government, and there is a role for business.
    Mr. Merisotis. And you have seen the data that, in today's 
terms, if we had a GI Bill, the GI benefit would be $10,000, 
compared to the maximum Pell Grant of $4,050 today.
    Mr. Kildee. Mr. Jones, I have been very involved in the 
TRIO and GEAR UP program for years and have seen then work very 
effectively in my own State of Michigan. What would the effect 
of the President's proposal be to terminate those programs and 
how do you interface with the school districts in California on 
those programs?
    Mr. Jones. Well the TRIO program is very, very important to 
California State University. With the five or six programs, we 
are serving probably close to 10 to 15,000 students through the 
TRIO program throughout the State. So many of the programs are 
designed for low-income, first-generation of students that we 
find any of the programs that are designed to help us reach out 
to students to help them to prepare academically and to help 
them to succeed once they reach the college, the California 
State University, those programs are very critical to us; and 
we would hope that there would be continued funding to support 
those.
    Mr. Kildee. Anyone have any comments on Mr. Merisotis and 
on the TRIO programs?
    Mr. Merisotis. The TRIO programs represent such an enormous 
part of the potential investment, and it is not an investment 
in needs-based financial aid. It is an investment in the 
reality of the life of those students. Counseling, tutoring, 
mentoring, that kind of support is absolutely essential in the 
lives of many low-income and disadvantaged populations, 
including first generation and disabled students; and those 
programs, again at a fairly modest level of investment, provide 
an extraordinary opportunity. I think the fact that a third of 
all low-income college students enrolled today participated in 
a Federal TRIO program has got to be one of our great Federal 
accomplishments in education policy.
    Mr. Kildee. What I have noticed in the TRIO program and 
GEAR UP program in Michigan--and I get out and interface 
between the colleges and the school systems--is that for some 
of these young people it is the first time in their life it has 
occurred that they could go to college. It is really an 
outreach program. Very often, they never realized that they 
could go to college; and this program really helps them realize 
that possibility.
    Thank you very much.
    Thank you, Mr. Chairman.
    Chairman Keller. Thank you, Mr. Kildee.
    Members on our side, I want you to know that we will 
recognize you in order of appearance here today.
    Next, Dr. Ehlers for 5 minutes.
    Mr. Ehlers. Thank you, Mr. Chairman.
    First of all, I want to commend you, Mr. Davis, for what 
you are doing. I think that is an ideal solution in many cases. 
A few questions on that.
    When you provide these scholarships for the students, you 
pay the full cost, or do they have to get student loans in 
addition?
    Mr. Tom Davis. All of our children, the seven we have in 
college currently, live with their parents and attend local 
college there in the Houston area. So we pay all their tuition, 
their books, lab fees, things like that. I mean, we don't pay 
their living expenses, because they live with their parents, 
but it is averaging about $5,000 per child per year.
    Mr. Ehlers. And the child can pick whichever school they 
want to go to?
    Mr. Tom Davis. That is up to the child. I just want him to 
go to college.
    Mr. Ehlers. OK, and if someone picked Harvard?
    Mr. Tom Davis. Well, we might have to talk about it, but--
--
    Mr. Ehlers. That might break the bank even further.
    Well, thank you very much for what you are doing. I think 
that is outstanding.
    Mr. Salandy, I hope I pronounce your name correctly. Again, 
I didn't quite get the picture of how you used the Federal 
funds that are available to you on this and how that correlates 
with the work the Foundation is doing. Could you just summarize 
that for me again please?
    Mr. Salandy. Definitely. So we work with selective colleges 
and universities, and they offer our students scholarships. But 
they are able to afford the program and offer those 
scholarships because they make up the difference of what 
financial aid does not award those students.
    So since we are working out of urban centers--we are based 
in New York City, Boston, Chicago, L.A., and Washington, D.C--a 
lot of our students tend to be high need. And we work in public 
high school systems. So the colleges that we work with can only 
afford the program and are only able to extend those 
scholarships to those students because of what they receive in 
financial aid. They make up that difference. Does that clarify 
things a bit?
    Mr. Ehlers. Do most of these students live at home, too, in 
order to reduce costs?
    Mr. Salandy. No, they are on campus. They are living on 
campus, yes.
    Mr. Ehlers. So your scholarship program doesn't cover any 
of the living expenses, does it?
    Mr. Salandy. No, it does not. No, it does not.
    Mr. Ehlers. Also, I want to point out someone--I forgot 
which witness--mentioned the Pell Grants have not been 
increased. I have here a graph which shows they are increased. 
There are double what they were 20 years ago. I don't know what 
the rate of inflation is. I suspect this hasn't matched the 
increase in tuition. But it certainly has more than matched the 
CPIs, so far as I know. I don't think that has doubled in the 
past 20 years.
    Mr. Merisotis. The total funding for Pell Grants has 
increased, but, as the chairman pointed out, there has been a 
significant number of increase in the number of students who 
received Pell Grants. The chart that was shown here previously, 
on the boards here, showed a 36 percent increase in the number 
of recipients since 2000. Only about 11 percent of that is 
accounted for by increasing enrollment. The rest really is 
because of increasing eligibility. That is, as a so-called 
quasi-entitlement, we have more people eligible for it. So for 
all of the people who are eligible, they are eligible to 
receive up to the maximum benefit. That is one of the reasons 
why the maximum Pell Grant hasn't been raised since 2000, is 
that we have more people who qualify. So there is increasing 
support for Pell Grants, and that is a good thing. But a lot of 
it has to do with the fact that we have seeing an increased 
number of recipients because of the growing eligibility.
    Mr. Ehlers. My points simply is we have increased the 
maximum award amount considerably, particularly in the last 10 
years. It has almost doubled just in the last 10 years. So I am 
not very pleased with that. I am not bragging about it. I just 
want to set the record straight that we have put a substantial 
amount of money in that.
    I am just very pleased with what I heard about the 
different programs. I think this is--in view of the rapidly 
increasing costs in higher education, there has to be 
additional financial aid; and I am pleased that many 
businesses, organizations are increasing their scholarship aid. 
That is certainly a plus.
    We do our part through the Pell Grant, through the student 
loan programs, which also are very expensive, but we need the 
private sector to dig in. I appreciate in each and every case 
your involvement as well, so thank you; and I yield back.
    Chairman Keller. Thank you, Mr. Ehlers.
    Next, Mr. Holt is recognized for 5 minutes.
    Mr. Holt. Thank you, Mr. Chairman.
    Mr. Merisotis, what can you say about the demographics of 
higher education? What will be the need for aid in the future?
    And, any of you, what can you say about the trends in the 
share of student aid that comes from the Federal Government? It 
is now approaching two-thirds, counting loans and all of that. 
I am just wondering under what circumstances you think that 
might decrease or increase and whether there is a greater need 
for the institutions, the colleges themselves or private 
corporations or others to pick up the change.
    Mr. Merisotis. There is a famous saying, ``demographics is 
destiny;'' and our destiny is pretty clear in this point. That 
is that by far the fastest-growing populations in our country 
in the next several decades will be African Americans, Asian 
Americans and, of course, Hispanics, the demographic juggernaut 
in our society. Those three communities have significant 
educational needs and lower average family incomes, 
particularly in our urban areas and some of our poor 
communities.
    So we look at the demographics of the population where a 
significant proportion of the eligible population for higher 
education is going to be from communities that are currently 
underserved, and clearly our Federal investment needs to be 
increased. The question is, how do we do that?
    I do believe in a partnership. I think the Federal 
Government has and is in the best position to serve as the 
coordinating partner in this partnership, because the Federal 
Government has, naturally, a national focus. But I think States 
have responsibility, families have responsibility, institutions 
have responsibility, and, yes, indeed, the private sector has 
responsibility. But the Federal Government has got to drive 
this train here, because the Federal Government is by far in 
the best position to impact the lives of these students that 
are going to impact our collective well-being.
    Mr. Holt. Any of the others of you care to comment on that, 
on this point, and kind of what--how is the pie being reshaped 
and re divided?
    Mr. Jones. Yes.
    Financial aid has grown considerably, but it has been 
through the Federal Treasury, largely. For the California State 
University, of our total financial aid, $7 billion, 72 percent 
is Federal financial aid; and, of that, really 50 percent 
really is the Federal student loans. We are lucky in that the 
cost of attendance is one of the lowest in the country for a 
public university, so the average indebtedness of our students 
is a little under $14,000 for a bachelor's degree.
    But keying off what Jamie said, one of the things that 
concerns us is the academic preparation of students. In 
California, the academic preparation and eligibility for the 
California State University--and I should say we are charged to 
admit the upper one-third of the graduating senior class which 
a B average or better. The eligibility of African Americans in 
our State is in the single digits in percentages. It is about 6 
to 7 percent. Latinos, which make up far over half the 
population of the State, only about 26 percent of those 
students graduating from high school meet eligibility 
requirements for admission to CSU. And we don't even begin to 
talk about the dropout rates in 8, 9 and 10 grades in the State 
of California and nationally.
    Financial aid is a critical key point to this whole area of 
higher education. But academic preparation in K-12 is an area 
that we haven't spent a great deal of time and attention to and 
one I think we need to.
    Mr. Holt. Mr. Salandy, first of all, I applaud you and your 
member organizations and your supporters for putting together 
what is a creative program and evidently quite a successful 
one. I am particularly pleased to see that the college that I 
am proud to have attended, Carlton College, is one of your 
participating organizations or participating colleges.
    I am wondering about the 10 percent of your students who 
don't graduate. You--you have said a little bit, but I want to 
understand better whether that that is a necessary 10 percent 
or whether there is something that might have been done, 
particularly since we're talking about financial aid, in the 
financial realm that would have made the outcome different for 
that 10 percent.
    Mr. Salandy. Yeah. I think that, first of all, the number 
of students that make up that 10 percent drop out for, you 
know, reasons that are pretty typical in the general population 
of why students drop out. Some of them change majors and ideas 
of what they want to become. But, also, you can't get away from 
the fact that the more financial dollars and the more support 
we can get at that level, we are able to serve more and more 
students.
    What we found is that--that, you know, the whole debate 
over equity versus excellence in trying to find those students 
who are actually capable of taking advantage of a prestigious 
or quality education, we found them, and we found them using 
unique indicators. But, yeah, the financial burden on some of 
them, some of them are--you know, they have issues related to, 
you know, back home, whether or not they are helping to support 
family members back home, and how much support they can get 
from family members back home in order to fill that gap of for 
room and board and issues like that.
    So, yeah, we do get quite a bit of that, of the financial 
reasons being behind the 10 percent that do drop out, but----
    Chairman Keller. Thank you, Mr. Holt.
    Next we recognize Mr. Osborne.
    Mr. Osborne. Thank you, Mr. Chairman, and thank you for 
having this hearing, and thank you for the exemplary way in 
which you are conducting your first hearing.
    Just a couple of comments.
    I was interested in the comment that roughly 75 percent of 
high-income students go to college, and roughly 30 percent of 
low-income student attend college. I guess for my own 
observation, that would probably be fairly accurate. I am sure 
it is accurate. And one thing that seems to occur to me is that 
sometimes vision is really important, and whether you go to 
school or not, and if you are raised in an environment where 
you don't see many people around you or come into contact with 
many people who have gone to college, you are probably not 
going to think about it much. On the other hand, if you come 
from a home where this is kind of expected, you are very apt to 
go.
    And so one thing that I have noticed is that you have been 
very interested in mentoring, and a young person who is in a 
mentoring relationship is much more apt to have their horizons 
broadened somewhat by that mentor. Some possibilities are often 
broached that otherwise might not be considered by the young 
person. So I think that is a good idea.
    The question I would like to ask you all is probably a 
little bit outside your area of expertise, but we have already 
pointed out that there has been a fairly dramatic increase in 
funding, but the actual grant itself is not increased because 
of the expanding numbers who are receiving Pell grants, and we 
all understand that.
    One of the variables that is really distressing is that--
the rate at which the cost of higher education is increasing. 
It is about 8 percent a year, which is far outstripping 
inflation. And so we have more and more pressure being put on 
people here in Congress and the Federal Government to fund 
education. And have you given any thought or do you have any 
ideas as to how we might control the cost of higher education, 
because if that--if that cost continues to expand as it is, it 
might be very, very difficult, no matter what we do, to make 
the college education affordable to so many low-income 
students.
    So I don't know if this is something you have thought about 
much, but we think about it a lot, and every time we try to 
make a proposal, it gets beaten down very quickly by the powers 
that be. And so any thoughts that you might have as to how to 
make college more affordable other than simply more Federal 
money?
    Mr. Merisotis. As I know you are aware, there is a 
disconnect here. The vast majority of the Federal investment is 
in financial aid. Financial aid goes to students. The problem 
is we are concerned about rising prices charged by 
institutions. The only mallet we have to try to address those 
issues, therefore, is financial aid. But if we use that mallet, 
we negatively impact students, and I don't think that is what 
anybody wants to do.
    One proposal that I have made previously is a very modest 
proposal to put some competitive money on the table for 
institutions to develop innovative solutions for cost control. 
Institutions love to compete for money, and a modest amount of 
expenditure could actually generate some really interesting 
ideas that you just don't see.
    Another possibility is to create incentives for States to 
also encourage those kind of efforts in public institutions, 
though it clearly won't address issues in the private sector.
    Unfortunately we live with a situation where, because of 
the way the programs are structured, we would end up negatively 
impacting students if we try to limit availability of financial 
aid, and that is where the vast majority of the resources are. 
So I really hope that this Congress won't choose those kinds of 
solutions. But modest, and I do mean modest, incentive money, 
competitive money, for institutions might actually lead 
institutions to think outside of the box and develop some new 
ideas.
    Mr. Osborne. So often what seems to me as we increase 
Federal aid, this simply gets capitalized into the increasing 
cost of education. And so your thought is well taken. There may 
be some way that we can, by putting some money on the table to 
be innovative and holding down the costs, might be helpful, 
might be a good thought.
    Anybody else have any thought on this issue?
    Yes, sir.
    Mr. Tom Davis. Well, I have noticed one of the students we 
paid for goes to junior college. Tuition there is $750 a 
semester for 15 hours. Another student goes to a State college 
there in Texas. Tuition for 15 hours for a semester is about 
$2,700, you know. And so if both of them are accredited 
schools, and you see such a vast range in the cost of an 
education, and so, you know, maybe you take in the--I have no 
idea why universities' cost is increasing so rapidly, but maybe 
from a Federal level you start pushing more of these kids 
toward junior colleges and stuff to get them started their 
first 2 years instead of sending those moneys to the more 
expensive colleges. I don't know. It is a thought.
    Mr. Osborne. Thank you. I think my time is up, and I yield 
back, Mr. Chairman, but appreciate you all being here.
    Chairman Keller. Thank you, Mr. Osborne.
    Next, Mr. Wu, you are recognized.
    Mr. Wu. Thank you very much, Mr. Chairman. It is good to 
see you there.
    I know that we are here to talk about employer-based 
private programs, but I want to broaden our horizons just a 
little bit.
    Mr. Merisotis, I was struck by a comment you made earlier 
in your testimony that tax incentives--that there is no 
evidence that tax incentives increase the number of lower-
income students who can attend. And I was just thinking very 
quickly to the analogy in the housing market where there is a 
mortgage interest tax deduction. It has helped a lot with 
middle-income of housing affordability, and there is, you know, 
that kind of getting a piece of the rock kind of--well, a broad 
public policy about housing. The middle class basically has 
access to two appreciating assets, and housing is one, and 
education is the other. And for housing we have these other 
things that we consider to help with low-income housing.
    And the question I had for you is if we were to help one 
group of people, whether it is employment-based or individually 
based, by permitting the deduction, the full deduction, of 
student loan interest, and then work on some kind of concept of 
something based on refundable tax credits like we had for the 
low-income refundable tax credit, would that help address what 
you said about the lack of breadth of a straightforward tax 
deduction?
    Mr. Merisotis. I am not sure. I think the fundamental 
problem with tax policy in this area always has been that tax 
benefits are awarded, take place, after the action has already 
occurred. That is, you are getting the tax benefit after you 
have done what you otherwise would have done. So there is not a 
lot of incentive there. I don't know a lot of people who make 
decisions, at least in this area of education. It may be true 
in your example with mortgages, but I don't know anybody who--
--
    Mr. Wu. I never would have purchased a house if I wasn't 
forced to by the Tax Code.
    Mr. Merisotis. So it seems unlikely that someone is going 
to say, I think I will go to college because I am going to get 
a deduction on my student loan interest in the following year. 
It doesn't seem very likely to me, and we see from the HOPE and 
Lifetime Learning Tax Credits that only about a quarter of the 
recipients of those have incomes below $30,000. An awful lot of 
eligible populations, by the way, for those programs actually 
don't take advantage of the tax benefits, which is another 
problem, getting back to Mr. Jones, about the lack of 
information being one of our other critical barriers.
    Mr. Wu. And that is a separate issue of getting the 
information out there.
    One of the things we do is student financial aid for 
universities, and that is one of the most well-attended things 
we do congressionally.
    I just want to ask whoever would like to answer this on the 
panel, we have looked at the whole pie chart of where student 
financial aid--the various sources of student financial aid, 
and one of those sources is institutional financial aid from 
the college or university. Where does that money come from? Is 
that from endowment funds? Is that from other restricted funds? 
Are there transfer payments from the nominal tuition rate? Can 
anybody address that?
    Mr. Jones. Speaking for the California State University and 
the State of California, there is another partner in this, and 
that is the State itself. And the State of California has an 
implement through the general fund. It just comes through the 
tax--the general revenue to the State to fund student financial 
aid and make access possible. But from the State university 
standpoint, it is a policy of our chancellor and our board of 
trustees. We provide over $200 million in another grant 
program, which augments the Pell grant and the State grant 
program for students, and that, again, is--a fraction of that 
was paid by State general funds, but I must tell you most of it 
comes from the fees that students pay.
    Our students have agreed that about one-third of the fees 
that they paid should be returned to aid and provided to other 
students with financial need. So as we increase our fees, one-
third goes right back into our State grant or the California 
State University grant program, and the fee increases and so 
forth occur somewhat regularly, but they are limited to about 
10 percent per year.
    Mr. Wu. So even at a California State university, a 
substantial amount of that institutional aid comes from other 
students, and one would assume that at private colleges, 
universities, that might be even higher. It comes from either 
students or endowment funds.
    Mr. Jones. Yes. Having worked at a prior institution in my 
early part of my career for about 15 years, that is where your 
endowment funds and your contributions come in.
    But I would say in California our State grant program 
students can use that grant. It is very much like a Pell grant 
in the sense it is an entitlement. The value is worth the 
amount of fees at the California State university, or the 
amount of fees at the University of California, and up to about 
10- to $11,000 of the independent colleges. So the State 
general fund is supporting students to go to independent 
colleges as well.
    Mr. Wu. I thank the witnesses for your good work, and thank 
you, Mr. Chairman.
    Chairman Keller. Thank you, Mr. Wu.
    Ms. Drake is now recognized for 5 minutes.
    Mrs. Drake. Thank you, Mr. Chairman, and thank you for the 
opportunity to be here.
    What a great idea of a bill to encourage our businesses to 
partner with us, with the government, to make sure our children 
have opportunities.
    Mr. Davis, I am really intrigued by what you have done, and 
I want to thank you for doing that, and it sounds like this is 
something that your company just said that is an opportunity we 
had, even though you chose not to take it, and we want to make 
it available; and I think what you have done--and you have 
heard in here, the three big things I think that keep children 
from going to college: No. 1, they don't believe they can 
afford it; No. 2, they don't know that they can do it. It is 
not on their radar screen if their parents didn't go, and we 
talked about it, and the percentages of income, higher income, 
certainly a much clearer percentage go; and then the third 
thing is the academic achievement.
    But what you have done is said if you want to go to 
college, I have the money. So No. 1, they are going to be more 
concerned about academic achievement; and No. 2, they know they 
can do it.
    So I have just a couple questions for you on that. Is there 
also a support mechanism within your business for that child or 
for that parent if that parent knows now they have the money, 
but how do they do it? Are there also people that help them 
work through that, or is that done through the child's school 
when--because they know they have the funding to go?
    Mr. Tom Davis. I am not sure I totally understand the 
question, but we--for one, most of our employees are Hispanic, 
and their parents did not--or our employees did not have the 
ability to go to college. Most of them didn't even finish high 
school, and so their kids--we are a small enough company that I 
know every child whose parents work for us, and I make a point 
to make them understand that they can go to college, and that 
it is a possibility. And even if their high school grades 
aren't good, I even go help them at high school, you know, to 
get them out of high school. And it is a struggle.
    Mrs. Drake. So you do that at the high school level as well 
as monitoring their college grades.
    Mr. Tom Davis. Yes. And one of the side effects of this 
whole program has been company morale. Our employees, they 
literally walk through fire for us. They--nobody is--we hadn't 
had anybody resign from our company or move on in 15 years, I 
mean, because we take good care of them, and they, in turn, 
take good care of us.
    Mrs. Drake. And the final question for you, because we are 
going to go vote, is, first of all, if a child wanted to be 
more in a career training, whether it is automotives or 
refinery people or--do you also help them with funding for that 
if it is not just regular college, if it is more workforce?
    Mr. Tom Davis. I don't care what the child wants, what form 
of education they want to get, you know, whether it is college 
or trade or, you know, we will help them.
    Mrs. Drake. And have you shared what you are doing with 
your business community there in the Houston area so they know 
the model that your company has put together, or are you not 
patting yourself on the back?
    Mr. Tom Davis. No. It is really through word of mouth; but, 
no, we don't advertise it.
    Mrs. Drake. Right. But as far as your fellow builders or 
other people within the business community, to let them know 
this is a program that works very well for you.
    Mr. Tom Davis. I share with them at lunch or something like 
that, but it is not a public thing.
    Mrs. Drake. OK. Thank you very much, Mr. Chairman. I will 
yield back so maybe you can have a couple other questions 
before we go.
    Thank you, Mr. Davis.
    Thank you all for being here.
    Chairman Keller. Well, thank you. I know in just a second 
Mr. Kildee is going to insert something into the record. Let me 
tell the witnesses and Members we have been called for votes. 
We have 15 minutes to be there. We are probably going to have 
time for about 5 minutes more of questions, and then we are 
going to adjourn because we will be there for about 40 minutes, 
and then it is going to be lunch, and I know some of you have 
flights to catch.
    Mr. Kildee.
    Mr. Kildee. Mr. Chairman, I ask unanimous consent to 
include in the record the comments from Sandy Baum of the 
College Board.
    Chairman Keller. Without objection, so ordered.
    [The prepared statement of Sandy Baum follows:]

          Prepared Statement of Sandy Baum, the College Board

    Both tuition assistance from employers and private grant aid play 
an important role in student financing. In 2004-05, the $8.4 billion in 
subsidies from these sources constituted about 15 percent of the total 
$57 billion in grant aid undergraduate and graduate students used to 
help defray the costs of higher education. However, this source of 
funding is most important for graduate students. Less than $4 billion, 
or only about 8 percent of undergraduate grant aid, comes from either 
employer assistance or private grants.
    Grant aid from private sources is very valuable to the students who 
receive it, but it is not need-based assistance and low-income students 
are less likely than more affluent students to receive this form of 
aid. Black and Hispanic students are less likely than white students to 
get help from these sources.
    About 8 percent of undergraduate students receive employer 
assistance, but only 4 percent of dependent undergraduates enjoy this 
benefit, compared to 13 percent of independent undergraduates. Among 
independent students, those in the highest income quartile are about 4 
times as likely as those in the lowest income quartile to receive 
employer assistance. This is not surprising, since individuals working 
more hours and in the labor force for a longer time are most likely to 
enjoy this benefit.
    Among dependent undergraduates, about 5 percent of those from 
families with incomes $70,000 or higher receive subsidies from their 
parents' employers, but fewer than 3 percent of those from families 
with incomes below $30,000 receive this funding. This reality is 
consistent with the general pattern of more generous employee benefits 
for higher-earning employees
    While private organizations such as Scholarship America do make 
important contributions to needy students, much private grant aid is 
distributed according to criteria other than financial need. Only 8 
percent of dependent students from families with incomes below $30,000 
receive private grants, compared to 10 percent of dependent 
undergraduates overall.
    Grant aid from private sources makes a significant contribution to 
students. The federal government might be well-advised to explore ways 
of encouraging increased participation of employers and other private 
entities in financing college and in particular, of targeting the 
subsidies to students with significant financial need. Federal matching 
funds could certainly be an effective means of accomplishing this goal. 
There is, however, no substitute for federal grants to low-income 
undergraduates. Assistance from private sources will never provide more 
than a small but helpful supplement to the public funding on which low- 
and moderate-income students rely. Without continued increases in 
federal grant funding, the gap in college enrollment between students 
from families in the lower half of the income distribution and those 
from more affluent families will not close.
                                 ______
                                 
    Chairman Keller. And now Mr. Ryan is recognized.
    Mr. Ryan. Thank you, Mr. Chairman, and I also want to lend 
my voice to your great hearing that we are having here and how 
important this is. I think this is really the most important 
discussion that we need to have, and we are competing against 
1.3 billion Chinese citizens, over a billion citizens in India, 
and we only have 300 million citizens in this country. So I 
think it makes it that much more imperative that we get all of 
our kids on the field playing for us. We can't afford to have, 
you know, the poverty rates we have in some of the other 
schools and the drop-out rates we have, as some of you have 
already mentioned.
    I want to take this opportunity, too, Mr. Davis, to thank 
you. I can't stress how important it is to have the leadership 
in the private sector on these issues. We hear a lot from 
businesses on how important it is to have an educated 
workforce, and I see your commitment not only in education, but 
a lot of other community things that are going on down in your 
community; and I want to thank you for being a leader in your 
community and how important it is.
    I have one question. I really don't even know who to ask it 
to. But one of the ideas that I have read about, and the idea, 
the concept, was mentioned here earlier, about kids and 
parents, especially poor kids and lower-middle-class kids, they 
don't even think education is an option for them. They don't 
know how much they qualify for the Pell grant or what is 
available.
    One of the ideas I read about last week that I think we 
need to maybe massage and kick around here because I think it 
could be a good bipartisan issue is to have a form sent to 
families based on their previous year's IRS forms that they 
filled out on what their income is. And if they have kids that 
are 14, 15, 16, 17, getting ready to go to college, they merely 
get an envelope that says, your kid John, who is 15, would 
qualify in your State of Ohio, for example, for $5,000 in Pell 
grant or $4,000 in Pell grant, and would be eligible for $1,500 
in loans and, therefore, could graduate from the Ohio State 
University in 4 years with, you know, $20,000 of it covered, 
whatever the numbers may be.
    Do you think that would be an effective use of our time, 
energy, and resources here from the government? Would that have 
the kind of impact that you are talking about here for not that 
much of a cost? And you are all welcome to comment.
    Mr. Jones. Any way we can effectively find to communicate--
I am trying to find the calculation in my mind, the cost to 
doing something of that nature. I know States need to do a 
better job. California does a very good job in trying to 
communicate very early to families at those age levels about 
that very thing, the Cal grant entitlement, Pell grant, and so 
forth. And let us not forget Gear Up, which is another very 
important program which we are very actively engaged in. That 
is reaching out to more families at an earlier age, and what it 
is doing is helping them to prepare academically.
    Our problem is not just cost, and I can't just emphasize 
this enough. It is the academic preparation and reaching a 14- 
or 15-year-old at that point who has not taken the requisite 
courses in elementary or middle school necessary to be 
successful, and taking English as early as eighth or ninth 
grade or algebra, is not going to be as successful as early on 
as we would like.
    So there is a combination. I applaud the thought, and I 
think we do need to brainstorm on ways of communicating the 
message, because I think you have hit on a key point in at 
least my 37 years. We do everything we can.
    Our Super Sunday, quite frankly, when a chancellor stands 
up on the pulpit and addresses a congregation in the church, 
and our presidents are there after the sermon and has time to 
address, that was getting out the message. We are doing it in 
the Bay area. We are doing it throughout the State with all 
underrepresented groups of students. And we just started with 
the African American because of the lowest college-going rate. 
But I go applaud that effort, and I think we should think about 
it.
    Mr. Salandy. I think also, in addition to the issue of 
academic preparedness, what we found is that the Posse 
Foundation--is that there are thousands of students out there 
that can succeed and that can do well, but are not being served 
because of financial limitations. And what we have done as an 
organization, how we get the word out is by reaching out to 
community-based organizations, and establishing relationships 
with public high school systems, and talking to counselors and 
principals so that they, in turn, disseminate that information 
about the availability of quality education to their students. 
And I think--I don't know how that might be applied more 
broadly, but----
    Chairman Keller. Thank you. Time is about expired. I know 
we have got two gentlemen who have been waiting.
    Dr. Price, if you can get off your best question, then I 
will go to Mr. Bishop real quick.
    Mr. Price. Thank you, Mr. Chairman. I want to commend you 
for this hearing, and I want to thank you all for coming.
    I can sit here all day and talk about this, because I agree 
with others, it is probably the most important thing we could 
discuss. It allows that pursuit of happiness to occur for all 
of our citizens.
    I come from Georgia, the Sixth District of Georgia. Twelve, 
thirteen years ago we adopted the HOPE Scholarship program 
there, which I think is the first State that has truly 
sequestered money from their lottery program and utilized it to 
fund tuition for all students, any students who go to a State 
school or private school and maintain a B average. It has been 
incredibly successful in keeping high-quality students in 
Georgia. It has also been successful in allowing individuals in 
a very public way--in providing them the incentive to say, if I 
can keep my academic scholarships up, I will be able to go to 
college.
    If you, in your wildest dreams or in your most creative 
mindset, could think about how we could provide that kind of 
vision for young people all across this Nation, do you have any 
thoughts that you haven't shared with us today or that you--or 
that you haven't written down somewhere that if we could just 
do this thing, it would be a wonderful, wonderful opportunity 
for all students across our Nation?
    Mr. Merisotis. A decade ago I was executive director of 
this bipartisan commission. One of the major recommendations 
was to create a uniform level of support available to all 
students irrespective of their financial situation; that is, 
that if you come from a higher-income family, you would be 
eligible for X thousands of dollars primarily in loans, and if 
you come from a very low-income family, you would be eligible 
for the same amount of money primarily in grants.
    The point is we can send a message, much of what you are 
talking about with the HOPE Scholarship in Georgia, to all 
students in this country, the Federal Government is going to 
make a specific commitment irrespective of their status; and I 
still think it is a very big idea that could have huge 
consequences for us as a country and should be one that would 
achieve bipartisan support.
    And I would be glad share with the subcommittee more of the 
information from that commission.
    Mr. Price. That would be great.
    Anybody else?
    Mr. Salandy. I would love to see--when I dream, I dream of 
recruitment processes that do not place the kind of emphasis 
that is now being placed on SAT scores and standardized 
testing, and I think that is a huge obstacle for students, the 
overreliance on those sorts of indicators of academic aptitude. 
I think that is a huge obstacle for students who might not 
perform well on those tests, but nonetheless, given the right 
kind of support, can be stars on campus.
    So in my--when I think of big, and I dream big, I dream of 
other measures, and perhaps also standardized, of course, but 
implemented on a large scale that don't simply test for the 
things that the current standardized tests test for.
    Chairman Keller. Mr. Salandy, I hate to cut you off. We 
will be happy to chat with you right after this.
    Dr. Price, if it is all right, let me yield for one 
question for Mr. Bishop. He has been waiting.
    Mr. Bishop. I have lots of questions, but I will ask one. I 
will ask it of Mr. Jones.
    In your testimony you talked about the importance of 
increasing funding for the Pell grant, increasing the Pell 
grant maximum, increasing funding for campus-based aid, 
restoring Perkins, which, as you know, the President's budget 
recommends that we eliminate.
    Quickly, we have passed--some of us disagreed--now a merit-
based component to Pell. Do you believe that a merit-based 
component to Pell is a best limited resource, or will we be 
taking those resources and putting them toward either 
increasing campus-based funds or increasing the Pell grant 
maximum?
    Mr. Jones. It is too early to tell yet, particularly in the 
first year, first and second year awards, because we don't know 
what the academic criteria will be. We know many of our CSU 
students will benefit from that. And the third and fourth year 
competitive grants, the Smart grants, are intended to address 
the workforce need that the Nation has identified, as well as 
the State of California, to encourage students to go in science 
and math and technology.
    I think always the California State universities', and 
certainly California joins with others, the greatest need is 
the need-based financial aid. But many of those students, by 
attaching it to the Pell grant, are, in fact, your neediest 
students. Ideally what we will do with the additional grants is 
reduce the student loan indebtedness. It would certainly in the 
CSU. I can't guarantee how it will be played out in other 
institutions, how they may, in fact, replace their 
institutional grant with another Federal grant and keep the----
    Mr. Bishop. That is my concern.
    My other concern is I come at this from a perspective of an 
ex-financial aid director, and my perspective would have been 
to add it to the campus basing, but let the financial aid 
officer use his or her discretion to assist the students who 
are in the greatest of need.
    Thank you for your answer.
    Chairman Keller. Thank you, Mr. Bishop.
    If anyone has any additional questions or additional 
responses, you can submit it to us, and we will certainly put 
it in on the record.
    I want to thank the witnesses for their important and 
invaluable time, and for Members for their participation.
    If there are no further questions, the subcommittee stands 
adjourned.
    [Whereupon, at 11:25 a.m., the subcommittee was adjourned.]
    [Additional material from Mr. Jones follows:]

     Supplemental Presentation by Allison G. Jones, Assistant Vice 
             Chancellor, California State University System

                        early assessment program
Goal of the CSU Board of Trustees
    Reduce the need for remediation in English and mathematics to 10% 
by 2007
Percentage of First-Time Freshmen Entering with College Level 
        Mathematics Proficiency
        
        
Percentage of First-Time Freshmen Entering with College Level English 
        Proficiency
        
        
Collaboration
     California State Board of Education
     California Department of Education
     California State University
Purposes of Early Assessment Program (EAP)
     Early warning
    - Identify students before their senior year who need to do 
        additional work in English and/or mathematics before entering 
        the CSU
     Identify student readiness
    - Inform students, families, and high schools of students' 
        readiness for college-level work in English and mathematics
     12th grade interventions
    - Motivate students to take needed steps in 12th grade to assure 
        readiness
EAP Development Principles
     Identify and develop common expectations of college 
readiness standards
     Align collegiate readiness expectations with K-12 
standards and assessments
     Assess college readiness standards
     Minimize additional tests or testing time
     Identify assessments appropriate to student academic 
preparation
    - 11th grade California Standards Test
     Provide feedback to students, families, and schools in 
time to focus additional academic preparation in 12th grade
     Cost-effectiveness
    - Reduce students' need for remediation
    - Improve path to the baccalaureate degree
Components of EAP
     11th grade testing (early assessment of college readiness)
     Supplemental high school preparation in 12th grade
     Teacher professional development
Why should eleventh grade students participate in the EAP?
     Earn an exemption from CSU-required English and/or 
mathematics placement tests
     Identify the need for additional preparation for college-
level courses while in high school
     Adjust senior-year coursework to prepare for college-level 
courses
     Avoid investing time and money in college remediation 
courses that do not count toward a baccalaureate degree
Early Assessment of Readiness for College
     Voluntary examination
     Administered in 11th grade
     In conjunction with California Standards Test
     In English and mathematics
     Contains 15 additional multiple-choice items in both 
subjects
     Essay required in English
     Selected items from CST and additional EAP items 
(including essay in English) are scored to determine student readiness 
for college English and/or mathematics
What is Assessed in Math
     CSU questions on CST are from State Board Standards
    - However, CSU does not cover Proof, Trig Functions, Probability, 
        and Logarithms
     Important topics that need to be learned but not essential 
skills for success in GE math
     Purpose: measure depth, not breadth of content knowledge
    - Depth important because CSU grants exemptions
What is Assessed in English
     CSU questions on CST are from State Board Standards
     Reading: comprehension
     Reading: literary response
     Writing strategies
     Written essay: student explains author's argument and 
extent to which student agrees with author's analysis and conclusion
Early Assessment of Readiness for College
     English
    - College Ready (Exempt)
    - Not College Ready (Non-exempt)
     Mathematics
    - College Ready (Exempt and Conditionally Exempt)
    - Not College Ready (Non-exempt)
What Do Results Mean?
College Ready (Exempt)
     Student demonstrates readiness for college level 
coursework in English Language Arts and/or mathematics and is exempt 
from further CSU testing.
College Ready (Conditionally Exempt)
     Student demonstrates readiness for college level 
coursework in mathematics at that point in time,; However, successful 
completion of a senior year math experience is required to retain the 
exemption.
Not College Ready (Non-Exempt)
     Student does not demonstrate readiness for college level 
coursework in English Language Arts and/or mathematics and is 
encouraged to participate in a senior year experience in either or both 
areas.
Incomplete
     Student did not complete a sufficient amount of one or 
both exams to render a designation.
Not College Ready (Non-Exempt)
     Students, once admitted, must take appropriate placement 
test to determine if they will enter regular or remedial coursework
    - English Placement Test (EPT)
    - Entry Level Mathematics Exam (ELM)
     Exemptions may be gained through other means, such as AP, 
SAT, ACT, IB, etc.
College Ready: Conditionally Exempt in Mathematics
     Students will be required to do further work to maintain 
their skills in mathematics to retain exemption.
    - Another math class with Algebra II as a prerequisite
    - Monitored, online mathematics e-learning program, such as ALEKS
How CSU supports high schools and students to gain proficiency in 
        English
     CSU English Success Website
     Twelfth Grade Expository Reading and Writing Course
    - Aligned with English-Language Arts Content Standards
    - Helps prepare students for college-level English
     Teacher Professional Development
CSU English Success Website
     Customized information for students, teachers, and 
counselors
     Checklists and guidance tips for parents (English and 
Spanish)
     Personalized roadmaps with step-by-step advise and e-mail 
reminders
     Advice on EPT requirements
     Online English resources for students, parents, 
counselors, and teachers
    - CSU Focus on English
CSU English Success Website
     Tips and tools to help students improve their critical 
reading and writing skills
     Online multiple-choice module offering two practice EPT 
exams
    - Students receive a score report with detailed feedback about 
        their responses
     Diagnostic Writing Service (DWS)
     Calibrated Peer Review (CPR), an online essay-writing tool
     Testimonials
     www.csuenglishsuccess.org
English for Success Home Page


12th Grade Expository Reading and Writing Course
     Developed by CSU English faculty and high school teachers
     Aligned with ELA content standards for 11th and 12th 
grades
     Structured around assignment template addressing reading 
and writing
     Lessons based on non-fiction and fiction texts
     Engages students in a study of rhetoric and composition
     Enables students to read and write academic prose 
effectively and strategically
12th Grade Expository Reading and Writing Course
     Increases students' mastery of academic language
     Emphasizes in-depth study of expository, analytical, and 
argumentative writing
     Deepens students' critical reading, writing, and thinking 
skills
     Designed to fulfill the B requirement of the A-G subject 
area requirements
     Not intended as an honors or remedial course
     Full course or modules
Preliminary Evaluation of 12th Grade Expository Reading and Writing 
        Course
Study Design
     Effect of course on students who experienced two modules 
with student in traditional courses
     Extent to which instructional context related to increased 
proficiency students in course
     Administration of EPT to 12th graders enrolled in course 
using modules and enrolled in traditional course
     Observations and interviews with teachers and students in 
10 classrooms, teacher survey responses (N=214)
Preliminary Evaluation of 12th Grade Expository Reading and Writing 
        Course
Effect on Teachers
     Experienced strong success with curricular materials
     Found material academically rigorous and engaging
     Systemic changes in teaching
     Observed that * * *
    - Depth, rigor, and intensity contributed to strong, positive 
        outcomes for students
    - College expectations increased
    - Students experienced increased confidence as writers and readers
    - Worked well for English language learners
Preliminary Evaluation of 12th Grade Expository Reading and Writing 
        Course
Effect on Students
     Increased skills in reading comprehension, expository 
writing, and independent thinking
    - Analyzed text material more thoroughly
    - Reexamined ideas in text
    - Read text with different/multiple purposes
    - Evaluated and analyzed strength of writers' arguments
    - Read more, including more complex texts by choice
    - Applied skills learned with expository texts with traditional 
        English language arts texts
     Students enrolled in course using modules scored higher on 
EPT than students in traditional classes
Professional Development in English
     Offered by County Offices of Education and the CSU to high 
school English teachers Introduces teachers to expectations of college-
level English
     Emphasizes teaching expository text and rhetorical 
analysis
Professional Development in English
     Provides teachers with skills necessary to teach the 12th 
Grade Expository Reading and Writing Course
     Reading Institutes for Academic Preparation offered 
through selected CSU campuses for teachers in grades 9-12 in all 
subject areas to improve capacity to teach reading/academic literacy 
across the curriculum
How CSU supports high schools and students to gain proficiency in Math
     CSU Math Success Website
     Twelfth Grade Math Course (under development)
     Teacher Professional Development
CSU Math Success Website
     Advise students how to meet ELM and EPT requirements
     Motivate students to take proactive steps to satisfy ELM 
and EPT
     Provide educational tools and planning resources to help 
students improve their math skills
CSU Math Success Website
     Diagnostic services (MDTP)
     Online math resources for students, parents, counselors, 
and teachers
    - CSU Focus on Mathematics
     Online e-learning mathematics tutorial (ALEKS)
     Live online math tutoring
     10-, 50-, 114- online ELM practice problems
     Roadmap advises students how to prepare math skills
     Video Testimonials
     www.csumathsuccess.org
Math for Success Roadmap


12th Grade Course in Mathematics
     Design of new 12th grade course
    - Under development
    - Will emphasize math skills needed for college readiness in 
        mathematics
Professional Development in Mathematics
     Increase teacher's knowledge and understanding of EAP 
program
     Examine student performance on ELM to identify and analyze 
patterns of student strengths and weaknesses
     Increase teacher's knowledge and understanding of options 
that exist to increase and sustain student math skills
     Agreement with Curriculum and Instruction Steering 
Committee (CISC) of California County Superintendents Educational 
Services Association (CCSESA) to deliver professional development to 
high school mathematics teachers
Just for the Kids
     User-friendly website provides data charts based on CST 
and EAP for Mathematics and English/Language Arts
     Helps schools benchmark performance against top performing 
schools with comparable student populations
     Connects schools with high performing schools to learn and 
implement effective strategies that improve student achievement
     Helps schools predict how 9th graders may perform by 11th 
grade if nothing changes
     Identifies effective 12th grade interventions
     www.jftk-ca.org
EAP Statistics--Spring 2005
     EAP testing available in all public high schools
     English EAP
    - 186,000 of 407,000 eligible juniors took English EAP (46% of all 
        eligible)
    - 23.5% exempt
     Mathematics EAP
    - 119,000 of 172,000 eligible juniors took Math EAP (69% of all 
        eligible)
    - 56% exempt
        2004: 153,000 of 386,000 eligible juniors took English (22% 
exempt)
        2004: 115,000 of 157,000 eligible juniors took math (55% 
exempt)
Resources
     Early Assessment Program Home Page:
    - www.calstate.edu/eap
     Math Success Website:
    - www.csumathsuccess.org
     English Success Website:
    - www.csuenglishsuccess.org
     ALEKS ELM Tutorial:
    - www.csumathsuccess.org/alekslink
     Frequently Asked Questions (FAQs):
    - www.calstate.edu/eap/documents/eapfaqfinal/pdf
     Just for the Kids
    - www.jftk-ca.org

                                 
