[House Hearing, 110 Congress]
[From the U.S. Government Publishing Office]






                     THE STATE OF HIGHER EDUCATION:
                        HOW STUDENTS ACCESS AND
                      FINANCE A COLLEGE EDUCATION

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

                                HEARING

                               before the

                   SUBCOMMITTEE ON HIGHER EDUCATION,
                 LIFELONG LEARNING, AND COMPETITIVENESS

                              COMMITTEE ON
                          EDUCATION AND LABOR

                     U.S. House of Representatives

                       ONE HUNDRED TENTH CONGRESS

                             FIRST SESSION

                               __________

             HEARING HELD IN WASHINGTON, DC, MARCH 8, 2007

                               __________

                            Serial No. 110-8

                               __________

      Printed for the use of the Committee on Education and Labor


                       Available on the Internet:
      http://www.gpoaccess.gov/congress/house/education/index.html

                               __________

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                    COMMITTEE ON EDUCATION AND LABOR

                  GEORGE MILLER, California, Chairman

Dale E. Kildee, Michigan, Vice       Howard P. ``Buck'' McKeon, 
    Chairman                             California,
Donald M. Payne, New Jersey            Ranking Minority Member
Robert E. Andrews, New Jersey        Thomas E. Petri, Wisconsin
Robert C. ``Bobby'' Scott, Virginia  Peter Hoekstra, Michigan
Lynn C. Woolsey, California          Michael N. Castle, Delaware
Ruben Hinojosa, Texas                Mark E. Souder, Indiana
Carolyn McCarthy, New York           Vernon J. Ehlers, Michigan
John F. Tierney, Massachusetts       Judy Biggert, Illinois
Dennis J. Kucinich, Ohio             Todd Russell Platts, Pennsylvania
David Wu, Oregon                     Ric Keller, Florida
Rush D. Holt, New Jersey             Joe Wilson, South Carolina
Susan A. Davis, California           John Kline, Minnesota
Danny K. Davis, Illinois             Bob Inglis, South Carolina
Raul M. Grijalva, Arizona            Cathy McMorris Rodgers, Washington
Timothy H. Bishop, New York          Kenny Marchant, Texas
Linda T. Sanchez, California         Tom Price, Georgia
John P. Sarbanes, Maryland           Luis G. Fortuno, Puerto Rico
Joe Sestak, Pennsylvania             Charles W. Boustany, Jr., 
David Loebsack, Iowa                     Louisiana
Mazie Hirono, Hawaii                 Virginia Foxx, North Carolina
Jason Altmire, Pennsylvania          John R. ``Randy'' Kuhl, Jr., New 
John A. Yarmuth, Kentucky                York
Phil Hare, Illinois                  Rob Bishop, Utah
Yvette D. Clarke, New York           David Davis, Tennessee
Joe Courtney, Connecticut            Timothy Walberg, Michigan
Carol Shea-Porter, New Hampshire

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

                   SUBCOMMITTEE ON HIGHER EDUCATION,
                 LIFELONG LEARNING, AND COMPETITIVENESS


                    RUBEN HINOJOSA, Texas, Chairman

George Miller, California            Ric Keller, Florida,
John F. Tierney, Massachusetts         Ranking Minority Member
David Wu, Oregon                     Thomas E. Petri, Wisconsin
Timothy H. Bishop, New York          Cathy McMorris Rodgers, Washington
Jason Altmire, Pennsylvania          Virginia Foxx, North Carolina
John A. Yarmuth, Kentucky            John R. ``Randy'' Kuhl, Jr., New 
Joe Courtney, Connecticut                York
Robert E. Andrews, New Jersey        Timothy Walberg, Michigan
Robert C. ``Bobby'' Scott, Virginia  Michael N. Castle, Delaware
Susan A. Davis, California           Mark E. Souder, Indiana
Danny K. Davis, Illinois             Vernon J. Ehlers, Michigan
Mazie Hirono, Hawaii                 Judy Biggert, Illinois












                            C O N T E N T S

                              ----------                              
                                                                   Page

Hearing held on March 8, 2007....................................     1
Statement of Members:
    Altmire, Hon. Jason, a Representative in Congress from the 
      State of Pennsylvania, prepared statement of...............     1
    Hinojosa, Hon. Ruben, Chairman, Subcommittee on Higher 
      Education, Lifelong Learning, and Competitiveness..........     2
        Prepared statement of....................................    12
        Making Opportunity Available report: ``Hitting Home: 
          Quality, Cost, and Access Challenges Confronting Higher 
          Education Policy''.....................................     3
    Keller, Hon. Ric, Ranking Minority Member, Subcommittee on 
      Higher Education, Lifelong Learning, and Competitiveness...    12
        Prepared statement of....................................    14

Statement of Witnesses:
    Breneman, David W., dean and professor, Curry School of 
      Education..................................................    16
        Prepared statement of....................................    18
        Internet link to the National Center for Public Policy 
          and Higher Education report: ``Measuring Up 2006''.....    19
    Merisotis, James, president, Institute for Higher Education 
      Policy.....................................................    25
        Prepared statement of....................................    27
    Soifer, Don, executive vice president, Lexington Institute...    33
        Prepared statement of....................................    34
    Wiener, Ross, vice president for program and policy, 
      Education Trust............................................    19
        Prepared statement of....................................    21
        Internet link to Education Trust report: ``Promise 
          Abandoned: How Policy Choices and Institutional 
          Practices Restrict College Opportunities''.............    47






 
                     THE STATE OF HIGHER EDUCATION:
                        HOW STUDENTS ACCESS AND
                      FINANCE A COLLEGE EDUCATION

                              ----------                              


                        Thursday, March 8, 2007

                    U.S. House of Representatives

                   Subcommittee on Higher Education,

                 Lifelong Learning, and Competitiveness

                    Committee on Education and Labor

                             Washington, DC

                              ----------                              

    The subcommittee met, pursuant to call, at 10:37 a.m., in 
Room 2175, Rayburn House Office Building, Hon. Ruben Hinojosa 
[chairman of the subcommittee] presiding.
    Present: Representatives Hinojosa, Wu, Bishop, Altmire, 
Courtney, Scott, Davis of California, Davis of Illinois, 
Keller, McKeon, Foxx, Castle, Ehlers, and Biggert.
    Staff present: Tylease Alli, Hearing Clerk; Denise Forte, 
Director of Education Policy; Gabriella Gomez, Senior Education 
Policy Advisor (Higher Education); Lamont Ivey, Staff 
Assistant, Education; Thomas Kiley, Communications Director; 
Ann-Frances Lambert, Administrative Assistant to Director of 
Education Policy; Danielle Lee, Press/Outreach Assistant; 
Ricardo Martinez, Policy Advisor for Subcommittee on Higher 
Education, Lifelong Learning and Competitiveness; Stephanie 
Moore, General Counsel; Lisette Partelow, Staff Assistant, 
Education; Rachel Racusen, Deputy Communications Director; 
Julia Radocchia, Education Policy Advisor; Robert Borden, 
General Counsel; Kathryn Bruns, Legislative Assistant; Steve 
Forde, Communications Director; Jessica Gross, Deputy Press 
Secretary; Taylor Hansen, Legislative Assistant; Amy Raaf 
Jones, Professional Staff Member; Jim Paretti, Workforce Policy 
Counsel; Linda Stevens, Chief Clerk/Assistant to the General 
Counsel; and Sally Stroup, Deputy Staff Director.
    Chairman Hinojosa [presiding]. A quorum is present. The 
hearing of the subcommittee will come to order.
    Pursuant to Committee Rule 12, any member may submit an 
opening statement in writing which will be made part of the 
permanent record.
    [The prepared statement of Mr. Altmire follows:]

Prepared Statement of Hon. Jason Altmire, a Representative in Congress 
                     From the State of Pennsylvania

    Thank you, Mr. Chairman, for holding this important hearing today 
on how students access and finance higher education.
    I would like to extend a warm welcome to today's witnesses. I thank 
all of you for taking the time to be here and I look forward to hearing 
from you.
    College access and affordability are the keys to ensuring America 
is competitive in the global economy. Unfortunately, in recent years, 
the United States has lagged, when compared to other industrialized 
countries, in the percentage of young adults enrolled in college and in 
the proportion of those students who graduate from college. The 
National Center for Public Policy and Higher Education's report, 
``Measuring Up 2006: The National Report Card on Higher Education'' 
found that among 27 industrialized nations, the United States has 
fallen to fifth in the percentage of young adults enrolled in college 
and has dropped to sixteenth in the proportion of those students who 
graduate.
    I am concerned that our nation is not doing enough to provide 
access to higher education to those who can not afford it and is not 
adequately ensuring that college students graduate with degrees. I am 
proud to say that this Congress has already taken two important steps 
towards improving college accessibility. We passed the College Student 
Relief Act, which will cut interest rates on student loans from 6.8% to 
3.4% over the next five years, and we voted to increase the maximum 
Pell Grant by $260 to $4,310.
    These were necessary first steps and I look forward to working with 
the Committee to continue to improve student access and affordability 
to higher education.
    Thank you again, Mr. Chairman. I yield back the balance of my time.
                                 ______
                                 
    I now recognize myself, followed by my good friend and 
colleague, Ranking Member Ric Keller, for an opening statement.
    Welcome to the first hearing of the Subcommittee on Higher 
Education, Lifelong Learning and Competitiveness. This is the 
first of a series of hearings that we will hold on the 
reauthorization of the Higher Education Act.
    I am looking forward to working with the members of the 
subcommittee and all of the stakeholders to develop legislation 
that will fulfill the promise of the Higher Education Act for 
the 21st century.
    There is a growing concern that as a nation we are losing 
our competitive edge. We know from experience that investing in 
higher ed is one of our primary tools for sharpening that 
competitive edge.
    After World War II we opened the doors of college far and 
wide to returning soldiers, rich, poor, black, white or 
Hispanic. Our nation became smarter, stronger and richer as a 
result of this egalitarian investment in education.
    In 1965 president Lyndon Baines Johnson signed into law the 
Higher Education Act, which expanded our national commitment to 
broad access to higher education. Again, our economic 
prosperity and capacity for innovation grew as a result of this 
investment.
    Yesterday, however, the study entitled, ``Hitting Home: 
Quality, Cost and Access Challenges Confronting Higher 
Education Today,'' was released by Jobs for the Future. This 
quantifies the scale of our challenge in higher education.
    The report found that by year 2025 just to keep pace with 
our international competitors, the United States would need to 
produce an additional 15.6 million college graduates. That 
translated into another 781,000 degrees per year or a 37 
percent increase over current production.
    There are no two ways about it. That is a tall order. We 
have not aligned our support for higher education to reflect 
this reality. We are shortchanging our next generation of 
college students. Hispanic and African American students will 
account for most of the growth in our traditional college-aged 
population, yet we know that nationally only half of these 
students are graduating from high school. Only 1 in 5 is 
college ready.
    Many of our families do not understand financial aid for 
the college process. A recent survey conducted by the Tomas 
Rivera Policy Institute in California found that more than half 
of the Hispanic parents and only 43 percent of young adults 
could not name a single source of college financial aid. 
Certainly we can do better.
    Overcoming these barriers of preparation and financial aid 
awareness is simply not enough to ensure college success. We 
know that cost is a major obstacle. The Advisory Committee on 
Student Financial Assistance estimates that in 2003 more than 
170,000 college-qualified low-income students did not enroll in 
any college at all because of financial barriers. Moreover, we 
know that just getting into college is not enough. The benefits 
of higher education come with degree completion. Too many of 
our students are not making it through to graduation.
    The 110th Congress has already made a down payment on 
improving access and affordability. We have passed legislation 
reducing interest rates on subsidized student loans, ensuring 
all students have equal access to the maximum Pell Grant, 
regardless of whether they attend low-cost institutions, and 
providing the first increase in over 4 years to the Pell Grant, 
boosting the maximum grant to $4,310, which is a $260 increase.
    This is real progress, but we are just getting started. 
Clearly, we need to expand access and success in higher 
education on a much larger scale than ever before. The 
reauthorization of the Higher Education Act is our opportunity 
to do that.
    Our distinguished panel today will help us think about how 
to get this job done. Thank you for joining us, and I am 
looking forward to your testimony.
    Before concluding, I want to ask for unanimous consent that 
a copy of the report that I mentioned in my opening remarks be 
made a part of this hearing today. Hearing no objection, it 
shall be done.
    [The report follows:]

           Hitting Home: Quality, Cost, and Access Challenges
                   Confronting Higher Education Today

            An initiative of Lumina Foundation for Education

                     [March 2007; by Travis Reindl]

    The United States needs to increase its production of postsecondary 
education degrees and reduce gaps in achievement among racial and 
socioeconomic groups. Otherwise, the country will not be able to meet 
workforce needs,maintain international economic competitiveness, and 
improve the quality of life for all Americans.
    If current production patterns in postsecondary education persist, 
the nation will face a significant ``degree gap'' that puts it at a 
disadvantage relative to other leading developed nations. In fact, the 
size of this gap--the difference between degrees produced in the United 
States and those produced by nations who are among our top 
competitors--could reach almost 16 million degrees by 2025, according 
to new data prepared for the Making Opportunity Affordable initiative.
    To close the gap, the nation's colleges and universities will need 
to increase the annual rate of degree production by more than 37 
percent. This estimate--prepared by the National Center for Higher 
Education Management Systems--focuses on top degree producing nations 
who are members of the Organisation for Economic Cooperation and 
Development and does not include India and China, whose degree 
production is also rising rapidly.
    According to the new data, closing the gap will require the 
nation's colleges and universities to ensure that minority groups, non-
traditional-age college students, and students from low-income 
backgrounds achieve the same levels of attainment that we see today 
among white and Asian Americans, traditional-age college students, and 
wealthier students. Simply reaching the current attainment levels of 
white students will depend on about 10.6millionmore people of color 
earning postsecondary degrees by 2025 than do so today. Paying for this 
level of expansion in postsecondary education will demand 
implementation of a two-fold agenda:
     Introducing a new public investment strategy that includes 
growth in funding and a much sharper focus on expanding capacity and 
bolstering productivity in the delivery of higher education;
     Encouraging higher education systems and institutions to 
be more cost-effective and collaborative with K-12 education in order 
to enhance student access and success, further contain costs, and 
introduce additional productivity improvements.
    This will require states and institutions to set goals for quality, 
cost, and access, and to establish metrics for measuring progress. 
States and institutions also must institute multi-tiered strategies to 
address these challenges. These strategies include: strengthening 
inter-institutional collaboration through comprehensive approaches to 
articulation and transfer; focusing resources on core academic 
priorities; streamlining student transitions from K-12 to postsecondary 
education; promoting timely degree completion; and redesigning academic 
programs to improve student results while reducing cost. While there 
have been some examples of state and institutional action in these 
areas, this action has not been comprehensive, coordinated, or 
sustained. But those states and institutions that have moved forward to 
adopt these changes have seen promising results.
    The multi-year Making Opportunity Affordable initiative aims to 
provide research, tools, and support to help states and institutions 
transform how they deliver postsecondary education to serve more 
students without reducing quality. By introducing more cost-effective 
approaches, states and their higher education systems can reinvest in 
access and quality improvements. Support for the initiative has been 
provided by Lumina Foundation for Education.
1. Changing workforce demands
    A recent study by the Bureau of Labor Statistics indicates that 
high-skill jobs that require advanced learning will make up almost half 
of all job growth in the United States.While low-skill jobs will 
continue to grow, the rapid expansion of high-skill work is an 
indication of the nation's shift from manufacturing and farming toward 
a more service- and information-based economy. In fact, jobs requiring 
an Associate's degree or beyond will increase at faster rates than jobs 
requiring less than an Associate's degree between now and 2014 (see 
Figure 1). The minimum level of education required in high growth 
fields is also likely to increase in the years ahead, which could widen 
the gap.




    High educational attainment correlates with state economic strength 
and high income. A dozen states (California, Connecticut, Colorado, 
Delaware, Illinois, Maryland,Minnesota, New Hampshire, New Jersey, New 
York, Virginia, and Washington) have both high levels of personal 
income per capita and high percentages of working-age adults with four-
year degrees. Only three states have high per-capita income and low 
educational attainment: Alaska, Michigan, and Nevada, all with 
economies tilted toward high-wage industries requiring lower levels of 
education.
2. Underlying problems
    In many ways the United States is doing better and worse when it 
comes to higher education. The nation's higher education system has 
historically been the strongest in the world, and by some measures 
still is. The number of students pursuing degrees is at an all-time 
high. Academic preparation for college-level work is improving. 
College-going rates are holding steady despite double-digit tuition 
increases.
    But these signs of success mask deeper problems. The percentage of 
our population earning college degrees is stagnating, because a larger 
proportion of young people are not entering or not progressing through 
postsecondary education. Low-income and minority students--the segments 
of the population growing most rapidly--are not succeeding at rates 
equivalent to their growth. Meanwhile, rising expenditures by students 
and taxpayers are not resulting in better learning, which points to a 
dangerous ``productivity gap.''
    Changing Demographics. The number of students attending higher 
education institutions has grown dramatically recently, but the 
composition of that population is changing along with that of the 
population as a whole. According to the U.S. Census Bureau, the 
percentages of African Americans and Latinos from 18 to 44 years old 
will rise by about 30 percent between 2000 and 2025, an increase of 
about 10 million people. Meanwhile, as the white population ages, the 
percentage of white adults from 18 to 44 will decline by 6.1 percent, a 
drop of 4.4 million. Among 18- to 24-year-old white young adults, the 
population will drop 9.6 percent. So the United States must 
dramatically increase degree production while more effectively serving 
groups who typically have not succeeded at the same rates as whites.
    Rising Costs and Prices. The costs of providing higher education 
and the prices paid by students and their families have increased 
substantially. Even when adjusted for inflation, tuition and fees have 
risen 24 percent at four year public universities over the past five 
years and 32 percent over the past decade, according to Trends in 
College Pricing 2006, a study conducted by the College Board. The 
report reveals that tuition and fees at private institutions have risen 
11 percent in the past five years and 25 percent in the past decade in 
inflation-adjusted dollars. Meanwhile, public two-year institutions 
have done a better job limiting price increases, but even their tuition 
and fees have risen 22 percent in the past decade when adjusted for 
inflation (see Figure 2).




    The result has been that lower- and middle-class families are 
having a harder time paying for college. More poor16.6% students are 
staying away, and large percentages of students face heavy debt as they 
enter the workforce. According to the American Association of State 
Colleges and Universities, today two out of three students who attend 
public colleges and universities graduate with debt, and the average 
borrower owes $17,250 in student loans. Ten years ago, the average 
student borrower attending a public college or university graduated 
owing $8,000 in student loans after adjusting for inflation.
    Rising prices are the tip of the iceberg. The amount of money that 
colleges and universities spend to provide education to their students 
is rising faster than consumer prices and health care costs. Over the 
past decade, the Higher Education Price Index has increased 
significantly faster than the nation's Consumer Price Index, which 
measures the relative cost of a typical basket of goods and responds to 
changes in the economy as a whole. According to data from the 
Commonfund Institute, the past decade has seen the HEPI rise 31 
percent, including an 18 percent increase in the last five years alone. 
Meanwhile, the CPI has risen 22 percent and 12 percent, respectively.
    There are disagreements about the causes of these cost increases, 
and some experts argue that universities cannot control spending growth 
because funding is always needed to improve quality. The Making 
Opportunity Affordable initiative is investigating the real patterns of 
spending in higher education and has found evidence that cost increases 
are not inevitable. Institutions can control costs and maintain access 
and quality if they do a better job of targeting resources to programs 
that benefit students. A new study to be released by the initiative 
later this year will provide new information on what is driving up 
costs.
    In the past, colleges have avoided coming to terms with cost 
management by seeking new revenues--in the form of private fundraising 
and student tuition increases--rather than changing practices. This 
promotes what Charles Miller, chairman of the U.S. Secretary of 
Education's Commission on the Future of Higher Education, has called 
``a top-line structure with no real bottom line.'' The revenue chase 
cannot continue. State appropriations for higher education are failing 
to keep pace with enrollment increases and inflation. Legislatures have 
increased funding for higher education by an average of 3 percent 
annually in recent years, but have many competing priorities. States 
also are facing large structural deficits--service demands in excess of 
available revenues--that could limit resources available to address 
these challenges. Private giving is highly variable and cannot be 
relied on by higher education as a budget balancer.
    The public is beginning to push back against constant tuition 
hikes, raising questions about whether college is worth it and whether 
colleges are doing the best they can to enable students to attend. More 
than two-thirds of Americans (68 percent) believe that colleges and 
universities could reduce their costs without hurting the quality of 
the institutions, according to a 2004 Chronicle of Higher Education 
poll.
    Quality. How well are students doing? Our understanding of student 
knowledge and skills comes from national studies, which indicate that 
the mathematical proficiency and document/prose literacy of college 
graduates have not improved and, in some cases, actually have declined 
over the past decade. Adults with college degrees dropped 11 points in 
prose literacy and 14 points in document literacy between 1992 and 
2003, according to the National Assessment of Adult Literacy. A 2005 
study by American Institutes for Research revealed that 20 percent of 
U.S. college students completing four-year degrees--and 30 percent of 
students earning two-year degrees--have only basic quantitative 
literacy skills. According to the study,more than 75 percent of 
students at two-year colleges and more than 50 percent of students at 
four-year colleges score below the literacy proficiency level. They 
lack the skills to perform complex literacy tasks, such as comparing 
credit card offers with different interest rates or summarizing the 
arguments of newspaper editorials.
    In addition, structural forces make it difficult for states and 
institutions to focus on these issues in a sustained way. State funding 
cycles promote reactivity and crisis management rather than thoughtful 
planning. Also, many states and institutions do not fully understand 
why costs are rising, in what areas they are rising, and what tools or 
knowledge will help them determine what to do.
    As a result of changing demographics, rising costs and prices, the 
erosion of quality, and these structural forces, we are losing ground 
in helping to ensure that all Americans can attend college at a cost 
the nation and its families can afford.
3. The degree gap
    According to the analysis of OECD data, the U.S. deficit in degree 
attainment poses a serious threat to the nation's economic well-being. 
Other highly competitive nations are improving the quality of the 
education they provide their young people, while also radically 
increasing the capacity of the systems that serve them. These nations 
have overtaken the United States' long-time position as the world 
leader in degree production relative to population as a whole.
    Today seven nations (Belgium, Canada, Ireland, Japan, Norway, South 
Korea, and Sweden) lead the United States in degree attainment (see 
Figure 3). More than half of Japanese and Canadian 25- to 34-year-olds, 
for example, have a Bachelor's or Associate's degree, while only 4 in 
10 Americans in this age group have earned postsecondary degrees.





    We are losing ground to other nations largely because of relatively 
low college completion rates. Although the United States still ranks in 
the top five in the proportion of young people who attend college, it 
ranks 16th in the proportion who actually finish, according to the 
National Center on Public Policy and Higher Education's Measuring Up 
2006 report. While estimates vary, American universities award about 18 
degrees for every 100 full-time students enrolled. The leading nations 
(Japan, Portugal, and the United Kingdom) award about 25 degrees. So 
these nations are experiencing more positive returns on their 
investments in higher education.
    As other countries ratchet up access and attainment, American Baby 
Boomers, the best-educated workers in history, are retiring and being 
replaced in the workforce by young people who possess less knowledge 
and weaker skills than the current generation. In fact, the United 
States and Germany are alone among OECD nations in this respect: The 
percentage of their workers ages 25-34 who have a postsecondary degree 
is actually smaller than the percentage of Baby Boom workers ages 45-54 
with such a degree.
    For the first time, researchers have examined the extent of the gap 
in degree attainment between the United States and the rest of the 
world and its consequences. A new report, based on data analysis 
conducted for Making Opportunity Affordable by NCHEMS, will be released 
in May. This report, The Degree Gap, estimates that the United States 
will need to produce 15.6 million more Bachelor's and Associate's 
degrees beyond currently expected levels if the nation is to keep up 
with its best performing peers--781,000 additional degrees per year 
between now and 2025, an increase of 37 percent over the current pace 
of degree production. According to the report, only eight states and 
the District of Columbia are on pace to meet this ambitious goal. But 
even states on course to close the gap will do so only by more 
effectively serving a growing population of historically 
underrepresented racial and ethnic groups. Some states will have to 
more than double the numbers of young people who obtain college degrees 
by 2025. This could have severe fiscal consequences, but states that 
take on the challenge could see tremendous economic benefit (see Figure 
4).





    However one looks at the problem, the United States has miles to go 
to eliminate racial and ethnic disparities in degree production, 
strengthen the domestic workforce to meet demand for higher skills and 
knowledge, and remain internationally competitive. Colleges and 
universities will have to ensure that minority groups achieve at the 
same levels as white and Asian Americans, and earn about 10.6 million 
more postsecondary degrees by 2025 than would be the case given current 
circumstances (see Figure 5).





4. What needs to be done
    The magnitude of the challenge indicates that business as usual is 
unacceptable. The solution combines two approaches: a) sustained 
investment in higher education; and b) redesigned institutional 
practice and public policy to promote greater cost-effectiveness, 
informed by new knowledge and metrics.
    A national agenda for redesigning the higher education system 
should include several crucial elements. Consumers and the federal 
government must continue to advocate broader access, improved 
productivity, and better quality in postsecondary education. Much of 
the heavy lifting, however, needs to come from state policymakers and 
higher education decision-makers to:
    Set goals for quality, cost, and access, and establish metrics for 
measuring progress. Development of strategic plans and public agendas 
at the campus, system, and state levels demands goals and metrics that 
address resource use in relation to student results. Because much of 
the data and information essential to this work are not currently 
available or widely used, the Making Opportunity Affordable initiative 
will make significant investments in creating and testing these tools.
    Pursue multiple strategies for meeting these goals, including: 
Strengthening inter-institutional collaboration through comprehensive 
approaches to articulation and transfer to reduce repeat course-taking 
and student attrition. Florida has taken the lead in addressing these 
concerns by ensuring that most community college graduates will be 
deemed to have met all general education requirements and will be 
guaranteed admission into the upper division (junior status) of a state 
university. State institutions also abide by a uniform system of course 
numbering, and the state offers a Web site that provides unbiased 
advising about postsecondary opportunities. Some states have initiated 
joint degree programs to fully utilize existing investments. North 
Dakota offers a joint program in nursing in which course delivery moves 
from campus to campus, with many institutions participating, allowing a 
needed program to be offered on a periodic basis in sparsely populated 
areas without the typical inefficiencies associated with providing 
expensive programs in rural communities.
            Focusing resources on core academic priorities
    A few states, such as Ohio and Virginia, have instituted 
productivity reviews that identify undersubscribed majors at all public 
institutions and reallocate public funds away from those majors if they 
fall below a designated threshold. The Illinois Priorities Quality and 
Productivity initiative in the mid-1990s pursued this goal by providing 
a common set of data about individual program performance to 
institutions. After providing the data, the Illinois Board of Higher 
Education left the decision about which programs to eliminate up to the 
institutions so long as they improved institutional performance within 
established guidelines.
            Streamlining student transitions to reduce rework and 
                    attrition
    This includes offering accelerated learning options (e.g., Advanced 
Placement/International Baccalaureate, dual/concurrent enrollment, 
Early College High Schools) and early intervention programs to boost 
student preparation. In California, the 11th grade standards test 
serves as a barometer of readiness for courses in the California State 
University system, giving students early warning about their college 
preparation. Washington's Running Start program reaches about 10 
percent of high school juniors and seniors in the state. Running Start 
students who transfer their credits to four-year institutions complete 
Bachelor's degrees with an average of 33 fewer state-supported credits 
than other students, resulting in lower net costs for both the student 
and the state. Once in college, Running Start students also appear to 
perform as well as, and in some cases better than, their peers.
            Promoting timely degree completion to create increased 
                    capacity for new enrollment
    New York's Bundy Aid program, for example, rewards private 
institutions for graduating New York State residents, providing strong 
incentives for ensuring degree completion. Western Governors University 
uses test-out provisions and other institutions use College Level 
Examination Program scores to allow qualified students to advance 
faster.
            Redesigning academic programs to improve student results 
                    while reducing cost
    Institutions don't need to tie up several faculty members to teach 
introductory courses in high-demand subject areas. A recent pilot study 
by the National Center for Academic Transformation found that 25 of 30 
institutions that redesigned a popular course by making smart use of 
technology and engaging professors as tutors, rather than lecturers, 
improved learning outcomes, while reducing cost by an average of 37 
percent. Later in 2007, the National Center for Public Policy and 
Higher Education will release a detailed report for the initiative on 
effective practices to promote lower cost, equitable access, and higher 
quality and productivity among states and institutions.
    We are at a crucial turning point. The U.S. economy is still 
strong, and has the potential to remain strong into the future. The 
nation's workforce is one of the most highly skilled and productive in 
the world, and can stay that way. But this will happen only if the 
country makes strategic choices about how we prepare today's 
workforce--and the workforce of 20 years from today.
    The structural changes necessary to put the system on track to meet 
the attainment benchmark will require breaking with tradition, on many 
levels, and recentering institutions on their core missions.
    Higher education in the United States successfully addressed the 
economic, demographic, and technological challenges of the 19th and 
20th centuries, educating new Americans in the Industrial Age, 
educating the ``greatest generation'' in the post-WWII era, and opening 
doors to women and minorities in more recent times. The development of 
land grant colleges, the expansion of higher education made possible by 
the GI Bill, and the establishment of community colleges reduced 
disparities in opportunity created a workforce able to satisfy the 
demands of the state and local economies, and they drove innovation 
that resulted in continuous economic growth and improvements in the 
quality of life and standard of living for almost all Americans. 
States, institutions, and the nation must make no less a commitment to 
confront the new global challenges of the 21st century, acting boldly 
to expand opportunity and produce the talent the nation needs at a cost 
taxpayers and students can afford.
                                 ______
                                 
    Chairman Hinojosa. With that, I yield to my good friend and 
ranking member Ric Keller of the great state of Florida for his 
statement.
    [The statement of Mr. Hinojosa follows:]

 Prepared Statement of Hon. Ruben Hinojosa, Chairman, Subcommittee on 
        Higher Education, Lifelong Learning, and Competitiveness

    Good Morning. Welcome to the first hearing of the Subcommittee on 
Higher Education, Lifelong Learning and Competitiveness.
    This is the first of a series of hearings that we will hold on the 
reauthorization of the Higher Education Act. I am looking forward to 
working with the Members of the subcommittee and all of the 
stakeholders to develop legislation that will fulfill the promise of 
the Higher Education Act for the 21st century.
    There is a growing concern that, as a nation, we are losing our 
competitive edge. We know from experience that investing in higher 
education is one of our primary tools for sharpening that competitive 
edge.
    After World War II, we opened the doors of college far and wide to 
returning soldiers--rich, poor, black, white or Hispanic. Our nation 
became smarter, stronger and richer as a result of this egalitarian 
investment in education.
    In 1965, President Johnson signed into law the Higher Education 
Act, which expanded our national commitment to broad access to higher 
education. Again, our economic prosperity and capacity for innovation 
grew as result of this investment.
    Yesterday, the study ``Hitting Home: Quality, Cost, and Access 
Challenges Confronting Higher Education Today'' was released by Jobs 
for the Future. This quantifies the scale of our challenge in higher 
education. The report found that by the year 2025, just to keep pace 
with our international competitors, the United States would need to 
produce an additional 15.6 million college graduates. That translates 
to another 781,000 degrees per year or a 37 percent increase over 
current production. There are no two ways about it--that is a tall 
order. We have not aligned our support for higher education to reflect 
this reality.
    We are shortchanging our next generation of college students. 
Hispanic and African American students will account for most of the 
growth in our traditional college aged population. Yet, we know that 
nationally, only half of these students are graduating from high school 
on time. Only one in five is college-ready.
    Many of our families do not understand financial aid or the college 
process.
    A recent survey conducted by the Tomas Rivera Policy Institute 
found that more than half of Hispanic parents and 43 percent of young 
adults could not name a single source of college financial aid. 
Certainly, we can do better.
    Overcoming these barriers of preparation and financial aid 
awareness is simply not enough to ensure college success. We know that 
cost is a major obstacle.
    The Advisory Committee on Student Financial Assistance estimates 
that in 2003, more than 170,000 college-qualified low-income students 
did not enroll in any college at all because of financial barriers.
    Moreover, we know that just getting into college is not enough. The 
benefits of higher education come with degree completion. Too many of 
our students are not making it through to graduation.
    The 110th Congress has already made a down payment on improving 
access and affordability. We have passed legislation reducing interest 
rates on subsidized students loans, ensuring all students have equal 
access to the maximum Pell grant--regardless of whether they attend 
low-cost institutions, and providing the first increase in over 4 years 
to the Pell grant, boosting the maxim grant to $4310--a $260 increase!
    This is real progress, but we are just getting started. Clearly, we 
need to expand access and success in higher education on a larger scale 
than ever before. The reauthorization of the Higher Education Act us 
our opportunity to do that.
    Our distinguished panel today will help us think about how to get 
this job done. Thank you for joining us. I am looking forward to your 
testimony.
    With that, I yield to my good friend and ranking member, Ric Keller 
of the great state of Florida.
                                 ______
                                 
    Mr. Keller. Well, thank you, Chairman.
    And, Chairman Hinojosa, as this is our first subcommittee 
hearing in the new Congress, let me personally congratulate you 
on your chairmanship. I look forward very much to working 
closely with you over the next 2 years on the very important 
issues this panel addresses, from college access to job 
training and everything else in between.
    I would also like to welcome all of our witnesses and thank 
all of you for taking the time to come and testify before the 
subcommittee today.
    The issue of student access to college and ways in which 
students are financing their college education are important 
ones to me. Pell Grants and student loans helped me to go to 
college.
    We have seen substantial increases in federal financial aid 
since 2000. For example, Pell Grant funding is up 80 percent 
from $7.6 billion in 2000 to $13.7 billion today. The maximum 
award since 2000 has increased from $3,300 to $4,310 today. And 
these increases have made it possible for an additional million 
and a half students to receive Pell Grants since 2000.
    On top of this dramatic influx in new aid, my colleagues on 
the Education and Labor Committee have tried to move the 
national dialogue about higher education beyond just federal 
spending to get to the heart of what I believe is the real 
problem, why costs are rising so dramatically and what we can 
do to stabilize this trend.
    With that goal in mind, we held over 30 hearings, 
considered several bills and passed a reauthorization of the 
Higher Education Act in the House in the form of H.R. 609, the 
College Access and Opportunity Act.
    The last point I believe is the crux of this decision, what 
is causing the cost of higher education to sky rocket and what 
can be done to slow down or reverse this dangerous trend. 
According to the most recent College Board report, over the 
last 5 years there was a 35 percent increase in tuition and 
fees at 4-year public colleges. This increase is higher than 
any other 5-year increase since the 1976-1977 year. For private 
4-year institutions, that number was 11 percent
    Unfortunately, the sky rocketing cost of tuition minimizes 
the positive impact of our increases in important financial aid 
programs, such as Pell Grants, so earlier this year the full 
committee's ranking member, Congressman McKeon, and I, 
introduced H.R. 472, the College Affordability and Transparency 
Act, which was adopted from the affordability provisions in 
H.R. 609.
    Our bill aims to provide more information to students, not 
just about college tuition prices but about net price, which we 
define as the amount the student must pay after the grant aid 
is subtracted from tuition. This is a measure and a concept I 
am hopeful we will have the opportunity to discuss more as the 
reauthorization process moves forward.
    I will also be introducing the One Stop Student Financial 
Aid Information Act of 2007 in the coming days, which will make 
it easier for students and parents to learn more about their 
financial aid options for college by providing all this 
information on one easy to access Web site.
    What I am most interested in learning here today is what 
the other partners in higher education are doing. I am 
interested in learning more about how states are treating 
higher education and whether states are doing their part to 
ensure that their citizens are able to achieve the dream of a 
college education.
    I am also interested in hearing more about what is being 
done in the elementary schools and high schools to make sure 
students are academically prepared to attend college. And, 
finally, I am interested in hearing what institutions are doing 
to make sure that their costs do not continue to spiral out of 
control.
    Before I conclude, I would like to thank our witnesses once 
again for agreeing to testify before the subcommittee today, 
and I look forward to the beneficial dialogue that I am sure 
will take place here today.
    With that, I yield back, Mr. Chairman.
    [The statement of Mr. Keller follows:]

   Prepared Statement of Hon. Ric Keller, Senior Republican Member, 
Subcommittee on Higher Education, Lifelong Learning and Competitiveness

    Chairman Hinojosa, as this is our first subcommittee hearing in the 
new Congress, let me congratulate you on your chairmanship. I look 
forward to working closely with you over the next two years on the very 
important issues this panel addresses, from college access to job 
training and everything in between. I'd also like to welcome all of our 
witnesses and thank all of you for taking the time to come and testify 
before the Subcommittee today.
    The issue of student access to college and ways in which students 
are financing their college education are important ones to me. Pell 
Grants and student loans helped me go to college.
    We've seen substantial increases in federal financial aid since 
2000. For example, Pell Grant funding is up 79%, from 7.6 billion in 
2000 to 13.6 billion today. The maximum award since 2000 has increased 
from $3,300 to $4,310 today. And these increases have made it possible 
for an additional million and a half students to receive Pell Grants 
since 2000.
    On top of this dramatic influx in new aid, my colleagues on the 
Education and Labor Committee have tried to move the national dialogue 
about higher education beyond just federal spending, to get to the 
heart of what I believe is the real problem: why costs are rising so 
dramatically and what we can do to stabilize this trend. With that goal 
in mind, we held over 30 hearings, considered several bills, and passed 
a reauthorization of the Higher Education Act in the House in the form 
of H.R. 609, the College Access and Opportunity Act.
    That last point, I believe, is at the crux of this discussion. What 
is causing the cost of higher education to skyrocket, and what can be 
done to slow down or reverse this dangerous trend? According to the 
most recent College Board report, over the last five years, there was a 
35 percent inflation-adjusted increase in tuition and fees at four year 
public colleges. This increase is higher than any other five year 
increase since 1976-77. For private four year institutions, that number 
was 11 percent.
    Unfortunately, the skyrocketing cost of tuition minimizes the 
positive impact of our increases to important financial aid programs, 
such as Pell Grants. So, earlier this year, the full Committee's 
Ranking Member, Congressman McKeon and I introduced H.R. 472, the 
College Affordability and Transparency Act, which was adapted from the 
affordability provisions in H.R. 609. Our bill aims to provide more 
information to students not just about college tuition prices, but also 
about net price, which we define as the amount the student must pay 
after grant aid is subtracted from tuition. This is a measure and a 
concept I am hopeful we will have the opportunity to discuss more as 
the reauthorization process moves forward.
    I will also be introducing the One Stop Student Financial Aid 
Information Act of 2007 in the coming days, which will make it easier 
for students and parents to learn more about their financial aid 
options for college by providing all this information on one easy to 
access website.
    What I am most interested in learning here today is what the other 
``partners'' in higher education are doing. I am interested in learning 
more about how States are treating higher education and whether States 
are doing their part to ensure that their citizens are able to achieve 
the dream of a college education. I am also interested in hearing more 
about what is being done in elementary schools and high schools to make 
sure students are academically prepared to attend college. And finally, 
I am interested to hear what institutions are doing to make sure that 
their costs do not continue to spiral out of control.
    Before I conclude, I'd like to thank our witnesses once again for 
agreeing to testify before the Subcommittee today. I look forward to 
the beneficial dialogue that I am sure will take place here today.
                                 ______
                                 
    Chairman Hinojosa. Thank you.
    I also want to welcome ranking member of the whole 
Committee of Education and Labor, Congressman Buck McKeon from 
California, and would invite him to give some opening remarks.
    You want to pass on that?
    Without objection, all members will have 14 days to submit 
additional materials or questions for the hearing record.
    At this time, I would like to introduce our very 
distinguished panel of witnesses here with us this afternoon.
    The first one will be Dr. David Breneman, who received his 
doctorate from the University of California at Berkeley. He is 
a nationally acclaimed economist and author and has taught at 
various universities, including Harvard. For the past 10 years, 
he has served as dean of their Curry School of Education at the 
University of Virginia. Recently, he chaired the National 
Advisory Group that reviewed the report we will discuss today, 
entitled ``Measuring Up 2006.''
    Next we are going to hear from Ross Wiener, who is vice 
president for programs and policy at the Education Trust, a 
national nonprofit organization focused on closing the 
achievement gaps in public education. He is a graduate with 
high honors from the George Washington University Law School 
and has clerked for the U.S. Court of Appeals for the First 
District. Prior to coming to Education Trust, he served as a 
trial attorney in the civil rights division of the U.S. 
Department of Justice.
    Later we will hear from Jamie Merisotis. Jamie is the 
founding president of the Institute for Higher Education 
Policy, a highly respected organization established in 
Washington, D.C. He is a leading authority and has published 
extensively in the higher education field. Prior to founding 
the institute, Mr. Merisotis was the executive director of the 
National Commission on Responsibilities for Financing 
Postsecondary Education, a bipartisan commission appointed by 
the president and congressional leadership.
    We will also hear from Don Soifer, who is executive vice 
president for the Lexington Institute in Arlington, Virginia. 
He has published extensively on various aspects of education 
policy, accountability and assessment, higher education finance 
and closing the achievement gaps. Mr. Soifer has testified 
twice before the U.S. Congress as well as various state 
legislatures. In addition, he has served as a consultant to the 
Virginia Department of Education. He is a 1990 graduate of 
Colgate University and is a resident of the District of 
Columbia.
    I want to welcome each and every one of you, and we will 
start with the first--I forgot to give you some of the rules 
that we are going to go by. Allow me to say that for those of 
you who have not testified before this subcommittee, let me 
explain our lighting system and the 5-minute rule.
    Everyone, including members, is limited to 5 minutes of 
presentation or questioning. The green light is illuminated 
when you begin to speak. When you see the yellow light, it 
means you have 1 minute remaining. When you see the red light, 
it means your time has expired and you need to conclude your 
testimony.
    Please be certain, as you testify, to turn on and speak 
into the microphone in front of you.
    The rules of the committee, adopted January 24, give the 
chair the discretion on how to recognize members for 
questioning. It is my intention as chairman of this 
subcommittee to recognize those member present and seated at 
the beginning of the hearing in the order of their seniority on 
this subcommittee. Members arriving after the hearing has begun 
will be recognized in order of appearance.
    With that, we are going to ask the first presenter to start 
with his presentation.
    Welcome.

 STATEMENT OF DAVID BRENEMAN, DEAN AND PROFESSOR, CURRY SCHOOL 
                          OF EDUCATION

    Mr. Breneman. Mr. Chairman and members of the committee, I 
am very pleased to be here. I am testifying on my own behalf as 
an economist who has written about higher education for over 35 
years and who has served as an administrator in both private 
and public institutions.
    My remarks will focus primarily on ``Measuring Up 2006,'' a 
report which I believe has been supplied to all members of the 
committee.
    The series of ``Measuring Up'' reports are best understood 
as a benchmarking exercise, evaluating empirically the 
performance of the 50-state systems of higher education using 
35 data indicators organized into six categories. States are 
ranked from best to worst performance and grades are assigned 
accordingly.
    The purpose of these reports is to provide each state with 
ah empirical measure of how it stacks up against the other 
states and to encourage them toward better performance. In the 
2006 report, a new international dimension was added as we were 
able to include comparable data from 26 member OECD countries. 
The results from that information were stunning.
    The first finding was that for older citizens, those aged 
35 to 64, the U.S. lags only Canada in the percentage of adults 
with college degrees. When one looks at the younger generation, 
however, age 25 to 34, the United States drops to eighth place.
    Clearly, the early advantage this country had, which you 
eluded to in your remarks, in ensuring mass higher education 
for the baby boom generation, has eroded as other countries 
have overtaken us in producing educated talent.
    When one turns to college participation rates for students 
age 18 to 24, Korea leads the list at 48 percent while the U.S. 
is fifth at 35 percent. Finally, the U.S. ranks in the bottom 
half, 16th among 27 countries, in the proportion of students 
who complete college degrees or certificate programs.
    The other key findings in the 2006 report are that while 
middle and secondary school preparation for college has shown 
some improvement from the early 1990s, participation and 
completion rates in college have been flat for really about 15 
years.
    Finally, by our measures, virtually every state received a 
failing grade on affordability.
    Members of this committee are well aware of the serious 
efforts being made at the federal, state and local level to 
improve K-12 performance, student performance, but it must seem 
obvious that the country is sending decidedly mixed messages to 
young people, encouraging them on the one hand to prepare for 
college and then pricing many of them out of the market or 
forcing them to work long hours while enrolled or to incur 
substantial debt.
    I will conclude my remarks with some thoughts on 
affordability.
    Starting at the state level, competing priorities in state 
government budgets have meant that the days of low or no 
tuition are behind us never to return. One result has been 
rising public tuitions, putting an end to one of the oldest 
state policies to ensure affordability. The Pell Grant program, 
enacted in 1972, was built on the assumption that states would 
maintain low tuition policies and the federal government could 
help to cover the other costs of attendance. That implicit 
understanding has long since broken down with the result that 
the maximum Pell Grant has not kept up to the rising cost of 
college.
    Further muddying the water were the tuition tax credits 
passed in the late 1990s that broke with the longstanding 
pattern of concentrating federal funds on those with lowest 
income.
    States have responded in part with their own student aid 
programs, but in several states these are reward and merit and 
are not targeted to the low-income student. Institutions have 
vastly expanded their own aid programs, but again with much of 
the money allocated competitively to attract students to a 
particular campus through merit aid.
    The resulting ``system,'' and I put that in quotations, of 
financial aid lacks coherence and presents a barrier to 
students who lack the sophistication and guidance about how to 
navigate the multiple and overlapping federal, state and 
institutional programs. The fact that no obvious forum exists 
where federal, state and institutional policies can be worked 
on simultaneously renders the problem of coherence elusive.
    Let me close by noting one further anomaly in the market 
for higher education. In normal markets, competition among 
suppliers tends to keep prices down. Higher education operates 
in an intensely competitive market, but the effect of 
competition in this case leads to higher rather than lower 
prices. Why is that so?
    No traditional college or university seeks to increase its 
market share of total enrollment. There are no potential 
Walmarts in the nonprofit sector of higher education. Rather, 
the competition is for quality, prestige and selectivity and 
the resulting status competition conveys a clear advantage for 
those institutions at the top of the pecking order. Colleges 
and universities further down the pack strikes to enhance their 
own standing in this ranking by spending more on their 
programs.
    Increased competition, therefore, is not the solution to 
rising prices in this market and workable regulatory mechanisms 
have eluded state and federal officials as well. Ensuring 
affordability should be the highest priority of this committee 
for if we fail to enhance educational opportunity, we will all 
be the losers.
    Thank you.
    [The statement of Mr. Breneman follows:]

  Prepared Statement of David W. Breneman, Dean and Professor, Curry 
                          School of Education

    Mr. Chairman, members of the committee, I am pleased to have the 
opportunity to present my views on the topic of this hearing. I am 
testifying on my own behalf as an economist who has written about 
higher education for over 35 years, and who has served as an 
administrator in both private and public institutions. My remarks, as 
requested, will focus on my work over the past decade as chair of an 
advisory committee to the National Center on Public Policy and Higher 
Education, a non-partisan, foundation-sponsored independent entity. The 
National Center has produced four national report cards on higher 
education performance, the most recent being Measuring Up 2006, copies 
of which I believe you have. I will note the highlights of this most 
recent report, and add some comments of my own on the issue of college 
affordability.
    The series of Measuring Up reports are best understood as a 
benchmarking exercise evaluating empirically the performance of our 50 
state systems of higher education. The unit of evaluation is the state, 
not the institutions individually, and all components of the 
postsecondary sector in each state are included. The report evaluates 
each state in six categories: preparation, participation, 
affordability, completion, benefits, and learning. A number of data 
indicators, 35 in total, make up these categories, and the grades 
assigned in each category are determined through a weighted average of 
the individual indicators. The states are ranked from best to worst 
performance, and grades are assigned accordingly.
    The purpose of these reports is to provide each state with an 
empirical measure of how it stacks up against the other states, as a 
way to encourage better performance. In the 2006 report, a new, 
international dimension was added, as we were able to include similar 
data from 26 OECD member countries. It was our view that the global 
economy requires each state to consider not just how its performance 
compares with the other states but with other developed nations as 
well. The results from that additional information were stunning.
    The first finding was that for older citizens (ages 35 to 64), the 
U.S. lags only Canada in the percentage of adults with college degrees, 
Canada having 41% compared to the U.S. 39%. When one looks at younger 
adults, however, (ages 25 to 34), the U.S. drops to 8th place, behind 
Canada, Japan, Korea, Finland, Norway, Sweden, and Belgium. Clearly, 
the early advantage this country had in assuring mass higher education 
for the ``baby boom'' generation has eroded, as other countries have 
overtaken us in the production of educated talent.
    When one turns to college participation rates of students aged 18 
to 24, Korea leads the list at 48%, with the U.S. fifth at 35%. 
Finally, the U.S. ranks in the bottom half--16th among the 27 
countries--in the proportion of students who complete college degree or 
certificate programs. These data alone should shock us out of the 
complacent view, long held, that U.S. higher education is the envy of 
the world.
    The other key findings in the 2006 report are that while middle and 
secondary school preparation for college has shown some improvement 
from the early 1990s, participation and completion rates in college 
have been flat for 15 years. Nor have the large gaps in college 
attendance that correlate with either income or race and ethnicity been 
narrowed. Finally, the report's measure of college affordability gives 
precision to the widely-recognized fact that the cost of college is 
rapidly outstripping the ability of many families to pay. Indeed, by 
our measures, virtually every state received a failing grade on 
affordability.
    Members of this committee are well aware of the serious efforts 
being made at the federal, state, and local levels to improve student 
performance in K-12 education. No Child Left Behind is the signature 
program for this effort. Yet it must seem obvious that the country is 
sending decidedly mixed messages to young people, encouraging them on 
the one hand to prepare for college, and then pricing many out of the 
market, or forcing them to work long hours while enrolled, or to incur 
substantial debt. Let me conclude with a few remarks on affordability.
    The reasons for rising tuitions are complicated and would require a 
separate hearing to explore. Competing priorities in state government 
budgets have meant that the days of low or no tuition are behind us, 
never to return. One result has been rising public tuitions, putting an 
end to one of the oldest state policies to assure affordability. The 
Pell Grant program was enacted in 1972, when public tuition levels were 
still very low, and a few among us may be old enough to remember that 
the original Basic Educational Opportunity Grant (as Pell was initially 
called), was designed to cover non-tuition costs. In short, that 
program was built on the assumption that states would maintain low 
tuition policies, and the federal government could help to cover other 
costs of attendance. That implicit understanding has long since broken 
down, with the result that the maximum Pell Grant has not kept up with 
the rising cost of college, as these costs have been shifted from the 
general taxpaying public to the student. Further muddying the water 
were the tuition tax credits passed in the late 1990s that broke with 
the long-standing pattern of concentrating federal funds on those of 
lowest income. Various forms of tax-favored savings and tuition futures 
plans from the 1990s further extended aid up the income scale.
    The states have responded in part with their own student aid 
programs, but in several states these have taken the form of merit-
based programs, modeled on the Georgia HOPE program, and are not 
targeted at the low income student. Institutions have vastly expanded 
their own aid programs, but again with much of the money allocated 
competitively to attract students to a particular campus through merit 
aid. Loan programs have proliferated, often part of an aid offer by the 
institution that is ``preferentially packaged'' to deliver more loan 
than grant aid to the less-competitive applicants, regardless of family 
income.
    The resulting ``system'' of financial aid lacks coherence, and 
presents a barrier to students who lack the sophistication and guidance 
about how to navigate the multiple and overlapping federal, state, and 
institutional programs. I commend Secretary Spellings and Deputy 
Secretary Martinez-Tucker in working toward simplification of the 
federal programs, and I hope this committee encourages and supports 
such efforts. (I also hope that the core federal commitment to need-
based aid is sustained.) No panacea is obvious, however, because the 
system has evolved as it has in response to various political pressures 
that are unlikely to go away. The fact that no obvious forum exists 
where federal, state, and institutional policies can be worked on 
simultaneously renders the problem of coherence elusive. But 
understanding how the ``system'' works (or fails to work) is the first 
step toward meaningful reform.
    Let me close by noting one further anomaly in the market for higher 
education. In normal markets, competition among suppliers tends to keep 
prices down. Higher education operates in an intensely competitive 
market, but the effect of competition in this case leads to higher, 
rather than lower, prices. Why is that so? No traditional college or 
university seeks to increase its market-share of total enrollments--
there are no potential Wal-Marts in the non-profit sector of higher 
education. Indeed, few traditional institutions today seek to expand. 
Rather, the competition is for quality, prestige, and selectivity, and 
the resulting status competition conveys a clear advantage to those 
institutions at the top of the pecking order. Wealthy parents then seek 
to enroll their offspring in the most prestigious institutions, and 
those colleges and universities further down in the pack strive to 
enhance their own standing in this ranking (dutifully reported in U.S. 
News & World Report) by spending more on their own programs. Increased 
competition, therefore, is not the solution to rising prices in this 
market, and workable regulatory mechanisms have eluded state and 
federal officials as well.
    Ensuring affordability should be the highest priority of this 
committee, for if we fail to enhance educational opportunity we will 
all be the losers.
                                 ______
                                 
    [The Internet link to ``Measuring Up 2006'' follows:]

http://measuringup.highereducation.org/--docs/2006/NationalReport--
2006.pdf
                                 ______
                                 
    Chairman Hinojosa. We will now hear from Mr. Wiener.

   STATEMENT OF ROSS WIENER, VICE PRESIDENT FOR PROGRAM AND 
                    POLICY, EDUCATION TRUST

    Mr. Wiener. Thank you, and good morning, Mr. Chairman and 
members of the subcommittee. Thanks very much for this 
opportunity to testify this morning.
    I just want to briefly reinforce the context that has been 
established and then talk about a few suggestions as to how 
Congress could help to turn around some of these patterns.
    For much of our history, as has been stated previously this 
morning, the United States has led the world in expanding 
access to higher education and the Congress has shown great 
leadership on this through the early establishment of land 
grant institutions, the GI Bill, the Higher Education Act and 
Pell Grants in 1972, and the return on our investment in 
expanding this access has been incalculable, contributing not 
only to our domestic prosperity but also to our global 
leadership.
    But as much as we can take pride in this tradition, I think 
we have to acknowledge that we have broken faith with it and we 
today have a serious problem in access and success in higher 
education that has serious implications for our identity as a 
nation and our leadership around the world.
    Today there is less social mobility in America than there 
was 20 years ago and less than in almost any other 
industrialized country. One important reason is that over the 
last 15 years there has been a massive shift in financial aid 
policy away from helping low-income students. This has two 
large effects.
    One is that many college-qualified low-income students 
never become college students and so can't be college 
graduates. The situation right now is that our highest 
achieving low-income students only go to college at the same 
rate as our lowest achieving high-income students. But the 
effect on college going is not the only impact. Those students 
that do go to college go to college in ways that are much less 
likely to allow them to be successful. They have to go part 
time or they have to select to go to lower-cost institutions 
that themselves have less resources to support these students.
    And while we should celebrate these students' resolve and 
we should be glad that these opportunities are available for 
them, we should not be forcing low-income students and 
disproportionate numbers of students of color to have to go in 
these routes where they are likely to be less successful.
    The end result of this diminishing opportunity is 
unsustainable inequality along economic and racial lines. Just 
two points of context before moving on. One is that children 
from families in the top income quartile in this country have a 
75 percent chance of having a baccalaureate degree by the time 
they are 24. Children from the bottom economic quartile, the 
bottom 25 percent, have only a 9 percent chance of graduating 
from college by the time they are 24. And these issues play out 
along racial and ethnic lines as well with white students 
getting degrees at about twice the rate of African American 
students and at about three-times the rate of Hispanic 
students.
    Hispanic Americans are the largest minority group in this 
country, the fastest growing, and yet they have barely a one in 
10 chance of having a baccalaureate degree by the time they are 
29 years old. This has serious implications for the country and 
we need to address this problem. And this shouldn't be seen as 
charity for these groups or something we do out of compassion 
for them.
    The fact is, America needs more college-educated workers. 
When you look at data generated by the Bureau of Labor and 
Statistics and the Census Bureau and you project this out, we 
are at risk of being short 3 million baccalaureate degrees in 
the workforce, not in 20 years or in 30 years but in 5 years, 
by 2012.
    So let me talk about several ways that Congress could 
address these issues in the Higher Education Act. One is to 
restore the buying power of Pell Grants. Those used to cover 
\3/4\ of the cost of attending college. They now cover less 
than \1/3\. And this should be the first priority, as has been 
mentioned earlier.
    Another is to eliminate the FAFSA. The way that low-income 
students have to apply for financial aid right now is 
notoriously burdensome and confusing. The federal government 
already has all the information it needs. Just like the federal 
government produces estimates of benefits that citizens are 
likely to get under the Social Security program, they should do 
the same for low-income families and proactively inform them of 
the aid they are likely to get.
    Congress should consolidate multiple programs that are 
intended to benefit low-income students. For example, the SEOG 
program is located right now in proportionately wealthier 
institutions that serve fewer low-income students, and that 
money could be better put into Pell Grants.
    Congress should make loan repayment schedules contingent on 
family income so that college graduates who are in fields where 
the income is less, there is a reasonable amount that they can 
pay. If this were done, it would also make more loan students 
more comfortable taking on the debt that is reasonable for them 
to take on to go to college.
    And, finally, Congress should continue to pursue reform in 
the subsidized student loan market and use competition to keep 
the subsidies down and, again, repurpose some of those 
resources to help low-income students afford college.
    Thank you.
    [The statement of Mr. Wiener follows:]

   Prepared Statement of Ross Wiener, Vice President for Program and 
                        Policy, Education Trust

    Mr. Chairman and Members of the Subcommittee, thank you for this 
opportunity to provide testimony on this important issue. The Education 
Trust is a national, non-partisan, non-profit organization dedicated to 
improving the education of low-income students and students of color, 
pre-kindergarten through college.
    This morning, I want to describe the profound--and profoundly 
disturbing--shift in financial aid policy that has put college out of 
reach for far too many Americans. I also want to point to some concrete 
actions that Congress should take to address problems related to both 
access and success in higher education.
Background
    For much of our history, the United States led the world in 
expanding access to higher education. From the establishment of land 
grants institutions, to the G.I. Bill, through the Higher Education Act 
of 1965, and the creation of Pell Grants in 1972, the United States 
Congress has shown true leadership on this issue. The return on our 
investment in expanding access to higher education has been 
incalculable, contributing both to domestic prosperity and 
international leadership.
    As much we can take pride in this tradition, we also must recognize 
that we have broken faith with it. Our recent history is one of 
shrinking opportunity and growing income gaps. One important reason is 
that, over the last fifteen years, there has been a massive shift in 
financial aid policy away from helping low-income students. Today, 
there is less social mobility in America than there was twenty years 
ago, and less than in almost any other industrialized country.
    While the focus of this hearing is on the financial barriers to 
getting a college education, I do not intend to minimize the other 
issues that need to be addressed to improve the education of low-income 
students and students of color. In particular, we at the Education 
Trust are acutely aware that inadequate preparation in K-12 means that 
far too many low-income students and students of color struggle in 
college and the workplace. Moreover, the higher education community has 
not stepped up appropriately to address low and stagnant graduation 
rates of the students who do make it to college.
    The large, unmet need faced by prospective students from low-income 
families, and the fact that the amount of financial aid a student will 
receive remains uncertain until so late in the process, have 
implications across all these problems. For instance, many potential 
college graduates never even become college students. Indeed, only 50% 
percent of all ``college-qualified'' students from low-income families 
enter a four-year college, compared to over 80% percent of similarly 
qualified students from high-income families. The sad reality is that 
America's highest achieving low-income high school graduates go to 
college at the same rate as our lowest achieving high-income high 
school graduates.
    But that's not the only effect. Other low-income students do attend 
college, but do so in ways that are far less likely to lead to a 
degree. Many are intimidated by the financial aid and application 
process but are enticed to enroll in fly-by-night proprietary schools 
where they take on debt but do not acquire skills that will help them 
pay off that debt. Others are forced to go to college part time, and/or 
to start in a community college with the aspiration to transfer and 
earn a B.A., but never gather the momentum to reach the baccalaureate 
level. The tragic irony is that many of these students do not end up 
with a degree, but do end up with debilitating debt burdens that leave 
them worse off than before. So while we should ensure that all kinds of 
options are available to students, we should not pretend that they are 
all equally likely to ensure students' success, and we should not force 
low-income and minority students down paths where success is rare.
    The result is inequality that is bad not just for low-income 
students and students of color, but bad for America. Children from 
families in the top quartile for family income have a 75% chance of 
getting a 4-year college degree by age 24; among children of families 
in the bottom income quartile, just 9% have graduated from college by 
24.
    The gaps by race are also stark, with African-Americans earning 
bachelor's degrees by age 29 at nearly one half--and Latinos at just 
one-third--the rate of Whites. Moreover, instead of gradually getting 
better, most of these gaps are getting worse. For while college-going 
and degree rates have gone up for all groups, they have gone up faster 
for white students than for students of color, who were already under-
represented. Since 1974, White students are up 19 points in college-
going and up 10 in college completion. African American students are up 
20 points in college-going but only 5.5 in college completion. And 
Hispanic students are up only 11 points in college-going, and just 3 
points in college completion.
    This inequality has grave implications for individuals and the 
country.
    In today's economy, education--and especially higher education--
provides the only certain route into the middle class and beyond. 
Unlike a generation ago, there are very few jobs where good health and 
a strong work ethic can ensure economic security. And the trend toward 
work that requires some college education is accelerating. Projections 
based on data from the Bureau of Labor Statistics indicate that, if 
current trends are not changed, then the U.S. will face a shortage of 
more than 3 million workers with bachelors degrees not in 20 or 30 
years, but in five years--by 2012.
    Moreover, we need to recognize that the rest of the world is not 
standing still. Having learned from our example, other countries have 
rapidly expanded participation and success in higher education. While 
we once led the world in college graduates in the adult workforce, we 
have slipped to fourth. Most disconcerting, the United States is one of 
only two industrialized nations where older workers are more likely to 
have a college degree than younger workers.
    These trends hold serious social and economic threats. We are in 
danger of creating a permanent underclass. And we are in danger of 
losing our leadership in the global economy, which would have other 
negative implications.
    The reality is that America needs more college graduates. To 
accomplish this, we must do a better job of educating low-income 
students and students of color, who have been disproportionately left 
out in the past. Given the especially dramatic growth in the number of 
Hispanic Americans, and the distressingly low numbers of young people 
from this community who are earning college degrees, their plight 
merits particular attention. When the largest minority group in the 
country has barely one in ten students getting through college with a 
degree, the nation must act. We cannot continue our economic growth, we 
cannot maintain our high standards of living, and we cannot create the 
nation we all want to live in, without getting more students of color 
and low-income students in and through college with a degree.
    Congress can show important leadership by aligning federal policy 
with the imperative to improve college outcomes, especially among low-
income and minority students. In addition to substantively improving 
federal policy, the actions described below would allow Congress to 
enlist states, colleges and universities, as well as the American 
people, in a broader conversation about how to improve higher 
education.
Financial aid: A promise abandoned
    The federal government has always taken a central role in ensuring 
equality of opportunity, and federal leadership is needed again if we 
are to return this country to a path of truly expanding college access. 
For one, the federal government is the biggest player in student 
financial assistance. In 2004-5, the federal budget for student aid was 
$90 billion, accounting for approximately three-quarters of all 
expenditures on student aid. Approximately $18.6 billion of this was 
allocated for grant aid, $68.6 billion for underwriting student loans, 
and $6 billion in tax credits and deductions. How this financial aid 
money currently is allocated is confusing and inadequate.
    Below are some concrete actions Congress could take to improve the 
chance of success for low-income and minority students in higher 
education:
            Restore the buying power of Pell Grants
    Historically, the federal government's principle vehicle for 
providing access to low-income students has been the Pell Grant. 
Created in 1972, the Pell Grant program has enabled millions of 
students from low-income families to attend two- and four-year 
colleges. But investments in this program, while up, have not kept pace 
with rising demand for college, or with the rising price of higher 
education. In 1975, the maximum Pell Grant covered approximately 84 
percent of the cost of attending a public four-year college. Today, it 
covers only 36 percent, effectively blocking access for thousands of 
aspiring college students from low-income families.1 In 1974, the 
majority of Pell recipients (62%) attended four-year colleges and 
universities, but that is no longer true--as of 2004, the majority of 
Pell recipients (54%) attend two-year colleges. Similar enrollment 
trends exist among African-American and Latino students who 
disproportionately attend two-year and proprietary colleges from which 
they have significantly lower chances of earning a degree.
    The diminution of Pell's buying power might, of course, be 
understandable given other pressures on the federal budget. But, in 
fact, federal expenditures on non need-based student aid have grown 
exponentially faster over the past decade than expenditures on need-
based aid. Indeed, of current federal expenditures on student aid, 52 
percent--or more than $45 billion--is not based on need. Much of the 
growth has been in tax deductions and credits, which disproportionately 
go to upper-income families and do nothing at all to assist the lowest 
income students and families. Before other worthy goals are pursued, 
federal financial aid policy should ensure that low-income students are 
able to attend college by increasing Pell Grants.
            Eliminate the FAFSA
    In addition to the re-allocation of aid away from low-income 
students, the process for applying for federal financial aid also is 
fraught with problems. The complexity, intrusiveness, and sheer burden 
of the FAFSA (Free Application for Federal Student Aid) manifests 
patent indifference as to whether low-income students get the aid to 
which they are entitled. The FAFSA is notoriously confusing and has 
been characterized by scholars as more complicated than filing an 
income tax return. Indeed, taking out a mortgage to buy a house is 
significantly simpler and demands less financial acumen than completing 
the FAFSA.
    If we are serious about ensuring that low-income students know 
about and receive their financial aid, this process can and should be 
streamlined. The government should proactively calculate estimated 
grant awards based on income tax returns and other publicly held 
records that already are in the government's possession. To help these 
students get an image of themselves as college students, the federal 
government should send an estimate of expected federal tuition grant 
aid to each low-income family with school-age children. The Social 
Security Administration routinely provides workers with estimated 
benefits and there is no good reason not to do this with federal grant 
aid.
    That the FAFSA persists in its current form makes a mockery of our 
commitment to helping low-income students go to college. It is not an 
exaggeration to say that the FAFSA evidences contempt for low-income 
students' college-going aspirations. If this Congress does nothing else 
to align federal policy with the goal of increasing low-income 
participation in higher education, it should replace the arduous FAFSA 
with a proactive notification of projected grant aid to prospective 
college students from low-income families.
            Consolidate programs intended to benefit low-income 
                    students
    The overriding focus of federal financial aid policy should be to 
make college accessible to those who otherwise could not afford it, and 
to make the financial aid process as simple and straightforward as 
possible. The myriad programs that ostensibly exist to help low-income 
students should be combined, so that the money goes to the right 
students--and students can know up-front the amount of aid to which 
they are entitled. Some of the many programs that exist now benefit 
institutions more than low-income students, and dilute the federal 
government's ability to target money to truly needy students.
    The SEOG program is a perfect example: SEOG allocations go 
disproportionately to wealthier institutions which serve 
disproportionately fewer financially needy students. This money would 
be better spent on increasing Pell Grants.
            Make loan repayment schedules contingent on family income
    As students are expected to assume more and more debt to finance 
their college education, it is incumbent upon the federal government to 
provide some insurance against individual financial ruin. Borrowing to 
help for college is a good investment. Most students will go on to earn 
more as a result, and it is fair and reasonable to expect them to pay 
off their loan obligations. But for those borrowers who confront 
prolonged debt-to-income disparities--and this includes not just drop-
outs, but also those who choose socially important, but lower-paying 
professions such as teaching--the federal government should index loan 
repayments on a sliding scale related to ability to pay. If low-income 
students were made aware of this support early in the process, they 
would be more likely to take on reasonable debt and enroll in college 
in the first place. The Project on Student Debt has proposed a 
reasonable plan to make repayment limits contingent on family income. 
This plan is modest, fair, and urgently needed.
            Ensure that tax-exempt institutions educate low- and 
                    middle-income students
    Institutions of higher education are huge non-profit corporations 
with tax-exempt status. It is not unreasonable to expect them to 
participate in the country's commitment to expanding higher education 
among those in the bottom half of the income distribution. No 
institution should be forced to educate more low- and middle-income 
students. But if they do not include a reasonable share of these 
students in their programs, then their generous government subsidy 
should be repurposed to ensure these students have access to 
postsecondary options somewhere else. At a minimum, each institution 
that wants to maintain its tax-exempt status should make a commitment 
to educating low-income students. It is a vital public interest and not 
unreasonable to expect non-profit colleges to draw \1/4\ of their 
students from the bottom \1/2\ of the income distribution.
            Engage states and institutions in improving access and 
                    success
    Beyond its proportional role, it also is clear that federal policy 
sets the context for what happens with state and institutional aid 
dollars; as the federal government has abandoned low-income college 
aspirants, so, too, have the other players in financial aid. Ten years 
ago, grants to students without demonstrated financial need represented 
14 percent of state grant expenditures. Today that fraction has nearly 
doubled to 27 percent2. I want to be clear that it is not a bad thing 
for government to help middle and upper-middle income families pay for 
college. But the first priority of financial aid policy should return 
to its historic purpose of helping students who cannot afford to attend 
college without financial assistance.
    Institutions of higher education have also abandoned low-income 
access. In the absence of any accountability or recognition for 
expanding access, these institutions have increasingly pursued higher 
status in the private college ranking guides by using their 
discretionary financial aid dollars to ``buy'' students who will 
improve their rankings. A recent report from the Education Trust, 
Promised Abandoned, documents how campus-based aid has also skewed away 
from low-income students in recent years.
    Congress cannot solve these problems alone, but Congress is 
uniquely positioned to stimulate an important new dialogue on how 
quality in higher education is defined. Current metrics for quality and 
recognition bestow status on colleges that only admit students who will 
succeed no matter where they go. Instead, we need to honor and support 
institutions that are helping increasing numbers of students who face 
far more difficult challenges to obtain the degrees that will help them 
advance personally and contribute to the social, civic and economic 
well-being of the nation. This larger issue deserves to be the focus of 
more Congressional deliberation. I will mention just two discreet ways 
in which Congress could spur progress:
     Improve data collection systems so that both policymakers 
and the public have easy access to honest and accurate information 
about student outcomes. Congress should immediately add critical 
information to the IPEDS data collection process, including the 
addition of ``Pell Grant'' status to the Graduation Rate Survey, so 
that the success of low-income students can be measured and reported; 
tracking and reporting year-to-year retention rates disaggregated by 
Pell status and race/ethnicity; and mandating and verifying the 
reporting (now voluntary) of cohort transfer rates. At the same time, 
Congress should facilitate development of unit-record systems that will 
provide more accurate accounting of what happens to students in higher 
education, while protecting privacy and confidentiality.
     Partner with states to encourage more need-based aid and 
better cost containment. Congress should explore ways to partner with 
states that are willing to commit to improving access and graduation 
rates for low-income students and students of color.
Conclusion
    Thirty years ago, President Lyndon Baines Johnson and the 89th 
Congress acted to make the American Dream a reality when they passed 
the Higher Education Act of 1965. When he signed this historic 
legislation, President Johnson recalled the experiences in his own 
life--first as a needy college student himself, and subsequently as a 
teacher in a school serving Mexican-American students--that prompted 
him to work so hard to win the enactment of this ground-breaking law:
    I shall never forget the faces of the boys and the girls in that 
little Welhausen Mexican School, and I remember even yet the pain of 
realizing and knowing then that college was closed to practically every 
one of those children because they were too poor.
    And I think it was then that I made up my mind that this Nation 
could never rest while the door to knowledge remained closed to any 
American.
    Later in his remarks, he called on all of us--``the teachers and 
the citizens and the educational leaders of tomorrow:''
    [W]hen you look into the faces of your students and your children 
and your grandchildren, tell them that you were there when it began. 
Tell them that a promise has been made to them. Tell them that the 
leadership of your country believes it is the obligation of your Nation 
to provide and permit and assist every child born in these borders to 
receive all the education that he can take.
    ``The rest,'' he said, ``is up to you.''
    Clearly, in a whole host of ways, we've strayed from that central 
commitment and broken that all-important promise. And the consequences 
have been grave. Many young people no longer believe that if they work 
hard, college is a real possibility for them. We can take issue with 
their logic. We can argue that college costs less than they think, that 
there is more aid money than they realize or that even large loan debts 
make long-term sense. But we cannot contest the facts: pathetically few 
low-income students, including the highest achieving, are entering and 
completing college.
    Though it may be too late for some students, it is not too late for 
others. And it is not yet too late for our country. We can change these 
patterns if we so choose.
                                 ______
                                 
    Chairman Hinojosa. We will now hear from Mr. Merisotis.

 STATEMENT OF JAMES MERISOTIS, PRESIDENT, INSTITUTE FOR HIGHER 
                        EDUCATION POLICY

    Mr. Merisotis. Chairman Hinojosa, Ranking Member Keller, 
thank you very much for this opportunity.
    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. Increasing educational 
opportunities for all Americans results in tremendous public, 
private social and economic benefits.
    Unfortunately, low-income, minority and other groups face 
unacceptably large gaps in their ability to get into and 
succeed in college due to a variety of financial, informational 
and academic factors. Supporting programs that have a track 
record of success is the best way to achieve an accessible and 
accountable system of higher education.
    At the same time, such an investment must be done with a 
clear focus on accountability to the students who benefit from 
the programs. With these dual goals of investing in those who 
might not otherwise go to college and ensuring accountability 
to the students we serve, I would like to offer the following 
options for your consideration.
    First, I urge you to invest in need-based grant aid as the 
best way to promote college access. The declining purchasing 
power of federal aid indeed continues to be a critical barrier 
to access to higher education. I urge Congress to consider an 
increase in the maximum Pell Grant to at least $6,000. this 
would pay for slightly less than \1/2\ of the price of 
attendance at a typical public 4-year college.
    At the same time, while I don't support efforts to pay for 
Pell Grant increases through cuts in other programs, in effect 
taking money away from one group of needy students to give it 
to another, I do believe that greater efficiency can be 
achieved. For example, an increase in the minimum Pell Grant 
would net at least some cost savings.
    Second, encourage a broad partnership in college financing 
through private sector aid to students. The private sector is a 
largely unrecognized partner in college financing. While 
private scholarship aid never can nor should be seen as an 
alternative to federal aid, the more than $3 billion annually 
awarded through private scholarships must be recognized and 
expanded. I encourage you to explore ways that the Title 4 
programs can be used to stimulate an even greater response from 
local communities, corporations and other private sector 
donors.
    Private loans present a very different set of opportunities 
and challenges. Given the predicted growth in private loan 
borrowing, it is important to charter reasoned debate about 
their potential benefits and risks. I support the overall goals 
of transparency and consumer protection contained in the 
Student Loan Sunshine Act.
    Given the increasing borrowing demands of students, I don't 
believe private borrowing should be discouraged, but I do 
believe that students should be informed of their federal loan 
eligibility prior to taking out a private loan.
    Third, I encourage you to strongly support locally-managed 
program, such as TRIO and GEAR UP, as essential components of 
our national access strategies. For many of the nation's most 
underserved populations, financial aid is necessary but not 
sufficient to encourage college access and success. TRIO and 
other programs provide tutoring, mentoring and counseling and 
promote the successful transition of students into and through 
college.
    Fourth, strengthen the capacities of minority-serving 
institutions to educate the nation's emerging majority 
population. Tribal colleges and universities, Hispanic-serving 
institutions and predominantly black colleges and universities 
and other minority-serving institutions represent some of the 
nation's most important but underserved education resources. 
These institutions provide opportunities to more than 2.3 
million students, the majority of whom are low-income and 
educationally disadvantaged.
    In the 110th Congress, I urge you to create a well-trained, 
flexible workforce that will meet our economic and social 
challenges head on through investment in minority-serving 
institutions.
    Fifth, embrace investment in immigrants as a key component 
of higher education access and success. Many immigrants face 
significant barriers to higher education. Developing a broader 
and more efficient path to citizenship and offering affordable 
and accessible programs to help immigrants learn English would 
open the doors to college for many immigrants. Policies that 
explicitly impede the college opportunities of legal 
immigrants, such as in the academic competitiveness grant and 
smart grant programs, which exclude legal permanent residents, 
must be reversed.
    Finally, I urge you to support a system of accountability 
that focuses on the complex life circumstances of today's 
college student. Higher education institutions must demonstrate 
that they are effective stewards of the funds that have been 
invested in them by the federal government. Accountability 
begins with an efficient system of information that can be 
readily collected, easily understood and meaningfully applied. 
I therefore support the pilot development of a national system 
of student level data, ideally one that harmonizes the more 
than 40 state systems already in place.
    Investing in those who might not otherwise go to college 
and assuring accountability to the students who are served are 
not just nice goals to pursue as part of a federal education 
policy agenda. They are necessary components of a national 
workforce investment strategy that can lead to greater 
prosperity, security and harmony for all Americans.
    Thank you.
    [The statement of Mr. Merisotis follows:]

Prepared Statement of James Merisotis, President, Institute for Higher 
                            Education Policy

    Mr. Chairman and Members of the Subcommittee: Thank you for this 
opportunity to appear before the Subcommittee regarding how students 
access and finance a college education.
    In the 110th Congress, you face the ongoing challenge of promoting 
access to higher education for all Americans who have the interest and 
ability to attend college. 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. The simple fact 
remains that increasing educational opportunities for all Americans 
results in tremendous public, private, social, and economic benefits. 
We know, for example, that workers who have attended college tend to 
have low rates of unemployment, and analyses of job growth and employer 
demands overwhelmingly suggest that future job growth will be 
concentrated in fields that require a college education. We also know 
that the higher earnings for college graduates results in more revenue 
for government coffers through increased tax collections. Social 
benefits of postsecondary education also accrue to individuals and to 
the public. For instance, people with more education tend to have 
greater health and life expectancy. Public benefits from higher 
education include reduced crime rates, increased civic participation, 
and more charitable giving and volunteerism. In short, by investing in 
our fellow Americans who might not otherwise go to college, we are 
investing in our collective future and well-being.
    Unfortunately, not all Americans are able to benefit from higher 
education due to a variety of financial, informational, and academic 
barriers. According to data from the U.S. Census Bureau, while 75% of 
high-income students enter college today, only 31% of low-income 
students do. 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, 
Hispanics, and Native Americans. These gaps are even wider for adult 
and so-called non-traditional students.
    So if investment in higher education matters, then maintaining and 
expanding that investment is critical. I recognize that the nation 
faces an uncertain economic future, one that places constraints on 
policy discussions such as these. But I hope you will not lose sight of 
the long-term effects that your investments will have on the nation. 
The programs established and defined within the Higher Education Act 
(HEA) are now more necessary than ever. Supporting these programs is 
the best way to achieve an accessible and accountable system of higher 
education for all Americans.
    At the same time, such an investment must be done with a clear 
focus on accountability to the students who benefit from the programs. 
Efficiency in the delivery and administration of programs that promote 
access and success must be maintained at all levels. Supporting access 
to quality programs, and to institutions that serve the nation's most 
underserved populations, should be a hallmark of these investments.
    With the dual goals of 1) investing in those who might not 
otherwise go to college, and 2) ensuring accountability to the students 
we serve, I would like to offer a limited set of concrete programmatic 
options for your consideration.
Invest in need-based grant 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 James 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 assure access to higher education for all qualified students through 
the Student's Total Education Package (STEP), a mechanism that ties 
Federal aid to a sliding subsidy scale based on financial need--remains 
unfulfilled. Such a mechanism would go a long way toward emphasizing 
the importance of grant aid for the neediest students while also 
acknowledging the important concerns about affordability for middle 
income students and families.
    Research indicates that investment in need-based grant 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. Even taking into 
account the funding increases of the last few years, the maximum Pell 
Grant today pays for only about one-third of the average price of 
attendance at a public four-year institution compared to more than two-
thirds in 1980. Significantly increased support for the Pell Grant 
program therefore should be a centerpiece of efforts to enhance the 
programs and policies in the Higher Education Act. I am pleased that 
both the Congress and the President have recently signaled their strong 
support for a long-overdue increase in the maximum Pell Grant. I urge 
Congress to consider an increase in the maximum Pell Grant to at least 
$6,000. This would pay for slightly less than one-half of the price of 
attendance at a typical four-year public college for the poorest 
students--still well below historic levels, but an important down 
payment for the future.
    At the same time, while I do not support efforts to pay for Pell 
Grant increases through cuts in other programs--in effect, taking money 
from one group of needy students to give it to another group of needy 
students--I do believe that greater efficiency could be achieved in 
existing grant programs. For example, an increase in the minimum Pell 
Grant would net at least some cost savings; it may be possible to do so 
by indexing the minimum Pell Grant to increases in the maximum Pell. It 
is also worth examining the issue of the allocation formula for campus-
based aid such as Supplemental Education Opportunity Grants, ensuring 
that such aid is targeted to those students and institutions with the 
least capacity to pay the costs on their own.
Encourage a broad partnership in college financing that promotes 
        private sector investment in aid to students
    The dual goals of investing in students who might not otherwise 
attend college and ensuring accountability to students can be achieved 
in part through a partnership that encourages private sector aid to 
students. Government-sponsored grant and scholarship aid from both 
Federal and state sources today totals more than $25 billion per year, 
with a similar amount awarded directly by institutions via their own 
grant funds. An astonishing total of more than $70 billion is awarded 
to students through government guaranteed student loans. But the 
private sector is an important and largely unrecognized partner in the 
college financing equation. The private sector's commitment and support 
for helping students go to college--and succeed when they get there--
should be better recognized and understood as a valuable complement to 
Federal aid.
    For example, private scholarship support, sometimes thought of as 
marginal or modest in its impact, is growing in importance and stature. 
A 2004 IHEP study found that at least $3 billion per year is awarded 
through private scholarship programs, and employer-provided education 
assistance to employees and their dependents totals several billions 
more. Private scholarship aid has long made a difference in the lives 
of students hoping to go to college. In fact, at about the same time 
that the National Defense Education Act of 1958 heralded the beginning 
of a series of governmental programs that have allowed millions of 
financially needy students to attend college, private scholarship 
assistance also became more organized and related specifically to 
meeting the country's educational, economic, and social needs. An 
optometrist from Fall River, Massachusetts named Irving Fradkin 
organized a community-based scholarship program in the late 1950s to 
help academically able and financially needy students go to college. 
The Citizens' Scholarship Foundation of America slowly expanded in the 
New England region, and eventually across the country, creating local 
scholarship foundations that contribute resources to assist students 
with college costs. In 2006, the national organization now known as 
Scholarship America--where I currently have the privilege of serving as 
the Chair of the Board of Directors--distributed over $180 million in 
scholarships to more than 120,000 students through its diverse array of 
community-based, volunteer-supported programs.
    Organizations like Scholarship America work in a variety of ways 
with colleges and universities to offer numerous scholarships and 
grants that include need-based and non-need-based forms of financial 
assistance to students. While private scholarship aid never will--nor 
should--be seen as an alternative to Federal financial assistance, it 
must be recognized as one of the key partners working to support 
students at the Federal, state, institutional, and private levels. I 
therefore would encourage you to examine ways in which the HEA can be 
used to stimulate even greater response from local communities, 
corporations, foundations, organizations, and individual donors in the 
private sector.
    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 that have encouraged 
the creation of over 100 new volunteer-supported, community-based 
scholarship chapters. The current LEAP legislation could be modified to 
reward those states where significant increases in student aid are 
produced by partnerships with local community-based scholarship 
providers.
    The other area of significant private sector involvement in 
financial aid is through private loans. A widely circulated recent IHEP 
study on private loans found that they are becoming an essential part 
of financing postsecondary education in today's market of rising 
tuition costs and fees. Given the fact that experts are predicting 
private lending will continue to grow, it is important to chart a 
reasoned debate about private loans and their potential benefits and 
risks for students in the future. Targeted outreach to students to 
ensure that they are receiving comprehensive information about the pros 
and cons of private loan borrowing is important. I support the overall 
goals of transparency and consumer protection contained in the current 
draft of the Student Loan Sunshine Act. While I don't believe private 
borrowing should be discouraged--given the increasing borrowing needs 
of students--I do believe that efforts must be made to inform students 
of their Federal loan eligibility prior to taking out a private loan. 
This would protect the interests of student consumers while ensuring 
that alternatives are available if Federal loans are not a reasonable 
option for certain students.
Decisively and unequivocally support locally-managed programs such as 
        Upward Bound, Talent Search, and GEAR UP as essential 
        components of our national access strategy
    For many of the nation's most economically and educationally 
underserved populations, financial assistance is a necessary but not 
sufficient strategy for ensuring access to, and success in, higher 
education. The Federal government recognized this more than 40 years 
ago with the establishment of the Upward Bound program, and continues 
that tradition through the TRIO programs and their more recent 
complements such as GEAR UP. 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, Upward Bound, Upward Bound Math Science, and 
Veterans Upward Bound. These programs provide counseling, information, 
skills development, college planning, and an array of other services 
that help students get ready for college. At the college level, Student 
Support Services, the Ronald E. McNair Post-Baccalaureate Achievement 
Program, and Educational Opportunity Centers programs provide tutoring, 
counseling, and supplemental instruction to help students stay in 
college through the completion of a degree (or transfer to a different 
institution) and pursue graduate-level education.
    These programs are key pillars in the overall effort to promote the 
successful transition of students into and through college. Yet in 
recent 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.
Strengthen the capacities of minority-serving institutions (MSIs) to 
        educate the nation's emerging majority populations
    No group of institutions does more to promote the dual goals of 
investing in students who might not otherwise go to college and 
ensuring accountability to those students than Minority-Serving 
Institutions (MSIs). Tribal Colleges and Universities (TCUs), Hispanic-
Serving Institutions (HSIs), and Historically Black Colleges and 
Universities (HBCUs) and other predominantly Black institutions, which 
collectively are referred to as MSIs, represent some of the nation's 
most important but underserved postsecondary education resources. 
Combined, more than 2.3 million students are educated by these 
institutions, or about one-third of all students of color. These 
numbers have been growing rapidly in recent years as increasing numbers 
of students of color seek opportunities for a college education--in 
fact, enrollment at MSIs increased by 66 percent from 1995 to 2003, 
compared to only 20 percent at all postsecondary institutions.
    Given demographic projections that show these communities are the 
fastest growing in the nation, it is clear that MSIs must be recognized 
as a leading voice for the underrepresented populations that are the 
main focus of most HEA programs. These populations find that MSIs offer 
a unique educational experience that fosters cultural values and 
traditions, promotes civic and community responsibility, and produces 
citizens who are attuned to the increasingly diverse country in which 
we live.
    MSIs educate more students of color in many areas of national need 
than mainstream institutions. For example, more than one half of all 
teacher education degrees awarded to African Americans, Hispanics, and 
American Indians in U.S. higher education are conferred by MSIs. These 
institutions also make major contributions to our nation's workforce in 
the areas of Science, Technology, Engineering, and Mathematics (STEM) 
despite significantly lower levels of financial support than other 
institutions.
    Most MSIs provide postsecondary education opportunities 
specifically tailored to low-income, educationally disadvantaged 
students. Forty-four percent of students enrolled at MSIs in 2004 were 
from families in the lowest income quartile, compared to 24 percent 
enrolled at all institutions. The fact that nearly half of all full-
time students enrolled at MSIs receive Pell Grants compared to only 31 
percent of all students enrolled in higher education, and that for MSI 
students Pell awards tend to be 9 percent higher on average, is 
evidence of the high financial need of MSI students and the critical 
importance of grant aid to their educational endeavors.
    In the 110th Congress, I urge you to see MSIs as a major avenue for 
advancing the nation's goals to create a well-trained, flexible 
workforce that will meet our economic and social challenges head-on.? I 
believe that several important steps could be taken to strengthen the 
capacity of MSIs. One is to expand both the scope 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 
MSI Digital and Wireless Technology Opportunity Act incorporates many 
of the key elements of investing in MSI technology capacity to benefit 
our future workforce. This legislation should be passed by Congress and 
its core principles applied to other policies and programs.
    I also would urge you to consider the development of new graduate-
level opportunities to enhance the capacity of MSIs to train future 
faculty and senior institutional leaders. The significant under-
representation of minorities in many advanced degree fields is a major 
concern. The limited graduate-level opportunities available to MSI 
graduates and other minorities can be enhanced through policies that 
support: the infrastructure of post-baccalaureate education at MSIs--
such as Ph.D. programs for schools currently offering Master's degrees; 
the recruitment and retention of minority professors; and the financial 
resources necessary to attain an advanced degree, including 
fellowships. It also would be useful to consider opportunities to 
expand support for international education at MSIs under Title VI, 
which historically have offered limited opportunities for the students 
served by MSIs.
Embrace investment in immigrants as a key component of the higher 
        education access and success strategy
    The United States has always been a nation of immigrants--a land of 
opportunity where newcomers can, through hard work and perseverance, 
achieve better lives for themselves and their families. But in today's 
world, realizing the American Dream is now almost impossible without at 
least some college education, and many immigrants face significant 
barriers to gaining access to and succeeding in higher education. 
Higher education for immigrants isn't an issue narrowly focused on the 
well-being of these immigrants as individuals but has major 
implications for the nation as whole. As the United States moves into 
the 21st century as part of a global economy in which postsecondary 
education is a key to economic competitiveness, it is imperative to 
develop policies at the Federal, state, local, and institutional levels 
to help immigrants gain access to and succeed in higher education. 
Without such policies, the nation may find itself with a workforce that 
does not have sufficient education to enable the United States to 
remain economically competitive.
    Legal immigrants face an array of barriers to access to higher 
education. They lack access to accurate information about postsecondary 
education, face high work and family responsibilities, are challenged 
by limited English proficiency, and have significantly lower levels of 
academic preparation and achievement. Immigrants who come to the U.S. 
as adults confront even more substantial challenges in understanding 
and gaining access to higher education because they did not attend 
American primary and secondary schools.
    Immigrants who actually enroll in higher education make up 12 
percent of undergraduate college students--a percentage that makes this 
group comparable in numbers to both Hispanic and Black students, and 
students with disabilities--yet receive relatively little attention in 
the public policy arena. Those who do enroll face additional barriers 
to persistence and degree completion. Immigrant students have higher 
unmet financial need than the average undergraduate and are more likely 
to enroll in community colleges or private for-profit institutions.
    There is no one way to overcome the barriers immigrants face in 
gaining access to higher education in the United States. Most policies 
that address immigrant needs must to be localized, narrow in focus, and 
targeted toward specific immigrant groups to ensure that efforts reach 
those who most need assistance. Many of the barriers immigrants 
confront are similar to the ones generally faced by low-income and 
first-generation college students in the United States, and policies 
intended to benefit that population as a whole will directly help 
immigrants. These include adequate investment in higher education grant 
aid and support programs such as TRIO and increased efforts to broaden 
public awareness of the steps traditional-age students need to take to 
be prepared for college.
    However, certain barriers have a greater impact on immigrants, 
regardless of their background and resources. The most obvious of these 
are limited English proficiency and difficulties in integrating into 
American society. Developing a broader and more efficient path to 
citizenship and offering accessible and affordable programs to help 
immigrants learn English and become familiar with their new country 
would open the doors to higher education for many immigrants. And 
policies that explicitly impede the postsecondary opportunities of 
legal immigrants must be reversed. An example of this is the provision 
in the new Academic Competitiveness Grant and SMART programs that 
limits these grants to U.S. citizens, thereby excluding eligible non-
citizens including legal permanent residents. Such arbitrary 
limitations do a disservice to the nation by denying educational 
support to populations that have contributed immensely to the nation's 
economic and social prosperity over the course of many decades.
Support a system of higher education accountability that focuses on the 
        complex life circumstances of today's college students
    Higher education institutions must demonstrate that they are 
effective stewards of the funds that have been invested in them by the 
Federal government and that they are accountable specifically to the 
students they serve. Accountability begins with an efficient system of 
information that can be readily collected, easily understood, and 
meaningfully applied to determine effective stewardship. Unfortunately, 
the current system of data collection and dissemination is fragmented 
and often burdensome on institutions, with little of the information 
used in an effective way by consumers or policymakers.
    The emergence of a national debate about data-driven strategies and 
accountability systems has been important, but has not done nearly 
enough to take into account the complex circumstances under which 
today's college students' lives are lived. The ideal scenario of a 
normally persisting, well-advised, highly motivated student runs 
headlong into the stark reality of life in America today: prior 
educational deficiencies, family and child responsibilities, financial 
pressures, language and cultural barriers, and poor information and 
support systems. Until we grapple with these deeply rooted concerns, 
the national dialogue about accountability will, in my view, continue 
to reinforce the existing biases and under investments that have left 
us with a system that is divided into haves and have-nots.
    An important first step in moving ahead will be to develop a 
national system of student-level data. This idea, first promoted on a 
large scale by the National Center for Education Statistics, could 
involve either a national system or a network of harmonized state 
systems--a more likely scenario given that more than 40 states have 
some type of statewide student information system. Such a national 
network or system has detractors, chiefly those who believe that it 
could both erode the privacy concerns of students and increase burden 
on institutions, particularly in transitioning from current systems to 
a new one. However, I believe that such a system could be developed 
with limited risk to privacy. An important first step would be to 
properly test and pilot a national student unit record system, perhaps 
using a voluntary group of institutions. The burden of transitioning to 
a new system is a legitimate one, especially for smaller institutions. 
If such a system is implemented, it would be wise to provide limited 
financial support to institutions to help pay for the costs of system 
transition during a fixed period of time.
    A privacy protected information system that collects, analyzes, and 
uses student level data could provide enormously useful information 
about student attendance patterns, the net price students pay (as 
opposed to the sticker price, which is paid by a minority of students 
at many institutions), and persistence and graduation rates. This 
information could be used to develop more effective strategies to 
assist students in negotiating the complex landscape of higher 
education.
    A related development in the national dialogue about accountability 
in higher education has been the concern about students who transfer. 
Approximately 60 percent of all students attend more than one college 
or university as they work toward their undergraduate degrees. These 
students need adequate financial support, effective information, and an 
improved network of institutional agreements to ease the transfer 
process. But mechanisms to do all of these things largely exist. A new 
investment in need-based grant aid, for example, combined with 
simplified financial aid application and award procedures, would be a 
major benefit for transfer students. Effective information about 
transfer could largely be obtained through a national student level 
data system, augmented by private efforts to inform students about 
specific institutional agreements, course requirements, and the steps 
required to make a successful transition from one institution to 
another. An example of such a private effort is the National 
Articulation and Transfer Network (NATN), an initiative of the Alliance 
for Equity in Higher Education that IHEP has supported and helped to 
launch. NATN is a national research and policy development resource for 
both students and school administrators designed to increase the number 
of transfer students, including historically underserved student 
populations, who graduate with baccalaureate degrees. More information 
is available at www.natn.org.
    On the issue of a possible Federal role in transfer, I do not see 
how a Federally mandated system of transfer could work, given the 
diversity of our higher education system--one of its hallmarks. Efforts 
to impose a Federal framework on inter-institutional academic practices 
are fraught with potential negative implications and would require a 
major new regulatory apparatus. This would not benefit students in any 
way. The Federal government's best contribution to the complex field of 
transfer and articulation would be to encourage these types of private 
sector efforts and support partnerships that involve inter-state 
agreements and protocols.
    Investing in those who might not otherwise go to college, and 
ensuring accountability to the students we serve, are not just nice 
goals to pursue as part of a Federal education policy agenda. They are 
necessary components of a national workforce investment strategy that 
can lead greater prosperity, security, and harmony for all Americans. 
We must continue to invest in postsecondary education as a critical 
component of our future knowledge and innovation infrastructure, much 
as we have invested in roads, bridges, and technology as components of 
our national transportation and information infrastructure. And we must 
be certain that our efforts to promote accountability are ultimately 
aimed at supporting the best interests of students--the backbone of our 
workforce and economic security.
    Thank you again for this opportunity to appear before the 
Subcommittee on this important issue.
                                 ______
                                 
    Chairman Hinojosa. Thank you.
    And we will now hear from Mr. Soifer.

 STATEMENT OF DON SOIFER, EXECUTIVE VICE PRESIDENT, LEXINGTON 
                           INSTITUTE

    Mr. Soifer. Mr. Hinojosa, Mr. Teller, Mr. McKeon and 
members of the committee, I deeply appreciate the opportunity 
to participate in this historic hearing this morning.
    As the cost and demand of higher education have risen year 
after year, traditional methods of financing have come under 
increasing stress. We recognize that a higher education is 
worth the investment. That is why we are here. But the ways to 
support it, policymakers must maintain, that each appropriation 
is in fact worth the investment.
    College costs have risen at a rate generally double CPI and 
they have risen at a right often higher than health care costs. 
In terms of an average family's monthly income, the cost of 
higher education is typically 25-cents on the dollar in many 
cases. In short, federal student financial aid can no longer be 
counted on to keep pace with the rising cost of higher 
education in the United States.
    We are currently asking our higher education system to 
support the cost for remedial education for high school 
students who enter. The Colorado Commission analyzed that the 
cost of providing remedial education to students in its system 
was $11 million in 2004. Research by the Alabama policy 
institute found the total spending for public and private 
higher ed institutions totaled some $84 million and had reason 
to believe that that also was understated.
    While state funding for higher education remains flat, 
institutions often pass that increased burden on to students. I 
think it is worth noting that should student loan providers 
have their profit margins cut in half, that they could probably 
be expected to do the same thing.
    In the face of tighter budgets, many institutions are 
finding ways to reduce their costs. A study by the Missouri 
State Auditor found that they typically filled job vacancies 
slower, freeze salaries, defer purchases and generally find 
ways to lower their operating expenses across the board. But we 
must still ask, in this changing environment, if our delivery 
systems still make the most sense.
    With fewer increases in state appropriations for higher 
education, some states have evolved their systems for 
delivering student aid. As the chairman of the Higher Ed 
Commission in the Arizona State House of Representatives 
described the goal of their new grant system as a student-
centered system of funding where access, affordability and 
quality drive good public policy.
    The president of the Chicago Federal Reserve observed last 
year that universities must be more transparent in their 
operations. I ask if it can truly be considered a slap on the 
wrist to ask a higher ed institution that has increased its 
cost at twice the rate of inflation to provide an explanatory 
statement and to provide a strategic plan to hold down future 
costs. There are certainly strong benefits to such transparency 
in operations.
    In light of the costs being incurred by our higher ed 
institutions for remediating students, we have to look to our 
public schools and ask if their education delivery methods are 
the ones best suited for accomplishing the challenges before 
them. Can charter schools, for instance, better prepare 
students to enter higher education? Research shows that this is 
often the case. And if so, how can there be more of them?
    It is also critical that we continue to monitor whether our 
local public schools are effectively closing learning gaps 
between all subgroups of students. How is our public education 
system helping children in perpetually under performing schools 
to get this preparation as well? I respectfully request that 
the committee consider these questions and trends as you 
continue your valuable work in creating the policies that make 
American students be able to reach and pay for a higher 
education.
    Thank you, Mr. Chairman.
    [The statement of Mr. Soifer follows:]

 Prepared Statement of Don Soifer, Executive Vice President, Lexington 
                               Institute

    Mr. Chairman and Members of the Committee: As the costs, and the 
demand, for higher education have risen year after year, traditional 
models of financing it have come under increasing stress. We recognize 
that a higher education is worth the investment. That's why we are here 
today. But how is it best supported? Policymakers must continue to 
ensure that each appropriation is worth the investment.
    One formidable, and growing, challenge is in meeting the 
transitional issues of high school students as they advance into the 
higher education system.
    Secretary Spellings' 2006 Higher Education Commission pointed out 
insufficiencies in preparing high school graduates for either college-
level work or the changing needs of the workforce. The Commission 
connected this trend to scores on the National Assessment of 
Educational Progress (NAEP), noting that only 17 percent of seniors are 
considered proficient in math and only 36 percent are proficient in 
reading. We are currently asking our higher education system to support 
the costs for this remediation.
    The Colorado Commission on Higher Education found that the cost to 
the state of providing remedial education to its students in public 
higher education institutions was $11.4 million in 2004.
    Research by the Alabama Policy Institute found that total remedial 
spending by that state's public and private higher education 
institutions totaled some $84 million per year. The authors pointed out 
that this may be understated because it does not reflect the time spent 
in non-remedial courses bringing students ``up to speed.'' Another 
concern this figure does not address is whether college level courses 
are at times being watered down to compensate for the skill levels and 
preparation of students.
Higher education cost and funding trends
    Institutions of higher education need to keep tuition increases as 
small as possible, while also maintaining quality. This often requires 
defining the mission of the university in meeting multiple goals.
    College costs have typically risen at twice the Consumer Price 
Index, and often faster then health care expenditures, according to the 
U.S. Department of Labor. Tuition costs, as a percentage of the average 
family's paycheck, are increasingly upward of 25 cents on the dollar.
    In short, federal student financial aid cannot be relied upon to 
keep pace with the rising cost of higher education in America.
    When state funding for higher education remains flat, institutions 
often pass the increased burden on to students. It is worth nothing 
that student aid providers would likely do the same thing should their 
profit margins be cut in half, as some current federal proposals would 
effectively do.
    Most of us have by now read examples of extravagant spending on the 
campuses of public and private universities, such as elaborate new 
fitness and recreation centers that carry pricetags of $50 or even $100 
million.
    In the face of tighter budgets, many institutions are actively 
seeking ways to reduce spending. Colleges and universities that cut 
costs tend to fill job vacancies slower, freeze salaries, defer 
purchases, and find ways to lower operating expenses across the board, 
according to a 2006 report by the Missouri State Auditor.
    In this changing environment, do our delivery methods still make 
the most sense?
    As the demand for higher education continues to grow, we are seeing 
major changes in the demographics of the population going to college. 
The Department of Education projects that the college-age population 
will increase approximately 12 percent from 2005 to 2014. Increases in 
non-traditional higher education students, who are not attending 
directly following high school, are also predicted.
    With fewer increases in state-level appropriations for higher 
education, some states have evolved their systems for delivering 
student aid.
    Arizona State Representative Laura Knaperek author of her state's 
new Postsecondary Education Grant Program, described the goal to be, 
``A student-centered system of funding where access, affordability and 
quality drive good public policy.'' Participating full-time students in 
the program receive $2,000 grants they can apply to tuition or other 
qualified expenses at accredited private higher education institutions 
in the state. Eligible students must meet residency requirements and 
are eligible for up to four years.
New policy options
    Chicago Federal Reserve President Michael Moskow observed last year 
that, ``Universities must be more transparent in their operations.''
    Can it truly be considered a slap on the wrist to ask a higher 
education institution that increases its cost at twice the rate of 
inflation to provide an explanatory statement and provide a strategic 
plan to hold down future costs? There are strong benefits to such 
transparency in operations. Just ask the public universities that 
invest their endowments in Strayer University stock, as the Chicago Fed 
also noted.
    A proposal introduced last year in the Senate would have extended 
the Pell Grant program to provide low-income high school students the 
opportunity to take classes at a nearby university, community college 
or technical college, a new option deserving further consideration.
    In light of the costs being incurred by our higher education system 
for remediating students, we have to look to our public schools and ask 
if their education delivery methods are the ones best suited for 
accomplishing the challenges before them? Can charter schools better 
prepare students to enter higher education? Research shows that this is 
often the case. If so, how can we develop more of them?
    Quality online education at primary, secondary and postsecondary 
levels can bring specialized subject-matter expertise, using more 
current education technology, to communities such as those where the 
traditional manufacturing base is no longer thriving. It can also 
provide a more cost-effective strategy to meet the remedial and other 
education needs of many higher education students, making a quality 
higher education more accessible to more Americans.
    It is also critical that we continue to monitor whether our local 
public schools are effectively closing learning gaps between all the 
subgroups of students? How is our public education system helping 
children in perpetually underperforming public schools to get this 
preparation as well?
    And how can the best, most effective teachers and administrators in 
those schools be paid commensurate to their success, and be paid well 
enough to compete with jobs in other sectors?
    I respectfully request that the Committee consider these questions 
and trends as you continue your valuable work creating the policies 
that will help American students reach and pay for higher education.
    Thank you.
                                 ______
                                 
    Chairman Hinojosa. Very good.
    I would like to start and ask my first question of James 
Merisotis. I will recognize myself for 5 minutes.
    Most of us support the GEAR UP and the TRIO programs that 
you mentioned in your statement. Why is it that after so many 
years in existence these programs are so severely under funded 
that TRIO, for example, serves less than 10 percent of eligible 
students? Is it accountability, as defined by the 
administration? What are your thoughts?
    Mr. Merisotis. It is not clear to me what the reason is for 
the under investment. Only about 10 percent of the eligible 
populations for the TRIO and GEAR UP programs actually benefit 
from those programs. The track record of success in those 
programs is impressive both in TRIO and in the more recent GEAR 
UP case.
    I think the challenge for those programs is that they are 
dealing with the complex life circumstances of students. So 
some of the traditional measures of success in these kinds of 
programs are difficult to pin down. You can't predict what 
someone would have done in the absence of these kinds of 
programs.
    It is also difficult to use the existing data systems to 
measure the long-term success of students. Students in today's 
society, particularly low-income and minority students, live in 
a very mobile, fluid context. It is difficult for us to track 
those students, to ensure continuity of services and 
consistency over time, and I think that is one of the reasons 
why there has been some focus on the question of are these 
programs as efficient as they should be.
    I think these programs are enormously important and I am 
troubled by the fact that they haven't received the sufficient 
support they deserve.
    Chairman Hinojosa. Do you agree that two things occur under 
both programs, particularly I see it in the GEAR UP program, 
that we have corporate America investing $1 for every dollar 
that the federal government invests in the GEAR UP program? 
And, number two, that we are seeing more parental involvement 
than we had before?
    Mr. Merisotis. I think that is right, and I think this 
broader issue of partnership and the involvement of the private 
sector through things like the private scholarship that I 
talked about are terribly important in terms of our 
understanding of how we can finance and effectively pay for 
higher education.
    The federal government doesn't stand alone in this process. 
And I believe states, institutions and the private sector all 
have an important part in playing to support the efforts of 
families and students in financing higher education and getting 
through college once they are in.
    Chairman Hinojosa. Thank you.
    My next question is for Mr. Wiener.
    Why do you think that both federal and state policymakers 
decided that it is more important to fund and develop programs 
for the middle-and upper-class college students than it is to 
focus and concentrate available funds to lower-income students?
    Mr. Wiener. It is hard to understand why we have shifted 
our emphasis so profoundly over the last 10 to 15 years, not 
just in student financial aid, although it is in acute example. 
And I think one of the reasons that it has been allowed to 
happen and perhaps hasn't gotten as much attention as it 
deserves is because we really need to have a new conversation 
about the metrics for quality and accountability within higher 
education.
    You know, right now, in all the ways that we tend to bestow 
status and recognition on institutions, they sort of earn that, 
the fewer students that need help they take on, the more elite 
the students they take on, the more likely those students are 
to graduate from college no matter where they go, the more 
elite status we tend to assign to the institution.
    And I think we really need to figure out a way that we 
honor and support those institutions that are really serving 
the national interest and the public interest of educating 
students who need an education, and I think that is part of 
sort of recentering this whole conversation.
    As your question notes, states have also shifted in this 
direction, although not quite as much as the federal 
government, and institutions themselves have as well shifted 
away from low-income students. So it is very important that we 
try to recenter and put this in a new direction.
    Chairman Hinojosa. Thank you.
    My last question is to David Breneman.
    Learning model section of your report discussing the 
question, ``To what extent do colleges and universities in this 
state educate students to contribute to the workforce.'' This 
implies that degree completion is not only a personal benefit 
but a societal benefit as well.
    Do you think the answers to this question will help us 
improve our efforts in the international competitiveness arena 
that we are losing the lead on?
    Mr. Breneman. The group that put out this report, we call 
it a report card, we decided one of the things we should 
include in this was an assessment of learning, apart from 
simply degree achievement. And you have certainly heard 
business people and others complain about college graduates who 
can't write a decent business letter and so forth. That 
suggests that the processes within the institutions in all 
cases are not adequate.
    This is an intensely controversial subject within 
faculties. The institutions have little incentive or interest 
in many cases in pursuing this. And what we have tried to do is 
begin to develop some empirical metrics and ways that 
institutions who wish to pursue them could pursue them. And the 
report lays out our, the state where that has reached in our 
work. And, as you know, the Spellings Commission has emphasized 
this as well.
    I think it is a difficult task. I don't know that I would 
pin all my hopes for the future on reaching some magical set of 
metrics. But I think it is a good exercise as part of a total 
strategy to improve the system.
    Chairman Hinojosa. I need to give my ranking member an 
opportunity to ask his questions. I recognize Congressman 
Keller.
    Mr. Keller. Well, thank you, Mr. Chairman, I appreciate 
that.
    Thank you all so much for coming here today.
    Let me start with you, Dean Breneman. I look at the report, 
this state report card on higher education, and the Florida 
section in terms of affordability gives Florida an ``F.'' And 
if you didn't know more and all you are doing is looking at 
this report, you would think, man, it sure is expensive to go 
to college in Florida. But I can tell you, it is complete and 
total nonsense.
    Florida community college is $1,500 and the 4-year public 
schools are $3,400. Where does that rank Florida? Second 
cheapest in the United States, according to the Department of 
Education. And if you have a ``B'' average in Florida, it is 
completely free. Your community college is paid for 100 percent 
by the state. And if you have better than a ``B'' average, a 
3.5, it is 100 percent tuition paid for at 4-year schools, and 
``B'' average 75 percent.
    So it is the best deal in--give the report?
    Mr. Breneman. There is no question this affordability 
measure and category has been the one that has been the 
lightening rod in this report. And I don't stand here and 
indicate to you that we or anyone else in the country has come 
up with an absolutely unambiguous and defensible way to measure 
this.
    What we tried to do is index college costs to the incomes 
of people in the individual states, and we have taken grief 
from the state of New York, from the state of Georgia, from a 
number of states who don't like their gradings.
    We have, however, tried to work with the metric of income 
and we have anchored it in the early 1990s and looked at the 
trend----
    Mr. Keller. I don't want to cut you off. I just want to let 
you know my concerns. I have got some other questions.
    Mr. Wiener, you had talked about shifting the federal aid 
from the low-end to the middle class. I don't know what you are 
talking about. We have increased Pell Grant funding 80 percent 
since I have been here, from $7.6 billion to $13.7 billion. 
And, really, nothing for the middle class, absolutely nothing.
    Let me give you an example. I have a teacher in my district 
who is married to a police officer. Collectively, they make 
$70,000. They have three kids in high school. Do you know how 
much their kids get for Pell Grants? Zip. Zip. They get no 
federal grant whatsoever.
    So what the heck are you talking about in terms of we are 
shifting all the money from that middle-class family away form 
poor families?
    Mr. Wiener. Well, first, let me just say, as I said in my 
written testimony, that it is a good thing to try and make 
college more affordable for middle-and upper-income families. I 
think the problem has been that really we haven't prioritized 
low-income, so let me explain how that has happened.
    Mr. Keller. Well, alluding to the fact I just told you, why 
don't you tell me, what are we doing to help that family, that 
middle-class family who makes $70 grand and can't get a Pell 
Grant? What are we doing and what should we be doing?
    Mr. Wiener. Well, we have actually created a number of tax 
credits and deductions that that family is entitled to.
    And, again, I would just note, with respect to the Pell 
Grants, the college board analyzes trends in financial aid 
every year, and in the 2005-2006 year it was the first time 
that they noticed a decrease in real dollars in funding for 
Pell. So that in 2005, 2006, in terms of constant dollars, Pell 
Grant's funding was back down to the level it was in 2001-2002.
    Mr. Keller. Let me interrupt there. I can just tell you the 
exact facts. The Pell Grant was $3,300 in 2000 and $4,310 
today. And the Pell Grant funding in 2000 was $7.6 billion and 
is $13.7 today. Only in Washington would someone call that a 
cut. There is no real cut. You may have argued that, well, 
should have kept up with inflation better. But there is no cut.
    Let me go on to my next question. The biggest frustration I 
have--and I am a big fan of Pell Grant, don't get me wrong. You 
are not going to find a bigger fan in Congress. But we are 
dealing with skyrocketing tuition.
    And, Mr. Merisotis, you said we should have Pell Grants at 
$6,000. Let us say that we had a magic wand today and I am 
pretty sympathetic to that, actually, and we made Pell Grant 
$6,000. And then universities across the country said, you know 
what, we have decided to increase our tuition this year $5,000.
    How do we help students if we don't address this 
skyrocketing tuition problem when we just keep increasing Pell 
Grants?
    Mr. Merisotis. I have been a researcher in the field of 
higher education for two decades. I have never seen credible 
evidence that suggests that federal student aid contributes to 
tuition increases. We can have a debate about this point if you 
would like, but my argument is that federal financial aid is 
one of many factors that are taken into account in the tuition-
setting decisions.
    Tuition-setting is a complex process. Institutions are 
involved. In some states, state boards are involved, 
legislators, et cetera.
    The historical records show that in times of increasing 
federal aid, tuitions have gone down, and in times of 
increasing tuitions, federal student aid has declined. So it is 
not clear that there is a correlation between the two, 
particularly as it relates to grand funding.
    Mr. Keller. My time is expired. Thank you.
    Chairman Hinojosa. At this time, I would like to recognize, 
from the state of New York, Congressman Bishop.
    Mr. Bishop. Thank you, Mr. Chairman. I want to thank you 
and the ranking member for holding this hearing.
    I want to thank our panel.
    To the last point that was just raised, I would just like 
to reinforce what Mr. Merisotis said. I participated in pricing 
decisions at the institution I was at for 25 years. We never 
once took into consideration available federal aid. We were 
focused exclusively on what we needed to charge to generate the 
revenue that we needed to have to provide quality service to 
our students, and we tried to do it at the lowest possible 
price.
    And as to what is driving costs, at least my own experience 
is the principal cost driver is personnel cost. 70 percent to 
75 percent of what colleges spend is in salary and fringe 
benefits. Those are the principal costs. And so if we want 
larger class sizes, we can cut costs. If we want fewer student 
services, we can cut costs. But I think the question we have to 
ask is what trade offs we would be making.
    I want to ask Mr. Wiener a question.
    I would like to engage you on your recommendation that we 
would eliminate SEOG. My own view is that that would be a 
tragic mistake if we were to do that, and I think that it would 
exacerbate a problem that you outlined in your testimony, which 
is that the way in which we finance higher education is driving 
low-income students to low cost, and I think your 
characterization of it was as low-service institutions. And if 
we were to remove SEOG from the toolbox, if you will, that the 
financial aid officer has, I think that would be precisely the 
outcome if we were to do that.
    I would like to hear your thoughts further on that.
    Mr. Merisotis. Yes, and those are I think very real 
concerns. Just two responses.
    One is that right now the SEOG money, it is not as if those 
institutions, and those institutions are sort of institutions 
that do disproportionately have more resources already, those 
institutions don't have to target SEOG money to their neediest 
students.
    And so one of the concerns is that that money, again, while 
it is going on a need base, is actually--how you end up 
deciding who is eligible for SEOG money at those institutions 
that have it is you look at cost of attendance minus expected 
family contribution. Those are much higher-cost institutions, 
so that they are able to serve students who are much higher up 
the income level.
    And so the thing I worry about is that those institutions 
actually can use the SEOGs in a sense to embellish their status 
by actually giving SEOGs to higher-income and previously higher 
performing students, who don't need the support as much as 
students who are eligible for Pell.
    Mr. Bishop. Again, we ought not to make policy by anecdote, 
which I am about to do, but my own experience has been that 
virtually every single student, at least at the institution I 
was at, that received an SEOG was a Pell-eligible student, and 
it was simply a means by which we were enhancing the value of 
the Pell Grant and trying to close the gap between total 
student cost and available resources.
    I want to move on. I would like to put this out for all of 
you. In the current you we now I think for the first time have 
a merit-based Pell program. I don't know what we call it, Pell 
Plus or something.
    And my question is, is that the best use of limited federal 
resources? Or would we be better served if we were to increase 
the Pell Grant, for example, for students who have a negative 
EFC?
    I will give it to either Mr. Wiener or Mr. Merisotis.
    Mr. Merisotis. I think our best investment is investing in 
students with financial need.
    The problem with a lot of merit-based aid is you are 
rewarding students for doing what they would have done any way, 
and I would rather invest money in the students who have the 
greatest financial need.
    We have huge barriers in terms of access to higher 
education in this country between low-income and other 
students. Let us focus on that. We can find other ways to 
encourage academic excellence outside of the Pell Grant 
program.
    Mr. Bishop. So can I infer from that that you would think 
that if we took a merit-based component out of Title 4 moneys, 
you would support that?
    Mr. Merisotis. I would.
    Mr. Wiener. I think this is actually, again, a very 
complicated issue. We do need a more comprehensive solution 
than we have right now. We have a lot of different programs 
that are serving discreet little parts of it.
    We need to make it much clearer to students earlier on in 
their education that there is support for them to go to 
college. We need to make there be more support. We need to make 
it clear to them what that support is. But we also need to make 
it more clear to students that what they do while they are in 
their K-12 education will have a big impact on how successful 
they are in higher education.
    And I would just point to the 21st Century Scholars program 
that was initiated by then Governor Bayh in Indiana, that sort 
of created a compact with students and said if you take a 
college prep curriculum and apply for financial aid and apply 
for financial aid and apply to college, we will make sure that 
affordability is not a problem. And I think that kind of 
comprehensive package is the most likely to really help low-
income students to succeed.
    Mr. Bishop. I know my time has expired, but if I could just 
make one last comment.
    My fear is that merit-based component, given the vast 
proliferation of merit-based aid on the institutional level, 
simply saves the institution money, that the institution is 
simply going to have the federal government do what they would 
have done anyway, and if we are going to target federal moneys 
to where they are needed the most, we ought to be targeting 
them to needy students and let the institutions deal with 
merit.
    Thank you, Mr. Chairman.
    Chairman Hinojosa. I now wish to recognize the gentleman 
from California, Ranking Member McKeon.
    Mr. McKeon. Thank you, Mr. Chairman.
    I always enjoy these discussions. Interesting how when we 
are talking about the cost of education, we talk about student 
loans, we talk about federal financial aid. We talk about 
everything but the institutions that are actually responsible 
for their tuition and fees.
    I know we heard a little bit about it, and they are 
handicapped. There is no way they can keep their costs down. 
They have to be going up because it is a very competitive 
world.
    I come from a business background. I thought we had kind of 
a competitive business. We were selling western clothes, jeans, 
shirts. If we raised our prices, somebody would keep theirs 
down and would do more business than we were, and we had to 
then lower our prices, because there were only so many pair of 
pants going to be sold, and the ones that could keep their 
prices down were the ones that were going to get the business.
    How do you say that this is a very competitive field when 
all schools have more applicants--I might be generalizing, but 
every time I visit schools, this is what they tell me--that 
they have more applicants than they have seats, or availability 
for students.
    Where are they competing? What are they competing for?
    Mr. Breneman. Well, since I introduced some of that 
conversation, I think the difference between your situation in 
the business you were in and in higher education is that you 
had an incentive to expand your market, through presales and 
presumably as your costs were lowered your profits went up.
    Higher education doesn't have that bottom line. It plays in 
another league. The institutions are not trying to expand, by 
and large. In fact, in many ways, just the opposite. They are 
trying to enhance their selectivity. The game they are playing 
in, just as a worst-case example, is the U.S. News and World 
Report. And if you look at the things that are rewarded, they 
are things that drive up costs and----
    Mr. McKeon. So as our population grows and we have more 
students coming out of high school that we are talking about we 
should be helping to benefit to get this education, at the same 
time we have the institutions keeping their numbers down.
    Mr. Breneman. Well, no. I think national enrollments are 
up.
    Mr. McKeon. Well, they are. But let us look. Ten years ago, 
the largest school in the country was University of Minnesota. 
They had about 50,000 students. They still have about 50,000 
students. So where is the competition? They are competing for 
the best students, okay, but meanwhile then their setting 
ground rules that are eliminating a great part of our 
population.
    Mr. Breneman. Well, the other change that I think is worth 
noting, and we are largely talking about the public sector 
here, I think, in----
    Mr. McKeon. Let me just assume that if all of the schools 
in the country had a million seats and we had a million and a 
half students competing for those seats, the competition it 
seems to me is on the students' side, not on the schools' side. 
If we have the same million seats and we have a half a million 
students, do you think there would be any incentive for some of 
the schools to lower their costs?
    Mr. Breneman. Yes, actually, well, two points, let me make.
    During the so-called ``birth dearth'' years in the 1980s, 
when actually the 18-year-old population was dropping, what you 
saw during that period, where you really were looking at 
smaller numbers, was you saw the great rise in tuition 
discounting, which was a way to--you would move your sticker 
price up, but then you would give more and more of it back to 
students and turn them back out----
    Mr. McKeon. In other words, when there was a declining 
number of students competing for the seats, they did move to 
keep their costs down.
    So what you are doing, what I kind of hear from the 
discussion, is it is the federal governments responsibility to 
pick up the cost for the increased number of students while the 
schools are trying to keep--they are competing for the best 
students. They are not doing anything to help other students 
come in.
    So back to that question, where we had a million and a half 
competing for a million seats versus a half million competing 
for a million seats, where do the schools--I mean, how is that 
competitive? How are they in competitive environment to really 
help the students that you are saying we should be working to 
help?
    Mr. Breneman. Well, let me just introduce----
    Mr. McKeon. Is it all the federal government's 
responsibility? Should the states bear some responsibility? 
Should the institutions bear some responsibility? Should the 
students themselves?
    I mean, one of these hearings that I attended a few years 
ago, one of our members said, ``I have a student in my district 
that wants to go to Princeton, and they should be able to do 
that.'' Well, I have some constituents that would like to have 
a Rolls Royce, but they can only afford a Chevy, you know.
    In my state, community colleges are doing a fantastic job, 
but they are overburdened, and they, in fact, in my state 
lowered the cost of their tuition this year. I would like to 
see other institutions lower their costs. It should not be all 
a federal government responsibility.
    Mr. Breneman. If I could just 10 seconds. The third player 
in this discussion we are having here is state government, and 
I think a big, historic change somewhere in the 1980s and early 
1990s was really the dropping and discarding of enrollment-
driven funding formulas which provided some incentive. If you 
added more students, you got a claim of----
    Chairman Hinojosa. If the gentleman will yield, there is a 
vote. This is the second call. I am going to ask for a short 
recess. It is only two votes. I am going to request that all 
members please return as soon after the second vote is taken 
and we will resume until each member has had an opportunity to 
ask their questions.
    Thank you. We are recessed.
    [Recess.]
    Chairman Hinojosa [presiding]. We are ready to resume.
    And I am delighted to be able to recognize the gentlelady 
from California, Congresswoman Susan Davis.
    Mrs. Davis of California. Thank you very much, Mr. 
Chairman.
    Thank you to all of you for being here. I think I may have 
missed some of the early remarks, but I hopefully could have 
picked that up.
    I wanted to follow up with Mr. McKeon's thoughts, if I may, 
because we obviously know that we have many, many young people 
who are doing basically what we ask. I mean, they are getting 
through what may be a fairly rigorous curriculum, but then they 
are not getting into the schools that they would like, into 
state schools.
    And while they have community college as a resource to 
them, at the same time they feel that, you know, they are just 
kind of being pushed out of what they had hoped 4 years prior 
they would be able to do.
    So if you can address, how do we deal with that?
    I mean, one of the ways in which I think in the state 
system, and I come from San Diego, that we have dealt with it 
is to have schools, you know, not running 24 hours, but to 
utilize available buildings. We certainly bring in other 
instructors, professors, to try to pick up that lag. So we are 
actually being able to educate more students than perhaps the 
old caps would indicate.
    So what are the best practices around that? We know that 
there are some. What should we be doing?
    The other issue that is very clear to students is that if 
they are not graduating in 4 years, that is adding thousands 
and thousands to their education when, in fact, they are not 
graduating because they don't have the instructors, they can't 
get the classes, they are working too hard, they are not able 
to get there. Kind of a dual issue.
    If you could address that question, I would really 
appreciate it.
    Mr. Wiener. These are very important issues. And I think 
generally we need to try to figure out how we sort of 
reemphasize undergraduate education. And, again, how we allow 
institutions to distinguish themselves for serving students who 
actually really need help to get in and through college.
    One of the recommendations in my written testimony is 
around collecting better data so that we can understand which 
institutions really do the best job for serving these 
nontraditional students. At what institutions are they most 
likely to actually get a degree, and not in 6 years, as you 
noted, but in 4 years. Where now the standard metric for 
evaluating graduation rates in 4-year institutions is 6 years. 
Only about 40 percent of students actually graduate in 4 years 
anymore.
    But right now we don't collect data very well to 
distinguish which institutions do a better job with those 
students, and we really do nothing to celebrate them.
    Mrs. Davis of California. What is the problem with that? I 
mean, would it take an organization to do that? Is it something 
that we ought to be doing here, Congress ought to be 
appropriating money for? What is the problem? I mean, that is 
an obvious need that we have.
    Mr. Wiener. Well, some of it relates to--so there is the 
IPEDS, the Integrated Postsecondary Education Data System, 
which is how the federal government collects a lot of 
information on higher ed, but it collects information in silos, 
so there is no way of cross referencing. We know which students 
are getting financial aid, but we don't know how those students 
do in different institutions. There is huge variations.
    We have created a publicly acceptable database called 
College Results Online, that puts every 4-year institution in a 
peer group that looks at all of the kinds of inputs that we 
know do make some difference in terms of how selective they 
are, how many resources they have, how much, you know, what 
kind of students they are serving. And within every group of 15 
or 25 institutions, there is a huge range in the actual 
graduation rate of those students.
    But that data right now is limited to first-time full-time 
freshmen, and we think it is one fair metric for evaluating 
higher ed, because those are the students who are most likely 
to get through with a degree. But we really have terrible data 
with respect to how nontraditional students are served, and 
there are ways of getting more data in IPEDS that would help 
that.
    Mrs. Davis of California. Thank you, Mr. Wiener.
    I can see that--would you like to respond?
    Mr. Soifer. As we have seen a greater demand for higher 
education, we have also seen a change in the demographic. We 
have also seen an increase in the nontraditional student rate 
at which students are going into higher education not directly 
out of high school.
    And when we talk in terms of these very high remedial 
costs, I was giving a talk at a campus in Pennsylvania and a 
student asked me, well, aside from the formal remedial costs, 
we just worry that our classes are being watered down because 
of kids who are--you know, my older brother was in this school 
6 years ago and is the content of the course matter being 
watered down to some extent that really is not measurable.
    So these are real challenges and the delivery systems that 
were created to serve this population really need to be looked 
at in ways to see if they really are still meeting the needs 
that they were created to meet.
    Mrs. Davis of California. I appreciate that.
    One other thought, very quickly, and you don't need to 
answer this now, is the FAFSA, the application for financial 
aid in assistance. I have been to workshops with the kids and 
they all have, you know, I speak FAFSA, and they are trying to 
reach out and do a good job.
    Is there something about that that could be easier, more 
accessible and more helpful to parents particularly? And is 
there information that is being captured in that that they 
don't have easy access to their income tax returns, and beyond 
income tax returns.
    Mr. Wiener. Beyond income tax returns, it is any kind of 
public assistance anybody in their household received. So 
whether it is likely that there is good record keeping 
generally in these households I think is a real challenge.
    And the fact is the federal government has all of the 
information. The federal government is the custodial for all of 
that information. And if we allowed low-income families to 
check a box on their income tax return, we could actually 
generate for them and proactively inform them of their 
eligibility for grant aid, which I think would have a huge 
effect on the motivation and on these students and these 
families visualizing themselves as college-going.
    Mrs. Davis of California. Thank you.
    Thank you, Mr. Chairman. That would be something to follow 
up on. I would appreciate that. Thank you.
    Chairman Hinojosa. Thank you.
    I now would like to recognize the gentlelady from North 
Carolina, Congresswoman Foxx.
    Mrs. Foxx. Thank you, Mr. Chairman. I appreciate it very 
much.
    I have a couple of questions I would like to ask.
    Mr. Wiener, you said in your statement that persons of 
color are relegated, I believe you said, I am not sure of the 
exact words, to going to schools of lower cost. You were right 
on the verge of saying lower quality, and you didn't say that, 
but I could feel that that was what you felt.
    Do you really have statistics to back up the fact that 
there is proportionately more students of color in lower-cost 
institutions than higher-cost institutions?
    Mr. Wiener. Yes, Madam Congresswoman.
    So in our report that I think is a part of the background 
materials for this hearing, but if not I would be very happy to 
provide it to the committee, it is very clear that students 
from minority groups are much more likely than other students 
to be in proprietary, for profit institutions as well as in 2-
year community colleges as well as in nonselective 4-year 
institutions. And each of the way sort of up that ladder are 
institutions that have more resources to support students.
    So, you know, we, I think, need to figure out how to create 
an accountability system or at least a system that recognizes 
institutions for serving underserved populations, because again 
right now I just am very worried that all the metrics on which 
colleges and universities can distinguish themselves encourage 
them to serve fewer of these students.
    Mrs. Foxx. Is there any proof at all that students, 
particularly going to proprietary schools, are unhappy with the 
fact that they are going to those institutions?
    I mean, there aren't many places where liberals in this 
country promote choice. I mean, mostly they want the government 
to control everything. But people do have a choice about which 
institution of higher education they want to go to, and if they 
are going to those, is it not that they are voting with their 
feet?
    Mr. Wiener. If that were the case, I think that--I 
certainly am in favor of students having choices about where 
they attend college. The problem is that cost is a truly 
prohibitive factor at this point for many of our young people, 
and the choice really is illusory. They are needing to figure 
out where they can go on very limited means. I think it is very 
clear.
    The Advisory Committee on Financial Aid has documented very 
clearly just how many college qualified students are not 
attending the institutions where they could be most successful. 
I mean, we are talking about millions of students over the 
course of years.
    So it is a very big problem and I think that is the reason 
that this hearing is so important, is that financial aid and 
the federal commitment to this really plays a big part in what 
they think of as their options and the country suffers for 
losing those college graduates.
    Mrs. Foxx. I have not heard you all say anything at all 
about encouraging more money for work-study. You have talked a 
lot about grants.
    I used to be in higher education, so I know a little bit 
about the research. I don't follow it as closely now as I used 
to, but the research used to show that if a student works 15 to 
20 hours on campus, they are much more successful academically. 
And then they do much better when they get out of school 
because they have had the work experience and they have people 
who can vouch for them when they are leaving college.
    So why don't you all ever talk about increased funds for 
work-study instead of just grants, grants, grants? You know, 
people don't respect what is given to them for free. They often 
respect what they get that they work for. And you change the 
whole ethos of people.
    So why don't you talk about work-study? Anybody? I mean, 
why are you silent on the issue of work-study?
    Mr. Breneman. Well, let me venture something. I don't think 
any--I certainly still subscribe to the perspective you have 
expressed about the 15 to 20 hours a week being very desirable.
    I don't actually know the answer to why work-study--my 
sense is it is sort of one of the campus base programs, and my 
sense is those programs have sort of stalled out and haven't 
shown much political clout. And I don't know if it is because 
of lack of advocacy or so much concentration on the Pell Grant.
    No one that I know is unhappy with work-study or thinks it 
is a bad program.
    Mrs. Foxx. Well, I mean, is it that it might involve a 
little bit of work on the part of the institutions to create 
those jobs? I mean, I am just stymied by the fact that all the 
research shows that it is so positive.
    And the other thing that you are silent on is increasing 
money for distance learning. I mean, we could vastly expand the 
opportunities for people with no money to do programs in 
distance learning because they could stay at home and do that.
    And so, why don't you talk more about the money for 
distance learning?
    Mr. Breneman. Well, I will just speak for myself on this. I 
have taken the theme of this hearing, perhaps inaccurately, to 
be primarily focused on the traditional college-age student, 
and I think distance learning is a vehicle that has greater 
applicability to the older student, personally, which I assume 
falls under the purview of your committee and perhaps there has 
been narrow mindedness on our side.
    Certainly this report which I was asked to speak to is 
really looking more at the traditional aged undergraduate.
    Mrs. Foxx. Mr. Chairman, I know my time is up, but I just 
would like to say I find that very narrow-minded, because of 
all the people we should be pursuing in distance learning, it 
is this media-afflicted population. I mean, they are so 
oriented to television and computers that I find it really 
narrow-minded on your part that you would say we are thinking 
about older people. Older people would be much less likely to 
want to do their learning that way than the current generation, 
it seems to me.
    I think the paradigms of so many of you are very narrow. I 
think that the questions you start with are often the wrong 
questions. I think you have just given us a great opportunity 
to say let us see what the rest of the story is or the other 
side of the issue.
    Thank you.
    Chairman Hinojosa. As we move on to allow other members to 
ask their questions, I wanted to ask unanimous consent that the 
report that Mr. Wiener referred to be made a part of this 
hearing. Hearing no objections, so be it.
    [The Internet link to an August 2006 report by the 
Education Trust, ``Promise Abandoned,'' follows:]

http://www2.edtrust.org/NR/rdonlyres/B6772F1A-116D-4827-A326-
F8CFAD33975A/0/PromiseAbandonedHigherEd.pdf
                                 ______
                                 
    Chairman Hinojosa. I would like to recognize the gentleman 
from the great state of Virginia, Congressman Bobby Scott.
    Mr. Scott. Thank you, Mr. Chairman.
    I thank the witnesses for their testimony and for their 
contribution.
    I had one question about the prohibition against those who 
have had drug convictions qualifying for financial aid. I have 
always had a problem with that, because upper-income students 
who get convicted can continue their education, but if you 
actually need student aid, you lose your education.
    What is the status of that and how many students are losing 
their educational opportunities because of that provision? 
Would the witnesses suggest that we get rid of it so that 
everybody can continue their education on an equal basis? Is 
there any reason to continue that policy?
    Mr. Wiener. If I could answer, Congressman Scott, you know, 
obviously we want to discourage young people from making bad 
choices, including using drugs or abusing alcohol, but I do 
think it is a big mistake to try and pursue that good public 
policy by limiting the chances and basically taking away the 
second chance those students have.
    Once they are sort of punished for that offense, they ought 
to be allowed to basically rejoin society and we need for those 
students to have a chance at higher education. And I think we 
are making a big mistake by cutting off their chances in that 
way.
    Mr. Scott. And is their likelihood to continue on drugs 
greater or less if they are allowed to continue or if they are 
prohibited from continuing college? Is that a counterproductive 
policy?
    Mr. Wiener. We certainly know that Americans who aren't 
able to access higher education are much more likely to be on 
public assistance, to be in trouble in any number of ways with 
the law. Recently there have been a whole spate of studies and 
reporting in The Washington Post this weekend and then 
editorialized on yesterday, how limiting the social advancement 
and social mobility of Americans is if they don't access higher 
education.
    Americans who go to higher education are much more likely 
to get married and have a family now than other Americans. So 
we are really shooting ourselves in the foot by cutting off 
these young people so early.
    Mr. Scott. Well, thank you.
    The portion of the education expense paid for by a Pell 
Grant has been eroding. Do you have the statistics? I believe 
it was that the Pell Grant would cover about 80 percent of the 
cost of education 20 or 30 years ago and now it is down below 
50 percent and not keeping up with inflation, so it is eroding 
even more. Do you have those numbers?
    Mr. Merisotis. In 1979, 1980, actually, was the high point, 
when it did cover about 80 percent of the average price. 
Today----
    Mr. Scott. Does the price include room and board?
    Mr. Merisotis. The price includes room and board, yes. So 
it is the price of attendance, tuition, fees, room and board.
    Now it covers nationally on average about 33 percent, so we 
are at a significant decline from where we were more than two 
decades ago.
    Mr. Scott. And for those who qualify for the Pell Grant, 
their chance of being able to cover that gap is obviously a lot 
less. When it covered 80 percent, a person could work a part-
time job, 15 hours a week and a little bit during the summer, 
and actually ``work their way'' through college.
    Can students work their way through college now?
    Mr. Merisotis. A couple of things. The first one is, the 
vast majority of college students today do work, particularly 
low-income students. So work is as a necessary part of how they 
finance their education.
    It is very difficult to manage an excessive amount of work, 
more than 15 or 20 hours, without it having other implications 
either on their academic progress, but also because a lot of 
today's college students have complex family and life 
circumstances that make it very difficult to work a very large 
number of hours without it having very serious consequences.
    Mr. Scott. What portion of low-income students don't go to 
college because they can't afford it?
    Mr. Wiener. Well, we know from research at the Department 
of Education that approximately 20 percent of low-income 
students who are fully college qualified, and that means that 
they were in the high levels of achievement in high school, 
don't go directly on to college, 20 percent. For high-income 
families, that is fewer than 3 percent of students don't do 
that.
    Mr. Scott. So 20 percent are not going to college because 
they essentially can't afford to?
    Mr. Wiener. That is correct. And there are more students 
who could be successful in college who are not going because of 
the expense.
    But, again, the Advisory Committee on Financial Aid 
estimates that in this next decade, anywhere--and I know this 
is a broad figure--but anywhere from 1.5 million to 2.4 million 
low-income students who are college-qualified won't go because 
of the financial burden and the risk that they don't feel that 
they can take in terms of taking on debt. That is way out of 
proportion to anything their family has ever earned.
    Mr. Scott. Well, is it also out of proportion to what they 
can reasonably pay back?
    Mr. Wiener. We are getting to that place, and very many 
students are forced to take on that level of debt. That is why 
in my testimony I referred to a program or a policy that is 
offered by the Project on Student Debt, and it is to try and 
make loan repayment schedules contingent on family income.
    One of the things that we do right now for paying back 
loans, sometimes it can have negative implications, actually, 
to work more, to earn more money. You could have your loan 
payment go up more than your additional income. So it 
encourages people to work less.
    The second is, we don't take into account at all whether 
the loan--whether the loan repayment--the person who has the 
obligation has a family, so that we have the same expectations 
as somebody paying back who is single and just out of college 
as someone who has two kids, as we have more and more 
nontraditional students. And, again, we need to encourage these 
people to go to college. We have got to index that against 
their actual expenses for supporting their family.
    Chairman Hinojosa. Ladies and gentlemen, I want to make 
some concluding remarks.
    I want to thank the witnesses and the members of the 
subcommittee for a very informative session.
    As previously ordered, members will have 14 days to submit 
additional materials for the hearing record. Any member who 
wishes to submit follow-up questions in writing for the 
witnesses should coordinate with majority staff within the 
requisite time.
    Without objection, the hearing is adjourned.
    And I thank each and every one of you.
    [Whereupon, at 12:32 p.m., the subcommittee was adjourned.]

                                 
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