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


 
PAYING FOR A COLLEGE EDUCATION: BARRIERS AND SOLUTIONS FOR STUDENTS AND 
                                FAMILIES 

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




                                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, MAY 1, 2007

                               __________

                           Serial No. 110-29

                               __________

      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 May 1, 2007......................................     1
Statement of Members:
    Altmire, Hon. Jason, a Representative in Congress from the 
      State of Pennsylvania, prepared statement of...............    57
    Hinojosa, Hon. Ruben, Chairman, Subcommittee on Higher 
      Education, Lifelong Learning, and Competitiveness..........     1
        Prepared statement of....................................     3
    Keller, Hon. Ric, Senior Republican Member, Subcommittee on 
      Higher Education, Lifelong Learning, and Competitiveness...     3
        Prepared statement of....................................     4

Statement of Witnesses:
    Boyle, James A., president, College Parents of America.......    34
        Prepared statement of....................................    36
    Martin, Dr. A. Dallas, Jr., president, National Association 
      of Financial Aid Administrators (NASFAA)...................     6
        Prepared statement of....................................     8
        Attachment A: Suggested Metrics and Key Performance 
          Indicators (KPIS)......................................    12
        Attachment B: Calendar Year and Ongoing Timeline for 
          Director...............................................    13
    Pressnell, Claude, vice chairperson, Advisory Committee on 
      Student Financial Aid......................................    17
        Prepared statement of....................................    19
        Reauthorization Proposal: A Federal Partnership for 
          Access and Persistence.................................    28
    Swarthout, Luke, higher education advocate, United States 
      Public Interest Research Group (U.S. PIRG).................    30
        Prepared statement of....................................    32


                    PAYING FOR A COLLEGE EDUCATION:
                       BARRIERS AND SOLUTIONS FOR



                         STUDENTS AND FAMILIES

                              ----------                              


                          Tuesday, May 1, 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 1:38 p.m., in 
Room 2175, Rayburn House Office Building, Hon. Ruben Hinojosa 
[chairman of the subcommittee] presiding.
    Present: Representatives Hinojosa, Tierney, Wu, Bishop, 
Yarmuth, Scott, Davis of California, Hirono, Keller, Petri, 
Foxx, Kuhl, Castle, and Biggert.
    Staff present: Tylease Alli, Hearing Clerk; Gabriella 
Gomez, Senior Education Policy Advisor (Higher Education); 
Lamont Ivey, Staff Assistant, Education; Ricardo Martinez, 
Policy Advisor for Subcommittee on Higher Education, Lifelong 
Learning and Competitiveness; Rachel Racusen, Deputy 
Communications Director; Julia Radocchia, Education Policy 
Advisor; Kathryn Bruns, Legislative Assistant; Amy Raaf Jones, 
Professional Staff Member; Victor Klatt, Staff Director; Linda 
Stevens, Chief Clerk/Assistant to the General Counsel; and 
Sally Stroup, Deputy Staff Director.
    Chairman Hinojosa [presiding]. A quorum is present, and the 
hearing of the subcommittee will come to order.
    Pursuant to Committee Rule 12(a), any member may submit an 
opening statement in writing, which will be made part of the 
permanent record.
    I now recognize myself and will be followed by my friend, 
Mike Castle, for an opening statement.
    Good afternoon to everyone. Welcome to the subcommittee's 
third hearing on the reauthorization of the Higher Education 
Act.
    In our first hearing, we discussed how the United States is 
falling behind in producing college graduates. Our current 
investments in higher education are not on the scale we need to 
educate enough of our people to remain globally competitive.
    In our second hearing, we discussed how well we are 
preparing low-income and first-generation students for college. 
Although we learned that we have some very effective programs 
such as TRIO and GEAR UP, they only reach a small fraction of 
the population that qualifies for the programs. Again, we are 
falling short.
    Today we will focus on the core mission of the Higher 
Education Act, removing financial barriers to college.
    Again, the evidence shows that our national investment is 
insufficient and costs us tens of thousands of potential 
college graduates every year. In this weekend's New York Times, 
there was an article on the ABCs of calculating financial aid.
    An entire industry has arisen around helping those who have 
the means to do so negotiate their financial aid packages. What 
happens to the students from low-and middle-income families? We 
need to find out. And my hopes are that the panelists today 
will help us answer that question.
    What happens to minority students who are still under-
represented on our college campuses is another question. At our 
flagship public institutions and our selective private 
institutions, they just are not there.
    A recent analysis by Post-Secondary Education Opportunity 
found that while in the 2005-2006 academic year 36.9 percent of 
resident under-graduate students were eligible for Pell grants, 
only 15.9 percent of students in the top 50 public institutions 
and only 9.7 percent of students at the top private 
institutions were Pell grant recipients. We are asking low-
income and minority families to shoulder an increasingly 
unbearable financial burden for college.
    The Advisory Committee on Student Financial Assistance 
reported that, between 2000 and the year 2004, the net price at 
a 4-year public college rose from 75 percent to 87 percent of 
family income for the lowest-income families. Students from 
low-income families bear a work-loan burden of over $10,000 to 
attend a public university.
    Post-Secondary Opportunity analyzed college affordability 
by race and income and found the following: The net price to 
the family as a share of family income is the greatest for 
blacks, Asians and Hispanics and the least for white and other 
race students and their families.
    Additionally, a report by Excelencia in Education found 
that Latinos received the smallest financial aid packages 
compared to all other groups.
    It should come as no surprise that many families see these 
barriers as insurmountable. The Advisory Committee estimates 
that over the next decade we will lose between 1.4 million and 
2.4 million college-qualified students who will fail to enroll 
because of financial barriers.
    This reauthorization of Higher Education Act is our 
opportunity to remove these financial barriers. We started with 
H.R. 5 to reduce the student loan interest rate. We provided 
the first increase in 4 years to the maximum Pell grant. But we 
must do more.
    In closing, I want to say that I would like to thank the 
witnesses for providing testimony today and for helping us 
identify ways we can remove the financial barriers to college. 
Thank you.
    And I now yield to the ranking member, Ric Keller of 
Florida, for his opening remarks.
    [The prepared statement of Mr. Hinojosa follows:]

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

    Good Afternoon. Welcome to the subcommittee's third hearing on the 
reauthorization of the Higher Education Act.
    In our first hearing, we discussed how the United States is falling 
behind in producing college graduates. Our current investments in 
higher education are not on the scale we need to educate enough of our 
people to remain globally competitive.
    In our second hearing, we discussed how well we are preparing low-
income and first generation students for college. Although we learned 
that we have some very effective programs such as TRIO and GEAR UP, 
they only reach a small fraction of the population that qualifies for 
the programs. Again, we are falling short.
    Today, we will focus on the core mission of the Higher Education 
Act--removing financial barriers to college. Again, the evidence shows 
that our national investment is insufficient and costs us tens of 
thousands of potential college graduates every year.
    In this weekend's New York Times, there was an article on ``the A-
B-C's of Calculating Financial Aid.'' An entire industry has arisen 
around helping those who have the means to do so negotiate their 
financial aid packages.
    What happens to the students from low-and middle-income families? 
What happens to minority students who are still under-represented on 
our college campuses?
    At our flagship public institutions and our selective private 
institutions, they just are not there. A recent analysis by 
Postsecondary Education Opportunity found that while in the 2005-2005 
academic year, 36.9 percent of resident undergraduate students were 
eligible for Pell grants, only 15.9 percent of students in the top 50 
public institutions and only 9.7 percent of students at the top private 
institutions were Pell Grant recipients.
    We are asking low-income and minority families to shoulder an 
increasingly unbearable financial burden for college.
    The advisory committee on student financial assistance reported 
that between 2000 and 2004 the net price at a four-year public college 
rose from 75 percent to 87 percent of family income for the lowest 
income families. Students from low-income families bear a work-loan 
burden of over $10,000 to attend a public university.
    Post Secondary Opportunity analyzed college affordability by race 
and income and found, ``The net price to the family as a share of 
family income is the greatest for blacks, Asians and Hispanics and 
least for white and other race students and their families.'' 
Additionally, a report by Excelencia in Education found that Latinos 
received the smallest financial aid packages compared to all other 
groups.
    It should come as no surprise that many families see these barriers 
as insurmountable. The advisory committee estimates that over the next 
decade we will lose between 1.4 and 2.4 million college qualified 
students who will fail to enroll because of financial barriers.
    This reauthorization of the Higher Education Act is our opportunity 
to remove these financial barriers.
    We started with H.R. 5 to reduce the student loan interest rate. We 
provided the first increase in 4 years to the maximum Pell Grant. But 
we must do more.
    I would like to thank the witnesses for providing testimony today 
and for helping us identify ways we can remove the financial barriers 
to college.
    Thank you and I now yield to the Ranking Member Ric Keller of 
Florida for his opening remarks.
                                 ______
                                 
    Mr. Keller. Well, thank you very much, Mr. Chairman, for 
yielding and for your comments as well.
    I also want to thank Governor Castle for temporarily 
sitting in for me. I was detained at another hearing. But just 
sitting in the same chair, I feel almost like a governor. And I 
am ready to start complaining about non-funded mandates and 
everything else. [Laughter.]
    But good morning, and thank you to all of you for joining 
us today. We are here to learn about some of the challenges 
facing parents and students in financing a college education.
    A college degree is the passport out of poverty for 
millions of American students each year. Without a college 
education, many workers today are shut out of quality, high-
paying jobs. I believe our top priority should be opening the 
doors of higher education to low-and middle-income Americans.
    With this new Congress we have the opportunity to take a 
step back and review the Higher Education Act reauthorization 
policies that were developed over the past several years. At 
the same time, there are certain goals that will continue to 
persist. Those goals are acceptability and affordability.
    We have already taken several positive steps in the right 
direction. For example, we have increased Pell grant funding; 
increased loan limits; rewarded high-achieving, low-income 
students with Smart grants; and created incentives for low-
income students to pursue degrees in math, science and critical 
foreign languages through Smart grants.
    However, Mr. Chairman, we all know that no amount of aid 
will truly benefit students unless institutions themselves are 
also held responsible for their role in the college cost 
crisis.
    With this in mind, earlier this year our committee's 
ranking Republican, Representative Buck McKeon, and I 
introduced the College Affordability and Transparency Act to 
provide parents and students better disclosure about the cost 
of college.
    I am hopeful that as we move forward in this 
reauthorization process we keep this bill in mind and the fact 
that funding alone is not a silver-bullet solution to all of 
the crises. Rather, colleges and universities must play a key 
role in lowering the barriers to a higher education.
    We have a great panel of witnesses with us today to talk 
about their perspective. I look forward to hearing from them. 
And I thank you all for your presence today before our 
committee.
    Mr. Chairman, I will yield back the balance of my time.
    [The prepared 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. Without objection, all members will have 
14 days to submit additional materials or questions for the 
hearing record.
    I would like to introduce our very distinguished panel of 
witnesses here with us this afternoon.
    The first panelist will be Dallas Martin. Dallas is 
president of the National Association of Student Financial Aid 
Administrators. NASFAA, I believe, is the acronym. He has 
represented the association before Congress, the executive 
branch and the general public for many years. Prior to joining 
this organization, Dr. Martin served as director of program 
planning and administration for the Division of Student 
Assistance with the American College Testing Program. He has 
worked as an administrator of financial aid and student 
personnel services. Dr. Martin received a Ph.D. in college 
student personnel administration in 1971 from the University of 
Northern Colorado.
    The second panelist will be Claude Pressnell. Claude is a 
member of and is representing the Advisory Committee on Student 
Financial Assistance. Dr. Pressnell has served as president and 
CEO of the Tennessee Independent Colleges and Universities 
Association. He has extensive experience in higher education 
and admissions and financial aid at various universities. Dr. 
Pressnell has numerous publications in higher education, and he 
received his Ph.D. from Vanderbilt University.
    The third panelist is Luke Swarthout. Luke is testifying on 
behalf of the U.S. Public Interest Research Group. He develops 
policy, lobbies and writes on federal student aid issues. He 
writes on student loan policy and federal higher education 
policy. Luke has authored several reports on student debt and 
federal aid, including the report entitled, ``Paying Back, Not 
Giving Back: Student Debt's Negative Impact on Public Service 
Career Opportunities.'' Mr. Swarthout received his Bachelor's 
Degree from Amherst College.
    The fourth panelist is James A. Boyle. He is the founding 
president of the College Parents of America. The organization 
was established in September 2003 to provide advocacy and 
resources for current and future college parents. His 
organization is a national membership association headquartered 
in Virginia. Prior to his current role, he served as vice 
president of brand marketing and corporate communication for 
Sally Mae and has over 20 years experience in the media 
industry. Mr. Boyle frequently testifies before Congress and 
has discussed higher education issues on various television 
programs. He received his Bachelor of Science in communications 
from Northwestern University in 1979.
    Having introduced them, I am now going to say welcome to 
each and every one of our witnesses.
    I would like to tell you just a little bit about our 
lighting system. 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 of Congress, 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.
    We will now hear from our first witness. Mr. Martin?

STATEMENT OF DALLAS MARTIN, PRESIDENT, NATIONAL ASSOCIATION OF 
                  FINANCIAL AID ADMINISTRATORS

    Mr. Martin. Thank you, Mr. Chairman.
    Members of the subcommittee, thank you for inviting me to 
be here with you today. The topic you have chosen to address 
today is very important because it fundamentally affects the 
future of our nation, not only in terms of our current and 
future competitiveness in the industrialized world, but also 
because it addresses the fiscal and economic health of our 
nation's citizens.
    While the United States continues to enjoy a period of 
economic prosperity that has benefited many, it has not been a 
period that has been helpful to those who are or remain at the 
lower end of our economic scale. It is well-documented that 
educational opportunity is not equal among all of our citizens, 
whether at the elementary, secondary or post-secondary level.
    As stated by the congressionally appointed Advisory 
Committee on Student Financial Assistance, low-income students 
who graduate from high school academically prepared to enter 
college still confront significant financial barriers. And they 
are also less knowledgeable about the financial resources that 
are available to them.
    Clearly, the cost of higher education has risen steadily as 
a percentage of family income. And as a result, more low-income 
students must abandon their plans to attend college on a full-
time basis. Instead, many of these students are working long 
hours, attending college part-time and borrowing more heavily.
    In fact, these students as well as many others who have to 
use credit financing through student loans to help pay for 
college, are finding that the current federal limits on annual 
and cumulatively borrowing amounts are unrealistic in terms of 
their needs. As a result, students and their families are 
forced to turn to more costly private or alternative loan 
options that are not as favorable and which are not regulated 
by our federal Title IV statutes.
    While the financial aid system in the United States is the 
most comprehensive in the world and assists some 13 million 
students annually, it is still incredibly complicated and 
confusing to many students and their families. Therefore, they 
turn to the people who have the primary responsibility for 
bringing it all together and who have the expertise necessary 
to guide them through the process: the financial aid 
administrators.
    Nowhere else can a student and his or her family get the 
complete information they need about state, federal and 
institutional aid programs and the procedures and timelines 
necessary to navigate the process efficiently and effectively.
    Since the passage of the Higher Education Act of 1965, the 
aid programs have grown dramatically, and that growth has 
brought equal expansion in the role and responsibilities of 
financial aid administrators.
    Financial aid administrators, unlike many other 
institutional administrators, don't graduate with a degree in 
financial aid administration. Such degrees do not exist. 
Instead, they learn from colleagues that are trained by the 
national, regional or state financial aid administrators, the 
education department, and in some cases, by state guaranty 
agencies and lenders.
    They are responsible for understanding and managing almost 
countless requirements, including all of the Title IV statutes, 
a federal student aid handbook of seven volumes of 763 pages, 
state rules and regulations that they also have to go through, 
donor scholarship requirements and lender and guaranty agency 
loan requirements.
    Further, these individuals have to understand all the 
details with the Family Education Rights and Privacy Act 
requirements, citizenship and immigration rules related to 
eligibility, selective service requirements, IRS requirements, 
state residency requirements, and numerous others that impact 
the student aid programs.
    These individuals juggle all these responsibilities in a 
constantly changing world of program requirements. Still, in 
spite of all of these challenges, I can assure you that the 
vast majority of financial aid administrators are dedicated, 
extremely hard-working individuals who do everything they can 
to provide accurate, timely information and help to families 
and students who without financial aid would be unable to 
achieve a post-secondary education.
    In closing, Mr. Chairman, I look forward to working with 
you and your colleagues as you develop legislation to 
reauthorize the Higher Education Act.
    The current controversy about preferred lender lists and 
institutional relationships with loan providers shows a need 
for some additional legislative clarity on what is and what is 
not permissible. But we must be careful not to impose 
unnecessary restrictions that make it impossible for 
responsible cooperation to occur amongst these parties.
    In addition, let me note that until earlier this year the 
Pell Grant maximum award had been frozen for 4 years, and we 
still need to further increase it in order for the program to 
achieve its intended goal. Likewise, we need to increase the 
annual and cumulative limits on Stafford loans. And let me also 
say that the LEAP and campus-based programs serve important 
financial needs to students, and yet they, too, are woefully 
under-funded.
    While all of these Title IV programs are complementary to 
each other, there are improvements that we can make to make 
them better. I pledge NASFAA's support and the support of my 
members to assist you, Mr. Chairman, and to assist your 
colleagues as you begin your critically important legislative 
work reauthorizing the Higher Education Act.
    My members know all too well how far away we are from 
achieving the goal of equal opportunity for low-and middle-
income families and students. Our focus first and foremost and 
must always be on meeting the financial needs of our students 
and families.
    Thank you.
    [The statement and attachments of Mr. Martin follow:]

 Prepared Statement of Dr. A. Dallas Martin, Jr., President, National 
          Association of Financial Aid Administrators (NASFAA)

    Mr. Chairman and members of the Subcommittee, I thank you for the 
opportunity to testify today. I am Dallas Martin, President of the 
National Association of Student Financial Aid Administrators (NASFAA). 
Formed over forty years ago, NASFAA represents student financial aid 
administrators at some 3,000 postsecondary institutions across the 
nation.
    Our association illustrates the diversity of our higher education 
enterprise with members from private and public institutions, community 
colleges, four-year schools, proprietary schools, and graduate/
professional institutions. At these schools, NASFAA represents 
approximately 12,000 financial aid professionals who are dedicated to 
helping families apply for and receive the funds they need to send 
their students to college. Given the complexity of the state, federal, 
and institutional aid programs, it is necessary to have someone with 
that kind of expertise guiding families through the process.
    The topic you have chosen to address today is very important 
because it fundamentally affects the future of our nation, not only in 
terms of our current and future competitiveness in the industrialized 
world, but also because it addresses the fiscal and economic health of 
our nation's citizens. While the United States continues to enjoy a 
period of economic prosperity that has benefited many, it has not been 
a period that has been helpful to those who are and remain at the lower 
end of our economic scale. It is well-documented that educational 
opportunity is not equal among all of our citizens, whether at the 
elementary, secondary, or postsecondary levels.
    As stated by the Congressionally-appointed Advisory Committee on 
Student Financial Assistance, low income students who graduate from 
high school academically prepared to enter college still confront 
significant financial barriers and are less knowledgeable about the 
financial resources that are available to them. Clearly the cost of 
higher education has risen steadily as a percentage of family income. 
As a result, more low income students must abandon plans to attend 
college on a full-time basis. Instead, many of these students are 
working long hours, attending college part-time, and borrowing more 
heavily. In fact, these students, as well as many others, who have to 
use credit financing through student loans to help pay for college are 
finding that the current federal limits on annual and cumulative 
borrowing amounts are unrealistic in terms of their needs. As a result, 
students and their families are forced to turn to more costly private 
or alternative loan options that are not as favorable and which are not 
regulated by our federal Title IV loan statutes.
    While the financial aid system in the United States is the most 
comprehensive in the world and assists some 13 million students 
annually, it still is incredibly complicated and confusing to many 
students and their families. Therefore, they turn to the people who 
have the primary responsibility for bringing it all together and who 
have the expertise necessary to guide them through the process--the 
financial aid administrators. Nowhere else can a student and his or her 
family get the complete information they need about state, federal, and 
institutional aid programs and the procedures and timelines necessary 
to navigate the process efficiently and effectively. Since the passage 
of the Higher Education Act of 1965, the aid programs have grown 
dramatically, and that growth has brought equal expansion in the role 
and responsibilities of financial aid administrators. Although 
complicated by many other outside influences that I will discuss later, 
the financial aid administrator assists students and their families in 
a variety of ways.
    Even before a student applies for student aid, a financial aid 
administrator can help the student and parents to * * *
     Understand the aid process by sponsoring financial aid 
early awareness activities for students and families in elementary, 
middle-school, and high school so that they can not only plan for 
postsecondary expenses, but, more importantly, know that college is 
possible and that academic preparation is important
     Estimate the costs of education, including direct costs 
(tuition, fees, on-campus housing, etc.) and indirect costs 
(transportation, other living expenses, books and supplies, etc.)
     Know the deadlines for applying for various types of 
student aid
     Estimate student aid eligibility
     Gain a thorough understanding of the types of aid that are 
available and the requirements to qualify
     Complete the Free Application for Federal Student Aid 
(FAFSA), which is the basic building block for determining the student 
aid package
     Know how to complete the FAFSA when circumstances aren't 
typical (a parent has lost a job, the student's parents live overseas, 
the student was raised in foster care, etc.)
     Understand when to submit an appeal to reflect unusual 
circumstances that cannot be reflected in the FAFSA
     Determine which additional applications are needed so that 
the student can receive funds from all of the sources for which he or 
she qualifies
     Remain aware of follow-up steps in the application process
     Identify free scholarship search engines and resources
     Notify individuals and families about the tax benefits 
they may be eligible for such as the Hope and Lifetime tax credits, the 
deduction for educational expenses, or the deduction for student loan 
interest
    Once the student applies for aid by submitting the FAFSA and any 
other additional aid applications, the financial aid office will notify 
the student of the amount he or she can expect to receive, and from 
what sources. Aid administrators can then help the student and their 
parents to * * *
     Identify alternative sources of funds if additional money 
is needed to meet educational costs
     Understand student loan terminology and identify the types 
and sources of loans that are right for the borrower
     Know when and how the student's funds can be applied to 
direct costs as well as reimbursed for indirect costs
     Understand the student's rights and responsibilities as a 
student loan borrower
    As a student continues in school, aid administrators can help them 
* * *
     Stay on track to continue to qualify for funds by 
progressing in their academic programs and reapplying for aid on-time 
each year
     Keep an eye on their loan debt and explain what the future 
repayments might be like
     Handle questions about whether to defer interest payments 
on unsubsidized loans while in school or pay the interest as it comes 
due
     Identify and find a Federal Work-Study job including FWS 
community service positions
     Provide refunds and assistance when a student needs to 
temporarily cease studies (such as to assist with a illness in their 
family) but plans to resume attendance later
     Find ways to budget so that the student doesn't have to 
borrow excessively and leave school with an excessive debt burden
    Financial aid administrators even assist former students if they 
have financial difficulties--to help them avoid defaulting on a student 
loan--by providing information about deferments, forbearance, or loan 
consolidation options.
    On a larger scale, aid administrators help reach out to students, 
often regardless of the institution they plan to attend. Beyond helping 
students and parents individually, they also * * *
     Participate in outreach programs, such as College Goal 
Sunday, which is a national program offered by many states to help low-
income and disadvantaged families find the means to attain a college 
education
     Offer ``Financial Aid Night'' or early awareness 
presentations to help students and parents learn how to apply for 
financial aid and understand the differences between the various 
sources of aid
     Advocate before policy makers at both the national and 
state level to ensure that financial aid funding remains available, 
affordable, and accessible to families
     Provide advice on current and proposed legislation 
affecting student aid programs to ensure they are achieving their 
intended purposes
     Seek additional ways to assist their students, whether by 
investigating new scholarship and loan programs, exploring ways to cut 
student costs, or expanding informational sources and implementing new 
technology to better meet students' needs.
     Take part in training activities sponsored by their state, 
regional, or national financial aid associations in order to update 
their skills and gain new information about changes in the federal 
student aid process and best practices so they may better serve 
students and families
     Comment on proposed federal and state regulations to 
ensure that the student aid process remains equitable and is not 
burdensome for families
     Respond to media requests for practical information to 
help families
     Develop detailed informational materials for students and 
parents, including financial literacy materials
     Participate in long-range planning for the institution
     Submit reports to federal and state agencies as well as 
institutional reports
     Research and participate in technology upgrades to improve 
the total student aid process on campus
    Financial aid administrators, unlike many other institutional 
administrators, don't graduate with a degree in financial aid 
administration--such degrees just don't exist. Instead, they learn from 
colleagues, they are trained by the national, regional, and state 
financial aid associations, the Education Department, and in some cases 
by state guaranty agencies and lenders. They are responsible for 
understanding and managing almost countless requirements, including the 
Title IV statute, some 449 sections of exceptionally detailed federal 
regulations, a Federal Student Aid Handbook of seven volumes and 763 
pages, state rules and regulations, donor scholarship requirements, and 
lender and guaranty agency loan requirements. Further, financial aid 
administrators must understand Family Education Rights and Privacy Act 
(FERPA) requirements, citizenship and immigration rules related to 
eligibility, Selective Service requirements, IRS requirements, state 
residency requirements, and numerous others that impact the student aid 
programs.
    Financial aid offices lead the way on many college campuses in the 
areas of automation and application of new technology. Document imaging 
and workflow systems are now key tools for many aid offices, yet they 
were virtually unheard of until the last decade. One of the more recent 
innovations to aid in processing efficiency is the Digital Dashboard 
technology that provides metrics and key performance indicators for the 
financial aid office. These allow staff to compare year-to-year data on 
applications received and processed, percentage of files selected for 
verification and completed, status of award packaging and loan 
processing, and how offers and disbursements compare to funds available 
for each program. A suggested metrics and key performance indicator 
list is shown as Attachment A to illustrate some of the data tracking 
and reporting that aid administrators must perform.
    As society has grown to expect more real-time communications, the 
financial aid office has also had to adjust to synchronous 
communication, which includes any form of technology-supported tool 
that permits students to communicate with others at the same time. 
Financial aid offices must constantly adjust their practices to reach 
students in the way that they respond to best. Gone are the days of 
``snail mail''; today it is ``real-time'' communication or you are 
considered to be in the dark ages. To further help you understand the 
scope of the financial aid office activities Attachment B provides a 
calendar year and on-going monthly timeline of a typical financial aid 
administrator's responsibilities.
    Financial aid administrators juggle all of these responsibilities 
in a constantly changing world of program requirements. Changes to the 
financial aid programs do not occur only during reauthorization of the 
programs. Instead, nearly every year, changes are made to one or more 
of the student aid programs. Sometimes these changes are made during 
budget reconciliation, or on an annual appropriations bill. In 
addition, changes to tax legislation may affect interest on loans, the 
receipt of scholarships, or direct tax benefit programs offered by the 
federal government.
    At times, current events may cause the Congress to legislate new 
requirements to remedy what is a real or perceived problem or need. 
Sometimes these requirements can be extremely burdensome because of the 
time, effort, and expense involved in creating systems and processes to 
address the issues, they may have virtually no impact on the amount of 
dollars spent in the programs. A prime example of one of these issues 
is verification of selective service registration. When imposed two 
decades ago, less than two percent of financial aid applicants were 
even identified as potentially not being registered, yet the 
requirement was imposed on everyone at great expense and is still in 
the law today. This is not to say that I do not believe in a student's 
civic obligation to register with Selective Service, but the solution 
imposed to resolve a very small problem added unnecessary complexity to 
already complicated delivery system.
    Another example to illustrate how excessive burdens are imposed on 
the financial aid office involves the recently enacted ACG/SMART grant 
programs. The Education Department's interpretation of the law for 
these programs has caused major problems for the financial community. 
On April 18, the negotiated rulemaking committee could not reach 
consensus due to the unworkability of the academic year progression 
aspect of Department's interpretation. Further, the inclusion of the 
merit component in the law has essentially invited the Department to 
step into academic purview. The Department is now regulating grade 
point average calculations, the ability to consider a grade equivalency 
to advanced placement exam scores, and whether transfer credits are 
part of a student's overall postsecondary background in terms of 
academic year progression. The definition of eligible program is 
problematic under the proposed regulations and the ineligibility of 
certificate programs for these grant programs was another sticking 
point preventing consensus. These are just some of the questions that 
still exist in these recently enacted programs that aid administrators 
have already had to begin to administer. Unfortunately, because 
reasonable resolution has not been reached on these issues, confusion 
and administrative complexity have been added that impact the program's 
effectiveness.
    Still, in spite of all of these challenges, I can assure you that 
the vast majority of financial aid administrators are dedicated, 
extremely hard-working individuals who do everything they can to 
provide accurate timely information and help to families and students 
who without financial aid would be unable to achieve a postsecondary 
education. The vast majority are ethical and strive to meet their 
responsibilities in a professional and caring manner. They work long 
hours for some of the lowest administrative salaries on campus, and in 
many cases they are not recognized by other administrators for the 
contributions they make to the institution and the students they serve.
    Many financial aid offices are also expected to fulfill all of 
these responsibilities with limited financial and human resources. 
While the Department of Education requires all schools that participate 
in the Title IV federal student aid programs to demonstrate 
administrative capability and ensure compliance with all regulations, 
to my knowledge, never has a school been cited during a program review 
for not providing the personnel and fiscal resources necessary to carry 
out their required responsibilities. This failure on behalf of the 
Department, and some schools that do not provide adequate resources, 
has forced many financial aid offices to seek assistance from lenders, 
guaranty agencies, and others to print student financial aid consumer 
information, to perform student loan exit and entrance counseling, to 
establish call centers, and to provide additional staffing during peak 
periods in the financial aid office. While all of these are functions 
that the school itself should ideally perform, without adequate 
resources to conduct all of its administrative capability requirements, 
it is not surprising that some financial aid offices would accept 
assistance from these entities to perform those tasks. While I might 
question whether or not this was the best course of action for a school 
to take, I cannot fault the financial aid office for using these types 
of resources to comply with their regulatory responsibilities and offer 
service to their students.
    In closing, Mr. Chairman and members of the Subcommittee, I look 
forward to working with you and your colleagues as you develop 
legislation to reauthorize the Higher Education Act. The current 
controversy about preferred lender lists and institutional 
relationships with loan providers shows a need for some additional 
legislative clarity on what is or is not permissible. We must be 
careful not to impose unnecessary restrictions that make it impossible 
for responsible collaboration to occur among these parties. It should 
not obscure the good work you can accomplish to ensure that our 
students and their families have the financial assistance they need so 
that they may take advantage of all the opportunities a postsecondary 
education can provide for them.
    Let me note that until earlier this year the Pell Grant maximum 
award had been frozen for four years and we still need further 
increases in order for the program to achieve its intended goal. 
Likewise, Stafford Loan annual and cumulative limits are nowhere near 
what they need to be to permit undergraduate and graduate students to 
borrow from federal loan sources and to avoid borrowing higher cost 
private educational loans. Similarly, the LEAP and campus-based 
programs serve important financial needs of students and yet are 
woefully under-funded. While all of these Title IV programs are 
complimentary to each other, there are improvements that can be made to 
make them better. And, when we consider reauthorizing the federal 
student aid programs, let us recognize that far too many of our 
citizens have been left behind. There is so much work that needs to be 
accomplished so that all Americans have the student aid they deserve so 
that they can stake a claim on the American dream.
    I pledge NASFAA's support and the support of my members to assist 
you, Mr. Chairman, and to assist your colleagues as you begin your 
critically important legislative work reauthorizing the Higher 
Education Act. My members know all too well how far away we are from 
achieving the goal of equal opportunity for low- and middle-income 
families and students. Our focus, first and foremost, must be on 
meeting the financial needs of our students and families.
                                 ______
                                 

 Attachment A: Suggested Metrics and Key Performance Indicators (KPIS)

                               processing
    FASFAAs received
    Students evaluated
    Students packaged
    Students selected for verification
    Students verified
    Loan requests received
    Loan requests processed
    Summer applications received
    Summer applications processed
    Documents received
    Communications sent (e-mail, paper)
    Calls received/average wait time
    Counter visits/average wait time
    Walk-in appointments/average wait time
    Scheduled appointments/average wait time
       funds management current year (offered/budgeted/disbursed)
    Federal Pell Grant
    FSEOG
    State Grant
    Institutional grant
    Federal Stafford/Direct Loan
    Federal Perkins Loan
    Institutional Loan
    Federal PLUS Loan
    Other loans
    Federal Work-Study
    Major state and institutional scholarship programs
                  prior year comparisons (historical)
    Federal
    State
    Institutional
    Endowed
    Other
    Percent of all funds that are need-based
    Percent of all institutional funds that are need-based
    Disbursements by month
                       outcomes (last two years)
    Enrollment
    Undergraduate enrollment
    Percentage receiving aid
    Percentage receiving Federal Pell Grants
    Percentage receiving state merit awards
    Graduate enrollment
    Percentage receiving aid
    Percentage receiving assistantships
    New freshmen
    Percentage receiving need-based aid
    Average need-based award
    Average merit-based award
    Aid applicant yield vs. yield on non-applicants
    Institutional discount rate
                           default management
    Federal Stafford/Direct Loan default rate
    Federal Perkins Loan default rate
    Average indebtedness
    Number of federal audit findings and dollar amount
    Number of state audit findings and dollar amount
                             administration
    Applicants per staff member
    Students per staff member
    Cost per recipient
    Cost as a percentage of dollars administered
    Staff turnover
    Counselor turnover
                            customer service
    Overall rating
    Rating compared to other administrative offices
                                 ______
                                 

     Attachment B: Calendar Year and Ongoing Timeline for Director

    Many items listed here will differ when they are done based on 
individual institution timelines
                  ongoing year-round responsibilities
     Cancellations and withdrawals and refund calculations 
(R2T4)
     Provide leadership in the administering and oversight of 
financial aid programs
     Ensure services delivered in affective and timely manner
     Support and enhance mission and purpose of institution
     Supervise and manage Financial Aid Office staff
     Council and assist students and families on financial aid 
matter and processes
     Monitoring compliance with all aspects of federal, state 
and institutional guidelines/regulations
     Reviews and communications federal and state legislative 
issues and regulation changes to appropriate colleagues, supervisors, 
Deans, and Directors
     Act as main point of contact for Deans and Directors of 
other departments on fin aid matters
     Tracking and management of all financial aid funds and 
award budgets
     Management of financial aid office budget
     Monthly reports such as Pell reporting and Direct Loan 
origination
     Arrange and coordinate training of financial aid office 
staff and possibly other dept staff (such as Admissions and Business 
Office staff)
     Respond to various surveys, such as US News, Petersons, 
PACCON, and NACUBO as needed
     Update the Program Participation Agreement (PPA) as needed
     Review and update as changes occur to the financial aid 
Policies and Procedures manual
     SSCR Reports due
     Provide financial aid presentations at Admissions 
orientation and visitation days
     Prepare narrative and technical reports for a variety of 
offices and uses (i.e. Board of Regents)
     Actively involved in State, Regional, and National 
Financial Aid Associations
     Various times of year run Satisfactory Academic Progress 
(SAP) reports (i.e. at end of each term)
     Reading/Reviewing/Awarding of Files
     Verification of files
     Review of additional information received and professional 
judgment requests
     Meetings
     Update Calendar and forms on Web site
     NCAA Committee work
     Legislative work/State Advisory board work including 
testimony, meetings, and preparation of statistics
                        annual responsibilities
     Annual Audit within 6 months of end of fiscal year
     Submit A-133 within 9 months of end of school's fiscal 
year
     File FISAP report
     Campus Safety report
     Drug & Alcohol Prevention Information distributed
     FERPA information distributed
     Publish and make available general school and financial 
aid information
     90/10 report (for proprietary schools only)
     Conferences and workshops put on by ED, State, Regional, 
National Associations and Vendors for training and networking
                             every 5 years
     Renewal of Program Participation Agreement (PPA)
     Master Plan review or Self-Study for re-accreditation
                                january
    This is an ideal timeline, not necessarily reality. Some items may 
slide into another month based on work load and individual office 
timelines. These are things to be thinking about and working on. Every 
office is different.
     Finalize awarding policies for the next academic year
     Finalize budgets (i.e. tuition & fees, room & board, etc)
     Train office staff on following year's awarding policies 
and file review procedures. Do this every year to ensure staff updated 
and trained. Things change year to year
     Financial aid processing begins for following academic 
year
     Communicate to students the timelines and deadlines for 
applying for aid for next academic year
     Process withdrawals and cancellations including refund of 
aid (R2T4)
     Processing of financial aid applications for winter or 
spring term starters
     Review & evaluate special circumstances and PJ cases for 
winter or spring term starters
                                february
    This is an ideal timeline, not necessarily reality. Some items may 
slide into another month based on work load and individual office 
timelines. These are things to be thinking about and working on. Every 
office is different.
     Receive and calculate tentative campus-based allocations 
by ED
     Use tentative allocations to set up budget for awarding 
campus-based funds
     Draft Cohort Default Rate sent to schools
     Submit correction of data, submit IDC and/or PRI challenge
     Submit appeal of campus-based program allocations due 
February 15th
     Communicate reminder to students about deadlines to apply 
for next academic year
     Work on processing files for next academic year
                                 march
    This is an ideal timeline, not necessarily reality. Some items may 
slide into another month based on work load and individual office 
timelines. These are things to be thinking about and working on. Every 
office is different.
     Final award notification for campus-based programs sent by 
ED for next academic year
     Finalize budgets for campus-based funds to be awarded for 
next academic year
     Communicate final budgets for campus-based funds to 
appropriate offices (Controller, Student Loan office if Perkins)
     Pell Grant Administrative Cost Allowance available
     Schedule annual audit for current academic year (typically 
over the summer at end of fiscal year)
     Work on processing files for next academic year
     For quarter schools work on processing applications for 
spring term starters
     Process withdrawals and cancellations including refund of 
aid (R2T4)
     Process Satisfactory Academic Progress report (for end of 
winter term)
                                 april
    This is an ideal timeline, not necessarily reality. Some items may 
slide into another month based on work load and individual office 
timelines. These are things to be thinking about and working on. Every 
office is different.
     Processing of financial aid applications
     Prepare for staff annual reviews
     Prepare for annual audit
                                  may
    This is an ideal timeline, not necessarily reality. Some items may 
slide into another month based on work load and individual office 
timelines. These are things to be thinking about and working on. Every 
office is different.
     IPEDS report due
     For private schools admissions deposits due for new 
students by May 1st
     Do annual staff reviews
     Prepare for annual audit
     Run SAP for semester schools for end of spring semester
     Continue processing of aid applications
     For some schools start of summer semester
     For some schools finalize office budget information for 
close of fiscal year
     For some schools finalize awarding aid information for 
close of fiscal year (depends on if summer is a header or trailer)
     Processing of aid applications
                                  june
    This is an ideal timeline, not necessarily reality. Some items may 
slide into another month based on work load and individual office 
timelines. These are things to be thinking about and working on. Every 
office is different.
     For semester and quarter schools run SAP report for either 
end of year or spring semester/quarter
     For some schools annual audit
     Closing date to request waiver of community service 
expenditure requirement
     End of federal fiscal year and end of award year
     Return excess Perkins cash on hand to ED
     Inventory and clearing out of files from office to storage
     Processing of aid applications
                                  july
    This is an ideal timeline, not necessarily reality. Some items may 
slide into another month based on work load and individual office 
timelines. These are things to be thinking about and working on. Every 
office is different.
     Finalize campus-based funds in preparation of fall FISAP 
report
     New federal award year begins
     Draw downs for new year can begin
     Report completion, graduation, and transfer out rates for 
general student body and athletes via IPEDS
     Direct loan reconciliation close-out
     Processing of aid applications
     For some schools annual audit
                                 august
    This is an ideal timeline, not necessarily reality. Some items may 
slide into another month based on work load and individual office 
timelines. These are things to be thinking about and working on. Every 
office is different.
     Dept of ED sends notification of additional available 
campus-based funds
     FISAP distributed to schools
     Campus-based reconciliation form due by ED
     Federal Perkins Safeguard Activity report due for prior 
year
     For some schools start of fall semester
     Process withdrawals and cancellations, including refunds 
of aid (R2T4)
     Review awarding policies and prepare preliminary awarding 
policies for next academic year (so Admissions recruiting staff have 
information for initial recruiting visits starting in September)
                               september
    This is an ideal timeline, not necessarily reality. Some items may 
slide into another month based on work load and individual office 
timelines. These are things to be thinking about and working on. Every 
office is different.
     For some schools start of fall semester/quarter
     Process withdrawals and cancellations, including refunds 
of aid (R2T4)
     Freeze statistical data for semester schools
     Work on statistical data for reports based on frozen data
     ED distributes supplemental applications for campus-based 
programs to schools
     Official Cohort Default Rates sent to schools
     Review data and initiate appropriate action and/or appeal 
to change Cohort Default Rate data and/or sanctions status
     Last date to send origination/disbursement records to COD 
for previous academic year
     Work on FISAP report (due October 1st at midnight)
                                october
    This is an ideal timeline, not necessarily reality. Some items may 
slide into another month based on work load and individual office 
timelines. These are things to be thinking about and working on. Every 
office is different.
     October 1st at midnight FISAP due
     Campus Security Report due to ED and students/employees
     Compile athletic program participation rates and financial 
support data (EADA report) and submit to ED
     Review previous year's awarding policies and application 
procedures
     Prepare application policies for the next award year so 
can prepare revisions to online applications and physical paper 
applications if necessary, so ready for application cycle in December 
and January
     Review informational publications
     Review of loan application and processing procedures so 
can update procedures for next academic year (including preferred 
lender list if applicable)
     Order FAFSA on the web brochures and pre-application 
worksheets if applicable
     Federal satellite video conference
     Surveys (Peterson's, Nacubo, etc)
                                november
    This is an ideal timeline, not necessarily reality. Some items may 
slide into another month based on work load and individual office 
timelines. These are things to be thinking about and working on. Every 
office is different.
     ED sends FISAP edits to institutions
     Regulations published by November 1st
     Finalize application and awarding policies for next 
academic year
     High School financial aid night presentations
     Communicate to students information about deadlines to 
apply for financial aid for next academic year and scholarship search 
tips (and scam information)
     Surveys (US News)
     Submit updated Perkins cash-on-hand on FISAP
                                december
    This is an ideal timeline, not necessarily reality. Some items may 
slide into another month based on work load and individual office 
timelines. These are things to be thinking about and working on. Every 
office is different.
     ED sends appeal procedures for campus-based awards to 
schools
     ED notifies institutions of needed hardware and software 
changes
     Institutions return any needed FISAP edits to ED
     High School financial aid night presentations
     Run SAP report for fall term
                                 ______
                                 
    Chairman Hinojosa. We welcome the National Association of 
Student Financial Aid Administrators' offer to help us.
    Next I call on Dr. Claude Pressnell.

   STATEMENT OF CLAUDE PRESSNELL, VICE CHAIRPERSON, ADVISORY 
               COMMITTEE ON STUDENT FINANCIAL AID

    Mr. Pressnell. Chairman Hinojosa and members of the 
subcommittee, on behalf of the Advisory Committee on Student 
Financial Assistance, I want to thank you for the opportunity 
to provide testimony on the barriers to college access and 
persistence for low-and moderate-income families.
    I am testifying today in my capacity as the vice chair of 
the Advisory Committee. In fulfilling our legislative charge, 
the Advisory Committee analyzes federal policy from the unique 
perspective of the student.
    Several Advisory Committee reports have found that barriers 
to college facing our nation's low-and moderate-income families 
can be grouped into four categories: first, financial barriers; 
second, inadequate academic preparation; third, poor and 
untimely information; fourth, the complexity of the application 
forms and process.
    First, let me begin with financial barriers. To view 
financial barriers through the eyes of a student, the Advisory 
Committee looks at the student work-loan burden to define what 
a true college cost is facing the families. The work-loan 
burden is also called net price or net cost, and it represents 
the total cost of attendance after subtracting grant aid from 
all sources.
    Between 1990 and 2004, the work-loan burden increased for 
all students, but especially those from the lowest-income 
families. This gap between grants and cost of attendance equals 
over 75 percent of the family income for the lowest-income 
families.
    Because of these financial barriers in the previous and 
current decades, millions of our nation's best and brightest 
students were and will be forced to alter their college 
enrollment and degree plans because of the lack of finances.
    Second, academic preparation is inarguably a key factor in 
the college access and persistence. Recent data show that 
between 1992 and 2004 there were increases in academic 
preparation as measured by courses taken. This is particularly 
true for low-income students. In spite of this, however, there 
have not been significant increases in college enrollment or 
degree attainment. These stagnant enrollment and attainment 
levels are directly tied to the increasing financial barriers.
    Third, information barriers also exist. The timing and 
quality of financial aid information is critical to college 
decision-making. The Advisory Committee has offered several 
recommendations for improving the quality and delivery of early 
financial aid information in our report entitled, ``The Student 
Aid Gauntlet.'' We continue to explore strategies for 
eliminating information barriers in our current Innovative 
Pathway study.
    However, we have found that in the face of the high work-
loan burden, early information is not enough. Once low-and 
moderate-income students are informed about their total 
financial aid package, they oftentimes discover that a 
shortfall in grant aid makes college expenses unmanageable.
    Fourth and finally, the complexity of the student aid 
process poses an unnecessary barrier for students. In 2004, 
members of this chamber tasked the Advisory Committee to 
identify those barriers and to make recommendations on ways to 
reduce them. Current proposed legislation in the House and 
Senate to amend the Higher Education Act addresses many of the 
Advisory Committee's key recommendations. However, these 
simplification improvements alone will not dramatically 
increase access if the work-loan burden levels remain high.
    In sum, these four barriers--financial barriers, inadequate 
academic preparation, poor and untimely information, and 
complexity of the application form and processes--can 
negatively impact access and persistence.
    Over the decade, financial barriers have grown and 
compounded the barriers to students by weakening incentives to 
prepare academically, compromising the effectiveness of early 
information efforts, and undermining efforts to simplify the 
student financial aid application process.
    In light of the pending HEA reauthorization, the Advisory 
Committee would like to offer a pragmatic, feasible policy 
recommendation that addresses each of these barriers 
simultaneously.
    Increase need-based financial aid is one solution that can 
stimulate increases in Bachelor Degree attainment among 
college-qualified high school graduates and increase the number 
of college-qualified students and forthcoming cohorts.
    Because ensuring access to college degree and attainment is 
not solely the responsibility of the federal government, the 
Advisory Committee recommends creating a national public-
private-federal-state partnership to coordinate and increase 
need-based aid from all sources.
    In such a partnership, federal matching grants would be 
provided to states as an incentive to coordinate with 
institutions and private organizations to guarantee Pell-
eligible students financial access to a 4-year college or 
university. With such assurance, students and family would know 
that adequate financial aid resources are there, and they would 
work hard to be academically prepared.
    One model of this partnership is currently included in the 
pending bipartisan Senate HEA legislation and is designated as 
grants for access and persistence in the ACCESS Act. This is 
sponsored by Senator Jack Reed----
    Chairman Hinojosa. Excuse me, Dr. Pressnell. I am going to 
interrupt you and say I am going to give you an additional 2 
minutes so that you can try to finish the Advisory Committee's 
six recommendations because that is very important.
    Mr. Pressnell. Well, thank you very much.
    With the grants for access and persistence in the ACCESS 
Act is sponsored by Senator Jack Reed. It is bipartisan 
support. It is co-sponsored by Senator Collins, Dodd, Kennedy, 
Murray, and Sanders. And we believe that this is a good first 
step toward leveraging scarce funding to lower the financial 
aid barriers for low-to moderate-income college-qualified 
students.
    In essence, what this partnership would do through, 
actually, in the Senate bill, would be to take the special LEAP 
money and provide that as an incentive grant pool that would 
pull together institutional need-based aid, as well as 
philanthropic support and possibly even corporate philanthropic 
support, to leverage then the scarce resources at the state 
level as well as at the federal level, to pull together to 
target that at Pell-eligible students that are college-
qualified to attend a 4-year university.
    So what we are trying to do through this proposal is to try 
to bring all the partners to the table to bring forth an 
aggressive, creative solution to our current crisis in terms of 
need-based aid for low-and moderate-income families.
    And so, on behalf of the Advisory Committee members, I 
thank you for the opportunity to come before you today. And we 
look forward to working with you to provide technical 
assistance on this matter and others as time moves forward.
    Thank you.
    [The statement and attachment of Mr. Pressnell follow:]
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
                                ------                                


           Advisory Committee on Student Financial Assistance

    Reauthorization Proposal: A Federal Partnership for Access and 
                              Persistence

    Summary: The proposal would forge a new partnership among the 
federal government, states, and colleges to create an assurance of 
access and persistence for low-income students. The proposal is 
necessary because college-qualified, low-income students face financial 
and procedural barriers to enrollment throughout the education 
pipeline. The proposal would attack this systemic problem by 
encouraging states to offer low-income students an early assurance of 
financial access to college, a simplified financial application 
process, and adequate grant aid to enroll and persist to degree 
completion. The proposal would also encourage colleges to provide 
support services and additional persistence grants to low-income 
students. The most effective early intervention programs have 
demonstrated that an early assurance of financial access has generated 
remarkable benefits for low-income students and their families: 
students who successfully complete early intervention programs are more 
likely to be academically prepared to attend college and more likely to 
enroll in college.
    Background: The Advisory Committee on Student Financial Assistance 
has outlined the access and persistence problems in its last two 
reports, Access Denied and Empty Promises. In summary, the Advisory 
Committee has found: (1) middle school students lack an assurance of 
adequate financial aid; (2) high school students face an overly complex 
financial aid application process and inordinately high unmet need; and 
(3) college students face an overwhelming level of work and loan burden 
in attempting to persist to degree completion. The Advisory Committee 
is convinced that progress is unlikely unless the Title IV access and 
persistence partnership among the federal government, states, colleges, 
and K-12 schools is boldly reinvigorated during this reauthorization.
    An effective access and persistence strategy must be 
multidimensional; it should contain three critical components: (1) An 
early assurance of financial access; (2) a simplified application and 
adequate grant aid; and (3) persistence grants and support services. An 
assurance of financial access to low-income middle school students 
would create incentives for students to aspire to attend college, 
enroll in early intervention programs, and prepare academically to 
attend college. A simplified application form that is aligned with 
existing federal programs would make eligibility more transparent and 
application less encumbered for high school students. Additional grant 
aid and support services at college would reduce low-income students' 
work and loan burden and improve the likelihood that they will enroll 
in college and persist to degree completion.
    Proposal: Congress should create a partnership that offers matching 
grants to states and institutions to form partnerships that promote 
access and persistence for low-income students. Congress could 
appropriate funds to states, especially those states that have a 
demonstrated commitment to early intervention leading to college 
access. States could have the flexibility to decide which low-income 
students to target the additional grant aid to, but could be encouraged 
to give priority to low-income students who have participated in a 
federal, state, community, or private early intervention program. The 
partnership could encourage states to provide low-income middle school 
students with an early assurance of financial access to a four-year 
college; it could establish a streamlined application process that 
included automatic eligibility, enabling states to notify every 7th 
grade student of his or her total drawing power on federal and state 
grant aid. The partnership would allow states to offer financial 
incentives, in the form of additional grant assistance, to high school 
students to participate in and complete early intervention programs. 
Participation in such programs will increase the likelihood that the 
targeted students will aspire to college and be academically prepared 
to enroll in college. The partnership could also encourage 
participating colleges to attract, retain, and graduate low-income 
students; institutions would receive matching funds to provide 
persistence grants and additional support services. Finally, the 
partnership could further reduce the work and loan burden of low-income 
college students by eliminating the student ``work penalty,'' whereby a 
student's grants decrease the more (s)he works to cover unmet need, and 
thus ensuring adequate grant aid each year of college.
    Key Features:
     The partnership could leverage additional federal funds 
with additional state and institutional grant aid through matching 
requirements.
     It minimizes structural changes to existing federal 
programs and does not create new federal programs to compete with those 
that already exist.
     It could leverage existing Title IV programs like SEOG and 
Work-Study to lower unmet need and increase enrollment and persistence.
     It could be scalable and data generating; the partnership 
could initially be implemented in a select group of states, or it could 
be gradually phased into every state.
     It could be internally accountable, holding participating 
students harmless against tuition increases and encouraging timely 
degree completion.
     Students could use their grant assistance at public and 
private accredited colleges.
     The federal government could encourage states to award 
available grant aid to students that participate in an early 
intervention program; programs that utilize strategies such as 
mentoring, counseling, academic support, providing financial 
information, involving parents, and visiting college campuses.
     The partnership could take advantage of existing early 
intervention programs such as TRIO, GEAR UP, I Have a Dream, and those 
operated by private (corporate and philanthropic) firms.
     The federal government could ensure consistency of grant 
aid each year of college by minimizing the current student ``work 
penalty,'' by which wages earned to cover unmet need reduce grant aid 
in subsequent years, as a means of encouraging persistence.
     Colleges could encourage academically qualified low-income 
students to attend their school by offering matching grant aid, and by 
providing support services that help students persist to degree 
completion.
    Benefits: The proposed partnership would allow the federal 
government to leverage existing Title IV programs to expand low-income 
students' access to college; thus, allowing the nation to produce more 
skilled workers. The partnership provides states with the opportunity 
to strengthen their need based grant programs to offset the rising tide 
of college costs. The partnership would also provide colleges with 
additional funds for persistence grants and support services. States 
and colleges would benefit from a student population that was more 
motivated, by an early assurance of financial access, to prepare 
academically and to persist to degree completion. Students of low-
income families would also benefit from an early assurance of financial 
access, as it would encourage them to have higher expectations to 
attend college and they would receive better information with which to 
make plans to attend college. Students would also benefit from the 
reduction of financial and procedural barriers to college access; 
students would receive a simpler financial application, a clearer 
articulation of the financial aid available, and consistent grant aid 
each year of college, through the elimination of the student ``work 
penalty.''
                                 ______
                                 
    Chairman Hinojosa. At this time, I would ask Luke Swarthout 
to proceed.

 STATEMENT OF LUKE SWARTHOUT, HIGHER EDUCATION ADVOCATE, U.S. 
                 PUBLIC INTEREST RESEARCH GROUP

    Mr. Swarthout. Chairman Hinojosa, other members of the 
committee, thanks for convening this important discussion 
today. I will be speaking on behalf of the U.S. Public Interest 
Research Group.
    USPIRG is a national network of state-based, non-partisan, 
non-profit organizations based in 30 states and working with 
students on over 100 campuses. Over the last decade, our higher 
education project has worked to represent hundreds of thousands 
of student members here in Washington, D.C., in urging for 
increased access to an affordable education.
    I am going to briefly summarize my written testimony and 
focus on two main challenges facing students: primarily issues 
of need-based financial aid and issues of rising student debt. 
I expand on these issues and others in my written testimony and 
would be happy to take questions on any of them.
    The goal of our financial aid system is to ensure any 
student has access to an affordable education regardless of 
their financial background. Unfortunately, recent studies, 
including those by the Advisory Committee, have shown that we 
are falling short of that goal, that there are hundreds of 
thousands of students every year who are academically qualified 
but who don't persist onto college primarily due to financial 
costs.
    Rising college costs and stagnant grant aid are having a 
real impact on college students, whether that is preventing 
students from going on to college or simply changing the way 
they progress through college. We are facing serious 
challenges.
    Many students are choosing not to start at a 4-year 
institution but rather start at a 2-year institution and 
progress along through that process. Other students are 
choosing to extend the period of how long it takes them to get 
through college. And while these may be ways to avoid debt or 
come up with available funds, it has the overall impact of 
decreasing graduation rates, which is something we should all 
be concerned by.
    Congress has the ability to take a strong step in solving 
these problems by increasing the maximum Pell grant award in 
the fiscal year 2008 budget. The maximum Pell grant award has 
remained stagnant for--up until this year, it remained stagnant 
for the last 4 years. And it is actually worth less than it was 
30 years ago.
    Last fall, the secretary of education's Commission on the 
Future of Higher Education recommended that the maximum Pell 
grant award be funded at 70 percent of the average 4-year 
college tuition. According to the American Council on 
Education, such an increase would peg the maximum grants at 
approximately $6,200. The commission report provides a useful 
framework to start thinking about where we need to be funding 
this important grant program.
    The second major financial challenge that I would like to 
address is the issue of rising student debt.
    As college costs have increased and more of the costs have 
been pushed onto the backs of students, we have seen more 
college graduates leaving school with serious amounts of debt. 
About two-thirds of students graduate with loans averaging 
about $19,000.
    But we have also seen in the last decade a seven-fold 
increase in the number of students borrowing above $40,000 in 
loan debt. Recent reports suggest that some students, from fear 
of this debt, particularly amongst first-generation students, 
will dissuade them from persisting on to college.
    And while more research needs to be done on the issue of 
access, it is quite clear that debt is having a serious effect 
on affordability. We released a report last year, the one that 
the chairman referenced, ``Paying Back, Not Giving Back,'' that 
found that 23 percent of public college graduates with loans 
had too much in debt to manageably repay at a starting 
teacher's salary. Furthermore, debt has been found to delay 
when graduates start families or are able to make purchases and 
investments like buying a home.
    We think that we need to expand and reform the income-
contingent repayment system. We are supportive of proposals 
like Congressman Petri's IDEA proposal and fair payment 
assurance, which is embedded in Senator Kennedy's Student Debt 
Relief Act.
    But beyond simply making debt more manageable, we need to 
take the steps to reduce the increased demand for debt burden. 
And certainly, what I talked about in terms of need-based 
financial aid will have an impact on that as well.
    A college education remains an incredibly valuable 
investment and accomplishment for American students, whether 
that is economic or intellectual opportunities open to them. An 
educated populace remains an incredible investment for our 
society, critical to our civic and social and economic health.
    But we do face real challenges. I have chosen to outline 
two here today. And we hope that the committee will look hard 
at serious reforms in the upcoming Higher Education Act 
reauthorization discussion to help reduce barriers and ensure 
access for all students to an affordable education.
    Thank you.
    [The statement of Mr. Swarthout follows:]

Prepared Statement of Luke Swarthout, Higher Education Advocate, United 
           States Public Interest Research Group (U.S. PIRG)

    U.S. PIRG is the federation of state Public Interest Research 
Groups--a national network of state based non-partisan, non-profit 
public interest advocacy organizations based inn 30 states. We work 
with students on more than 100 college campuses across the country. For 
more than a decade, our Higher Education Project has represented 
hundreds of thousands of college student members at the federal level 
by working to increase access to an affordable college education. On 
behalf of our members I want to thank you for convening this hearing 
and offering us the opportunity to testify.
    In my testimony I will focus on the issues and challenges that 
students and their families face as they apply to college and as 
students move through college. In particular, I will focus on places 
where federal policy affects students and their choices or on places 
where federal policy could help students and their families manage this 
process.
    I would like to highlight some of the principle challenges facing 
high school students as they apply to college: the lack of financial 
aid, an overly complicated process, and the need for additional 
information.
Grant Aid
    Our financial aid system is designed to ensure that academically 
qualified students are able to attend college regardless of their 
financial situation. The federal government plays a critical role in 
guaranteeing access to college for millions of low- and middle-income 
students through programs like the Pell Grant and Supplemental 
Education Opportunity Grants. Unfortunately recent studies suggest 
hundreds of thousands of students are unable to progress from high 
school to college because of a lack of financial aid.
    Students face real challenges paying for higher education. Rising 
college costs and stagnant need-based grant aid has put college out of 
reach for many students and families. For other students, cost has 
forced them to change how they progress through college, starting at a 
2-year institution rather than a 4-year college or extending their 
college career to limit loan debt or to simply come up with sufficient 
funds to pay their tuition bill.
    The Advisory Committee on Student Financial Assistance estimates 
that over the past decade between one million and 1.6 million qualified 
high school graduates did not attend college largely due to lack of 
financial aid. Their recent report, Mortgaging Our Future, estimates 
that between 1.4 and 2.4 million students will be similarly limited 
from attending college during the next decade for the same reasons. 
These estimates do not include the students who will choose to attend 
2-year institutions rather than 4-year colleges due to cost. We concur 
with one of the key conclusions of their report: we must increase need-
based aid from all sources--federal, state, institutional and private.
    Congress should take steps to increase funding for the Pell Grant 
in the FY08 budget. In real dollars, the maximum Pell Grant award is 
worth less than it was worth thirty years ago. Over the past five years 
the value of the maximum grant award has declined relative to inflation 
and the cost of college. The 2007 budget passed this February increased 
the maximum grant award by $260 and marked the first increase in 4 
years. Last fall Secretary of Education's Commission on the Future of 
Higher Education called for an increase in the maximum Pell Grant to 
70% of the average 4-year college tuition. According to a recent 
analysis by the American Council on Education that would set the 
maximum grant award at $6,200. The Commission report provides a useful 
measure in thinking about where the maximum Pell Grant level should be 
set to ensure access to college for all students.
Admissions and Financial Aid Process
    As a college degree becomes more critical, the process for applying 
to college and for financial aid has become more complicated. As 
teenagers, students and their families are faced with a series of 
meaningful and difficult choices--from what institution to attend to 
how to finance their education. Three choices in particular stand out: 
what school to apply to, how to fill out the FAFSA form and how to 
interpret the financial aid package.
    College Choice: Even as millions of new students apply to college 
and universities every year, there is a clear absence of centrally 
catalogued consumer information to assist families in their choice of 
college. This information, including cost of attendance, net price, and 
financial aid at the institution, would help students assess comparable 
institutions and provide common points of comparison between 
institutions. Adding more clarity to the cost of college on a user-
friendly website would help immensely as students and families navigate 
the college admissions process. Clear information would also help 
current students understand and track changes in cost over their 
college experience.
    The COOL (College Opportunities Online Locator) website seems a 
likely place to hold such information. However our interest is ensuring 
students have access to this information regardless of the location.
    FAFSA. The Free Application for Federal Student Aid is the federal 
form that students fill out to determine their eligibility for 
financial aid. The complexity of this form has led it to be compared 
unfavorably to federal tax returns. The consequence of this overly 
complicated form and application process is the underutilization of 
federal student aid. Approximately 1.5 million Pell Grant eligible 
students did not fill out the FAFSA form in 2004.
    There are many ways we can simplify this process. We support a 
recent proposal by Chairman Miller and Representative Emmanuel to use 
IRS data to pre-populate the FAFSA form with information taken from tax 
returns. According to The Institute for College Access and Success, 
nearly two-thirds of the asset or income related questions on the form 
could be filled out through such a process.
    Financial Literacy. The third procedural challenge facing students 
as they prepare to attend college involves understanding the various 
components of their financial aid package. As more students and 
families borrow to pay for college and as those loans increase in size, 
financial literacy has become more critical. With average student debt 
nearing $20,000 and a significant percentage of borrowers owing in 
excess of $40,000, the interest rates, terms and conditions of those 
loans will have a greater effect on the choices of graduates after they 
college. The distinction between federal student loans and alternative 
or ``private'' loans or whether a parent should take out a PLUS loan or 
a second mortgage are increasingly meaningful questions for American 
families. As we ask students and their families to shoulder a larger 
share of the burden of college finance we must ensure that they are 
prepared for this responsibility.
Textbooks
    For families who have budgeted for the cost of college, high 
textbook costs can be an unexpected shock once a student reaches 
campus. While textbook costs are rarely, if ever, factored into 
tuition, a recent PIRG study found that students pay an average of $900 
a year for college textbooks and that increased costs have been driven 
by such publisher practices as issuing frequent unnecessary new 
editions and bundling books with unnecessary additional materials. Such 
practices have driven the cost of textbooks to rise far faster than 
inflation and have undercut the capacity of students to resell their 
textbooks. For students at some community colleges, textbooks cost can 
represent up to 40% of the cost of college. As a result of rising 
prices, some students wind up sharing books or going without textbooks. 
At the instruction of Ranking Member McKeon and Representative Wu, the 
Advisory Committee on Student Financial Assistance is undertaking a 
study of potential textbook reforms. I would encourage the Committee to 
consider textbooks as a real financial challenge facing students and 
encourage them to take several steps to help students including 
mandating publishers disclose textbook prices when they market on 
campus.
Financing College: Work and Loans
    Rising college costs and lack of financial aid have caused students 
to work more and borrow more to pay for college. The former is 
undermining the college experience for millions of students while the 
latter is increasingly dictating what students can do after they 
graduate.
    Working during the semester and over the summer has long been a 
part of how students pay for college. Indeed the federal work study 
program is founded on the belief that some work may even be beneficial 
to a student's college experience. Unfortunately full-time students 
increasingly also work full-time jobs that undermine their studies and 
their college experience. Whereas work was once one piece of the 
balanced college experience, it is increasingly a burden particularly 
for students from low-income families.
    According U.S. PIRG's report At What Cost?, 74% of full-time 
students graduating in 2000 worked while attending school. Of these 
students, nearly half worked more than 25 hours a week. These students 
reported needing to work to pay for college. In addition, they reported 
that their work schedules had a negative experience on their grades, 
limited their class schedules and the number of courses that they could 
take and their extra-curricular experience. Increased reliance on work 
undermines the college experience for millions of students. In 
addition, it encourages students to take fewer classes in a semester 
and to extend college beyond 4 years. Students working full-time are 
significantly more likely to interrupt their college careers than those 
working only part-time.
    The challenge of balancing work and school weighs heaviest on low-
income students who can expect less financial assistance from their 
families. As a result, they bear a larger share of the cost of college 
and need to work longer hours than their peers from wealthier 
backgrounds. In addition, students from low-income families are more 
likely to describe their work as necessary to paying for their 
education than students from upper-income families. Congress can help 
these students by increasing federal student aid and helping to 
restrain rising college costs.
    The final major financial challenge facing current college students 
and their families is the issue of rising student debt. Over the past 
decade, as more of the cost of college has been passed onto students, 
borrowing has significantly expanded. Nearly two-thirds of four-year 
college students borrow to pay for college, and the average student 
graduates with approximately $19,000 in loan debt. Some recent reports 
suggest that fear of debt dissuades some segments of the population 
from attending college. While the impact of student debt on access is 
being explored, debt's impact on affordability and the choices that 
students make during college and after graduation is increasingly well 
documented. Student debt dictates the career paths that students can 
follow. According to a recent U.S. PIRG report, 23% of student 
borrowers at public colleges would have unmanageable debt on a starting 
teacher's salary. High student debt may dissuade graduates from 
starting a family or persuade them to delay major investments like 
purchasing a home.
    A college degree should be about opening doors for students, 
providing them with new opportunities whether intellectual, economic or 
occupational. As student debt expands and as more students turn to 
private loans to pay for college, we risk undermining that fundamental. 
Congress should reform and expand the income contingent repayment 
system for students to ensure that they can manageably repay their 
student loans without undermining the opportunity of their college 
education. We are support proposals such as the Income-Dependent 
Education Assistance Act introduced by Representative Petri and the 
language included in Senator Kennedy's Student Debt Relief Act under 
the heading ``Fair Payment Assurance.'' Beyond simply helping students 
manage debt we must take concrete steps to reduce the burden of 
borrowing facing recent graduates including meaningful increases to 
need-based grant aid.
    A college education remains an incredibly important personal 
accomplishment, associated with greater wealth, better health and 
increased civic participation. An educated populace remains a critical 
priority for our national civic, social and economic health. I have 
outlined some of the key challenges and issues facing students. I would 
encourage you to adopt key changes to the Higher Education Act to both 
help our nation's students and families and to keep our nation strong.
                                 ______
                                 
    Chairman Hinojosa. The final presenter witness will be 
James Boyle.
    You may proceed.

  STATEMENT OF JAMES A. BOYLE, PRESIDENT, COLLEGE PARENTS OF 
                            AMERICA

    Mr. Boyle. Thank you, Mr. Chairman and members of the 
subcommittee. I appreciate your inviting me to testify today.
    My name is Jim Boyle, and I am the president of College 
Parents of America, the only national membership organization 
for current and future college parents.
    Our group's mission is to empower parents to best support 
their children on the path to and through college. Much as AARP 
does for seniors, we aim to fulfill that mission by providing a 
three-pronged mix of advocacy, timely information and access to 
discounts, in our case, on college-related spending.
    College Parents of America is still relatively young, 
established in 2003. But the topics you are examining today--
barriers and solutions to paying for a college education--have 
been on the minds of parents since the first tuition checks 
were dropped in the mail a couple of centuries ago.
    For decades, of course, the barriers and solutions to 
paying for college were relatively simple. The only students 
who went to college were those whose parents could afford to 
pay for it. That is not an era that any of us would like to 
revisit.
    As college-going rates increased and schools, both public 
and private, multiplied, the issue of paying for college got a 
bit more complicated, and various solutions rose forth. 
Academic grants, athletic scholarships, support from local 
business or community groups all became ways to help young 
people attend the college or university of their choice.
    Since there is little time for a complete history of paying 
for college in America, I will jump to the 1970s when the 
foundation for student aid that still exists today was put in 
place.
    For some period of years, perhaps a decade, it was possible 
for a student to achieve a college degree with support from a 
mix of Pell grant, institutional aid, federal student loans, 
some work study, and compensation from a summer job. As a 1979 
graduate of Northwestern, I benefited from those programs 
myself.
    There were challenges to paying for college, to be sure. 
But they did not seem as insurmountable as the barriers for 
students and their families appear today.
    Parents of today's college students have seen their child, 
in many instances, break through the gauntlet of competitive 
college admission, only to arrive anxiously on campus, where 
there is no rest for the weary, with attrition levels in the 
double digits. Given this scenario, parents are naturally 
concerned about the status of their own college investment and 
whether the money spent is supporting their child's academic 
success in a safe, healthy learning environment.
    On our collegeparents.org Web site, we have a blog. In one 
of the topic areas, we ask parents to comment on how the cost 
of college affects their family.
    One posting from Lena began this way: ``The fetal 
position--that is what I revert to every year for 3 days, as I 
have to fill out FAFSA forms and loan applications for the next 
year. How will I ever get out of debt? I feel that question as 
I know now that I am digging myself deeper and deeper into a 
hole. I am in so far now, I have to just keep going and hope 
that the investment in my three children pays in the end.''
    Another parent named Ann wrote, ``I thought we had done 
pretty well saving for college in a 529 for our son, who is to 
be a freshman this fall. What an eye-opener the FAFSA was. It 
turns out we are expected to pay freshman year only every penny 
we have saved, an amount equal to 40 percent of our yearly 
income. I guess parents are supposed to stop saving for 
retirement, eat Ramen Noodles and turn the thermostat down 10 
degrees in order to meet the cost of college.''
    So what are the paying-for-college solutions that should be 
congressional priorities? The three legs of the stool--aid, 
loan, and tax policies--should each play a part in the crafting 
of those solutions.
    We believe the three principal ways that Congress can put 
college within more reasonable reach are by placing more 
federal dollars into grant aid, in particular, by raising the 
maximum level for a Pell grant, making the federal student loan 
program more family-friendly by increasing the limits on the 
amount that may be borrowed via federal student loan, and by 
increasing the subsidies directed toward both student and 
parent loans so that private loans are not utilized as much as 
they are today, and making permanent the now-precarious 
ability, due to expire again at the end of this year, for 
families to deduct a portion of college-related expenses and, 
while doing so, raising that deduction from its extremely 
modest $4,000 to a more reasonable amount of $12,000.
    I think a fair question to ask is, how can student aid 
account for less than 1 percent of the federal budget when more 
than 80 percent of the jobs that would be created in the next 
10 years will require a post-secondary education?
    Since there is a decidedly mixed message when it comes to 
state funding for higher education, we face a potentially 
massive college access crisis without a substantial federal 
investment in student aid. Federal student aid is more 
essential than ever as a means of ensuring that all of 
America's young people have a chance to achieve their 
potential.
    I thank you again for the opportunity to testify before you 
today and look forward to working with other members of the 
panel and those of you on the subcommittee.
    Thank you.
    [The statement of Mr. Boyle follows:]

            Prepared Statement of James A. Boyle, President,
                       College Parents of America

    Mr. Chairman and Members of the Subcommittee, thank you for 
inviting me to testify today. My name is Jim Boyle, and I am the 
president of College Parents of America, the only national membership 
organization for current and future college parents.
    Our group's mission is to empower parents to best support their 
children on the path to and through college. Much as AARP does for 
seniors, we fulfill that mission by providing a three-pronged mix of 
advocacy, timely information and access to discounts, in our case on 
college-related spending.
    College Parents of America is still relatively young, established 
in July 2003, but the topics you are examining today--barriers and 
solutions to paying for a college education--have been on the minds of 
parents since the first tuition checks were dropped in the mail a 
couple of centuries ago.
    For decades, of course, the barriers and solutions to paying for 
college were relatively simple--the only students who went to college 
were those whose parents could afford to pay for it. That is not an era 
that any of us would like to revisit.
    As college-going rates increased, and schools--both public and 
private--multiplied, the issue of paying for college got a bit more 
complicated, and various solutions rose forth. Academic grants, 
athletic scholarships, and support from local businesses or community 
groups all became ways to help young people attend the college or 
university of their choice.
    Since there is little time for a complete history of paying for 
college in America, I'll jump to the 1970s, when the foundation for 
student aid that still exists today was put in place. For some period 
of years, perhaps a decade, it was possible for a student to achieve a 
college degree with support from a mix of Pell Grant, institutional 
aid, federal student loans, some work-study and compensation from a 
summer job. As a 1979 graduate of Northwestern University, I benefited 
from those programs myself.
    There were challenges to paying for college, to be sure, but they 
did not seem as insurmountable as the barriers for students and their 
families appear today. And whether those barriers are real--or just 
perceived--either the reality or the perception can have a damping down 
effect on college-going rates, and college success rates too, as it 
becomes more difficult for families to meet--or think they can meet--
the cost of all four years of higher education.
    Parents of today's college students have seen their child, in many 
instances, break through the gauntlet of competitive college 
admissions, only to arrive anxiously on campus where there is no rest 
for the weary, with attrition levels in the double digits. Given this 
scenario, parents are naturally concerned about the status of their own 
college investment, and whether the money spent is supporting their 
child's academic success in a safe, healthy learning environment.
    The sticker price to attend college continues to go up at a much 
faster rate than the consumer price index, and that causes great 
angst--and bewilderment--for parents across the country. Let me give 
you two examples of parent reactions.
    On our collegeparents.org Web site, we offer a blog called 
``Hoverings,'' with its playful title meant to be a tongue-in-cheek 
reference to the term ``helicopter parents,'' which seems to have taken 
hold in the media as a way of describing today's college moms and dads. 
The blog covers some serious issues, however, and in one of our topic 
areas we asked parents to comment on how the cost of college affects 
their family.
    One posting, from Lena, began this way: ``The fetal position: that 
is what I revert to you every year for three days as I have to fill out 
FAFSA forms and loan applications for the next year. How will I ever 
get out of debt? I feel that question in the pit of my stomach as I 
know that I am just digging myself deeper and deeper into a hole. I'm 
so far in now, I just have to keep going and hope that the investment 
in my three children pays in the end.''
    Another parent, named Anne, wrote: ``I thought we had done pretty 
well saving for college in a 529 for our son who is to be a freshman 
this fall. What an eye-opener that FAFSA was! Turns out that we are 
expected to pay, freshman year only, every penny we have saved, an 
amount equal to 40 percent of our yearly income. I guess parents are 
supposed to stop saving for retirement, eat Ramen noodles and turn the 
thermostat down 10 degrees in order to meet the cost of college.''
    The bottom line is that college costs are a barrier for the vast 
majority of parents and students because the dollars required to meet a 
school's financial expectations are often far above and beyond what is 
available in a family's monthly budget.
    Since this is a hearing on both barriers and solutions, I won't 
spend any more time now bemoaning the situation in which we, as a 
nation, find ourselves. We should be turning to solutions, and today's 
conversation can be a significant step in that direction.
    There is every reason to get started ASAP. There is overwhelming 
evidence that a college education helps to create a more productive 
workforce and a more informed and active citizenry. It may seem 
obvious, but I think it is always worth pointing out the nation's 
economy and security depends on increasing the ability of future 
generations of students to obtain a college degree.
    So what are the paying-for-college solutions that should be 
congressional priorities? The three legs of the stool--aid, loans and 
tax policies--should each play a part in the crafting of those 
solutions. Not all are within the purview of this committee, or this 
committee alone, but each can play an important role in helping 
families to meet the high cost of college.
    College Parents of America believes that the three principal ways 
that Congress can put college within more reasonable reach are by:
    1. placing more federal dollars into grant aid, in particular by 
raising the maximum level for a Pell Grant;
    2. making the federal student loan program more family-friendly by, 
for example, increasing the limits on the amount that may be borrowed 
via a federal student loan and by increasing the subsidies directed 
toward both student and parent loans; and
    3. making permanent the now-precarious ability for families to 
deduct a portion of college-related expenses and, while doing so, 
raising that deduction from its extremely modest $4,000 figure to a 
more reasonable amount of $12,000.
    I think a fair question to ask is how can student aid account for 
less than one percent of the federal budget when more than 80 percent 
of the jobs that will be created in the next 10 years will require a 
postsecondary education?
    Maybe not a fair question, at least for this committee, relates to 
the provisions in the tax code on tuition tax deductibility, as 
compared to some other federal tax deductions. And that question would 
be: if the tax code is supposed to reflect our society's values, how 
can we look ourselves in the mirror when a $100,000 luxury SUV can be 
deducted if used for business purposes, yet only $4,000 of college 
expenses are available for deduction?
    Since there is a decidedly mixed message when it comes to state 
funding for higher education, we face a potentially massive college 
access crisis without a substantial federal investment in student aid. 
Federal student aid is more essential than ever as a means of ensuring 
that all of America's young people have a chance to achieve their 
potential.
    At College Parents of America, we are attempting to do our small 
part to educate parents about the various options for financing 
college, so that no doors of educational opportunity are closed due to 
real or perceived lack of funding choices. Here in the United States 
Congress, you can act to push those doors wide open, and I encourage to 
work together, in a bi-partisan fashion, to begin to make that happen.
    Before I close, and join with my fellow panelists in taking your 
questions, I want to say a few words about the recent student loan 
scandals, which I know that you examined in detail last week in a 
hearing with Attorney General Cuomo and which you will be pursuing some 
more next week in your planned session with Secretary Spellings.
    There is plenty of blame to go around in the whole sordid affair, 
and it is truly a shame because I believe nearly all of the individuals 
who serve as financial aid administrators, and who work for student 
loan companies, do so because they are genuinely committed to helping 
to make it possible for young men and women to attend college.
    While further investigation may prove otherwise, I believe that a 
few bad actors have taken a system that, for the most part, works well, 
and made it look woefully inadequate and unfair to student and their 
families.
    Amidst all the clouds, however, there is a bit of a silver lining 
as I believe that the scandal will accelerate an inevitable 
``consumerization'' of the student loan business, helping to set a more 
desirable stage where students and their parents are in the driver's 
seat when it comes to loan choices.
    Thank you again for the opportunity to testify before you today. I 
know that various pieces of legislation have been introduced, on both 
sides of the aisle, which are intended to break down barriers and 
provide solutions for students and families who are struggling to pay 
for college. In my limited time, I chose not to address any single one 
of those bills, but instead to broadly address the topic at hand. As we 
continue our discussion today and in the months ahead, I am pleased to 
offer my views on pending legislation, and to join with you, as 
appropriate, in communicating progress on those bills to current and 
future college parents across the country. I look forward to working 
with you.
                                 ______
                                 
    Chairman Hinojosa. Thank you, each and every one of you.
    We are going to proceed then with questions, and I am going 
to be the first one. I want to address my first question to 
Luke Swarthout.
    You mentioned that students should have more structured 
financial literacy opportunities as they plan for college. Is 
this a significant issue as you speak with students across the 
country?
    Mr. Swarthout. I think certainly financial literacy is an 
issue facing students as they try and navigate the FAFSA, as 
they try and make decisions about what schools to attend and as 
they try and think about what a reasonable amount of debt 
should be.
    Experts on financial advice sort of look at the 
preparedness that high school students enter with, and even 
their parents enter this process with a kind of a gap. So I 
think there is certainly an issue that we see from students all 
across the country.
    Chairman Hinojosa. There is no question that it is very 
important, after listening to you and hearing last week the 
head of the Federal Reserve, Bernanke, talk about this and the 
importance of being able to put all students, high school and 
college, through this program. And I want to tell you that Mrs. 
Judy Biggert and I are co-chairs of the House Financial 
Literacy Caucus and would be pleased to work and follow-up with 
your organization.
    My next question to you--please answer it as brief as you 
possibly can. Some students start at 2-year community colleges, 
was part of your statement. And we know that some take 6 to 10 
years to get their Bachelor's Degree. Tell us what two 
solutions do you recommend to help students graduate in 4 to 6 
years.
    Mr. Swarthout. One piece of that is to increase financial 
aid so students who are eligible to attend 4-year institutions 
are able. And then I think Congress could help matriculation 
between 2-year and 4-year institutions by encouraging schools 
to have matriculation agreements that allow for the easy 
transfer of students from starting 2-year institutions into 4-
year institutions.
    Chairman Hinojosa. My next question is to Jim Boyle.
    We are not the Ways and Means Committee, as you well know. 
But one of your recommendations is for us to make federal loan 
programs more family friendly by increasing subsidies directed 
toward both the students and parent loans. Would you elaborate 
on that recommendation?
    Mr. Boyle. The explosion of debt for families has, of 
course, occurred in the private loan arena, particularly over 
the past 5 years and certainly over the past decade. And so, 
the recommendation is that if there is increased federal 
subsidy for federal loans and increased investment and a 
raising of the limit on federal student loans, then more of the 
borrowing can occur under that program, which offers greater 
protection to families.
    The reality is that the amount of money able to be borrowed 
under a federal student loan today is only a fraction of the 
real cost of college for most families. And then they 
necessarily turn to these private loan alternatives.
    Chairman Hinojosa. You closed by saying that we face a 
potentially massive college access crisis without a substantial 
investment in student aid. I couldn't agree with you more.
    And is there any way you and your organization can help us 
get that particular message to the president, the 
administration, especially to the secretary of education, so 
that we can maybe solve this problem?
    Mr. Boyle. Sure. We stand ready to work with you to do 
that.
    I compared our organization to AARP at the top of my 
statement. We are a little bit smaller than AARP. However, 
there are actually 35 million families who fit into our 
category of being current or future college parents, exactly 
the same number that are members of AARP. And so, our goal is 
to mobilize those families to get that message across to you 
and members of the administration.
    Chairman Hinojosa. My last question is to Dallas Martin.
    You correctly pointed out that your membership has to 
administer large and complex programs funded by the government 
with limited federal resources and likewise, limited resources 
from the institutions.
    Do you have some suggestions on how you would--or maybe you 
want to submit in writing--ideas for us to consider, as to how 
the government can better support the workforce that directly 
impacts our students and their families?
    Mr. Martin. Well, Mr. Chairman, let me say that, you know, 
first and foremost, our highest priority is obviously providing 
need-based assistance to the students, because that is first 
and foremost.
    But the people that we represent and others that work with 
us, including our colleagues in the TRIO programs and GEAR UP 
and so on, are very important, in terms of being the 
individuals that are out there to assist families in finding 
out about these opportunities.
    Unfortunately there are many families in this country, 
particularly low-income students, first-generation, that are 
unaware of many of the programs that are available.
    We work, for example, with a program that is sponsored by 
the Lumina Association called College Goal Sunday. And in that 
program, one of the things that we do across the country--we 
have 38 states now that participate--is we try to go out and 
work with families to not only explain about financial aid 
programs, but to help them fill out the FASFA. And we do this 
in cooperation with these kinds of things.
    But many times we are dealing with volunteers. We also use 
a lot of student help and others that are in community groups.
    So one suggestion that I would make is an issue that we had 
back in 1980, and that was, the Congress had enacted at that 
time a program to provide training and financial aid and 
student support services. This was a provision that was enacted 
at that time but was never funded.
    The bill at that time asked for an annual appropriation of 
$1 million to do this across the country through a variety of 
different programs. It is no longer there, but it was an 
attempt at least, even back then, to look at this need. The 
need is even greater today.
    So that would be one suggestion. But I would be happy to 
try to provide you with some other recommendations as we go 
forward, Mr. Chairman.
    Chairman Hinojosa. If you can give those to us in writing, 
I would appreciate it very much.
    Mr. Martin. You bet.
    Chairman Hinojosa. I am going to now go to my friends on 
the other side of the aisle. And by special request by the 
ranking member, I am going to be going out of order. There are 
some who have other committees that they need to get to. So I 
am going to follow Ric's suggestion and go to Congressman Petri 
for his questions.
    Mr. Petri. Thank you very much, Mr. Chairman.
    I have a couple of questions. The first is for Mr. 
Swarthout.
    And I thank you for briefly referencing in your testimony 
expanding opportunities for income-contingent repayment.
    As you are probably aware, a number of other countries that 
have instituted student loan programs to help kids have access 
to higher education and pay for it, including England and I 
think Australia, have also put in place systems where people in 
those countries are able to repay their student loans by 
withholding directly to their inland revenue services.
    I have introduced legislation to do that in the United 
States that would cap the obligation a person would have at 15 
percent of their after-school income. And that would eliminate 
the problem of default and poor credit rating. And it would 
also give people the opportunity to do low-income work to 
prepare for maybe more lucrative careers later. And it would 
save the government collection expenses and payers a lot of 
aggravation.
    I wonder if you could expand on that idea, and if you have 
had a chance to discuss it with students, if there is interest 
out there, whether you think people would participate.
    It is already done on a voluntary basis privately. But this 
would have a number of advantages, I think.
    Mr. Swarthout. Certainly. And I referenced this in my 
testimony.
    I think as student loans become a larger piece of how we 
ask students to pay for college, a system that would assure 
students that they can pursue their personal goals, their 
personal careers without fear of unmanageable debt would be 
something that students would greatly appreciate and that 
would, I think, give them more confidence as they are apt to 
take out increasingly large loan burdens.
    I would caution to say that we don't use the development of 
some good reform as a way to load more onto the backs of 
students. But I think this is something that would be very 
popular with students and an incredibly necessary reform as 
more students take out larger debt.
    And I thank you for your work on this.
    Mr. Petri. A question for Mr. Martin, which, really, it 
refers to this sort of elephant in the room right now. And that 
is all the newspaper stories and attention that have been 
focused on ties and arrangements between private lenders 
largely and financial aid administrators and schools.
    And I wonder if you have any comments on your 
organization's consideration and then voting down efforts to 
adopt gift and ethics rules a few years ago and also on the 
practice of accepting large amounts of money from different 
private student loan lenders to pay for conferences that your 
organization puts on for lenders.
    Mr. Martin. I would be happy to respond to that, Mr. Petri.
    Yes, let me, first of all, say that obviously we regret 
seriously some of the things that have come to light recently 
and what we believe is misbehavior on the part of a few 
individuals and very poor judgment.
    Let me say, in terms of--you referenced the question about 
our board voting down a particular thing on a ban on what 
should be a limit of $50 at the time, which came as a 
recommendation from a reauthorization committee that we had 
before the full board.
    There were a number of people that looked at this. And it 
was a very close vote. But some people said, you know, ``We 
think we are ethical. We don't need a limit on this. We know 
what is right and what is wrong.'' There were other people that 
felt that the limit was too generous. We had some people who 
thought it wasn't maybe enough.
    It went back and forth. And obviously like in any 
democratic body when you have a board of directors, people are 
going to differ. And they made that decision.
    But that aside, as far as what we are doing, we have been 
very concerned for a long time about what is going on in those 
relationships. We have talked about that. Even as our own 
association--yes, it is true that we do accept sponsors at many 
of our events and receive those for our conferences. We believe 
that these are business partners that are important to us.
    The monies that we generate off of part of that and some of 
the monies that come out of our conferences and stuff are used 
to do things like the outreach programs that I talked about, 
training the financial aid administrators, and other kind of 
things that we think are very positive.
    On the other hand, at our recent board meeting, we looked 
at a lot of this. We were very concerned. And so, our board of 
directors approved a resolution not only pointing out that we 
don't accept or condone these actions, but in that resolution, 
we agreed to do four things, which we are currently doing and 
taking very seriously.
    The first is for us to go back and review, even though we 
have had a statement of ethical principles for a long time--is 
to develop a new code of conduct to further define what is and 
is not acceptable behavior on behalf of financial aid 
administrators.
    Second, that code of conduct also goes forward and simply 
says that we want to review the association's business 
practices, what are our relationships with our business 
partners, which will address the very issues you are talking 
about, about sponsorships and so on.
    Third, we want to make certain that then, once this code is 
developed, that we go out and provide an educational forum so 
that all of our people understand this and that we are serious 
about this, this is what we expect of people, of our 
association.
    And last, we ask every institution to sit back, take a 
review of their own operations and what they are doing on their 
own campuses today, to make certain that they are operating 
with transparency, that they are putting students' needs first 
and that they are doing this in an honest, ethical, 
straightforward way.
    Chairman Hinojosa. The time is up. And I would like to, at 
this time, recognize the gentleman from New York, Congressman 
Bishop.
    Mr. Bishop. Thank you, Mr. Chairman. Thank you very much 
for holding this series of hearings.
    And thank you all, to the panel, for your testimony.
    At the risk of over-generalizing, it seems to me that the 
whole issue of affordability rests on three broad principles. 
One is that institutions price themselves in a responsible 
fashion. The second is that there be adequate sources of 
assistance available from the federal government, from state 
governments, and from the institutions themselves. And then the 
third is that the needs-analysis system that measures the 
family's ability to pay be one that does so in a reasonable 
fashion.
    So I guess my question would be to Dr. Martin.
    Do you think our current needs-analysis system represents 
an accurate, realistic measure of a family's ability to pay? 
And if not, what recommendations would you provide to change 
it?
    Mr. Martin. Mr. Bishop, let me say that it is always 
interesting how we look at this, in terms of who does that. You 
know, I have had some of my members that have been critical of 
some of the liberalizations that have been made to the need 
analysis over the last few years of where you don't look at the 
overall financial well-being of a family by taking out home 
equity or other kind of things. But on the other hand, I think 
it is--you know, the response is people say, ``Well, it is not 
reasonable for me to have to sell my home in order to send my 
son or daughter to college.'' So I think we have to balance 
both of these.
    I would say I think there are some further improvements. 
For an example, I think we have put some disincentives right 
now into the need-analysis systems. One thing that we have 
recommended further refinement and improvement on, and we have 
made a little progress in, is HERA.
    But the other thing that I would do is I think right now 
asking the assessment rate on student earnings, for an example, 
is too high. I mean, students that are out there working to do 
this are doing that primarily for their own existence and so 
on. And then to have an assessment rate that you are supposed 
to save X percent of this so that you can go back to school 
just doesn't make a whole lot of sense.
    And so, that is one area that I would hope that we would 
examine.
    Mr. Bishop. Let me maybe sharpen the question a little bit. 
I think in 2005 tables were changed, the net effect of which is 
that about 80,000 students lost their eligibility for Pell and 
about 1 million students had their Pell eligibility and other 
Title IV eligibility affected.
    Mr. Martin. This----
    Mr. Bishop. Let me just--would you recommend that we redo 
or undo that change?
    Mr. Martin. Absolutely. That was a change in the state tax 
tables that caused that.
    Mr. Bishop. Yes.
    Mr. Martin. Place-to-place differences. And we have even 
proposed other solutions of a better way to look at that for 
equity.
    Absolutely, I would strongly recommend you do that.
    Mr. Bishop. Thank you very much.
    Mr. Swarthout, you made several references in your 
testimony to work and how work might be a disincentive. My 
experience has been that students who work on the campus tend 
to do better in class. And I think there is a fair body of 
evidence that suggests that students who work on the campus 
persist to graduation in greater numbers.
    Where is the breaking point? I mean, if, for example, we 
were to significantly increase college work study funding, 
something we have not done I think in 5 or 6 years, so as to 
encourage more on-campus jobs, might we be solving two 
problems?
    Mr. Swarthout. I refer to this in my testimony. I think 
that we concur that some work is good for students. What is 
concerning to us is the growth in the number of students who 
are full-time, full-work students.
    Whether that breaking point is more than 25 hours a week, I 
think it would be hard for me to see a student working more 
than 25 hours a week and still getting the most out of college.
    So to be clear, I don't exactly know where that breaking 
point it. I think what we would be supportive of is efforts to 
increase work on campus, and provided that we are mindful that 
pushing students to take up too much work undermines their 
ability to study and get the most out of college.
    Mr. Bishop. Okay. I have tons of questions, but one last 
question for Dr. Pressnell.
    You make reference to one of the six recommendations that 
you would have for the Higher Education reauthorization, that 
we would work to reduce the financial barriers to transfer from 
2-year institutions to 4-year institutions.
    I am assuming when you make reference to financial 
barriers, you are talking about non-acceptability of credit. Is 
that----
    Mr. Pressnell. Well, actually we are referring in 
particular to the financial barriers. Most of the financial aid 
programs tend to be centered toward students that are incoming 
students, so usually the freshman year.
    Where there is a lack of financial assistance, tends to be 
at that transfer point. So, for instance, those students who 
desire to get a 4-year degree but may start at a 2-year 
institution, their persistence to and the completion of the 4-
year degree is exceptionally low. And part of that is 
attributed to the fact that there are not the financial 
assistance programs available at that transfer point.
    So it is not even so much the transfer of credits. There 
are some very innovative approaches that are going on with 
articulation agreements that we have seen across that there is, 
in particular, a financial barrier for the community college 
students to enter into that 4-year institution at that 
sophomore or junior level.
    Mr. Bishop. Okay.
    Thank you, Mr. Chairman. My time is up. Thank you.
    Chairman Hinojosa. Thank you.
    At this time, I would like to recognize the congressman 
from Delaware, Michael Castle.
    He is gone? Okay. Maybe he will return.
    At this time, I would like to recognize the congresswoman 
from Illinois, Judy Biggert.
    Mrs. Biggert. Thank you very much, Mr. Chairman. Thank you 
for holding this hearing.
    I would like to kind of start at the beginning maybe, and 
that is savings. I think in our country our savings rate is a 
negative-1.1 percent.
    How could we, you know, help people, you know, to save the 
money to start out?
    I know there are a lot of states who have a college fund 
that parents, grandparents can put money into as young as when 
a child is born. And I have another bill, 401(k) Kids, which is 
to make it a federal program that you could put $2,000 a year 
into the college fund for a child. And that would include 
grandparents, aunts and uncles. And it would not be tax-free 
dollars, but in taking the interest out, which the interest 
would not be taxed. And it could be used for college.
    If they didn't spend it all--but I think, with the price of 
colleges these days, that it certainly would be gone--but it 
could then be used to buy a first house or for retirement.
    Do any of you see that as feasible? Are people doing that 
today so that they will have the money for colleges?
    Mr. Martin. Ms. Biggert, let me just say that I think 
anything that we could do to encourage families that have the 
ability to save, we should be doing so. I think the 5239 plans, 
for an example, have proved to be very successful in a lot of 
places.
    Now, there are a few states that have had trouble with part 
of their funding and how they have done that in paying off. But 
I think overall that is an excellent choice.
    Again, I think one of the changes--going back and talking 
about need analysis. We have proposed that we treat that asset 
differently. Don't count it as a student asset, but count it as 
a parent's asset so it is not going to be charged as much. So 
those are kinds of things that encourage families to save.
    But let me also just be very clear. We also know that we 
have many, many families in this country that, in spite of 
their wanting to save or do it, they simply do not have the 
means to do so. And many of them have children who are very 
qualified who would benefit from college.
    So for families that can save, I agree; we ought to be 
encouraging them as much as we can. But we also have to 
recognize that some families, no matter what we do, are going 
to still need extra help.
    Mrs. Biggert. And even with the 2-year colleges now, I 
think in Illinois we see that some of those schools are larger 
than the biggest university in the state because people just 
have to go there. But even those colleges are getting so 
expensive that it is very difficult for them.
    Mr. Boyle, do you have any comment on this?
    Mr. Boyle. Yes, well, I think you are going to start to see 
the impact of savings plans in a positive way in the next few 
years because they are still relatively young. And so, there is 
little comfort to parents who have kids in college today 
because they really didn't have enough time to save a 
substantial amount.
    I would say an issue, however, that certainly pops up with 
current college parents is a perceived unfairness when it comes 
to savings. I have got, you know, pages and pages of entries 
from parents on our list-serve going through this year's 
financial aid cycle where they believe that it is unfair that 
they have saved for college and then they learn about 
scholarship money being doled out to families that didn't save. 
And they sort of wave their hands and say, ``Why did I bother 
saving? It is just coming back to bite me.''
    So I think there is a communications issue for schools to 
deal with that. And it is caught up in a whole swirl of 
perceived unfairness issues when it comes to merit aid and 
other decisions that are at the discretion of the financial aid 
office.
    Mrs. Biggert. Well, right now we are dealing with looking 
at getting, for example, teachers to go to rural areas, or we 
need more math students and more math teachers and more 
engineers, so that we are saying, ``Well, your debt will be 
either taken care of, or at least part of it will be dissolved, 
if you give so much time to go to these areas.''
    Do you see that happening? Have students taken advantage of 
this? Is that working?
    Mr. Martin. Well, I could tell you that if you--well, 
actually there was an article in the paper today that talked 
about the government's loan forgiveness program and some of the 
successes of people that have gone on in the government because 
of their forgiving loans and stuff of people to go into public 
service.
    If you look at, overall, the effects of loan forgiveness 
programs, however, in terms of the percentage of people that 
benefit by them and that stay in those professions, whether it 
is education or other kinds of public service, the percentage 
that actually take advantage is fairly low in terms of the 
offerings that are out there.
    You know, I am not saying that there is not some success. 
But it hasn't been as successful as I think many of us had 
thought they would be through the years.
    And I am talking going back to 1958 with the national 
defense student loan and the forgiveness programs there. And I 
have watched it with every loan program since, and they all 
have a similar pattern of history.
    Mrs. Biggert. Thank you.
    I yield back.
    Chairman Hinojosa. Dr. Pressnell, can you add to the answer 
to the question that Judy asked?
    Mr. Pressnell. You know, it is interesting. I think we are 
seeing more of those programs actually come about. States are 
starting to take a little bit more action in trying to address 
these particular shortage areas through these types of 
programs.
    One thing that I--if I could go back to your question about 
the savings issue, I really want to echo what Mr. Martin said 
about encouraging everyone to save as early as we possibly can.
    So I think we have a number of compounding problems. We 
don't have early enough information about those two at the 
appropriate age level, so students at junior high, students in 
high school and so forth and with parent information. Then we 
have also exposed a couple of fundamental issues with the 
formula, the FASFA, such as how are those savings plans treated 
in the need-analysis formula. And the Advisory Committee, as 
well, has offered some solutions to that that would encourage 
savings, but it would also, though, assess the earnings off of 
that that is applicable to that particular college year, so 
those particular expenses. So you don't go and assess the 
entire corpus against the family, but you do assess what is 
available to them.
    And the other is back on the work-loan burden, the comment 
about having more college work study. The big advantage of the 
college work study program, as it deals with the FASFA, is that 
federal college work study is not counted against you on the 
FASFA. But if you work off-campus, that income is assessed 
against you.
    And so, the Senate has currently proposed increasing the 
income protection allowance. We would support that.
    The silver bullet for this, however, and happens to be 
quite costly, is that you would hold the student earnings into 
the parents' income and you would just count it all as one 
particular asset at the same rate. Because student earnings are 
assessed at a higher rate than the parental earnings.
    So there are some solutions that have been recommended. 
They do have price tags as well that appreciate your 
observations on.
    Mrs. Biggert. Thank you.
    Chairman Hinojosa. At this time, I would like to recognize 
the gentleman from Kentucky, Congressman Yarmuth.
    Mr. Yarmuth. Thank you, Mr. Chairman.
    Dr. Pressnell, your answer there segued nicely into a line 
of questioning that I wanted to discuss.
    During the recent recess, we conducted two forums in my 
district: one, a higher education forum, where we talked to 
college officials, loan officers and so forth, financial aid 
officers; and also a job development forum, where we also 
talked about the relationship between the education system and 
job growth.
    And while everybody talked about the need for more money 
and increasing the Pell grants and all the things we have 
talked about today, there was a common theme that came up that 
talked about structural problems in all of our financial aid 
programs that were barriers to access and to completion; 
talking about the fact that if you were eligible for Perkins, 
you are not eligible for Pell, that some programs don't pay for 
summer school, that some of the non-traditional formats of 
instruction where they are shrinking the education module are 
not accommodated by different financial aid programs.
    Is this something? Are these types of structural problems 
things that you have seen? And if they are, would you either 
disabuse me of that notion, or would you just elaborate on 
maybe what some other of these structural problems might be?
    Mr. Pressnell. Well, I believe the Advisory Committee has 
offered a number of comments, especially in the report, 
``Student Aid Gauntlet,'' on what can be done with the FASFA, 
not only to simplify it in terms of being more user-friendly, 
moving more toward technological solutions with the FASFA, but 
as well dealing with some of the issues, in particular, how 
they impact low-and moderate-income families around student 
work issues, in particular, trying to take a look at increasing 
the auto zero and the simplified needs test for those families 
that are already in federally means tested programs.
    So we have addressed some of those structural issues that 
we do believe will help address some of those solutions.
    The federal government, the programs like the Pell grant, 
the campus-based aid programs, the TRIO programs and so forth, 
are really proven and tried programs. And they are affecting 
the appropriate populations. The Pell grant program definitely, 
within the right scope, is hitting especially the low-income 
and moderate-income families.
    The campus-based aid programs, again, are structurally 
sound in that it penetrates down to the level of the counselor 
and the family and allows some discretion in that based on Pell 
eligibility to increase some of those aid programs.
    The recommendation that I made in my comments about 
creating a partnership, I think, might help further some of 
those solutions. The LEAP program and the special LEAP program 
is already a federal model of the federal government partnering 
with state. And if you then can bring more people such as your 
corporate partners, your foundations that are interested in 
helping low-to moderate-income families and begin to pool those 
resources with institutional aid, then that puts more in there 
to reduce some of those burdens.
    But you are right, it is going to take multiple strategies 
to ultimately address this. You are going to need strategies 
that address the structure, address the formula slightly, but 
also maybe make some programs more robust.
    Mr. Yarmuth. We have, quite appropriately, I think, focused 
to a large extent on high school issues and, kind of, the 
traditional student. But in Kentucky, we have a half-million 
adults who have some college education, dropped out for a wide 
variety of reasons, and who are out there and would love to 
have the opportunity to complete their college education. And 
that is a half-a-million people who could better their lives 
and grow the economy, are important to Kentucky and virtually 
every other state.
    Are there things that you could recommend that we might do 
to address the problem of the adult student who would like to 
complete a college education he or she had to desert?
    Mr. Pressnell. Well, I think that, from a financial aid 
standpoint, I think that we really need to enable our financial 
aid directors to feel more freedom in exercising professional 
judgment so that they can base their aid on expected family 
income.
    Now that is available to them, but there is some hesitancy 
among some financial aid directors to exercise that too 
aggressively. And some of that is appropriate. But usually it 
tends to penalize your non-traditional students that are doing 
just what you said, where last year's income, which is what the 
system is based upon, is not reflective of their present 
situation as they are about to enter into college.
    I think, as well, encouraging states to make sure that 
their financial aid programs give allowances for the non-
traditional students. And I know our state, in particular, 
Tennessee, is trying to take a look at how their financial aid 
programs are also geared toward those non-traditional students. 
So you have that.
    Then, again, at the institutional level, it deals with 
programmatic flexibility, evening courses. And I think you are 
finding a lot of institutions are moving in that direction, 
online solutions as well as accommodating their schedules.
    Mr. Martin. Mr. Yarmuth, could I also just say to you that 
you talked about--I think part of it, again, is making certain 
that the adults have the information about what is available, 
too, because many of them don't know.
    The second thing you mentioned is structural problems. Let 
me give you an example. I have worked with situations of where 
it is not unlikely that your state people get laid off from 
work. They lose their job. They are trying to get back. They 
are trying to get back into the workforce. They go back to 
school to begin to do that training.
    In the meantime, they may be drawing unemployment 
compensation or something. But there is a time limit on that. 
And the time limit doesn't match up with, necessarily, the time 
limit they need to complete that certificate or degree.
    And somehow if we could get some of the agencies to 
understand this when we are supported both ways that if you are 
doing those kinds of things on stuff that is worthwhile, to 
provide that additional support. We could provide enough for 
the educational benefits out of the Title IV program, but it is 
the other big costs of that living. In many cases, they have 
families and so on that they are trying to deal with. So it is 
that kind of coordination that we need to look at.
    Chairman Hinojosa. Thank you.
    I would like to now yield time to the ranking member, the 
gentleman from Florida, Congressman Keller.
    Mr. Keller. Thank you, Mr. Chairman.
    And, Dr. Pressnell, I think I heard you mention 
matriculation agreements. Is that right?
    Mr. Pressnell. I did.
    Mr. Keller. Okay. I just think that matriculation 
agreements may well be the future of college access for low-
income young people. And I want to explore that a little bit 
with you.
    And for those who aren't as familiar with it, take my 
community of Orlando, Florida. Probably the best deal for a 4-
year education is at the University of Central Florida. The 
total package for tuition and room and board is around $12,000, 
of which tuition is about $3,400. But it is a very competitive 
school. The average SAT is over 1,200. And they have, I think, 
46,000, 47,000 students going there.
    So they entered into a matriculation agreement with the 
local community college, called Valencia Community College, 
where you can go to Valencia literally full-time for $1,500 a 
year. And after you get your Associate's Degree, after 2 years, 
you are guaranteed, 100 percent, admission into, specifically, 
University of Central Florida. So it is a very cost-efficient 
way to get your 4-year degree and save a place for you in a 
very competitive school.
    Is that the type of matriculation agreement you are talking 
about? And what is your view of these agreements in general?
    Mr. Pressnell. Well, that, I think, is a very good model. 
And I think that what we find--anything that institutions can 
do to ease the transition from a 2-year institution to a 4-year 
institution should be done. And I think that each institution 
has the ability to assess what their strengths are and what 
program correlations that they have with existing community 
colleges in their area.
    And in many cases, the institutions are trying to work out 
partnerships. Four-year institutions tend to have more spaces 
at the junior, senior level.
    Mr. Keller. Because of certain kids dropping out after the 
first, second year?
    Mr. Pressnell. Sometimes that occurs.
    One program, or one issue, that we have tried to address at 
the Advisory Committee in particular, which is who I am 
representing today, is that we need to also make sure that not 
only is there course-level and degree congruency in transfer, 
but there has also got to be some financial support for those 
students. Because once they again are at a 2-year institution 
maybe paying $1,500 a year and then they transfer into an 
institution where the costs are considerably higher, as we look 
at low-and moderate-income families, there have to be some 
financial incentives there for them to make it.
    So not just academic, but also this financial transition.
    Mr. Keller. Okay.
    All right. Let me move on just a bit.
    Mr. Boyle, you want to increase the deductibility of 
college tuition from $4,000 to $12,000. Is that right?
    Mr. Boyle. Yes.
    Mr. Keller. Are you concerned at all about the eligibility? 
For example, right now to get the $4,000 deduction, if you are 
single, you have to make $65,000 or less, and if you are 
married, $130,000 or less.
    Do you think that is sufficient? Or should that be raised 
to accommodate more middle-class folks? Or what is your opinion 
on that?
    Mr. Boyle. We actually believe that the limit should be 
eliminated, that the deduction should be available to all 
taxpayers, that in terms of sending a signal about the 
importance of higher education, that just as the mortgage 
interest deduction is available to all, so should an investment 
in higher education.
    And the $65,000 limit, particularly for single-income 
single parents is extremely low, that they are caught in a true 
middle-class-squeeze situation, where they are not eligible for 
financial aid yet not able to deduct the cost of college.
    Mr. Keller. Right. And I don't disagree with you on 
anything you just said. But have you looked at what the price 
tag might be for that, or seen that CBO score for that?
    Mr. Boyle. I looked at it about 3 years ago when we put a 
petition on our Web site to that effect, but I can't recall it 
off the top of my head.
    Mr. Keller. The reason I asked you is I had a bill called 
the Family Friendly Employer Act, and it was pretty simple and 
supported by just about all the Republicans and Democrats on 
the Ways and Means Committee.
    It essentially said, right now an employer can put his 
employee through college and deduct $5,200 a year, but he can't 
put his employee's child through college. And this says, put 
your employee--or the child. And the reason is, if you are a 
hotel owner, the maid or janitor may not want to go to college 
but the 17-year-old kid might want to.
    Mr. Boyle. Yes.
    Mr. Keller. And it is a very narrow thing.
    And the number I got back from CBO was so sky-high, they 
just assume every employer in the whole country will do it, and 
they will do the max. And it just died because of that.
    And so, that is one of the challenges we have when we face 
very meritorious proposals like the Family Friendly Employer 
Act or the proposal you just made. And we struggle with ways to 
get around that.
    Do you have any wisdom as to how we might make our best 
case to finally get some incentives in place that will help 
more low-and middle-income kids go to college?
    Mr. Boyle. Well, I think it is stressing the importance of 
college as compared to some of the other deductions that are in 
the tax code.
    I mean, the one I like to speak about, that was in my 
written testimony, is, if the tax code is supposed to be 
reflective of our society's values, how can we look at 
ourselves in the mirror when you can deduct $100,000 for the 
cost of a luxury SUV used for business purposes and you can 
deduct only $4,000 for the cost of a college education?
    Mr. Keller. Well, thank you.
    And, Mr. Chairman, my time is expired.
    Chairman Hinojosa. Thank you.
    I want to add that when you have your proposed legislation 
costed, you said that they figured that everyone would take 
advantage of it and the cost was prohibitive. What if they were 
to redo the calculations and take a look at the low-income, 
moderate-income students or students from low-income and 
moderate-income families and see if possibly your idea might 
increase accessibility to higher education?
    And using the fact that many of our prisons are filled with 
minority men and women coming from that group of low-income, 
moderate-income, that it would probably reduce those numbers 
and thus improve the economy of our country and especially 
improve the quality of life of their families.
    Would you give that some consideration?
    Mr. Keller. Well, I absolutely would. I am a practical man. 
And 90 percent of a loaf is better than no loaf at all. And 
right now I have no loaf. So I think that the whole target you 
are trying to reach is low-and moderate-income families. And 
so, if we could somehow narrow it to limit the CBO scores, that 
is something I would be very receptive and willing to do.
    Chairman Hinojosa. Thank you.
    At this time, I would like to recognize the gentleman from 
Virginia, Congressman Robert Scott.
    Mr. Scott. Thank you, Mr. Chairman.
    Mr. Boyle, let me follow up on that last question. If we 
had some new money on the table, would it make more sense to 
spend it on deductions or increasing Pell grants?
    Mr. Boyle. Well, I guess, the way the question is posed, I 
think it should be probably 60-40: 60 percent toward increasing 
Pell grants and then 40 percent made available for ability to 
increase deductions.
    Mr. Scott. Okay.
    Mr. Martin, do you know how many low-income students fail 
to go to college because they just can't afford it?
    Mr. Martin. There have been different estimates, Mr. Scott. 
The Advisory Committee recently had come out with a report that 
said there was more than 1 million a year that are qualified 
and not able to go because of this. There are some estimates 
higher than that, some lower. But it is an awful lot of them.
    And let me say that, again, to answer your question that 
you asked Mr. Boyle, I would put the money into Pell grants 
because, for many of the low-income students, these are not 
people that necessarily are going to benefit with that 
deduction. And I understand the other part of it. But I think 
we have a real crisis in this country with low-income people. 
And we cannot afford not to put them first on the pecking 
order.
    Mr. Scott. Well, let me ask the other two panelists on the 
question, whether we had some more money to spend, would it be 
in deductions or increase the Pell grants.
    Mr. Pressnell. Yes, Mr. Scott, Dr. Martin indicated that 
the Advisory Committee had issued a report that 1.4 million to 
2.4 million students are going to be lost in this decade. That, 
by the way, are students who took and completed Algebra II and/
or Trigonometry. So these are highly college-qualified 
students.
    Mr. Scott. Yes.
    Mr. Pressnell. I believe that if the federal government 
wants to issue a transformative difference in our society in 
terms of breaking the cycle of poverty, reducing dependency on 
other federally funded welfare programs, the money needs to go 
into the Pell grant program so that low-and moderate-income 
families can have access into higher education.
    Mr. Scott. Thank you.
    Mr. Swarthout. I concur. It ought to be our priority, it 
ought to be Congress's priority, it ought to be our society's 
priority to ensure that all students, regardless of their 
financial background, have access to college.
    The Pell grant is a time-tested program that is the best 
way of guaranteeing that fundamental promise to all students. 
And I would recommend that be the priority.
    Mr. Scott. Thank you.
    Talking about people that have lost financial aid, about 
200,000 have lost it because of the drug convictions. Does 
anyone have a comment on whether or not we ought to continue 
the prohibition against financial aid to those who have drug 
convictions?
    Mr. Martin. Mr. Scott, let me say that--and I know there 
was some modification of that. Mr. Souder, who is a member of 
this subcommittee, had made some modifications to change that, 
so it is just during the time that the individual is receiving 
student aid. That is a welcome change and clarification. It 
narrows it somewhat.
    Personally, I would say that, if I had to choose, I would 
like to eliminate it, because I think, in many cases, it is not 
significant. But the least I would do is I would at least have 
the process by which the time the student is sentenced, or the 
individual sentenced, depending on the severity of the case, I 
would allow the judge and the individual to make that choice of 
whether or not that this should go away, not just across the 
board.
    Because there are huge differences. I am not trying to 
protect people that are out there that are peddling, selling 
drugs that are really the criminals. But unfortunately there 
are some in our society who have experimented with something, 
small amounts or something, and the cost of this is they have 
messed their lives up forever.
    And sometimes I think if we could help them and get a hand 
up and realize the difference, it might be worthwhile.
    Mr. Scott. Thank you.
    Mr. Pressnell. Mr. Scott, taking a slightly different 
perspective, these additional questions on the FASFA just add 
to the complexity of the process for students applying for 
financial aid, such as the selective service question and the 
drug question.
    The Advisory Committee has taken the position that the 
FASFA needs to be as streamlined as absolutely possible, so 
that it does address the proper administration of the aid 
program. So the Advisory Committee's position is that those 
questions be removed from the form.
    Mr. Scott. Thank you.
    On the contingent payment plan, what is a reasonable 
percentage of income on a contingent repayment for students 
paying back student loans on a contingent?
    Mr. Swarthout. Sure. The best study on this came out last 
year from an economist, Sandy Baum. And she said that some 
amount of income should be protected, anything about $18,000, 
$19,000, equivalent to 150 percent of poverty.
    A recent graduate who has that income needs to devote most 
of that to housing and food and transportation, but that, above 
that, it would be reasonable to expect about 15 percent of what 
she called discretionary income, which would be above about 
$19,000, in her estimation, which would make sure that you are 
protecting people who are with the lowest income and targeting 
your subsidy to the students with the most need, people 
entering public service careers, teachers who start with low-
income, rather than helping students who graduated and are 
lucky enough to have more lucrative income.
    So I would use that as a litmus test.
    Mr. Scott. My time is just about up. I wanted to get in one 
more question, and that is whether or not students ought to be 
able to refinance their loans any time they want, rather than 
getting stuck and locked in.
    You can redo a mortgage whenever you want. Is there any 
reason you can't have multiple refinancing of student loans?
    Mr. Martin. Well, this has been an interesting topic. And 
the question is, when you do that at certain times, it 
obviously can be very costly. And if we had all the resources 
we need, I would say absolutely.
    I would say if you are going to allow the multiple 
refinancing on these, I would at least look at means testing of 
who qualifies, because if people are out there making lots of 
money, very successful from their degrees--and there are a lot 
of these people that are simply going out and doing that, you 
are turning around and asking the taxpayers to help continue 
subsidies that you have already received because you have got 
your loan. They have already had the benefits of that. You are 
out there.
    I understand for lower-income people or people that are 
struggling, public-interest kinds of jobs and stuff, aren't 
making much, yes, because of the debt thing. I think there are 
other ways that we could deal with restructuring, such as what 
Luke has mentioned here with some repayment options to give 
people better relief by restructuring the programs.
    The likelihood of people that have to go out and refinance 
all the time would be greatly reduced.
    Chairman Hinojosa. At this time, I would like to yield time 
to the gentlewoman from California, Congresswoman Davis.
    Mrs. Davis of California. Thank you, Mr. Chairman.
    Thank you to all of you for being here. I know that you had 
an opportunity to cover some of the financial literacy areas. 
But I just wanted to see if you have any particular 
suggestions.
    And, Mr. Boyle, heading up the parents group, how do we 
educate parents better? Are there some avenues out there that 
haven't been addressed very well? Do you think schools have 
some best practices that you have seen? Or is that a whole 
other area that we need to work harder and better in?
    Mr. Boyle. Well, I think in the area, as referenced 
earlier, of public and private partnership, this is one that 
lends itself well to that.
    I think the Jumpstart Group Coalition has nearly every 
major financial service company as part of it. And every year 
when they present their programs, there is no shortage of 
wonderful programs going on across the country. Yet it still 
doesn't seem to make a dent into the issue.
    So I think it is investing those programs into areas and 
reaching families who aren't necessarily just their customers 
but who are potential customers and could benefit from that 
information.
    Also I think there is something to be said for better 
training of college counselors at the high school level so that 
they can better address financial questions of parents, 
specifically as it relates to paying for college.
    I think the situation right now is most of them are trained 
on the academic side in how to get into college, but paying for 
it is certainly part of the equation. Many families can't get 
those questions answered and then often are turning to outside, 
sometimes very expensive, resources in order to get the answers 
to the questions that they need.
    Mr. Pressnell. If I might, the Advisory Committee is 
currently involved in an Innovative Pathways study. And a part 
of that study is actually looking at early information and what 
is appropriate information at various levels. And so, you know, 
not the same information is applicable to all age groups.
    But we are looking at--the University of Virginia has a 
model right now, that they are taking some of their best and 
brightest recent graduates and placing them alongside 
counselors in high schools for the sole purpose of encouraging 
students to go to college and how to navigate the financial aid 
system. So that is one thing we have seen.
    The other is that we are looking at, are there other 
federal communication and state communication avenues that we 
need to piggyback upon, for instance, federally means-tested 
programs, free school lunches and so forth. Why not at that 
early age communicate to families, communicate to the student 
there is financial aid available for you to go to college and 
enter into the assumption, ``Where are you going to go, and by 
the way, there is money available for you,'' early on?
    So the Advisory Committee is in the midst of a study that 
is looking at appropriate information for appropriate folks 
clear up through independent adults and parents as well.
    Mrs. Davis of California. Yes, okay.
    Mr. Martin. Ms. Davis, let me also say that last year--I 
mean, the last Congress, Congressman Akaka had introduced a 
financial literacy bill. And we, as an association, had 
endorsed that and so on. Unfortunately it never became law, but 
I thought it was a good model as a starting place.
    But I think the Advisory Committee is on the right track of 
doing it. Part of the problem is getting the information that 
is appropriate to the families that need it. And we need to 
find other delivery vehicles.
    I mean, I know it sounds silly, but, you know, when I open 
up my mail with a bill or something, there is always some 
little brochure or something in there. Why don't we start 
putting things in there to help families make some good 
decisions?
    I mean, you want to ask some people to be good citizens? 
Let's go out and ask some of these corporations that stuff it 
with all the other advertisements in my bill, let's ask them to 
put something worthwhile that might make a difference in this 
country.
    Mrs. Davis of California. Yes. I appreciate that. Thank 
you. We have tried to think of ways of making--I know you have 
addressed the FASFA as well and whether even in the tax form 
people should automatically be told that they qualify and they 
may have to answer some additional questions.
    But at least the financial questions are essentially done. 
And people don't have to go back and go into a fetal position, 
as you mentioned earlier, in order to, you know, have so much 
anxiety around this. And I think that that is one of the 
concerns that we have.
    One of the pieces of information that perhaps you don't 
have to go into great detail right now, but trying to clarify 
for people: What do these private, or so-called unregulated, 
loans look like? What greater impact in terms of the debt that 
students will incur as a result of that? How the comparison is, 
just so people have, I think, that understanding would be 
helpful.
    And the other thing is just, do you have a sense of what 
breaks down--students take out these loans. But they also use 
credit cards. Do you know what percentage of what the debt that 
they actually incur comes from credit card debt that they feel 
that they need to incur? And everybody encourages them to do 
that, of course. Is that a very large percentage of it? Or is 
it a smaller percentage really and not a significant?
    Mr. Martin. It is a growing percentage of people that are 
using credit cards to help finance this. And, yes, there have 
been some studies, and I will be happy to make certain that we 
can get you that information. You know, it is a serious concern 
in terms of this.
    I also would say on the market, I think the other thing 
that is amazing to me--and you talked about the private loans 
and they are not as favorable. It is amazing to me how many 
cases we have uncovered of people taking out private loans 
without going first and exhausting their eligibility for the 
federal programs.
    And I think a lot of that is due to the aggressive 
marketing that goes directly from some of these providers of 
these loans directly to families and such. And they are giving 
them this because of slick marketing material. They are not 
making it clear that, in fact, families are eligible for other 
kinds of loans and so on.
    And I hope that that is something in the regulations that 
we deal with here soon that we can address, so that families 
are at least aware of those options.
    Mr. Swarthout. And if I might follow up on the point about 
private loans, I think one of the things that we have seen in 
the stories over the last month is the proliferation of 
misinformation around private loans. And these are loans that 
are determined, unlike federally guaranteed loans, based on 
your credit score, whether you have a credit-worthy co-signer.
    Frequently they are advertised by ``rates as low as.'' 
``Rates as low as'' is not a particularly instructive way of 
educating a consumer. If 1 percent of students get the ``as low 
as'' rate but the bulk of--you know, and that might be 7 
percent--but there are a whole bunch of students up at 15 
percent, we are doing students as consumers and families a 
disservice by failing to force greater clarity in this process, 
not the least of which so that they can be compared across to 
federal loans, where, as Dallas mentioned, there are still a 
disturbingly large number of students who do not max out on 
their Stafford loans before taking out private loans.
    Mr. Boyle. And part of it is the timing issue. Today, May 
1st, is the day when students, you know, across the country 
have to inform a school that they are planning to attend. And 
they have only received those acceptances in the last 30 days, 
for the most part. And so, the family, if they haven't focused 
on how to meet the cost of college, suddenly has this time 
crunch, and that is when these direct mail pieces are hitting 
them.
    They are looking for a way, ``How do I find the money? My 
goodness, it is going to cost X amount.'' And they are 
responding to that need. It is almost like, you know, you are 
coming toward your mortgage closing date and, you know, you are 
scrambling to put together the finances.
    Closing date for going to school is really today, and it 
puts a tremendous amount of pressure on families to make a 
decision quickly.
    Mr. Pressnell. But the private label loans are, you know, 
having an increasing role in higher education finance largely 
because federal and state financial aid programs have not kept 
pace.
    And we just have had a slight increase in the Pell. The 
increase in the loan limits has been a long time coming. And 
the freshman loan amount is still significantly low, 26, 25, 
and has been there for many, many, many years.
    And so, as these programs remain stagnant, there are other 
solutions that come in to fill the gap.
    Mrs. Davis of California. Right, and that don't necessarily 
represent the true cost to the students as well.
    Mr. Pressnell. True.
    Mrs. Davis of California. Yes.
    Thank you, Mr. Chairman.
    Chairman Hinojosa. I want to make some closing remarks and 
say that last week I had six students from my congressional 
district in south Texas come visit Washington and visited me in 
my office. All six of them were Hispanic. Five were young women 
and one was a young man, all graduating seniors who had scored 
over 1,250 on their SAT scores and were helped to come to the 
Northeast to visit about six or seven colleges and universities 
and see if they could select one to attend.
    And after spending a couple of hours with them over lunch 
and in my office, I asked each one of them to tell me what was 
the key to the success that they had experienced in scoring so 
high and being able to have an opportunity to select a college 
to attend. And one by one answered, ``It was my mother who was 
very involved with me in elementary school and all the way 
through high school.'' The second one, it was the mother. The 
third one said, ``It was my mother and father.'' The answers 
were the same for all six.
    And it leads me, then, to what Buck McKeon's group, which 
included me, went to China to visit some of the universities 
with the greatest number of engineering graduates in that 
country. And we asked over and over at each university some of 
the students, ``Why do you think that you all have been so 
successful in international competition and scored first or 
second almost every one of the last 10 years?'' And again, 
their response was that they had parents and grandparents who 
had spent a lot of time with them to get them to the point that 
they are at those universities.
    So I conclude by saying that parental involvement, together 
with Judy Biggert's recommendation on savings, is definitely a 
start.
    And when we look at the groups that are shown in Dr. 
Pressnell's report and testimony, the academic barriers, the 
low-income and moderate-income group are the ones that I 
believe Congress is and should be looking at finding ways to 
get that parental involvement, rewards for starting a savings 
account, like they do in China, which is 5 percent of every 
check or salary that is paid to their family, and then to 
follow that with incentives that would hopefully get those 
individuals, those young men and women and, in some cases, 
adults, as was presented by one of the questions that was asked 
by one of the members on the Democratic side.
    And that is that there has to be Ways and Means Committee 
involvement helping us reach that affordability answer to the 
puzzle, and that there will have to be ways in which we can 
possibly give subsidized housing to those who qualify for the 
Pell grants or are listed in the low-income and moderate-income 
so that they can live on campus in subsidized housing, rental 
housing, apartments or dormitories, so that we can shorten the 
number of years for graduation, instead of 6 to 10, as I asked 
earlier, and reduce it to 4 to 5, and thus have less debt than 
the way that we are doing it now.
    So having said that, I want to thank each of the 
presenters, the witnesses, and say that it was very helpful. 
And we will make all of your remarks and questions and answers 
part of the record.
    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 to the 
witnesses should coordinate with majority staff within the 
requisite time.
    Without objection, this hearing is adjourned.
    [The prepared statement of Mr. Altmire folows:]

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

    Thank you, Mr. Chairman, for holding this important hearing on the 
financial barriers that students and their families confront trying to 
pay for a college education.
    In the current global economy earning a bachelors degree is 
becoming a prerequisite for being able to find stable and rewarding 
employment. However, just as earning a bachelors degree has become more 
important than ever, going to college has become more expensive than 
ever.
    The rising cost of attending college is forcing millions of 
students to graduate with massive amounts of debt and many more are 
deciding to forego college altogether. The average student graduating 
from college this year will have accumulated $19,000 in debt by 
graduation day. I find this to be unacceptable.
    The 110th Congress has already taken several important steps to 
make college more affordable. This includes raising the maximum Pell 
Grant award for the first time in four years and passing the College 
Student Relief Act (H.R. 5) to reduce the interest rate on subsidized 
student loans from 6.8% to 3.4% over the next five years.
    These were critical first steps and I look forward to hearing more 
about the next steps Congress can take to increase college 
affordability for all students and their families.
    Thank you again, Mr. Chairman, for holding this important hearing. 
I yield back the balance of my time.
                                 ______
                                 
    [Whereupon, at 3:15 p.m., the subcommittee was adjourned.]

                                 
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