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





                     BARRIERS TO EQUAL EDUCATIONAL
                     OPPORTUNITIES: ADDRESSING THE
                  RISING COSTS OF A COLLEGE EDUCATION

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

                                HEARING

                               before the

                              COMMITTEE ON
                          EDUCATION AND LABOR

                     U.S. House of Representatives

                       ONE HUNDRED TENTH CONGRESS

                             FIRST SESSION

                               __________

            HEARING HELD IN WASHINGTON, DC, NOVEMBER 1, 2007

                               __________

                           Serial No. 110-70

                               __________

      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             Cathy McMorris Rodgers, Washington
Raul M. Grijalva, Arizona            Kenny Marchant, Texas
Timothy H. Bishop, New York          Tom Price, Georgia
Linda T. Sanchez, California         Luis G. Fortuno, Puerto Rico
John P. Sarbanes, Maryland           Charles W. Boustany, Jr., 
Joe Sestak, Pennsylvania                 Louisiana
David Loebsack, Iowa                 Virginia Foxx, North Carolina
Mazie Hirono, Hawaii                 John R. ``Randy'' Kuhl, Jr., New 
Jason Altmire, Pennsylvania              York
John A. Yarmuth, Kentucky            Rob Bishop, Utah
Phil Hare, Illinois                  David Davis, Tennessee
Yvette D. Clarke, New York           Timothy Walberg, Michigan
Joe Courtney, Connecticut            Dean Heller, Nevada
Carol Shea-Porter, New Hampshire

                     Mark Zuckerman, Staff Director
                   Vic Klatt, Minority Staff Director
























                            C O N T E N T S

                              ----------                              
                                                                   Page

Hearing held on November 1, 2007.................................     1

Statement of Members:
    Altmire, Hon. Jason, a Representative in Congress from the 
      State of Pennsylvania, prepared statement of...............    69
    McKeon, Hon. Howard P. ``Buck,'' Senior Republican Member, 
      Committee on Education and Labor, prepared statement of....    69
    Miller, Hon. George, Chairman, Committee on Education and 
      Labor......................................................     1
        Prepared statement of....................................     2

Statement of Witnesses:
    Alexander, F. King, president, California State University, 
      Long Beach.................................................    30
        Prepared statement of....................................    32
    Bassett, Dr. John E., president, Clark University............    10
        Prepared statement of....................................    12
        Additional submissions:
            ``About Clark University''...........................    16
            ``Enhancing Affordability and Access in Independent 
              Higher Education''.................................    16
            ``U-CAN Media Coverage''.............................    27
    Wellman, Jane V., executive director, Delta Project on 
      Postsecondary Costs, Productivity and Accountability.......     3
        Prepared statement of....................................     6




















 
                     BARRIERS TO EQUAL EDUCATIONAL
                     OPPORTUNITIES: ADDRESSING THE
                  RISING COSTS OF A COLLEGE EDUCATION

                              ----------                              


                       Thursday, November 1, 2007

                     U.S. House of Representatives

                    Committee on Education and Labor

                             Washington, DC

                              ----------                              

    The committee met, pursuant to call, at 11:01 a.m., in room 
2175, Rayburn House Office Building, Hon. George Miller 
[chairman of the committee] presiding.
    Present: Representatives Miller, Kildee, Payne, Andrews, 
Scott, Woolsey, Hinojosa, Tierney, Kucinich, Wu, Davis of 
California, Bishop of New York, Sanchez, Sestak, Loebsack, 
Altmire, Yarmuth, Hare, Clarke, Courtney, McKeon, Petri, 
Castle, Ehlers, Platts, Keller, McMorris Rodgers, and Foxx.
    Staff present: Tylease Alli, Hearing Clerk; Alfred Amado, 
Legislative Fellow for Education; Jeff Appel, GAO Detailee; 
Denise Forte, Director of Education Policy; Ruth Friedman, 
Senior Education Policy Advisor (Early Childhood); Gabriella 
Gomez, Senior Education Policy Advisor (Higher Education); 
Lloyd Horwich, Policy Advisor for Subcommittee on Early 
Childhood, Elementary and Secretary Education; Lamont Ivey, 
Staff Assistant, Education; Thomas Kiley, Communications 
Director; Danielle Lee, Press/Outreach Assistant; Ricardo 
Martinez, Policy Advisor for Subcommittee on Higher Education, 
Lifelong Learning and Competitiveness; Stephanie Moore, General 
Counsel; Alex Nock, Deputy Staff Director; Joe Novotny, Chief 
Clerk; Rachel Racusen, Deputy Communications Director; Julie 
Radocchia, Education Policy Advisor; Dray Thorne, Senior 
Systems Administrator; Margaret Young, Staff Assistant, 
Education; Mark Zuckerman, Staff Director; Kathryn Bruns, 
Minority Legislative Assistant; Amy Raaf Jones, Minority 
Professional Staff Member; and Sally Stroup, Minority Deputy 
Staff Director.
    Chairman Miller [presiding]. The committee will come to 
order for the purposes of conducting a hearing on Barriers to 
Equal Educational Opportunities: Addressing the Rising Costs of 
College Education.
    We are going to be in a bit of a time jam here, and in the 
name of trying to make this a coherent hearing, we have agreed 
that we are going to forego our opening statements.
    We all are in agreement on both sides of the aisle that 
this is a priority for this committee on how we address both 
paying for college and checking the best we can this rapid rise 
in the cost of college. It has been a priority for Mr. McKeon, 
for Mr. Tierney, for Mr. Keller, for Mr. Hinojosa and many 
other members of the committee, but I think we would all be 
best served by hearing from you first before the bells ring, 
and then we will return after the votes are taken.
    And, Ms. Wellman, we are going to begin with you, but I 
have to tell people who you are here. So I will get that sorted 
out. Maybe, Ms. Wellman, you want to tell people who you are.
    Our first witness will be Jane Wellman who is the executive 
director of the Delta Project on Postsecondary Costs and 
Productivity and Accountability. The Delta Project is analyzing 
college spending, seeking to document trends, identify and 
promote best practices to help institutions improve 
productivity.
    Next, we will have Dr. John Bassett, who has served as 
president of the Clark University in Worcester, Massachusetts, 
since 2001. Before assuming that position at Clark University, 
Dr. Bassett was the dean of the college of arts and sciences at 
Case Western Reserve University and an English professor and 
the department chair of North Carolina State University.
    Is Ms. Sanchez here for purposes of introduction?
    Ms. Sanchez. Thank you, Mr. Chairman, and I appreciate the 
opportunity to allow me to introduce Dr. King Alexander.
    Dr. Alexander is the current president of the California 
State University at Long Beach, one of the largest 4-year 
universities in California, and prior to his current post, Dr. 
Alexander served as the president of Murray State University in 
Kentucky. He is a foundation fellow at Harris Manchester 
College, University of Oxford, and a faculty affiliate at both 
the Cornell University Higher Education Research Institute and 
the University of Illinois Institute of Government and Public 
Affairs. He has over 15 years of experience in the field of 
higher education and has co-edited several books and authored 
numerous journal articles and book chapters. I am very pleased 
that he is able to join us here today, since he is from my home 
state and from very close to my district, and I am sure you 
will find him as engaging as I do.
    Chairman Miller. Thank you.
    And welcome to all of you.
    We are going to give you each 5 minutes to sort of 
summarize your testimony. There will be a green light on, and 
then there will be an orange light to warn you that you are 
getting close to wrapping up, and then a red light, but we want 
you to finish your thoughts and your sentences there.
    So welcome again to the committee.
    Ms. Wellman, we are going to begin with you. We need your 
microphone on.

   Prepared Statement of Hon. George Miller, Chairman, Committee on 
                          Education and Labor

    Good Morning.
    Welcome to today's hearing on ``Barriers to Equal Educational 
Opportunities: Addressing the Rising Costs of a College Education.''
    New data just released by the College Board show what is by now an 
all-too-familiar trend. In the last five years, tuition at four-year 
public colleges nationwide soared by 31 percent, after inflation. And 
whether a student attends a public college in-state or out-of-state, a 
private college, or a two-year college, the bad news is that prices are 
up across the board.
    To help meet these rising costs, students are relying more than 
ever on both federal and private student loans. Worse yet, each year as 
many as 200,000 would-be students choose to delay or forego a college 
education because they simply can't afford it.
    These trends aren't just troubling for students and families, but 
also for our country's future. Now more than ever, the strength of our 
economy rests on our ability to produce a highly educated workforce.
    Business leaders tell us that the most important thing we can do to 
drive the innovation we need in today's global economy is to ensure 
that all students have access to a good education.
    One of the key priorities for this Congress has been to make 
college more affordable and accessible for every qualified student who 
wants to attend. Already this year, we took a truly historic step 
towards this goal by enacting the College Cost Reduction and Access 
Act. This law does more to help students and families pay for college 
than any federal effort since the GI Bill of 1944. It provides more 
than $20 billion in financial assistance to low-and middle-income 
students and families over the next five years.
    I believe this law will help lead our country in the right 
direction by expanding college access--and doing so at no new cost to 
taxpayers.
    But there is still work to be done in order to ensure that no 
student is prevented from going to college because of the price. 
Increasing financial aid for students addresses one side of families' 
ledgers; today we will address the other side--cost.
    As we move closer to reauthorizing the Higher Education Act, one of 
our goals will be to develop strategies to help colleges rein in 
increases in costs.
    It is clear that as consumers of higher education, students and 
families need better information about college pricing, and the reasons 
behind tuition increases from year to year.
    As we examine how best to further address these rising costs, we 
must learn more about how colleges and universities set their prices 
and the factors that drive their various cost increases. We also must 
learn more about how both schools and states spend their higher 
education dollars and the relationships between college costs and 
education quality. And we must look at the roles of federal, state, and 
local governments in helping to keep college affordable.
    Today we will hear about these different elements of the college 
cost equation. We will also learn more about practices that are already 
being used by some states and colleges to help keep college costs 
manageable.
    I want to thank all of our witnesses for joining us today for this 
important discussion.
    I also want to recognize two members of our committee, our Senior 
Republican, Mr. McKeon, and one of our senior Democrats, Mr. Tierney, 
who have put forth interesting proposals to address college costs. 
Today's hearing will help us build on their efforts.
    A college degree continues to be the gateway to joining the middle 
class. I look forward to continuing the work of this Committee and of 
this Congress to help ensure that all Americans have the opportunity to 
go to college.
    Thank you.
                                 ______
                                 

 STATEMENT OF JANE V. WELLMAN, EXECUTIVE DIRECTOR, DELTA COST 
                            PROJECT

    Ms. Wellman. Thank you very much, Mr. Chairman, members. It 
is a pleasure to be with you today.
    I appreciate the opportunity to share my views and some of 
the emerging work of the Delta Project on College Costs and 
Productivity and Accountability.
    I should say at the outset I come to this topic after 
almost 30 years of work in higher education and public policy 
in the State of California, where I worked in the University of 
California and for the legislature for many years. With private 
colleges, I worked with the Independent College Association 
here in Washington, and then in nonprofit policy work for many 
years.
    And the topic of spending and how the money gets spent in 
higher education as contrasted to tuition or financial aid or 
revenues is the least well understood and analytically 
documented and, in my view, one of the most important things 
for us to collectively get our arms around, if we are to do a 
better job of ensuring access and affordability. So that is the 
reason for our work.
    I just want to make three basic areas of comments today. 
You have my prepared testimony. I will not read it, you will be 
happy to know. But just in three areas: First, why focus on 
this? What is the point? Secondly, a little bit about what the 
data say about trends and patterns across all of postsecondary 
education, and then I will finish with some comments on what 
the federal role might be going forward.
    First, the reason for the focus on costs is not an 
analytical exercise in data gathering. We can do that, of 
course, but the point is our country needs to increase 
educational attainment levels and postsecondary educational 
attainment levels by significant amounts, some say almost a 
doubling of baccalaureate degree recipients in the next 15 
years, both for workforce needs and to maintain internal 
competitiveness. There is some dispute about whether the 
numbers are doubling or only 30 percent. No matter how you 
slice it, it is a huge increase.
    And even if we are successful in reversing some of the 
declines we have seen in state revenues and with the generous 
funding from the federal government in recent financial aid 
increases, it is hard to see how we are going to get that level 
of increased attainment under our current finance and 
production model, and this then raises the question of how can 
we do a better job of using the resources we have and obtaining 
greater attainment, and that means not sacrificing quality, not 
sacrificing access to low-income students and building the 
system we need.
    So it is about attainment. It is not about picking apart 
numbers. It is how do we use data to do a better job of getting 
kids through making decisions about that.
    The second point on the data and what the data say about 
trends in revenues and expenditures in postsecondary education: 
as you well know, we have a highly diverse system of higher 
education, and the patterns of resources between research 
universities, community colleges, privates, publics, 
proprietaries are so starkly different that other than this 
generalization, all other generalizations about spending in 
higher education are wrong.
    It is very important to look at the different sectors and 
to see what the patterns are, and so in the testimony, I have 
provided just some snapshots to give you a little bit of a 
visual about what those revenue structures look like between 
the public research universities, where their money comes from, 
masters' associates, private research, private baccalaureate 
institutions.
    You will note none of the data in here speak to proprietary 
education for the simple reason that the data on proprietary 
schools is bad. It is getting better, but it is not good enough 
to get an historic lens on. It should be included in these 
numbers, and it is not.
    The most important point I would like to make about the 
data are on what is labeled Figure 3, and it shows a snapshot 
of what has been happening in the last 6 or so years, and what 
has been happening to tuition increases in contrast to 
spending, and where the money is going in broad patterns by 
types of institutions, and looking at these numbers, one begins 
to see the differences between cost and how institutions spend 
their money and price, what it is that is paid in the form of 
tuition.
    Just looking at the top line on this, by example, as a 
national average level in public research universities since 
1998, in state undergraduate sticker prices went up 40 percent, 
an average of $2,200 roughly. Gross tuition revenues, the next 
line over, only went up 31 percent. The difference between the 
first column and the second column is largely what has been 
happening in tuition discounting and institutional financial 
aid. So looking at those two numbers helps you get a sense of 
those patterns.
    Moving over one more column, spending that goes to the 
direct cost of instruction--this is the proportion of spending 
within the institutions that is going into the classroom--
increased by only 4 percent. So you note the big difference, 40 
percent tuition increase, spending increase, particularly that 
went into the classroom, only a 4 percent increase in a 6-year 
period.
    Moving to the next column, you see full educational costs. 
What that means is spending on students that are not in the 
classroom, for instance, student services, academic support, 
libraries, computing. You get a little bit of the sense of 
where the money is going.
    The last column, the biggest increase in public research 
universities is attributable to research.
    So this gives you a broad aggregate sense of what the 
patterns have been in the last decade, prices going up in the 
public sector much more rapidly than spending, absolute 
spending reductions, as you see, over this period for public 
masters' and community colleges, and the lowest rate of 
increase going directly into the classroom in those sectors, 
this despite double-digit tuition increases.
    The pattern in private colleges is quite dramatically 
different--private, nonprofit colleges. There, tuition 
increases track spending much more closely, and you see 
increases in private institutions, 20 percent tuition over this 
period, $7,600 average; increase in tuition revenue, 23 
percent; spending of instruction, up; spending elsewhere, up. I 
will not belabor all of the rest of it.
    But this gives you some sense of what has been happening 
and the takeaways from it. The state funding constraints are 
significant contributors to tuition increases in public sector. 
Public sector tuitions are not going up because the 
institutions are spending money at that rate. It is because of 
a shift of cost shifting between state and tuition. Spending is 
going up, and state spending is going up. It is just not going 
up fast enough to keep pace with enrollment and inflation. 
Private institutions are paying more, spending more, charging 
more and spending more on the classroom.
    I see I have the red light on. So I will skip over some of 
the other points and conclude with just a couple of comments 
about the federal role, and that is that I do not believe the 
research supports the view that federal financial aid is 
contributing in a significant way to increases in tuition. 
There have been several studies done on that, and they all find 
the same thing. Now one can argue that any revenue availability 
contributes at some level to growing spending because if the 
money is not there, it cannot be spent, and so I think one 
could concede that without finding a direct causal relation 
between federal financial aid.
    I think the federal government has obviously a huge 
interest in this topic, and in my way of thinking, at least two 
very important roles that can be played. The first is on data 
and analysis and public transparency about costs. The federal 
government has the best cost data. The IPED system is 
imperfect, but it is not that bad. The problem with it is that 
it is opaque, it is not maintained, it is not edited, and it is 
really only accessible to researchers who have time to get into 
it and work with it a lot in order to make any sense of it, and 
so the Spellings commission had a recommendation on that topic. 
I have put that in your text. I think they got that right. I 
think it is a matter of moving forward on it.
    Secondly, I think the federal government----
    Chairman Miller. I am going to ask you to wrap up, so we 
can get to your colleagues' testimony.
    Ms. Wellman. Okay. I will stop.
    [The statement of Ms. Wellman follows:]

   Prepared Statement of Jane V. Wellman, Executive Director, Delta 
    Project on Postsecondary Costs, Productivity and Accountability

    Mr. Chairman and members, thank you for the opportunity to meet 
with you today. I am delighted to be able to join you today, to share 
my views about ways to tackle the college cost problem, based on the 
emerging work of the Delta Project on Postsecondary Costs, Productivity 
and Accountability. I want to focus my comments today on three issues: 
1) the reasons for focusing on costs and productivity; 2) data trends 
on spending patterns in postsecondary education, including the relation 
between spending and tuition increases; and 3) the federal role in 
tackling the root causes of cost increases in higher education.
    Why the focus on costs? Because higher education in the United 
States has a higher education productivity problem:
     Our nation spends almost twice as much per student in 
postsecondary education as other countries, yet we are behind in 
graduation rates, and falling further behind as other countries are 
increasing educational attainment and success. To be sure, 
international comparisons do not always use similar measures; still 
they raise the question about how the US system can use existing 
resources to become more productive, to improve degree attainment 
without sacrificing access or quality.
     Persistent gaps in enrollment access, and degree and 
certificate completion, among low income and minority populations 
threaten future economic competitiveness. Our number one performance 
challenge is to get more low income and minority students not just to, 
but through, college. Managing prices and costs has to be part of that 
equation, but we also need to do a better job of targeting resources in 
ways that increase student success. Policymakers and higher education 
leaders need to develop better ways of looking at spending and 
performance and then using the data to put resources behind areas that 
will increase student attainment.
     Postsecondary education's dependence on annual increases 
in revenues is putting higher education out of reach for many students 
and making it difficult for the federal government and states to keep 
pace with cost increases. Student tuitions are paying an increasing 
share of general revenues in all institutions, and public skepticism is 
rising about spending within higher education. Without greater public 
accountability for spending, and attention to managing growth in 
spending, policy makers will remain hesitant to support needed 
increases in funding for higher education.
Trends in revenues and spending in higher education: where the money 
        comes from, where it goes, and the relation between spending 
        and tuition
    There is no single answer to the higher education `cost problem'--
the issues in large urban community colleges bear almost no resemblance 
to well-endowed selective private institutions--so generalizations are 
risky. But we're not going to tackle spending problems without having 
decent data about what those spending problems are. To do that, policy 
makers and institutional leaders need better data about spending and 
performance. The work of the Delta Cost project is designed to put 
spending information into the public domain, through regular reports 
about spending trends, and publicly accessible tools to give 
institutions, policy leaders, and consumers easily accessible ways to 
evaluate postsecondary spending patterns. We have recently a completed 
the first comprehensive analysis of trends in revenues and spending in 
this century. The work uses similar methodologies to the work done by 
the Congressional Commission on Costs, and a follow-up study 
commissioned by the National Center for Education Statistics (NCES) in 
1998. Some highlights about what we have found:
     Cost exceeds revenue from tuition. The cost of providing 
students with a college education exceeds the revenue schools receive 
from student tuitions. Figure 1 provides a snapshot of total revenues, 
by source, for 2005 and shows that total revenues per FTE for public 
research universities averaged a little over $40,000/student/year 
compared to $16,700 for public masters' universities, and just over 
$12,000 for public community colleges. This compares to $78,407 for 
private non-profit research universities, $26,705 for private masters' 
level universities, and $36,653 for private baccalaureate institutions.


    However, not all revenues are available for general purposes and as 
a result, the total volume of revenues mask resources spent on core 
educational activities. Colleges and universities get and spend money 
in areas that are ancillary to the educational teaching and basic 
functions even if they contribute to the educational experience. They 
are in the hotel business (residence halls), the restaurant business 
(food services), the building business (capital outlay, and grounds and 
buildings), the R&D business (organized research and community 
service), and the health care business (hospitals and clinics). 
Resources generated in these areas are fee-for service activities and 
the funds are not available for general purposes. The three primary 
sources of unrestricted revenues for both public and private 
institutions are tuition revenues, public appropriations from state and 
local government, and revenue from the combination of private gifts, 
earnings from endowments, and investment income. Looking only at the 
bottom three tiers of revenue on Figure 1 helps to show what those 
resources are.
     Spending and tuition. Switching from revenues to spending, 
Figure 2 shows a snapshot comparing spending clustered into three broad 
areas: spending that goes directly into the instructional function 
(faculty salaries for teaching and departmental research); other 
educational costs (student services, and the proportion of academic, 
institutional and maintenance expenses that support instruction); and 
all other spending (primarily organized research, and institutional 
spending on scholarships).
  figure 2: median educational and general (e&g) spending per fte by 
                    carnegie group and control, 2005


    Figure 3 shows the patterns of spending in relation to tuition 
since 1998. Reading across the top line, you see the rate at which 
sticker prices increased, followed by net revenue from tuition, 
followed by spending in the three categories above (direct spending for 
instruction, other educational costs, and other spending). These 
numbers tell a good deal about the basic patterns. Total spending per 
student has gone down after adjusting for inflation since 1998 among 
public community colleges and masters' institutions, but is up slightly 
in public research universities, and up by roughly two times the rate 
of inflation among private non-profit institutions.


    In all sectors, net revenue from tuition is going up less rapidly 
than sticker prices, because of the growth in tuition discounting. 
Among public institutions, spending for instruction has increased 
relative to other categories in the research universities, but has 
declined in public masters and community colleges. The patterns are 
quite different among private institutions--where spending for 
instruction increased significantly, but even so, less rapidly than 
spending for other educational costs (advising, computing, and 
administration).
     State funding constraints and tuition increases. Adjusting 
for enrollment increases and inflation, spending in public institutions 
has not increased significantly in the last decade. Nonetheless, 
tuitions have gone up by double digits. In public institutions, the 
primary cause of tuition increases has been that state funds have not 
kept pace with the combination of enrollment growth and inflation, even 
states they have increased funding. The structural budget problems that 
are squeezing higher education as a state funding priority are not 
expected to go away any time soon. This is not a temporary problem; 
it's a long term situation.
     Private fund-raising not benefiting the bottom line. 
Despite all the attention to fund-raising and capital campaigns, 
private unrestricted funds (from gifts, income from endowments and 
investment income) still comprise a very small proportion of revenues 
in most institutions. The much touted ``privatization'' of finance in 
higher education is really about increased reliance on student tuitions 
as a general source of revenue. As a result, students increasingly 
subsidize general institutional operations--including student aid 
(paying for other students), administration, and research.
     Growing inequality: the rich getting richer? Resource 
disparities among different types of institutions are increasing, with 
real cost cutting in public two- and four-year institutions, flat 
spending in public research universities, and rising spending in 
private institutions. The spending gap between public and private 
institutions has never been larger. Competition between institutions is 
intense, and competition fuels increases in spending believed to be 
necessary to enroll the ``best'' students, and to recruit the top 
faculty.
     There is no evidence that explicit attention to increasing 
productivity and controlling costs is a policy priority within 
institutions or in states. Despite repeated calls (Congressional Cost 
Commission; NACUBO Cost of Instruction Work; Spellings Commission) for 
more `transparency' and better use of cost data within institutions, 
most institutions do not publicly document costs, or include 
information about spending and subsidies in public communications. A 
recent AGB/NACUBO survey shows that governing boards generally see 
little information about spending patterns; instead the focus is on 
growing revenues and meeting the market for tuition. Spending 
information is almost completely absent from state ``report cards,'' 
and on institutional web-sites offering consumer information. The focus 
remains on tuition and financial aid, not on how money is spent.
     The bottom line? The accusation that spending in higher 
education is `out of control' isn't quite fair. Not all institutions 
are spending more, despite the shift in revenue from state funds to 
students. But it is clear that spending is going up in some sectors, 
for the simple reason that it can. In all institutions, student 
tuitions are paying a higher share of revenues, but these resources 
aren't going into the classroom. The economic benefit from a college 
degree has never been higher, and students and families will do 
everything they can to get a college education. But there's no evidence 
the resources are going to pay for student success or increasing degree 
attainment, and low income students are most at risk. It's a funding 
trajectory that bodes ill for the future, and will require an 
unprecedented level of attention from policy makers and institutional 
leaders if we're going to turn it around.
Suggestions about the federal role
    The federal government clearly has an interest in increasing 
productivity in higher education--both to maintain the value of federal 
financial aid funds going to needy students, and to tackle the 
challenges of increasing educational attainment for all students. There 
are two areas where I believe interventions would make a difference: 
one is in information and data; the other is in incentives to states 
and institutions to do more to manage costs.
    On the data front: We need to pay as much or more attention to 
spending as we now do to fund-raising, tuition and financial aid. 
Regular transparent reporting about cost trends can help this. Despite 
imperfections, these NCES/IPEDS finance data are the best source for 
this information. They need to be made more accessible to lay users--
through regular editing, routine publication, and an annual reporting 
on trends. The recommendation in the Spellings Commission report on 
this topic is right on from my perspective:
    ``The secretary of education should require the National Center for 
Education Statistics to prepare timely annual public reports on college 
revenues and expenditures, including analysis of the major changes from 
year to year, at the sector and state level. Unlike the data currently 
available, institutional comparisons should be user-friendly and not 
require a sophisticated understanding of higher education finance.''
    For incentives: history has shown that federal funding incentives 
make a difference in moving states and institutions in new directions. 
With a relatively modest investment of funds, the federal government 
can provide incentives to states to ramp up their oversight capacity of 
college spending, and to do more to tie increases in state 
appropriations to evidence that institutions are investing resources in 
improving student attainment. One model might be adopted from the 
recent effort through the Fund for Improvement in Postsecondary 
Education, working with the Association of American Colleges and 
Universities, in partnership with the public four-year institutions, to 
pilot innovations in student learning. Figuring out how that will work 
will take some discussion, it's sure to be an idea that will be 
controversial in some quarters. But it will take some serious 
collective action to turn around the path we are on, to ensure that we 
have a financing system capable of meeting our nation's needs now and 
in the future.
Terminology
    All revenue and expenditure data come from the Integrated 
Postsecondary Education Data Surveys, special analysis developed by the 
Delta Cost Project.
    Auxiliary enterprises: revenue-generated activities, such as 
dormitories and bookstores.
    Direct instruction: spending going directly to pay for the 
instruction; primarily faculty salaries and benefits, including adjunct 
faculty, and costs of departmental staff. All credit and non-credit 
bearing instruction (such as developmental education) are counted as 
``instruction.''
    Full cost per student: educational or student-related spending 
other than instruction; such as student services, admissions and 
registrars, and non-research portions of academic and institutional 
support (administration), and operation and maintenance of the physical 
plant.
    Full education and general spending per student: all spending 
including research, public service and student scholarships, but 
excluding hospitals and clinics.
About the Delta Project on Postsecondary Costs, Productivity and 
        Accountability
    The Delta Project is a non-profit policy and research organization 
chartered in 2007 with the mission of helping to improve college 
affordability by controlling costs and improving productivity. The 
Delta Project is focused on the spending side of the college cost 
problem--how institutional spending relates to access and success, and 
ways that costs can be controlled without compromising quality. The 
work is animated by the belief that college costs can be contained 
without sacrificing access, or educational quality, through better use 
of data to inform strategic decision making. Located in Washington, 
D.C., project work is supported by Lumina Foundation for Education and 
other national philanthropies as part of Making Opportunity Affordable, 
a national initiative focused on increasing college opportunity and 
success through increased productivity. This statement is the sole 
responsibility of the Delta Project, and does not imply endorsement of 
any partner organization or funding agency.
    For more information: [email protected]; or http://
www.jff.org.
                                 ______
                                 
    Chairman Miller. Thank you.
    Mr. Bassett?

   STATEMENT OF JOHN E. BASSETT, PRESIDENT, CLARK UNIVERSITY

    Mr. Bassett. Thank you, Chairman Miller and Ranking Member 
McKeon and the other members of the committee.
    I appreciate the opportunity also to come and testify on 
these very, very important issues, and I also want to thank the 
committee for its work in increasing federal financial aid for 
students and particularly for the recent increase in the Pell 
grant. These are real questions about costs. There is no 
question.
    I am also testifying on behalf of the National Association 
of Independent Colleges and Universities, or NAICU, which is an 
association of over 1,000 private universities and colleges in 
America.
    But I have spent the majority of my life in the public 
sector, with 14 years at Wayne State and 9 years at North 
Carolina State, so I feel sensitive to the issues in both the 
public and private sector.
    I have been asked to focus this morning some of my time on 
the issue of transparency, particularly since I was the one 
that chaired the NAICU committee that developed the U-CAN 
proposal, the University and College Accountability Network, 
and the seeds of U-CAN actually lie in this committee, I think, 
when Congressman McKeon and others began to ask questions about 
the availability of information.
    We were somewhat frustrated, too, because we know that high 
school seniors and their parents are deluged with information 
about colleges, and we know that we submit the IPEDS to the 
government with, as you say, reams of paper with data, but 
there was no way that a family could get in a concise user-
friendly format some comparable information in a concise manner 
about size of schools, about tuition, about financial aid, 
about emphasis of schools.
    And out of that came the initiative of NAICU. We began with 
focus groups made up of high school students and their parents 
from diverse economic backgrounds and tried to develop a 
compact, clear, concise user-friendly device with comparable 
information, and that really is what U-CAN is.
    Parents and students also wanted to know, ``What is it that 
makes your school distinctive? What is it that makes you 
special? What is different about your school as well?'' And so 
what you have posted up there on the wall, but also in your 
materials is--they have chosen my own university, Clark, as an 
example--is a two-page Web site--concise, clear--providing 
general information about things from tuition to financial aid 
to geographical distribution to number of students who 
graduated each year.
    But then also there are 47 data elements there, 25 hot 
links to things that are more specific about your college. 
``What do you students do when they graduate? What kind of 
careers do they go into? ``What kind of community service are 
your students involved in?'' And Clark students, most of them, 
are involved in the community, and so there is a whole page on 
community service.
    Since U-CAN was rolled out in the last week of September, 
there are now over 700 colleges and universities that have 
joined the U-CAN Web site. We have had over 70,000 hits, about 
418,000 pages being used.
    I think it is important to remember that this is only a 
starting point, that students will begin to narrow down the 
number of colleges they are really interested in at some point, 
and then they ask much more focused personal questions. ``I am 
interested in pre-med. What kind of biology program do you 
have?'' ``I may want to play soccer while I am in college. Do 
you have a soccer team?'' ``I am interested in being involved 
in theater.'' ``What kind of accounting program do you have?'' 
There is no two-page insert that can cover all of that, but 
this can help people know more about each specific college, 
what it can do, what its majors are, what programs it has.
    Still, we are left with some of the fundamental questions 
about costs, and let me turn to those briefly because prices 
are up. I looked at the Clark data. Our tuition between the 
mid-1990s and the middle part of this decade went up about 59 
percent. Our financial aid went up about 64 percent per student 
in that same time period, which means we actually recouped less 
than the tuition increases provided.
    The main reasons for the great growth in tuition: costs--
utility costs, health care costs, technology costs, insurance 
costs--and some of those went up well over 100 percent and the 
others close to 100 percent at the same time period.
    Higher education at its best, moreover, is very labor 
intensive. It is still 20 students and a professor, 30 students 
and a professor, 40 students and a professor. You do not have 
the same kind of savings that you may have in certain kinds of 
productivity, in manufacturing, for example, from technology.
    Colleges are cutting costs. They are joining consortia. 
They are outsourcing. They are saving on energy. They are 
double-paning their windows. They are cutting the temperature 
in classrooms. And you have a compendium attached with a lot of 
what is happening in colleges.
    I will be brief in finishing up. Every year, moreover, 
colleges and universities also make cuts that they do not like 
to make because they impact quality. They replace a professor 
with part-timers and teaching assistants because they are 
having a hard time making budget. They increase class size. 
They cut library holdings. They cut counseling staff.
    In the private sector, it is a very tight market that all 
except the wealthiest universities are in. When we figure out 
what our budget of expenditures will be and then figure out 
what tuition increase a college can make, we will reach a 
tipping point where a further increase in tuition will have a 
negative impact on revenue. Those that cannot afford to pay 
will not come, and those that are getting financial aid will 
continue to get it.
    I still believe the best solution to these problems is a 
healthy partnership between colleges and universities, public 
and private, and the government and the state governments 
working together to get their arms around these issues.
    Thank you.
    [The statement of Mr. Bassett follows:]

 Prepared Statement of Dr. John E. Bassett, President, Clark University

    Chairman Miller, Ranking Member McKeon, and members of the 
committee, I appreciate having the opportunity to testify today on the 
critical issue of college access, cost and pricing. This is an 
important topic and is one with which we all struggle. My name is John 
Bassett, and I am president of Clark University.
    I am testifying on behalf of the National Association of 
Independent Colleges and Universities (NAICU), which represents more 
than 1,000 private, non-profit institutions of higher education and 
related associations. NAICU membership reflects the diversity of 
private, non-profit higher education in the United States--including 
traditional liberal arts colleges, major research universities, church- 
and faith-related institutions, historically black colleges and 
universities, women's colleges, performing and visual arts 
institutions, two-year colleges, and schools of law, medicine, 
engineering, business, and other professions.
    I recognize that many members of the Committee have some very real 
questions about why college costs so much--particularly in the private 
sector. I hope this hearing will help us find answers to some of those 
questions, and explore ways we might move forward, together, to ensure 
that all Americans can afford to go to college.
    First, I want to thank this committee for all you have done to fund 
the student aid programs. We deeply appreciate the bipartisan support 
this Committee has shown over many years for the federal student aid 
programs. We especially welcome the infusion of new funding coming into 
the Pell Grant program this year under Chairman Miller's leadership. 
This increase will make an important difference, and we know that 
finding the resources to fund these programs in the face of competing 
budget pressures is a difficult task.
    I was asked today to focus on one aspect of access to college--the 
transparency issue. In particular, I have been asked to highlight a 
recent effort by NAICU. Five weeks ago the association launched U-CAN--
the University and College Accountability Network--in response to the 
call of public policy makers for more user-friendly information about 
colleges. As the chairman of the NAICU task force that implemented this 
idea, I am particularly excited about what we have accomplished in a 
relatively short time, and on a comparatively modest budget.
    The seeds for U-CAN came from this very committee. For years, 
Representative McKeon has called for colleges to be more transparent 
about our prices. His goal was to assure that consumers have better 
access to simple, understandable information about the most important 
financial aspects of college attendance--such as patterns of tuition 
increases, the amount of available aid, typical student loan burdens, 
and graduation rates.
    As you know, we have not agreed with many of the cost-related 
proposals coming from this committee. We have, however, shared your 
frustration that mounds of potentially useful information sit largely 
unused. Colleges expend considerable effort and resources in compiling 
data for the federal government.
    Several legislative proposals were laid out as a clear path for the 
Department of Education to improve access to this kind of information 
through their COOL website; but--with the exception of the recent 
improvements made by the College Navigator--little action has been 
taken. Certainly, there were no signs of activity when, in the spring 
of 2006, we decided to attempt to develop a response to what we thought 
was this Committee's vision for improved consumer information.
    We began by asking focus groups of parents and high school students 
to tell us what they most wanted to know about college. Their wish list 
that was remarkably similar, but not identical, to the College Consumer 
Profile that was included in this Committee's recent Reconciliation 
bill, as well as in HR 609 from the last Congress. We also asked about 
format, length, and style. We learned that consumers wanted something 
that would be concise, consistent, comparable, and colorful. It needed 
to be Web-based, so that they could quickly explore various colleges, 
then drill down for more information in areas of special interest. 
However, they also wanted to be able to print out information on a 
college, then lay it on the dining room table and compare it with 
similar information from other colleges.
    The many end users we talked with were clearly more astute college 
evaluators than we sometimes appreciate. They appropriately regarded 
this kind of a consumer information tool as a starting point, not an 
end point. In other words, they want to begin by comparing colleges on-
line, but ultimately want to refine their lists and make their 
decisions based on visiting campus, speaking with informed counselors, 
and weighing a college's strengths against their expectations. This is 
a smart, cost-efficient approach, and one we applaud.
    Interestingly, the focus groups also asked us for something beyond 
comparable data. They asked us to find a way for colleges not only to 
be compared, but for each college to tell how it differs from its peer 
institutions--what, in the college's view, makes it special or 
distinctive.
    The product that resulted from this year-long exercise is a two-
page consumer profile that has a similar look and feel for each 
college. There is a wealth of consistently-presented facts and figures 
in those two pages. Beyond that, though, are brief blocks of narrative 
and a series of click-on buttons that allows each college to tell its 
story. One high school college counselor we talked with said, ``I like 
to ask colleges that come in to visit me to tell me about the things 
they are most proud about on their campuses. Tell me the programs, the 
things that make you special. I want to know what they brag about, 
because that tells me about who they are.'' A college's U-CAN profile 
captures this kind of important qualitative information.
    There is a rich array of information--and paths to additional 
information--in the U-CAN profile as it was unveiled a few weeks ago. 
There are a total of 47 comparable data elements provided. Beyond that, 
however, there are 25 click-on buttons that link to various sections of 
the college's Web site for additional details on areas of interest. The 
links cover the wide range of information that families told us they 
wanted to explore--everything from spiritual life to the surrounding 
community to campus crime reports. Included are some links that 
Congress is especially interested in as well, such as information on 
transfer of credit. We do not seek to rank schools. Rather, we believe 
that families should consider a wide range of institutions at a wide 
range of prices, as well as the highly visible brand-name colleges and 
universities. Such an approach is good for students, good for 
competition, and good for this nation.
    The U-CAN project is funded entirely from NAICU reserve funds. 
Neither participating colleges nor consumers are charged a fee. We are 
not seeking any federal funding, nor do we accept any advertising. 
NAICU and the participating institutions consider this effort a public 
service.
    It has been an enormous undertaking to get this new tool developed 
and launched in less than a year. However, more than 600 private 
colleges had signed up to participate by the time we launched U-CAN on 
September 26. We now have more than 700 schools signed up, and the list 
continues to grow daily. This is a remarkable achievement when you 
consider that the total number of colleges and universities that belong 
to NAICU is 943 (we have an additional 65 association members).
    Though only five weeks old, the U-CAN Web site, www.ucan-
network.org, has already become a busy gathering place for those 
seeking college selection information. Over 400,000 pages have been 
viewed so far by 60,000 visitors.
    College-going students can find U-CAN on Facebook, YouTube, and 
Wikipedia, as well as in Google search ads. We're also about to mail 
information on the project to 2,700 high school guidance counselors, 
and we're appearing on radio talk shows nationally--not just to promote 
U-CAN but also to help consumers find and use other tools for an 
informed college choice.
    We are learning as we go. What you presently see on the Web site is 
``U-CAN 1.0.'' We have a comprehensive feedback mechanism built into 
the site, so that we can gather user comments on problems and 
shortcomings, and can continue to improve our product in the coming 
months
    As proud as we are of U-CAN, we understand that this greater 
transparency, while important, does not answer all your questions about 
cost. Parents are increasingly anxious about how they will pay for 
their children's education. We do hope that if they see how much aid is 
available, and understand the range of pricing structures even just 
within the private college sector, some of that anxiety will be 
lessened. However, this committee has many legitimate policy questions 
on price that I would also like to address.
    At it simplest level, prices have gone up because our annual costs 
have gone up, and because we are providing more services than ever. To 
be very specific, let me lay out some of the principal cost drivers for 
last year, as found in a survey of NAICU institutions. While this list 
changes somewhat from year to year, there are some cost drivers--such 
as health insurance and financial aid--that have perennially appeared 
on such a list for the past decade.
     From 1994-95 to 2004-05, grant aid provided by private 
colleges increased 150 percent, more than twice the rate of tuition (71 
percent).
     Since 2005, the price of utilities has risen 27 percent, 
according to the Commonfund Institute. This is almost triple the 
average annual increase over the previous four years.
     The median increase for health care costs at colleges was 
9 percent in 2005-06, according to the College and University Personnel 
Association.
     In recent years, annual premiums for many types of 
insurance, including general liability, property, and worker's 
compensation, have commonly increased by double-digit rates. Experts 
expect property insurance to increase between 10 to 50 percent in 2006, 
according to the Chronicle of Higher Education.
     Periodicals and other library materials routinely increase 
by double-digit rates each year. The Association of Research Libraries 
reports that between 1986 and 2004, research library expenditures for 
scholarly journals increased 273 percent.
    Next, let me tell you some of the ways institutions are organizing 
to counteract the effect of these rising costs, including innovative 
affordability and cost-cutting initiatives. There is, however, no 
single approach, because of differences in institutions' mission, 
student population, and fiscal resources.
    To control operating expenses, institutions are:
     Entering into consortial arrangements to reduce 
administrative and academic redundancies, and leverage their purchasing 
power to obtain lower costs for energy, insurance, information 
technology, and other services.
     Outsourcing campus services, such as grounds and 
facilities maintenance, alumni relations operations, residence hall 
management, billing and other back-office functions, and bookstores.
     Turning to environmentally friendly systems to lower 
energy consumption; streamlining staff; and consolidating offices and 
programs to enhance efficiency.
     Increasing the revenue they receive through non-tuition 
sources, including philanthropic giving, and the selling and renting 
out of underused campus-owned facilities and properties.
    A compendium of college affordability, cost-saving, and consortial 
initiatives is posted on the NAICU Web site and is also attached to 
this testimony.
    Further, many of the state associations affiliated with NAICU are 
deeply engaged in collaborative efforts. Representative Petri has been 
particularly engaged in helping one of our most innovative and active 
states--Wisconsin--on their model statewide efforts to reduce costs. 
But other states are also undertaking similar efforts. In fact, a 
number of private college state associations have made such progress in 
this area that they have formed a separate non-profit called the 
Coalition for College Cost Savings to promote the power of collective 
action to drive better bargains on the cost of services at private 
colleges. Although this is not a NAICU initiative, it is a related 
response by the private college sector to the concerns of Congress.
    As many members of this Committee know, independent colleges 
believe that the best solutions to college access challenges come 
through our working in partnership with the federal government. We have 
opposed, and will continue to oppose, measures that we believe 
represent inappropriate restrictions on our ability to secure the 
revenues we need to maintain our financial security and improve our 
educational offerings--or any policy measures that threaten our ability 
to fulfill our distinctive missions. When Congress invests in the 
traditional student aid programs, it makes a real difference for our 
students. Indeed, welcoming students from all income levels to our 
campuses is not just something we want to be able to do--it is at the 
very heart of who we are.
    In this regard, we also want to address a grave misperception that 
exists in some public policy arenas today. Time and again we have heard 
the argument that somehow the federal investment in student aid drives 
up college prices. Exhaustive research has conclusively shown that this 
is not the case. Still, the misperception persists, so let me try today 
to put it in simpler business terms.
    When a low-income student arrives at our door, with the tuition 
glass partially full because of federal aid, it is less expensive for 
us to fill that cup. If it costs us less money to enroll that student, 
then there is less upward pressure on our student aid budget, and 
ultimately on our tuition.
    Formal research bears this out. For more than a decade, researchers 
have sought to determine whether a causal relationship exists between 
increases in federal student aid and increases in tuition. The 
conclusion reached is that there is no analytical evidence to support 
the existence of such a linkage. You have authorized several studies at 
the Department of Education on this question, and those findings have 
clearly indicated this not to be the case.
    One of the most authoritative studies on the topic was the 2001 
Department of Education report, ``Study of College Costs and Prices, 
1988-89 to 1997-98,'' which investigated whether federal or state 
student financial aid led directly to tuition increases. The study, and 
I quote, ``found no associations between * * * federal grants, state 
grants and student loans and changes in tuition.''
    Then in 2003, the Department of Education prepared a summary of 
research related to higher education financing, ``Congressionally 
Mandated Studies of College Costs and Prices.'' That document 
highlights information from four major studies. While the studies 
address the issue of college pricing from several angles, together they 
clearly demonstrate the depth of research on this topic--with no 
evidence that federal student aid is impacting college prices.
    Mr. Chairman and Members of this Committee, thank you for this 
opportunity to give you an overview of U-CAN. I also want to assure you 
that we are hard at work to contain costs. We would welcome a further, 
national conversation about this matter, through which we look for 
constructive solutions that do not reduce innovation or educational 
quality. Finally, I want you to know how much we appreciate the 
continuous support you have all shown for the federal student aid 
program.
                                 ______
                                 
    [Additional submissions by Dr. Bassett follow:]
    
    
                                ------                                


   Enhancing Affordability and Access in Independent Higher Education

 Price and Cost-Control Initiatives at America's Private Colleges and 
                              Universities

     national association of independent colleges and universities
Enhancing Affordability--Replacing Loans with Grants; Reducing Expected 
        Student and Family Contributions
    Over the past decade, private institutions have made themselves 
more accessible and affordable to students of modest means through 
unprecedented investments in their institutional grant programs. They 
have retooled institutional needs analysis formulas to reduce expected 
student and family contributions, lowered work expectations, and 
replaced loans with grants.
            Amherst College, Amherst, MA
    Amherst will replace all loans with scholarships in its financial 
aid packages beginning in the 2008-09 academic year. The policy will 
eliminate loans for all students. It will affect incoming students in 
the Class of 2012 and current students. In 1999, Amherst eliminated 
loans for low-income students.
            Baylor University, Waco, TX
    Baylor has increased grant aid and the percent of the need covered 
by institutional scholarships, and reduced student loan expectations.
            Brown University, Providence, RI
    Beginning with the class of 2003, students who qualify for 
institutional aid receive larger grants and smaller loans. It gives 
students with the greatest financial need approximately $17,000 in 
additional grant aid over four years. All students can now apply 100 
percent of any outside grants toward the self-help portion of their 
financial aid packages, reducing loan or campus work expectations.
            Centenary College of Louisiana, Shreveport, LA
    Centenary offers the Centenary Affordability Program (CAP), which 
is open to all parents who qualify for a federal PLUS loan. For the 
four years their child is enrolled at Centenary, the college will pay 
the interest on annual loans of up to $15,000. A fixed rate payment 
option and four years of interest-free borrowing result in fast 
principal reduction. CAP can be combined with other financial aid for 
which a student may qualify.
            Columbia University, New York, NY
    Beginning in 2007-08, Columbia will eliminate the debt burden on 
students whose families earn less than $50,000 per year, replacing 
loans with grants. In 2007, an alumnus pledged $400 million, all 
designated for financial aid. It came a year after Columbia announced a 
$4 billion fundraising campaign to build an endowment for financial aid 
and faculty development.
            Davidson College, Davidson, NC
    Beginning in 2007-08, Davidson will eliminate loans from financial 
aid packages. Students will have their demonstrated financial need 
funded entirely through grants and student employment, and graduate 
debt-free. The policy applies to both incoming and upper class 
students. In 2006-07, Davidson capped student loans at $3,000 per year, 
increasing grants by whatever amount it reduced loans.
            Emory University, Atlanta, GA
    Beginning in 2007-08, Emory will replace need-based loans with 
grants for students whose parents earn $50,000 or less. Students whose 
families earn between $50,001 and $100,000 won't have to take out more 
than $15,000 in loans over a four-year period. Emory will pay the rest.
            Gannon University, Erie, PA
    Gannon matches the state grants of eligible students from New York 
and Ohio.
            Harvard University, Cambridge, MA
    Since 2006-07, parents in families with incomes of less than 
$60,000 are no longer expected to contribute to the cost of their 
children attending Harvard. Harvard also reduced the contributions of 
families with incomes between $60,000 and $80,000. The new thresholds 
build on those announced two years ago, with eliminated expected 
contributions for families with incomes below $40,000, and reduced 
contributions for families with incomes between $40,000 and $60,000. 
The number of students enrolled at Harvard from these income brackets 
increased by 24 percent for the class entering fall 2005--the first 
full year of the program.
            John Carroll University, University Heights, OH
    John Carroll makes it possible for families making under $40,000 to 
enroll their incoming freshman tuition-free, effective for the 2007-08 
academic year. Once federal and state aid eligibility is determined, 
John Carroll scholarship and grant aid will be awarded to cover the 
remainder of the cost, up to full tuition and fees.
            Lyon College, Batesville, AR
    Students transferring to Lyon from two local community colleges, 
who come with the dean's recommendation and a 3.0 grade point average, 
will receive a scholarship that, combined with state and federal 
assistance, allow those living at home to complete their junior and 
senior years at a cost comparable to attending the two year 
institution.
            Massachusetts Institute of Technology, Cambridge, MA
    Since 2006-07, MIT has matched students' Pell Grants, up to their 
maximum amount. Earlier, MIT revised its financial aid package to 
replace $2,000 in loans or work-study with grants for all students.
            Princeton University, Princeton, NJ
    Princeton no longer requires undergraduates on financial aid to 
obtain loans, providing grants instead. In addition, the summer 
earnings expectation for financial-aid students was reduced, with the 
largest reductions for students from lower-income families. The amount 
that students are expected to contribute from their own savings was 
also reduced. Princeton's calculation of expected parental 
contributions has been reduced by removing home equity from 
consideration (or giving an equivalent renter's allowance to those who 
don't own homes, but have other investments). As a result of these 
improvements, the portion of tuition covered by the average grant for a 
freshman aid student rose from 65 percent in 1997, to 90 percent in 
2006.
            Schreiner University, Kerrville, TX
    Schreiner pays the interest on federal Plus loans taken out by 
parents.
            Stanford University, Stanford, CA
    Since 2006-07, families with annual incomes of less than $45,000 
have not been expected to contribute to the cost of tuition at 
Stanford, and the requirements for families earning $45,000 to $65,000 
have been cut in half. In 2007, Stanford increased need-based financial 
aid by 15.2 percent, to $76 million annually, to assist students from 
middle-income families and reduce the sum parents are expected to 
contribute. It reduced the amount of home equity it assesses when 
calculating need, capping the amount at 1.5 times family income. An 
allowance is also made for renters. It also reduced the amount middle-
income students are expected to borrow during the school year to $2,000 
from $3,500. Both of these reductions will be offset by increased 
scholarship funds for students.
            University of Pennsylvania, Philadelphia, PA
    Since 2006-07, Penn replaces loans with grants for students of 
families earning less than $50,000. As a result, the highest-need 
students will each receive grant aid of more than $45,000 in 2006-07. 
The move coincides with a $6.3 million increase in Penn's undergraduate 
financial aid budget for the coming academic year, with those funds 
targeted to middle- and low-income students. In 2005-06, the university 
reduced the summer savings requirement and increased allowances for 
incidental expenses for students from low-income backgrounds.
            Williams College, Williamstown, MA
    Several times in recent years Williams College has reduced what it 
expects students to borrow and has made up the difference with 
increased grant aid. Students in the lowest income bracket now have no 
loans at all. The next bracket borrows a cumulative total of $3,800 at 
graduation. The highest loan expectation is a cumulative total of 
$13,900 at graduation.
Enhancing Affordability: Tuition Cuts
    Tuition cuts have been a small but growing trend over the past 
decade. In the five past years, a dozen have cut their list price. To 
date, one institution has cut tuition for 2007-08.
            International College, Ft. Myers/Naples, FL
    Cut tuition by 20 percent.
    The following reduced tuition in 2006-07.
            Alliant International University, San Diego, CA
    Cut tuition by 26 percent.
            Regions University, Montgomery, AL
    Cut tuition 42 percent.
Enhancing Affordability: Tuition Freezes
    One-time tuition freezes keep an institution's list price at the 
previous year's level. These universities will not increase tuition for 
2007-08.
            Beacon College, Leesburg, FL
            Freed-Hardeman University, Henderson, TN
            Harrisburg University of Science and Technology, 
                    Harrisburg, PA
            Philander Smith College, Little Rock, AR
            Princeton University, Princeton, NJ
            Rollins College, Winter Park, FL
            Rust College, Holly Springs, MS
Enhancing Affordability: Tuition Guarantees
    A growing number of private institutions offer four- or five-year 
tuition guarantees to freshmen. Tuition will not increase for the years 
they are enrolled. These programs give families peace of mind that 
their tuition won't increase by unexpected amounts, and allow them to 
more easily budget. These colleges and universities include, but aren't 
limited to, the following.
            Baylor University, Waco, TX
            Capitol College, Laurel, MD
            Concordia University, River Forest, IL
            George Washington University, Washington, DC
            Hardin-Simmons University, Abilene, TX
            Hiram College, Hiram, OH
            Hiwassee College, Madisonville, TN
            Merrimack College, North Andover, MA
            Northwestern College, Orange City, IA
            Ouachita Baptist University, Arkadelphia, AR
            University of Charleston, Charleston, WV
Enhancing Affordability: Partnerships with Community Colleges and High 
        Schools
    Private institutions are giving community college and high school 
students opportunities to earn credits at reduced prices and to ``test 
the waters'' before enrolling. Many institutions partner with local 
two-year colleges to offer joint degree programs that lower overall 
costs for students.
            Benedictine University, Lisle, IL
    Students with an associate's degree from one local community 
college are able to earn a bachelor's degree from Benedictine through 
an on-site program at the two-year institution. Tuition is half what 
the students would pay if they enrolled as adult nursing students at 
the Benedictine. The university is exploring similar partnerships with 
two other community colleges.
            Gannon University, Erie, PA
    Gannon has dual enrollment programs with local and regional high 
schools where qualified high school students can take college courses 
and earn college credit while they are still in high school.
            Hiwassee College, Madisonville, TN
    Hiwassee, a two-year institution, provides dual enrollment courses 
for high school juniors and seniors in surrounding counties. The 
program essentially provides collegiate course work for students with 
no out-of-pocket expense.
            Lyon College, Batesville, AR
    Students at two nearby community colleges may take one course a 
semester at Lyon while paying their community college's rate, allowing 
them to ``test the waters'' before transferring. In addition, Lyon 
students may take a course each semester at these institutions, 
allowing Lyon to save the cost of creating courses that are already 
locally available and meet the college's academic standard.
            Schreiner University, Kerrville, TX
    Schreiner provides at no cost to qualified area high school seniors 
access to one course to promote higher education as an option, and give 
them the opportunity to explore the college classroom before committing 
to enroll. The university has also developed articulation agreements 
with nearby community colleges.
            Walsh College, Troy, MI
    Walsh gives students the opportunity to complete three college 
degrees within a total of five years. The program offers a seamless 
transfer from an associate's in business program at two local community 
colleges into the bachelor's, and then master's business programs at 
Walsh. This shortens total degree completion time by as much as one 
year, with 87 hours offered at community college rates.
Enhancing Affordability: Accelerated Degree Programs
    Private institutions nationwide offer accelerated degree programs. 
These programs get students out into the workforce earning a salary 
earlier, and saving on their tuition, room, and board costs.
            Adelphi University, Garden City, NY
    Adelphi offers a five-year combined bachelor's and master's 
teachers program, as well as accelerated joint-degree programs 
combining undergraduate liberal arts with professional studies 
(dentistry, engineering, environmental studies, law, optometry, and 
physical therapy), in conjunction with six other public and private 
institutions.
            Albertus Magnus College, New Haven, CT
    Albertus Magnus College offers both undergraduate and graduate 
accelerated programs. Tuition for these programs is approximately half 
of tuition for traditional day programs.
            College of Notre Dame of Maryland, Baltimore, MD
    The College of Notre Dame offers Accelerated College, a program in 
business and nursing for working women and men. Once a student enters 
an accelerated college cohort, tuition will remain the same for that 
cohort until graduation.
            Gannon University, Erie, PA
    Gannon offers accelerated joint-degree programs in law, pharmacy, 
osteopathic medicine, podiatry, physical therapy, and other fields with 
three other institutions.
            Hiram College, Hiram, OH
    In 2006, Hiram added an accelerated biomedical humanities program, 
which prepares students to take the MCAT or GRE exams at the end of 
their second year, and to enter medical school or graduate school after 
three years.
            Judson College, Marion, AL
    Judson allows students to graduate with bachelor's degree in two 
years, ten months, saving time and money.
            Mount St. Mary's University, Emmitsburg, MD
    Mount St. Mary's offers accelerated undergraduate and graduate 
degree programs, including several for returning adult students. 
Tuition for the undergraduate accelerated program is less than half 
that of the traditional program.
            Nichols College, Dudley, MA
    Nichols offers an accelerated joint bachelor's and master's of 
business administration program in on-site and online formats, both of 
which cost less than the traditional programs.
            Peirce College, Philadelphia, PA
    Peirce allows adult learners to earn an associate degree in half 
the usual time.
            Saint Joseph College, West Hartford, CT
    Saint Joseph offers seamless undergraduate/graduate degree programs 
that allow students to earn baccalaureate and master's degrees in five 
years in biology, chemistry, and psychology/counseling. The college 
also offers an accelerated degree program in nursing.
            Seattle University, Seattle, WA
    Matteo Ricci College at Seattle University is the three-year 
university phase of a program that integrates high school and 
university level studies. It allows students to complete their high 
school and university education in six or seven years, rather than the 
traditional eight.
            Waldorf College, Forest City, IA
    Waldorf offers all its bachelor's degree programs in a three-year 
format.
Enhancing Affordability: Four-Year Graduation Guarantees
    These guarantees ensure that students at private colleges and 
universities graduate in four years. They avoid an additional year of 
tuition payments and get graduates into the workforce sooner than most 
of their peers at public universities. Institutions that don't deliver 
on the promise for a student who follows university guidelines and 
stays on track, will provide the remaining classes at no cost.
            Augsburg College, Minneapolis, MN
            Centre College, Danfield, KY
            DePauw University, Greencastle, IN
            Doane College, Crete, NE
            Dominican University of California, San Rafael, CA
            Milwaukee School of Engineering, Milwaukee, WI
            Muskingum College, New Concord, OH
            Pace University, New York, NY
            Regis University, Denver, CO
            University of the Pacific, Stockton, CA
Enhancing Affordability: Job Guarantees
    Job guarantees for new graduates keep institutions accountable for 
the quality of education provided, and assure students that their 
financial investment is worthwhile.
            College Misericordia, Dallas, PA
    College Misericordia offers a guaranteed placement program that 
ensures graduates of a paid internship in their fields if, six months 
after graduation, they do not have a job in their fields or have not 
been admitted to graduate school.
            Manchester College, North Manchester, IN
    Students who have not secured a job within six months of graduation 
may take additional undergraduate courses free of charge for one year 
to help prepare for employment.
            Milwaukee School of Engineering, Milwaukee, WI
    Undergraduate course may be repeated at no cost within three years 
of graduation if the graduate or his/her employer believes job 
performance will be enhanced.
            Newbury College, Brookline, MA
    Students who graduate with a bachelor's degree and at least a 3.0 
grade point average, may take up to 10 courses at Newbury free of 
charge, if they are not employed after six months.
            Robert Morris College, Chicago, IL
    The 180-Day Guarantee offers associate degree students additional 
free education if they are unemployed within 180 days of graduation.
Enhancing Affordability: Work Colleges
    Work colleges blend liberal learning and applied studies into the 
undergraduate curriculum. Every student is required to work on campus 
or in the community. In return, partial or full tuition is covered by 
the institution. Five of these institutions are listed below. For more 
information, visit www.workcolleges.org.
            Alice Lloyd College, Pippa Passes, KY
    Every full-time student is required to work as a part of his or her 
overall educational experience, helping to significantly defray the 
cost of attendance. Tuition at Alice Lloyd is guaranteed to students 
residing in 108 central Appalachian counties in parts of five states.
            Berea College, Berea, KY
    Every admitted to Berea is awarded the equivalent of a four-year, 
full tuition scholarship. All students are required to work at least 10 
hours a week in campus and service jobs.
            Blackburn College, Carlinville, IL
    Every student works a minimum of 160 hours a semester, keeping the 
cost of attendance low.
            College of the Ozarks, Point Lookout, MO
    No full time student at College of the Ozarks pays a penny of 
tuition. Students work 15 hours a week during the regular school year, 
plus two 40-hour weeks during holiday periods, to help offset the costs 
of their education.
            Deep Springs College, Deep Springs, CA
    Each student attends for two years and receives a full scholarship 
valued at over $50,000 per year. Students work at least 20 hours a week 
on the campus and accompanying ranch.
Controlling Costs: Outsourcing; Streamlining Staff; Integrating 
        Information Technology; Employee Incentives to Cut Costs
    Private colleges and universities are launching--and expanding--
innovative initiatives, and adopting business practices to control 
operating costs, enhance efficiency, and give students a high quality 
education at the lowest price possible. These include outsourcing 
services, targeting cost reductions, implementing new information 
technology for administrative functions, and streamlining staff while 
safeguarding quality.
            Clark University, Worcester, MA
    Clark has launched initiatives in strategic fuel purchasing, 
computerized energy co-generation and management, which have resulted 
in a 33-percent annual savings. Clark practices ``enterprise'' 
budgeting, which treats certain parts of the university as self-
contained businesses.
            Columbia College Chicago, Chicago, IL
    Columbia College Chicago has a financial incentive program that 
rewards faculty and staff who save money by eliminating processes and 
procedures without harming student services or outcomes. Recipients are 
given a financial award equal to one-third of the cost savings, up to 
$2,000.
            Denison University, Granville, OH
    The university's personnel committee now requires that any growth 
in staff size be approved only if it can be accomplished without 
creating any additional burden to the student body. The increase must 
be funded by either non-student revenue or by a tradeoff with an 
existing expense.
            Emory University, Atlanta, GA
    Emory has consolidated departments and is collaborating with 
regional institutions to purchase commonly used supplies. It is 
eliminating contractor redundancy by combining contracts with major 
vendors for lower prices, and pursuing smaller vendors for greater 
discounts.
            Flagler College, St. Augustine, FL
    To enhance efficiency, Flagler requires faculty to teach at least 
five courses or 300 credit hours each semester; has replaced permanent 
tenure with rolling one- to three-year contracts; and increased the use 
of part-time adjunct faculty.
            Georgetown College, Georgetown, KY
    Georgetown College outsources much of its alumni relations 
operations, including the production of alumni publications, management 
of alumni events, and development of an alumni website.
            Massachusetts Institute of Technology, Cambridge, MA
    MIT launched a re-engineering project to close the gap between the 
institute's income and its expenses. MIT has consolidated suppliers and 
steamlined facilities operations.
            McKendree College, Lebanon, IL
    To serve students more cost effectively, the McKendree restructured 
its administrative staff. Without reducing the quality or degree of 
service to students, several staff positions were closed.
            Spartanburg Methodist College, Spartanburg, SC
    Spartanburg reorganized its administrative structure, replacing six 
academic departments with four academic divisions. The new structure 
also reduced the number of administrators reporting to the vice 
president for academic affairs, enhancing efficiency.
            Stetson University, DeLand, FL
    Stetson has reduced administrative costs through program 
consolidation and new computer applications. It replaced the chief 
academic officer with a dean's council, giving the deans of arts and 
sciences, business, and music direct responsibilities for institutional 
planning.
            Union University, Jackson, TN
    Union University has outsourced several of its operations, 
including bookstore, facilities, grounds, and housekeeping. Through 
careful budget monitoring, it has taken steps to reduce hiring.
            University of Notre Dame, Notre Dame, IN
    Notre Dame has re-bid and streamlined administration of benefit 
plans; implemented campus-wide budget reductions; enhanced procurement 
processes; outsourced the cashier's office; and implemented incentive 
plans to encourage departments to improve expense management.
Controlling Costs: Cost Savings through Environmentally-Friendly 
        Systems
    Private colleges and universities are moving quickly to implement 
and expand environmentally-friendly systems that reduce energy 
consumption and result in significant cost savings.
            Adelphi University, Garden City, NY
    Adelphi installed a geo-thermal heating system in 2003 for its new 
residence hall and reduced the building's projected consumption by 30 
percent. The university cuts back 400 kilowatts of power on high demand 
days in exchange for payment from its energy supply company.
            Illinois College, Jacksonville, IL
    To reduce energy costs well into the future, Illinois College 
opened a resident hall in 2006 that emphasizes state-of-the-art 
strategies for sustainable site development, water savings, energy 
efficiency, materials selection, and indoor environmental quality.
            Juniata College, Marion, AL
    Juniata buried cool-water lines at all the main buildings to reduce 
the electrical load for air conditioners, making it more cost efficient 
to cool buildings. The college has created a LEED-certified classroom/
multipurpose building that uses recycled materials, natural heating and 
cooling systems, composting toilets and a variety of other systems to 
reduce the environmental footprint and cut down on energy consumption. 
Juniata installed new boilers that can be switched between natural gas 
and heating oil, allowing the college to save money by locking in long-
term supplies at reduced costs.
            Park University, Parkville, MO
    Park has had significant savings by building classroom and office 
space underground, including saving more than 50 percent on the 
construction cost of new distance learning facilities. Park also reaps 
ongoing savings through lower operating and utility costs.
            Princeton University, Princeton, NJ
    Princeton has implemented an electricity supply load management 
system that predicts electricity demand on an hourly basis, compares 
demand to pricing, and allows Princeton to use major equipment when 
energy costs are lowest; this system saved about $2 million in the 2006 
fiscal year. Princeton also produces chilled water when costs are 
lowest, stores this chilled water until it is needed, and has been 
recommissioning heating and cooling systems to original or improved 
designed standards for additional savings.
            University of Evansville, Evansville, IN
    The University of Evansville produces approximately half of its own 
electricity with a guaranteed savings of at least $400,000 annually 
over the next 15 years.
            University of Scranton, Scranton, PA
    During summer 2005, the University of Scranton implemented a water 
conservation project that will save the university nearly $100,000 a 
year and conserve more than 10 million gallons of water consumption. 
The savings from reduced water consumption, sewer taxes, and thermal 
energy for water heating are estimated at about $95,000 per year.
            Wilson College, Chambersburg, PA
    Vegetable oil from Wilson College's 100-acre, on-campus, organic 
farm, is recycled into biodiesel fuel for the farm's equipment, and 
waste products from the dining hall and equestrian center are used as 
compost for the fields.
Controlling Costs: Student Employment Initiatives
    A growing number of institutions are giving students an opportunity 
for paid on-hands work experience related to their field of study. 
Colleges save on the higher costs of full-time, permanent employees. 
See also Work Colleges, page 7.
            Juniata College, Marion, AL
    Juniata's entire information tech support operation is run by its 
students. Student managers direct budgets, hire (and fire) student 
employees, and take on R & D assignments for new software or products.
            Marquette University, Milwaukee, WI
    To save costs, Marquette supplements its finance staff by hiring 
student accounting interns who apply classroom knowledge while 
providing a needed university service.
            Rhodes College, Memphis, TN
    Since 2004, students compete for jobs as ``student associates'' in 
areas related to their academic field of study. Rhodes pays the 
students staff wages, while reaping the savings of assigning only 
fractional positions, and the students gain valuable training and 
experience. With 60 students involved, Rhodes has already seen cost 
containment almost triple in the third year of the program. The 
positions solve departmental needs at a fraction of the cost and gave 
resulted in improved services, extended programming, and greater 
student satisfaction.
Controlling Costs: Regional and Metropolitan Consortial Arrangements
    Increasingly, private colleges and universities in a common 
metropolitan area or region are working together to cut operating costs 
while improving quality. These multi-institution alliances allow 
colleges to leverage joint purchasing power for lower costs on energy, 
insurance, and information technology; reduce administrative and 
academic redundancies; offer students new learning opportunities and 
better services; and share best practices.
            Associated Colleges of Central Kansas, McPherson, KS
    ACCK's consortial activities collectively save participating 
campuses an estimated $1.2 million each year. It provides 
administrative computing services and selected academic programs from a 
central location; an undergraduate major in special education, and 
upper-level coursework in several disciplines. ACCK offers a health 
insurance pool; Internet access through a single vendor; daily courier 
service; and a Blackboard server used by faculty at the member 
institutions.
            Colleges of the Fenway, Boston, MA
    Six neighboring institutions in Boston formed the Colleges of the 
Fenway consortium to share courses, programs, and services, while 
retaining their individual names, missions, and independence. The 
consortium offer cross registration of students and collaborate on 
master planning and information technology. It offers temp services and 
advertising contracts; and teams together to hold admissions and 
marketing events.
            Five Colleges, Inc., Amherst, MA
    Five Colleges, Inc., a consortium of five private and public 
institutions, promotes long-term education and administrative resource 
sharing. Members make joint appointments in areas such as risk 
management and recycling; jointly recruit for admissions; conduct joint 
management training; and have a cooperative purchasing agreement that 
allows the institutions to jointly save $1 million each year. The 
colleges have common academic calendars; offer a joint automated 
library system and online course catalog; share several academic 
departments; and make joint faculty appointments.
            Independent College Enterprise, Charleston, WV
    The Independent College Enterprise is a collaborative effort 
between seven Virginia, West Virginia, and Massachusetts institutions 
to share all of their administrative computing services. ICE owns and 
operates the hardware and software that support the financial 
management, human resource, financial aid, admissions, alumni, 
development, and student records processes for all seven schools.
            Lehigh Valley Association of Independent Colleges, 
                    Bethlehem, PA
    LVAIC's collaborative purchasing programs have generated 
substantial cost savings, giving smaller institutions better pricing, 
and access to higher quality products and services. It handles $60 
million in group purchasing of products and services. Seven other 
regional colleges, universities, and private secondary institutions 
have joined LVAIC's six member institutions in these programs.
            Southeastern Pennsylvania Consortium for Higher Education, 
                    Glenside, PA
    The eight private colleges and universities that make up SEPCHE 
share administrative services; a common calendar among groups of 
colleges to facilitate co-curricular and curricular activities; cross-
registration and transfer processes; and collaborative student 
activities. They jointly hire faculty and staff in mutually beneficial 
areas, develop new academic programs, and provide faculty development.
Controlling Costs: Statewide Consortial Arrangements
    State associations of private colleges and universities are 
innovating and expanding collaborative initiatives that cut operating 
costs while improving quality. These statewide alliances allow colleges 
to leverage joint purchasing power for lower costs on energy, 
insurance, and information technology; reduce administrative and 
academic redundancies; offer students new learning opportunities and 
better services; and share best practices.
            Association of Independent Colleges and Universities in New 
                    Jersey, Summit, NJ
    AICUNJ provides New Jersey's 14 independent colleges and 
universities consortial purchasing for communications, energy, 
insurance, computer software, equipment financing, mattresses and 
travel, and employment benefits such as temporary and long term 
disability benefits plans. Collaborative professional development 
workshops also help keep costs down.
            Association of Independent Colleges and Universities of 
                    Pennsylvania, Harrisburg, PA
    AICUP member institutions participate in several joint purchasing 
agreements, including licensing for major Microsoft products, with an 
average cost savings of 60 percent to 70 percent; repair and 
maintenance contracts, with an estimated overall cost reduction of 10 
to 30 percent; local and long distance phone service; Internet access; 
natural gas; electricity; bond financing, with an overall savings of 
$1.5 million in insurance expenses; and worker's comp and auto 
insurance.
            Connecticut Conference of Independent Colleges, West 
                    Hartford, CT
    CCIC has a multi-pronged administrative collaboration effort that 
is focused on group purchasing, shared services and the development of 
new markets. Members have access to shared staff training and contracts 
for various products including legal online music downloading, internet 
security tools, personal security options, parcel delivery, bottled 
water, conference calling, and news clipping services. Other services 
include student health insurance, workers compensation insurance, 
internal audit services, an annual risk management conference, and 
collaborative emergency planning. Work groups meet on a regular basis 
to explore options, expand services and share best practices.
            Council of Independent Colleges in Virginia, Bedford, VA
    CICV is involved in several collaborative business programs, 
including a volume discount program for long-distance telephone service 
and a discounted Microsoft Campus Agreement. CICV is also engaged in 
extensive collaborative efforts to recruit students for member 
institutions.
            Independent Colleges and Universities of Florida, 
                    Tallahassee, FL
    ICUF sponsors the Independent Colleges and Universities Risk 
Management Association that offer property, liability, workers 
compensation, and auto insurance. This group will soon add pooled 
coverage for property, casualty, workers compensation, auto, pollution, 
e-commerce, and a number of other products. ICUF provides its 28 
members with self-insured medical benefits; maintains a purchasing 
arrangement with UPS, Dell, and Siemens; and offers a statewide 
Microsoft Campus Agreement.
            Maryland Independent Colleges and Universities Association, 
                    Annapolis, MD
    MICUA offers collaborative purchasing programs its 18 member 
colleges, including student, property and casualty, group life, and 
long-term disability insurance; and student tuition payment plans.
            Ohio Foundation of Independent Colleges, Columbus, OH
    OFIC's 35 member colleges share technology hardware, software, and 
expertise; software licensing; faculty development and teacher 
education programs in technology use; consultative referral service in 
health and property and casualty insurance solutions; and consultative 
referral services in energy management solutions. OFIC also provides 
collaborative programs in minority student recruitment and retention.
            Oregon Independent Colleges Association, Portland, OR
    On behalf of its 17 member institutions, OICA has initiated and 
sustains volume purchasing programs for all voice and data 
telecommunications; multiple lines of software and hardware; a self-
insured workers compensation benefit trust; a self-insured employee 
health benefits trust; moving vans; public notices; and management 
training. Annual savings are estimated at $3 million to $5 million. 
Students at OICA member institutions can also cross-register, without 
cost, at other schools to complete required courses not offered in a 
given term at their home campus.
            Tennessee Independent Colleges and Universities 
                    Association, Nashville, TN
    TICUA offers its 35 members a self-funded health insurance program; 
and has its own procurement program that offers discounts with over 30 
vendors, ranging from computer software to electrical services. TICUA 
partners with its sister organizations in Kentucky and Florida to offer 
Tuition First and Independent Colleges and Universities Risk Management 
Association, respectively, to its members.
            Wisconsin Association of Independent Colleges and 
                    Universities, Madison, WI
    The WAICU Collaboration Project is a comprehensive initiative to 
perform all administrative support (back office) functions of 
Wisconsin's 20 private colleges and universities. According to the most 
recent statistics, WAICU reduced members' costs in 2005 by more than $5 
million--a 58 percent increase in savings from 2004. The effort, now 
halfway through its implementation process, includes joint 
administration of health plans, a study abroad consortium, professional 
development for faculty and departmental chairs, collection services, 
background checks, and a student health plan, which is being adopted in 
other colleges and universities outside of Wisconsin. The congressional 
report The College Cost Crisis called the WAICU project 
``transformative.''
Controlling Costs: National Consortial Arrangements
    These consortial efforts allow institutions from around the nation 
to pool resources to control costs and improve services.
            Association of Jesuit Colleges and Universities, 
                    Washington, DC
    Twenty-one AJCU member institutions provide a collaborative virtual 
reference service, which allows participating colleges to extend 
standard hours of operation by distributing the staffing of the service 
across multiple libraries and multiple time zones. Online reference 
librarian assistance is offered 24 hours a day, seven days a week.
            Coalition for College Cost Savings, Nashville, TN
    CCCS helps small to medium sized independent institutions in 16 
states enhance efficiency through joint procurement agreements for 
several services and products. Joint contracts for comprehensive asset 
management programs and employee long-term care insurance will be 
offered.
Controlling Costs: Non-Tuition Revenue Sources
    To help reduce the pressure of rising costs on tuition, private 
institutions are generating and expanding alternative revenue streams.
            Augustana College, Rock Island, IL
    Augustana launched a capital campaign with the goal of endowing $50 
million in need based scholarships.
            Hampton University, Hampton, VA
    Hampton uses income and interest from real estate and other 
investments to fund approximately $4million in scholarships for 
students each year.
            Loyola University Chicago, Chicago, IL
    Loyola University Chicago converted the first floor of a college 
owned building in Chicago to commercial retail rental property, and has 
leased university-owned land for 99 years in exchange for annual rental 
income of $2 million plus cost of living increases each year and 36,000 
square feet of education space.
            Martin Methodist College, Pulaski, TN
    MMC has encouraged alumni to use the new, but temporary, federal 
IRA charitable rollover provision to establish scholarship endowments.
            Nichols College, Dudley, MA
    Nichols' facilities are rented out in the summer at 100 percent 
capacity to help offset costs.
Price and Cost Transparency
    To keep prospective and enrolled students, their families, and 
policymakers informed on the cost of attendance, major campus 
expenditures, and budget priorities, private colleges are better 
communicating consumer and institutional financial information.
            Drake University, Des Moines, IA
    Drake posts audited financial statements on the web, distributes 
letters and e-mails explaining tuition increases, holds town meetings 
on the budget, and e-mails financial updates to the campus community.
            Emory University, Atlanta, GA
    Emory posts its financial statements online.
            Gannon University, Erie, PA
    Gannon's president sends an annual letter to all students, 
undergraduates and parents explaining not only the rationale for 
tuition increases, but outlining the new projects, facilities 
renovations, and faculty support.
            Hiram College, Hiram, OH
    Hiram outlines typical costs to prospective students and families 
through a number of ways, including providing financial scenarios on 
its website and in recruitment materials.
            Princeton University, Princeton, NJ
    Princeton established the first institution-specific financial aid 
calculator, which allows any family to go online and get a 
confidential, detailed estimate of how much aid they would receive and 
what they would pay for a Princeton education.
                                 ______
                                 

                          U-CAN Media Coverage

    Before and after its launch, U-CAN has generated considerable 
national attention. What follows is a list of national, regional, and 
trade stories that have reported on the initiative.

Bergen County, N.J., Record (October 27, 2007)
    A new resource for comparing private colleges (syndicated column)

Chicago Tribune (October 24, 2007)
    Private colleges fighting back with their own guide

Norfolk, Va., Virginian-Pilot (October 21, 2007)
    Career Connection (no web link available)

Asbury Park Press (October 19, 2007)
    New Web sites aid college search

Tampa Tribune (October 8, 2007)
    Database Has Score On Private Colleges

Westchester, N.Y., Journal News (October 6, 2007)
    Need to Pick a College?

Fort Worth Star-Telegram (October 6, 2007)
    Private College Resource

Reading Eagle (October 4, 2007)
    High marks are given to new Web site on college selection

Philadelphia Inquirer (October 4, 2007)
    Rethinking college rankings (opinion piece)

Tampa Bay Business Journal (October 3, 2007)
    Eckerd College joins new college ranking system

Carlisle Sentinel (October 1, 2007)
    Private colleges offer data

WPTZ.com (October 1, 2007)
    Four Private Colleges Join Web-Based List

University Business (October 2007)
    Changing Student Demographics

Burlington Free Press (September 30, 2007)
    Four Vermont colleges join consumer information network

Allentown Morning Call (September 30, 2007)
    U-CAN helps students and their parents choose the `right' college 
or university (editorial)

San Antonio Express-News (September 29, 2007)
    Comment: College comparison is now made easy

Baltimore Business Journal (September 28, 2007)
    Shop for Maryland colleges online

Newport News Daily Press (September 28, 2007)
    Online service quickly compares private colleges

Lansing State Journal (September 28, 2007)
    Need to pick a college? Headline online

Chicago Tribune (September 27, 2007)
    Private colleges get a bit of a boost

Seattle Post Intelligencer (September 27, 2007)
    New web site makes picking college easier

Cedar Rapids Gazette (September 27, 2007)
    National Web site offers admissions info for 600 colleges (no web 
link available)

Greenville News (September 27, 2007)
    College comparison Web site unveiled

Wilkes-Barre Citizens Voice (September 27, 2007)
    New web site brings private colleges to the public

Columbia Daily Tribune (September 27, 2007)
    Colleges launch site to rival U.S. News school rankings

Albany Times Union (September 27, 2007)
    Colleges unveil own database

Northwest Indiana Times (September 27, 2007)
    U-CAN look it up

Wilkes-Barre Times Leader (September 27, 2007)
    Local schools on new online database

Allentown Morning Call (September 27, 2007)
    College profile Web site unveiled

Asbury Park Press (September 27, 2007)
    Need to pick a college? New Web sites can help

Watertown Daily News (September 27, 2007)
    Two schools like new college-guide index

Chambersburg Public Opinion (September 27, 2007)
    Wilson joins effort to make comparisons of colleges easier

BusinessWeek (September 26, 2007)
    A new tool for the college bound

Inside Higher Ed (September 26, 2007)
    Accountability and the Applicant

Chronicle of Higher Education (September 26, 2007)
    Information, Please: As One Consumer Database Debuts, Higher-
Education Leaders Ponder Another

Abilene, Texas, Reporter-News (September 26, 2007)
    Local universities seek new national ratings

USA Today (September 25, 2007)
    Need to pick a college? New websites can help

St. Paul Pioneer Press (September 25, 2007)
    New web site to smooth college quest

Chronicle of Higher Education (September 25, 2007)
    College Comparison Web Site Debuts

Education Week (September 10, 2007)
    Colleges Build Web Sites to Enable Campus Comparisons, Sans Ranks

St. Louis Post-Dispatch (September 9, 2007)
    College Rankings: Is it rank, or a rank?

Minneapolis Star Tribune (September 5, 2007)
    Colleges are changing the rankings game (editorial)

Chronicle of Higher Education (September 4, 2007)
    The `U.S. News' Rankings Roll On

San Antonio Express-News (August 31, 2007)
    Compare college rankings to reality (opinion piece)

Kerrville, TX, Daily Times (August 21, 2007)
    Schreiner University makes U.S. News list

Cleveland Plain Dealer (August 21, 2007)
    College ranks and college angst (opinion piece)

San Antonio Express-News (August 20, 2007)
    Use college rankings with a grain of salt (editorial)

Carlisle Sentinel (August 19, 2007)
    Dickinson president serves on panel challenging college rankings

Time Magazine (August 18, 2007)
    Much Ado About College Rankings

Baltimore Examiner (August 18, 2007)
    College presidents developing alternative to U.S. News rankings

Greenville News (August 17, 2007)
    Clemson, Furman move up in magazine rankings

Washington Post (August 17, 2007)
    U.S. News's College Rankings Face Competition and Criticism

Omaha World-Herald (August 17, 2007)
    Colleges promote alternative to ranking

Minneapolis-St. Paul, Star-Tribune (August 17, 2007)
    Colleges increasingly avoiding `Best' label

San Antonio Express-News (August 17, 2007)
    Colleges call `elitist' list distorting; magazine defends it as 
useful tool

York, Neb., News-Times (August 16, 2007)
    Better information for a better college choice (opinion piece)

St. Petersburg, Fla., Times (August 6, 2007)
    Do your homework on college rankings (editorial)

Waterbury, Conn., Republican-American (August 3, 2007)
    College Dropouts

Sioux Falls, SD, Argus Leader (July 25, 2007)
    College guide: Useful or irrelevant?

Macon, Ga., Telegraph (July 23, 2007)
    Wesleyan boycotts college rankings

Bloomberg News (July 23, 2007)
    Williams, Amherst Won't Fight System

Indianapolis Business Journal (July 21, 2007)
    Some Indiana Colleges Revolt Against Survey

Christian Science Monitor (July 19, 2007)
    A better way to rank America's colleges

Columbus Dispatch (July 14, 2007)
    Magazine's college rankings done poorly

Lynchburg, Va., News & Advance (July 10, 2007)
    Sweet Briar boycotting U.S. News and World Report rankings

Burlington, Vt., Free Press (July 10, 2007)
    College rankings rile some schools

Richmond Times-Dispatch (July 7, 2007)
    Colleges question U.S. News rankings

New York Times (July 4, 2007)
    Colleges Join Forces on a Web Presence to Let Prospective Students 
Research and Compare

Cincinnati Enquirer (July 2, 2007)
    Ranking the college rankings (editorial)

Spartanburg, S.C., Herald Journal (July 1, 2007)
    Converse, Wofford balk at taking part in U.S. News survey

Chronicle of Higher Education (June 26, 2007)
    Private-Colleges Group Proposes Template to Foster Comparisons of 
Members

Inside Higher Ed (June 26, 2007)
    Campus Accountability Proposals Evolve

Philadelphia Inquirer (June 24, 2007)
    U.S. News' College Rankings Overrated (editorial)

U.S. News & World Report (June 22, 2007)
    About the Annapolis Group's Statement (column)

Cleveland Plain Dealer (June 21, 2007)
    Liberal arts schools protest U.S. News survey

Time (June 20, 2007)
    A Better Way to Rank Colleges?

CNN (June 20, 2007)
    Many American colleges balk at U.S. News rankings

USA Today (June 20, 2007)
    Some colleges may opt out of rankings

Inside Higher Ed (June 20, 2007)
    More Momentum Against `U.S. News'

Chronicle of Higher Education (June 20, 2007)
    Annapolis Group Challenges `U.S. News' Rankings

Allentown, Pa., Morning Call (June 20, 2007)
    3 local colleges join others in bucking U.S. News rankings

New York Times (June 20, 2007)
    Some Colleges To Drop Out Of Rankings By Magazine

Bloomberg News (June 19, 2007)
    More Colleges Plan to Snub Annual U.S. News Ranking
                                 ______
                                 
    Chairman Miller. Thank you.
    Mr. Alexander?

   STATEMENT OF KING ALEXANDER, PRESIDENT, CALIFORNIA STATE 
                    UNIVERSITY AT LONG BEACH

    Mr. Alexander. Thank you Chairman Miller and members of the 
committee for this opportunity to share my thoughts with you 
about the rising college costs, public accountability and, I 
also want to point out, equal opportunity.
    I am president of a university of 37,000 strong, but I am 
here representing the largest university system in the United 
States of 450,000 students, and we are the most diverse system 
in the United States where 54 percent of our students come from 
underrepresented backgrounds and 40 percent of those students 
are Pell grant eligible students, roughly first-generation 
students seeking college attainment and attendance.
    I am also representing many of the public universities who 
do what we do throughout the United States. Our tuition and 
fees this year will reach $3,164, roughly half the national 
public university average, and we do a very good job at keeping 
our fees low. The CSU System is roughly at about $3,400 or 
about half of the national public university average. We grew 
by 1,400 students alone just in our institution, in the CSU 
group by 25,000 new students just between last year and this 
year.
    I am here to talk to you about two issues: accountability 
and transparency, which we welcome, we welcome with open arms. 
I am also here to thank the committee for the work that they 
did 4 years ago when we first started talking about the concept 
of net tuition and exposing net tuition and real differences 
between net tuition and sticker pricing as well as making sure 
parents have better information, and I will hit this a little 
bit later.
    Accountability and transparency first, it is the first 
issue, and we certainly commend the efforts and support all the 
work that you are doing. We also, NASULGC and the American 
Association of State Colleges and Universities, will unveil our 
volunteer system of accountability this month. This makes 
actually 12 pages of data and information about student 
learning, as well as the type of colleges that they are 
attending, volunteer service opportunities, lots of 
information, lots more information available to students and 
parents, and this will be unveiled this month through a NASULGC 
as well as ASCU to the nation. This represents all public 4-
year sectors in higher education.
    I would like to point out that the CSU does not want to 
stop there. We also have taken this opportunity to add our own 
CSU VSA, and if you turn to my testimony, you will see a chart. 
That chart highlights some of the things that we want the 
public to know. These are things we want our taxpayers to know, 
that we want our policymakers to know: average student loan 
debt versus national averages, percentage of students leaving 
in debt, net tuition of the average family that may attend, not 
an awarded student, but just an average family so they have an 
idea of what they may pay to attend our institution.
    In addition to that, we think it is absolutely vital that 
we measure and calculate economic diversity in our 
institutions. So, when we take into account graduation rates, 
we also take first into account the types of students that we 
are serving within our institutions.
    As I mentioned, we have 40 percent first-generation Pell 
grant-eligible students, and we would like these issues raised 
and we would like these issues accounted for by those 
institutions who remain public in mission and who remain public 
in practice in the type of students that they serve around the 
United States.
    I would also like to focus on the issue of college costs, 
state appropriations and the maintenance of state funding 
efforts. The biggest issue, as Ms. Wellman pointed out, for us 
is the abdication of state governments in their roles and 
responsibilities to provide universal access for all of our 
students to public higher education.
    Roughly 80 percent of our students are in the public 
sector. We are highly contingent and reliant on what the states 
do for us. We greatly appreciate the financial aid that you 
helped by putting into the system to help offset many of these 
cuts, but, in many cases, it does not allow us to keep pace 
with the cuts that we have had to endure.
    When states step to the plate, as California did 2 years 
ago, we also stepped to the place and we did not increase our 
tuition and fees one single dime 2 years ago when the state 
came through and helped offset the enrollment growth numbers 
and the enrollment growth cost escalation that we experienced 
through fixed-cost growth.
    When our state steps to the plate, we do not raise tuition 
nearly to the degree that we do when our states remove 
themselves from these fiscal responsibilities. That is why I 
think it is imperative to do two things.
    First of all, when we follow these college costs issues, 
that we must also follow dollars, not percentages. The 
universities out there with the lowest dollar rates are often 
generally the institutions who, when they increase, increase 
their rates by the highest percentages. Now former Chairman 
McKeon took this into account by incorporating the $500, I 
think, exemption which helps many of our institutions who have 
fought hard to keep costs low and who will continue to fight 
hard to keep costs low.
    But the most important issue that I think we need to 
address as a federal government, and we need to address as 
higher education is how can we use the leverage of the federal 
government to maintain, to make sure that state governments do 
not remove themselves from these important responsibilities. We 
have done this in Medicaid. We have done this in Title 1 for 
public schools. Yet we are any easy cut. We are the first 
organization or first institution cut when states need to make 
budget cuts, and this comes at a time when higher education has 
never been more important to this nation and never been more 
important to society.
    By incorporating state maintenance of effort, provisions in 
new legislation that protect states and ensure that states keep 
up to their responsibilities to ensure that states like 
California, North Carolina, Texas, West Virginia are rewarded 
for having high tax effort in support of keeping costs low is 
very important for this nation. To not address this issue, I 
think you will see most states continue to slide in the 
direction that many states have done throughout the New England 
area, as well as Ohio, and many states that have not funded 
higher education very well in the last two decades.
    This is my greatest concern, and I think it is the greatest 
crisis that we address, is the formation of a federal 
partnership between the federal government and states to 
maintain state levels current or increasing levels of state 
appropriations for their public institutions of higher 
education.
    Thank you.
    [The statement of Mr. Alexander follows:]

 Prepared Statement of F. King Alexander, President, California State 
                         University, Long Beach

    Thank you Mr. Chairman and members of the Committee for this 
opportunity to share with you some of my thoughts regarding the 
important national issue of rising college costs, public accountability 
and equal opportunity.
    I am president of California State University, Long Beach which is 
the nation's 24th largest university with an enrollment of 37,000 
students. We take great pride in providing high quality educational 
opportunities at costs that are less than half of the national public 
university average. We are pleased that we serve so many students who 
come to us from first generation college families and diverse 
populations. Currently, approximately one third of our students are 
Pell Grant eligible and nearly 65% are African-American, Asian-
American, Hispanic, and of other ethnic origins. With the support of 
the American Association of State Colleges and Universities and our 
California State University Chancellor, Dr. Charles Reed, I am here 
today representing AASCU and the CSU System, the largest university 
system in the nation which currently serves 450,000 students. Fifty-
four percent of our students in the California State University System 
are from underrepresented, minority, and diverse backgrounds.
    Before making my comments, I want to thank the members of the 
Committee for the progress that has been made over the last four years. 
Nearly four years ago in a hearing before the House Education and 
Workforce Committee on 21st Century Competitiveness, I remember 
stressing to the former Chairman and others a number of important 
issues including the introduction of the ``net tuition'' concept which 
has since been taken very seriously by this Committee. You have also 
acted to address the critical issue that we raised regarding dangers of 
simply monitoring percentage growth without considering actual dollar 
increases which substantially disadvantages those colleges and 
universities that have worked hard to keep costs low. Too, I made the 
point then and I repeat now that by simply making new reporting 
requirements instead of developing new policy strategies to provide 
incentives for institutional effectiveness in addressing real public 
needs, we are missing a crucial opportunity to reform the current 
system of higher education.
    On these important points, I would like to focus my comments this 
afternoon and address two distinct areas, both of which have 
significant ramifications for collegiate costs and equal opportunity; 
(1) Accountability and transparency; and (2) college costs, state 
appropriations and ``maintenance of state tax effort.'' In each of 
these areas I will attempt to describe the existing problems and then 
offer policy recommendations that, in my view, would help remedy some 
of the primary concerns of taxpayers and policy-makers.
1. Improving Accountability and Transparency
    We commend and support the efforts of this Committee to require 
that higher education become more transparent and accountable to 
students, parents, and taxpayers. The marketplace for education or any 
market cannot function effectively or efficiently without adequate 
information. California State University, Long Beach and the CSU System 
have taken these legislative and public concerns very seriously and 
created the most transparent and accountable measurement system in the 
nation. This system is known as the California State University 
Voluntary System of Accountability (CSU VSA) which augments the soon to 
be released national public university Voluntary System of 
Accountability (VSA). The CSU VSA is an important addition to the 
national VSA and adds numerous measurement categories designed to 
indicate the role that the twenty-three public universities in the CSU 
are playing when addressing a series of ``Public Good'' domains. This 
information will be made available for policymakers and taxpayers 
throughout California and the nation in addition to the institution-
specific information resulting from the national VSA. While the 
national public university VSA was developed primarily to address 
student and parental concerns regarding the lack of substantive 
institutional student learning information, the CSU VSA was developed 
to address additional concerns that are of value to the general public 
at-large.
    In November 2007, both the American Association of State Colleges 
and Universities (AASCU) and the National Association of State 
Universities and Land-Grant Colleges (NASULGC) will release the 
``Voluntary System of Accountability'' template for public discussion. 
This reporting system will make additional information available to 
parents and students regarding student specific actual college costs, 
financial aid results, community service participation as well as 
numerous standardized test results that assess value-added learning 
growth both inside and outside of the classroom. We fully endorse the 
public university VSA and our university will be among one of the first 
pilot institutions to provide the necessary information for reporting 
purposes. The California State University System will, in addition, set 
forth what is called a ``Public Good'' measurement system that will 
provide more clarity and transparency especially for categories that 
are not included in the national VSA or the model adopted by the 
private higher education sector.
    In addition to the national VSA, the augmented CSU VSA (see 
Appendix A), addresses four important ``Public Good'' categories that 
are either deemphasized or not included in the other measurement 
systems. If approved by the CSU Board of Trustees in mid-November, this 
information, which has already been collected from each of the 23 
universities in the Cal State system, will be made available for public 
discussion. The categories include:
            1. Average Undergraduate Student Debt
     Average amount in debt of graduating seniors
     Proportion of graduating seniors in debt
            2. Degrees Granted
     Degrees Granted in High Demand Fields
     Race/Ethnicity of Undergraduate Degree Recipients
            3. Economic Diversity: Access and Completion
     Undergraduate Pell Grant Eligibility (enrollment & 
percentage enrolled)
     Undergraduate Pell Grant Recipients 5-yr. Average 
(enrollment & percentage)
     Undergraduate Degrees Awarded to Pell Grant Students 
(Degrees & Percentage)
            4. Actual ``Net Tuition and Fees'' paid by an average 
                    student when compared to the posted sticker price
    As you can see from the categories exhibited in Appendix A, it is 
our hope that the federal government will also consider these items 
when developing new reporting requirements for colleges and 
universities. Currently, many institutions refuse to make economic 
diversity data readily available to consumers, taxpayers and other 
constituencies.
Recommendations for more effective accountability and transparency
    A. In addition to the current reporting of graduation rates, the 
federal government should collect and distribute aggregate graduate 
numbers and economic diversity characteristics of enrolled and 
graduating students. This reporting can be accomplished by requiring 
and publishing Pell Grant eligibility access and completion data in 
aggregate numbers and percentages. Also, existing graduation rate 
reporting should be disaggregated using federal financial aid receipt 
(Pell Grant eligibility) as a proxy for income so that policymakers can 
better understand risk categories earlier in order to support timely 
and successful graduation.
    B. Require that an average ``net tuition and fees'' be calculated 
by each institution and made available to students, parents and 
taxpayers. This average net tuition should reflect the average cost 
versus the sticker price per full-time student, not simply aided 
student. Sticker prices do not reflect the actual cost of higher 
education. Using ``sticker prices'' distorts and creates a flow of 
misinformation to consumers and students further confusing the economic 
realities of college attendance. If the federal government is to help 
improve the efficiency of the marketplace of higher education it can 
contribute materially by collecting, calculating, and distributing 
actual program cost information by types of institutions. Such 
information can then be used to develop as a more viable basis for the 
allocation of federal subsidies. This initiative would simplify federal 
policies while not penalizing states that continue to publicly support 
higher education and encourage institutions to keep costs down.
    C. Require the colleges and universities to collect and distribute 
average student undergraduate debt amounts and the percentage of 
seniors graduating with student loan debt. Consumer information about 
student debt loads is currently very difficult to obtain for most 
people.
    D. Require that federal agencies collect and pay much closer 
attention to institution specific expenditure trends when making 
policy-based determinations. Understanding institutional expenditure 
trends is essential for determining which colleges and universities 
have actually increased their costs to serve more students, more needy 
students, or simply to maximize the prestige of the institution.
2. College Costs, state appropriations and ``maintenance of state tax 
        effort''
    In addressing the issue of college and university tuition and fee 
growth, it is obvious that the problem of higher education costs and 
tuition does not detrimentally affect parents, students and 
institutions the same. This fact is evidenced in numerous 
congressionally-mandated studies of college costs and prices, showing 
drastic variations in average tuition and fee growth between private 
and public universities during the last two decades. Public perception 
of rising tuition costs has been shaped by a number of reasons, 
including geographic location and the media which is heavily influenced 
by high cost institutions in the northeastern region of the U.S. 
Importantly, misunderstanding is fueled by an overall lack of 
information in the academic marketplace that prevents students and 
parents from distinguishing real net costs from ``sticker prices.'' For 
example, students and families pay college tuition in dollars, not in 
percentages, yet the vast majority of public discourse by policymakers 
and the media dwell on college cost increases reflected simply as 
percentage growth. In fact, ``if you analyze actual tuition and fee 
dollar increases, instead of tuition and fee percentage growth, you 
will discover that many of the public universities with the largest 
percentage increases over the last few years are the very institutions 
that are the most affordable and accessible. A small dollar increase 
may well be reflected in a relatively large percentage increase at 
lower tuition institutions. This is especially true in lower cost/high 
tax effort states like California, Hawaii, North Carolina, West 
Virginia, and Kentucky which have worked hard to keep student tuition 
and fees at very reasonable levels in exchange for maintaining above 
average tax support. These low tuition states remain low cost in an 
effort to ensure widespread access and affordability. Also, these same 
states are among the lowest in the nation in average student loan debt 
per graduate.
    Furthermore, it is quite obvious that as state appropriations slide 
downward, student tuition and fees must rise. The interlocking 
relationship between public institutions, tuition and fee policies and 
state appropriations is an area that seems to be pervasively 
misunderstood by taxpayers and policymakers. Over the last decade 
studies have highlighted the instability of state appropriations and 
the effects of state policy on public institutional tuition changes. In 
a recent Congressionally mandated NCES study on college costs and 
prices, it was shown that state general fund appropriations was by far 
the most significant factor in determining public college and 
university resident tuition rates . This is especially evident when 
reviewing overall public college and university tuition and fee changes 
when compared to state appropriation changes during the last decade. As 
shown in Table 1, the most influential reason for increases in public 
college and university costs is the drastic fluctuations of state 
appropriations. Therefore, in my view it should be a federal imperative 
to ensure that states maintain their public support of higher 
education. This ``maintenance of fiscal effort'' is a necessary part of 
the federal/state partnership to ensure that states continue their 
current level of support. A ``maintenance of effort'' federal/state 
partnership would make it more difficult for states to further reduce 
their fiscal responsibility to public colleges and universities by 
shifting the increasing costs of higher education to students, and 
ultimately, federal tuition-based programs.


    In the case of the State of California, the dependent relationship 
between state appropriations and student tuition and fees was never 
more apparent than when the state budget was developed two years ago. 
State legislators and the Governor made a conscience decision to 
increase funding for higher education by approximately 6.5 percent to 
alleviate the need for a student fee increase while still allowing the 
CSU to expand by 25,000 additional students. The result was that 
student tuition and fees did not increase one dollar during that year.
    It is also important to point out that state legislatures do not 
allow, in most cases, public institutions to set their own tuition and 
fees. Currently, there are only 14 states that allow individual 
institutions such prerogative.
College Costs and Equal Opportunity Recommendations
    A. Federal Partnerships: Cost of Education Allowances Program (with 
maintenance of state fiscal effort provision):
    Thirty-five years ago, the original Pell Grant legislative proposal 
called for the creation of a companion program that would grant 
additional funds to the institutions that served Pell Grant recipients. 
The program was premised on the well-recognized fact that it costs more 
to educate lower income students at all levels. The original 
legislation recommended the creation of ``cost of education'' 
allowances to be allocated directly to institutions. These grants were 
to accompany the Pell Grant recipients to their respective college or 
university. This proposal emphasized the benefit to the individual as 
opposed to the institution by recommending that the Department of 
Education create ``cost of attendance'' allocations in the amount of 
$2,500 per Pell Grant eligible student. This plan provided additional 
assistance to institutions serving needy students. To ensure that these 
funds were properly devoted to student enrichment, the proposal 
required that federal funds be used to support campus-based academic 
and student service programs that primarily assist lower-income 
students. This program would have created important fiscal incentives 
for institutions to enroll lower-income students. However, this part of 
the original plan was never enacted.
    Currently, there are no federal incentives of this kind in place 
and as a result many high priced private and public institutions have 
seen their enrollments of lower income students stagnate and even 
decline. The incentives we propose today would foster greater fiscal 
collaboration among federal, and state governments and institutions. 
This would promote greater college access for lower income students, 
support retention efforts, and reward higher completion rates. As part 
of this partnership, our recommendation calls for the creation of a 
``state maintenance of effort'' provision to ensure that states do not 
reduce their commitment to public higher education. These federal 
incentives would not only provide invaluable support to those 
institutions serving the neediest students but would ensure 
sustainability of state funding at federally supported levels. To 
accomplish this, the federal government should require that states 
maintain current levels of state support in the form of average per 
student appropriation or an expected level fiscal tax effort which 
would be defined at the federal level. If states do not abide by this 
provision and used these federal funds to ``supplant'' existing state 
support then the amount of the federal institutional grant can be 
reduced or withheld pending.
    B. The federal government should not continue to increase the 
current aggregate federal loan limits so long as such are tied to the 
sticker prices established by the individual institutions. Rather any 
increases in federal loan limits should be based on the actual costs 
incurred by the institutions in the provision of the educational 
programs. If the current system that incorporates sticker pricing 
remains in place when aggregate loan limits are expanded we fear that 
this will result in even higher sticker prices in the years to come on 
many college campuses. This trend also would further generate more 
public backlash against all higher education institutions not just the 
institutions that have escalated their pricing. By simply expanding the 
aggregate loan limits without making additional formulaic changes the 
federal government would ultimately drive more students toward higher 
amounts of student loan debt.
    Institutionally, the expansion of the aggregate loan limits would 
primarily advantage public and private wealthy institutions that charge 
significantly higher tuition rates over the lower cost, less affluent 
public universities and community colleges. Instead, it is our belief 
that the federal government should direct institutions to provide 
adequate student loan counseling and assistance that encourages 
students to use all federally supported loan opportunities. Currently, 
numerous studies indicate that students who have been increasingly 
turning to additional private loans to pay for college have not fully 
maximized the existing federal loan programs. Federal loan programs and 
their subsidies should be focused on expanding access instead of 
providing choice. By not expanding the aggregate loan limits the 
federal government is also putting more pressure on the wealthy 
institutions to better control their sticker pricing and expenditures.
    C. The federal government should require that all colleges and 
universities that receive federal direct student aid enroll at least a 
given percentage of Pell Grant eligible students or demonstrate that 
the institution is making progress toward this goal. Institutions with 
less than the prescribed percentage of Pell Grant eligible students 
would face federal direct student aid reductions.
    In summary I have spoken to you today about important issues 
regarding the enhancement of institutional accountability and 
transparency, the determination of actual college costs, and the role 
of the federal government in ``state maintenance of effort'' in 
supporting higher education. I realize that some of these 
recommendations require a significant overhaul in our national higher 
education agenda by requiring a much more strategic partnership between 
the federal government and our state governments. I also realize that 
timeline for this Reauthorization is very short and upon us now. 
However, I do think that we will require these kinds of national 
conversations to reform our current higher education system if we are 
going to promote equal and affordable education opportunities in order 
to remain competitive with other OECD nations in the decades to come.


                                 ______
                                 
    Chairman Miller. Thank you very much.
    The committee will recess for the purposes of going and 
casting our votes, and we will return as soon as those votes 
are done.
    Thank you.
    [Recess.]
    Chairman Miller. Thank you very much for your patience.
    The committee will reconvene.
    Thank you for your testimony.
    I am going to begin with Mr. Tierney. Mr. Tierney has a 
conflict since he is in the Conference Committee on the 
Intelligence Committee. So Mr. Tierney is recognized for 5 
minutes.
    Mr. Tierney. Thank you very much, Mr. Chairman.
    Thank you, our witnesses today.
    I think you are probably aware that we have had a bill out 
there for the last couple of sessions that talks about state 
maintenance of effort, and I think the concept is acceptable to 
most people. What we are having difficulty with is how do we 
accomplish it.
    So, if we could start maybe from right to left on this, 
sir, if you could give us some ideas of just what would we use 
as either an incentive or a stick or both to get states to do 
that?
    Mr. Alexander. Okay. Thank you for the question.
    I know that you have been working to try to incorporate 
these provisions into the act, in the Reconciliation Act, and I 
commend the efforts. I know that the LEAP funds were used as 
potential leverage for this earlier, and I know that our 
counsel and state government certainly do not want their 
flexibility constrained.
    But what I think could be done--in 1972, the Pell grant 
program, when it was put into effect, had a companion program 
that was supposed to be adopted at the same time. It was called 
the Cost of Education Allowances. Those Cost of Education 
Allowances would partner with institutions and reward 
institutions who enrolled, retained and eventually graduated 
lower-income Pell grant students. That initial grant to that 
institution that would follow the low-income student was $2,500 
in the discussions in 1972. For some reason or another, that 
companion program was left off the table when the Pell grants 
were adopted and the final proposal was finished in 1972.
    I believe that you can use a similar structure to shape the 
type of grants that would go to institutions and leverage them 
with state appropriations so that that grant would ebb and flow 
or increase and decrease based on what the state's commitment 
to their own appropriations are.
    Mr. Tierney. Would you give me an example of that?
    Mr. Alexander. Certainly. For every Pell grant--for 
example, our institution with 37 percent Pell grant students--
we would actually get a companion grant that would follow those 
students to our institution to help them succeed.
    Now the actual amount of that grant could fluctuate based 
on how California contributes to public higher education and, 
actually, put pressure and leverage on the state legislature by 
saying if the grant were on national average $2,500, but in 
California the grant could be $3,200 because it is a more 
commonly supported tax system and tax base, our appropriations 
are higher.
    Those appropriations could be shaped, or at least the grant 
size could be shaped, based on tax effort of those states 
either to advantage those states that want to continue 
supporting higher education or disadvantage those states that 
think that it is in their best interests to remove themselves 
from these appropriations.
    This also does another thing. It creates an environment 
where states cannot supplant the federal resources, like we 
state in Title 1, and it works very much like the Title 1 
proposals in our Title 1 schools. There is a provision in Title 
1 that says that the states will not supplant these monies with 
state monies, and it is designed, in the same similar design, 
to aid schools that support low-income students and aid schools 
to support them throughout their educational careers.
    Mr. Tierney. Thank you.
    Sir?
    Mr. Bassett. Congressman Tierney, we both live in a state 
that has not taken very good care of public higher education 
over the years, and one of the excuses really is the strength 
of the private-sector system, which is not a very good excuse 
for taking such bad care of the public system. Even though I am 
at a private university, you may know that Governor Patrick 
recently asked me to co-chair a committee to look at the 
governance structure of public higher education in the state.
    The only thing I would encourage--and the federal financial 
aid works in both the public and private sector, but even 
limiting the discussion to the public sector for the moment--is 
I would encourage us to study carefully the consequences of any 
of these linkages that we develop here. How are states likely 
to respond if the formula is the kind of one that President 
Alexander talked about? What will universities respond? How 
will CFOs respond to this structure?
    I think something needs to be done. I think you are 
probably on the right track with the proposal here, but I also 
know that all these linkages have consequences that one does 
not predict when one sets them up, and simply looking ahead to 
the next stage and seeing what that would probably be would 
probably be helpful. But I do believe that some of our states 
are taking a lot better care of public higher ed than others 
are.
    Mr. Tierney. Thank you, sir.
    Ms. Wellman?
    Ms. Wellman. I am not sure if I have a lot to add. I like 
the shape of the proposal that Dr. Alexander put out. It makes 
sense to me.
    The one thing I would hope could be considered is to add a 
tension through accountability metrics about how resources are 
used and look for examples of ways that degree attainment is 
increased, not just make it about increasing money on top of 
money.
    It has to have indicators of spending and productivity to 
provide incentives for the states and the institutions to do a 
better job of paying attention to money.
    Mr. Tierney. Well, thank you very much.
    Mr. Chairman, thank you for your courtesy as well.
    Chairman Miller. Thank you.
    The gentleman from Florida is recognized for 5 minutes.
    Mr. Keller. Well, thank you very much, Mr. Chairman. I want 
to especially thank you for holding this very important 
hearing.
    Congress is very concerned about the skyrocketing cost of 
college tuition. Tuition is up 31 percent at public 4-year 
colleges over the past 5 years. What good is it to college 
students if Congress raises Pell grants by $2,000 only to see 
colleges respond by raising tuition by $3,000?
    The author of the College Board report, Ms. Sandy Baum, was 
quoted recently in USA Today, on October 23, 2007, saying, 
``Clearly, finding some way to temper prices is necessary.''
    We have heard some excuses that, ``Well, we have expenses 
that are going up, and health insurance and electricity and 
other bills, and inflation has played a role in this,'' and I 
frankly think that that is an unacceptable excuse. When I 
pulled the numbers, the 1-year change in inflation, the CPI, is 
2 percent, yet college tuition at 4-year universities, 
according to the College Board, is up 6.6 percent in the last 
year, triple the rate of inflation. Over the past 5 years, the 
change in inflation is 15.1 percent, yet the tuition at public 
4-year universities is 31 percent, double the rate of 
inflation.
    I am not saying that we are so frustrated that we are about 
to implement price controls. I am saying the skyrocketing cost 
of tuition is starting to tick people off around here, and we 
have to get a handle on this situation.
    I do not want to paint too broad a brush. When I look at 
states like California, you can get a community college 
education for $633 a year. What a spectacular bargain. And then 
after you graduate from a 2-year community college, many of 
their universities have articulation agreements that allow you 
into their 4-year schools for a mere $4,971, again a bargain. 
My home state, not to brag, but is also a great bargain, $2,000 
to go to community college, $3,300 to go to a 4-year school.
    And so let me begin by, Ms. Wellman, asking you some 
questions. And, certainly, I do not blame any of you all who 
are testifying for any of these problems, actually, and Mr. 
Alexander here is from one of the best states, California.
    But, Ms. Wellman, when you look at the increasing costs 
that colleges or universities have to deal with in terms of 
their overhead, what percentage of that is the salaries of the 
college professors and the staff?
    Ms. Wellman. It is a different number in different 
institutions, and the general pattern is that it has been going 
down.
    Mr. Keller. College or university professors are getting 
decreases in their salaries?
    Ms. Wellman. There are two things going on. The high-end 
faculty are getting paid more, and the regular faculty are not 
getting paid that much more, and most of the faculty are part-
timers, so----
    Mr. Keller. So take the high-end guy. Let us say it is a 
famous professor that you need in your chemistry department 
because he has published some stuff. He is getting a bigger 
percent increase because he is a valuable commodity, and you 
have to compete with other universities, correct?
    Ms. Wellman. Yes.
    Mr. Keller. But when you talk about the lower-end person, 
someone who teaches, you know, Intro to History to an undergrad 
at community college, they are still getting a little bit more 
than they were the year before, but not a whole lot more.
    Ms. Wellman. That is right.
    Mr. Keller. Of a university president's budget, when he 
looks at electric bills and costs of other things, what 
percentage typically are salaries for the professors and staff?
    Ms. Wellman. I think the standard in the industry is that 
it is someplace between 80 percent and 90 percent salaries. I 
think the data show that it is actually going down a little 
bit, but it is a hefty percentage. The biggest single area of 
spending increase in institutions has been merit-based student 
aid, number one, followed by benefits, health benefits.
    Mr. Keller. Mr. Alexander, as someone who runs a university 
out there, can you give us any suggestions, based on 
California's success in this area, as to what we might do or 
what might be done to address the increasing costs of tuition?
    Mr. Alexander. I think it is very important. I think you 
are hitting in and around a very important issue that I have 
made one recommendation in my testimony that we should pay a 
lot more attention to, is instead of, I think, incorporating 
everybody in sort of the same criticism, I think we need to pay 
close attention to the expenditures, per-student expenditures.
    I think it will tell the whole story of college costs, and 
for the last 20 years, you will find out which institutions 
have increased their expenditures because they are serving more 
students, which ones have not changed their per-student 
expenditures.
    I am speaking on behalf of a university since 1985 that has 
gone from about $11,500 a year in per-student expenditures to 
about $13,200, so we really have not changed very much. But I 
know there are other institutions out there that have gone from 
$30,000 to $80,000 per student, and I think the expenditure 
considerations are very important to pay close attention to.
    And in addition to that, I think that then the federal 
government should play a role in identifying those institutions 
who are doing a good job and then rewarding or supporting those 
institutions that are doing a good job in keeping costs down 
and being efficient to the public.
    Mr. Keller. Thank you.
    Mr. Bassett, sorry I did not get to you, but my time has 
expired. So, hopefully, one of the other folks will be able to 
ask.
    Chairman Miller. Do you want him to answer?
    Mr. Keller. Mr. Bassett, do you have any suggestions for 
the chairman and other members here as to what we might do or 
what might be done to address the skyrocketing costs of college 
tuition or the increasing costs, however you phrase it?
    Mr. Bassett. Well, you put your finger on the reasons for 
the increases in costs, clearly. There are utilities. We talked 
about this. There are tremendous increases in technology costs. 
As I indicated just at my own school, utility costs were up 152 
percent over a decade; technology costs, 189 percent; health 
insurance, 90 percent; and regular insurance, 90 percent.
    But, to some extent here, it is still the labor-intensive 
industry that it is, people, and if you do not change the ratio 
of the number of faculty members to the number of students or 
if you do not change replacing a full-time professor with a 
teaching assistant or a part-timer, those costs continue to be 
probably a little out of whack with consumer price indexes.
    If it costs $40,000 a year to educate a student at a good 
private college, and we charge them $30,000, the other $10,000 
is coming from philanthropy, from the endowment, from the 
annual fund. To provide education of the same quality at a 
public, however, is going to have the same cost factor, and if 
you are only paying $7,000 of that $40,000, the rest is going 
to be covered by taxes, or you are going to develop your own 
philanthropic foundation, as you have to do, but philanthropy, 
taxes and tuition are really the three sources of income here.
    I think we have to work together on containing costs 
because I agree with you. Americans are saying, ``How do we 
limit the cost of college education?''
    But I do know the Pell grants do not lead to higher 
tuition. In fact, the Pell grants help us keep tuition lower 
because in our market--and, again, I cannot speak for the 
wealthiest of the universities--if we raise tuition above a 
certain point, we do reach a tipping point, and we are going to 
lose revenue, and the existence of a Pell grant makes it 
unnecessary for us to raise tuition as much as we would have to 
otherwise or to reduce quality, which is the other option.
    Chairman Miller. Thank you.
    The chair is going to be recognized for his time. I 
recognized another member previously, for those who just came 
in.
    The issue that was raised by Mr. Tierney and, Mr. 
Alexander, in your testimony, the idea that somehow we have to 
not supplant language or something along those lines, we have 
that in almost every other big grant program to the states.
    In this particular situation, the grant program is not 
exactly a grant program. It is access to federal loans, and it 
is access to the Pell grant and a few other things that we do 
in higher education. I used to be staff in the state 
legislature, and many members here used to be members of the 
state legislature. You do make decisions based upon what you 
put at risk with respect to the federal government, whether it 
is Title 20, whether it is Medicaid, whatever it is, you weight 
that, and small cuts sometimes carry high risk, and 
legislatures do not do that.
    You know, we just made this commitment of some $20 billion 
in various ways to higher education, and yet we can see that if 
we continue this pattern, that advantage will be nullified 
rather rapidly, and so I think that the idea of trying to 
construct a partnership here where we cannot just keep putting 
money in at the top--you know, the idea that you respond to Mr. 
Tierney that you might have a partner--what did you call it? A 
Pell grant? A shadow? Or the one that follows the Pell grant? 
The original from the----
    Mr. Alexander. Yes. Cost of education allowances.
    Chairman Miller. Yes, but we now live under a pay-as-you-go 
system, so I have to come up with billions of dollars to once 
again try to get you, the states, to meet their public 
obligation to their public institutions. I do not think that we 
can do that, and that is why we have these other ways of 
dealing with it, with the maintenance of effort or supplanting 
or whatever regulations we put in place.
    I think to more and more members of Congress that is 
starting to look like a wise decision. Otherwise, we are on a 
fool's errand. We just keep shoveling coal in at the top, and 
they just keep taking it out the bottom, and that is not 
working out for the families we represent, and it is certainly 
not working for the use of federal tax resources.
    Having said that, that is the easy part. Constructing it is 
the difficult part because you do not want to start harming 
individual institutions or students, and it sort of leaves out 
of the equation the privates in this one because we are talking 
about the obligation of the states.
    And I just do not know if you want to elaborate on this, 
but, you know, we in this committee have been struggling with 
this for a number of years, and after you get past 
transparency, there are not many levers left unless you move to 
a larger maintenance of effort idea.
    Mr. Alexander. I would say a couple of things have 
certainly evolved perhaps the way that they were not supposed 
to. The federal government 40 years ago was supposed to augment 
states, not become the primary revenue supplier through grants, 
loans and tax credits, and for the first time in the history of 
American higher education, the federal government now is at $90 
billion in tuition-based assistance, while the states are at 
$85 billion. So they have passed the states. The states have 
not been keeping up with their obligation. That is certainly 
true.
    Anecdotally, when I was in the State of Kentucky, I was 
standing in the parking lot, and the speaker of the state 
senate of Kentucky leaned over to me and said, ``Why should we 
give you more resources when you can just get it through 
federal loan and grant programs?''
    This is an interesting comment because it basically said, 
``I am going to get re-elected by not helping you, but you can 
help yourself by increasing tuition,'' ultimately getting 
students in greater debt, pushing students into greater debt.
    I think more legislatures are understanding this is an 
easier out than many of their other obligations.
    And with regard to private sector, there are many private 
institutions out there who have also remained true to serving 
low-income students and large numbers of low-income students. 
Those are generally your lower-cost private institutions also, 
and they could also be included in this federal program that 
creates cost of education allowances to help them educate, 
retain and graduate those students.
    If I could add, my greatest concern is that the incentives 
work in the opposite fashion right now, and universities are 
quickly fleeing their responsibilities to low-income students 
all over the United States. We see it from Maine to the State 
of Washington, and if you have followed these trends over the 
last 20 years, the only two states who really have increased 
their Pell grant eligible students substantially throughout the 
state systems have been states with large demographic changes, 
like Texas, New Mexico, Florida and California. So it is a 
national issue of national significance.
    Chairman Miller. Thank you.
    Mr. Castle.
    Mr. Castle. Thank you, Mr. Chairman, and thank you very 
much for the hearing.
    And thank all of you.
    I am particularly interested in this subject, and I have 
several questions. I would like to get into the actual costs 
themselves.
    I see, Mr. Bassett, for example, in this enhancing 
affordability and accessing independent higher education chart 
all the good things that some of these schools are doing, and I 
look at the schools, and I wondered if any of us could get in 
most of these schools. I mean, we have Amherst and Brown and 
Columbia, Davidson, Stanford and Harvard and Princeton or 
whatever. It is nice that those schools are doing it, but I am 
also concerned about the vast majority of our kids who need 
education.
    I am one who believes that we should educate every child 
possible in this country for economic reasons and maybe 
societal reasons in general, and the question I have is 
directly to the actual costs of all three of you, and as either 
heads of organizations or as heads of schools or whatever, you 
have had some exposure to this, but I am interested in 
innovations that may be going on that could save costs.
    I just jotted down some things: for example, using retired 
professors. Every one of us in this room could talk about some 
professor who is probably 70 years old now who was really 
extraordinary when we there who probably on a per diem or per 
hour basis would be willing to come back.
    Are there volunteers available? We use them in political 
campaigns? Are there coaches who would volunteer to some 
degree? What about alternative energy, going to solar and those 
kinds of things? I mean, various ideas out there that perhaps 
could help with these costs because I do not care how you cut 
it, the costs of higher education have gone up faster than the 
cost of living in this country.
    We need simply to deal with this, and maybe this is one way 
we can deal with it. Are there innovative ideas out there that 
have either been tried or could be tried that we could be 
looking at that you have run across or tried yourself or 
whatever? Any one of you.
    Ms. Wellman. I think the short answer is yes, and one of 
the things we are working to do is identify those examples of 
effective management practices that have reduced costs and, at 
the same time, gotten more kids to and through college.
    Course redesign has been tried, and it is very successful 
in a number of colleges to increase the students' success in 
first-year programs. The programs are less expensive. The 
students learn more. They retain more. They graduate more.
    There have been a lot of colleges that have done good 
things with energy conservation, and if you look at it 
nationally, there are good numbers and a good track record on 
cost reduction in energies. There is administrative savings and 
information systems savings.
    The biggest changes are going to come when we are able to 
look at different ways of using instructional staff to put more 
full-time faculty in classes for the freshman and sophomore 
year and get those students retained and on to graduation.
    We fund our systems now in a kind of lopsided way. There is 
more money per student spent the farther the student gets in 
the career, and if we are going to be smart about being cost 
effective and increasing attainment, we can move money around 
to really increase productivity without compromising costs. It 
can be done.
    Mr. Castle. Thank you.
    Mr. Bassett. I think that most of the colleges I am 
familiar with have done a number of these things, certainly 
energy reduction, reducing temperatures. I mean, my university 
was proud to get the first gold rating from LEEDs on a new 
building in the City of Worcester, but that is part of a larger 
energy commitment we have made to save money there. Using 
retired faculty, yes, and often it does reduce costs, but it is 
at the margins. It is not something that is going to have a big 
impact.
    Ms. Wellman's point about instructional costs, though, is 
not an unimportant one, and a lot of the less fortunate savings 
maybe right now we are doing come from less expensive per 
student teaching at the lower levels. If we start taking that 
as seriously as we should, it could potentially increase costs 
so we have to be creative in how we build that in.
    But consortial arrangements and purchasing, state 
arrangements, such as one they have, I believe, in Wisconsin 
that Representative Petri helped set up for savings--those 
colleges that operate in a very tight market have to be looking 
at all these things. What we may need is a better information-
sharing system, a best practices communication system where we 
could all more efficiently share new ideas with each other for 
cutting some of those costs.
    Mr. Castle. Dr. Alexander, do you have any thoughts on 
this? You have about 30 seconds.
    Mr. Alexander. Just briefly, in California, we have some 
environmental restrictions that force us to do a lot of these 
things at much earlier times from the cars we buy, fuel-
efficient hybrids to solar panels to all our new buildings 
being green buildings. So we are moving in this direction. 
Sometimes sustaining things initially and working on 
sustainability initially costs you more up front and, actually, 
the savings do not come for 10 or 15 years down the line.
    I have 11 unions on my campus that, and using part-time or 
retired faculty does sometimes get into that, but we continue 
to grow as an institution, and our expenditures are relatively 
flat, and we serve about 1,300 to 1,500 new students every 
single year, and our campus is pretty crowded.
    So we are doing everything we can to serve those students 
as efficiently and effectively as possible, and we will 
continue to look for ways to do that as well.
    Mr. Castle. Thank you.
    I thank the panel.
    Chairman Miller. Thank you. The gentleman's time has 
expired.
    I was just looking at new information put out by the Public 
Policy Institute in California this morning, and it said that, 
``In Californians' minds, the state's economic vitality is 
closely tied to higher education, with 76 percent calling the 
state's college system very important to California's future. 
It is the belief of most residents, 68 percent, that the 
state's economy will need a higher percentage of college 
education workers in 20 years.''
    They recognize that these institutions are economic engines 
for the future of the state, and yet 43 percent say they are 
very worried and 32 percent say they are somewhat worried about 
being able to afford college for their youngest child. So they 
recognize this as an asset to the state, and yet they have this 
anxiety about whether they are going to be able to participate 
in the benefits of that asset.
    And I think sometimes you know, when we see the state 
legislatures--and I know there are economic cycles in states--
walking away from this on the assumption that, well, you can 
just make it up in tuition, that is what creates that anxiety.
    Mr. Courtney, you are recognized for 5 minutes.
    Mr. Courtney. Thank you, Mr. Chairman.
    Dr. Bassett, in your handout, you had some examples of 
colleges that are doing different ideas or, you know, pointing 
out different ideas in order to make college more affordable, 
and there were a couple of colleges that have actually 
eliminated using loans and just replacing them with grants--
Amherst, Baylor, Brown University. Are they able to do that 
just because they have large endowments? I mean, what are they 
doing right there that allows them to do something that 
extraordinary?
    Mr. Bassett. Yes. [Laughter.]
    All of the rest of us would like to do that because it is 
tremendous P.R. I would say it is large endowment. It is also a 
larger percentage of the students able to pay full tuition, 
again, the two sources of revenue being their endowment and 
gifts and tuition.
    Clark, I find, has the smallest percentage of families 
making over $100,000 of any lead private in New England, and, 
therefore, we may have the smallest percentage of full-paying 
students of any of the group of schools we compare ourselves 
with.
    I would love to be able to say, like Harvard, like Amherst, 
no more loans, grants if you need it. We would try to come as 
close as possible to that, but we cannot get all the way there 
ourselves, and I think that is true of 95 percent of the 
colleges.
    Mr. Courtney. I kind of figured it was like that.
    Mr. Bassett. Yes.
    Mr. Courtney. And, Mr. Alexander, the other two witnesses 
have sort of expressed their opinion about the question of 
whether or not increasing Pell grants has an effect of pushing 
up tuition. I do not think you have actually weighed in 
yourself specifically this morning on that. I am just curious 
whether or not you wanted to at least go on record as far as 
what your thoughts are on that.
    Mr. Alexander. On the record, I will say I have studied 
this issue for quite some time as well, and I have seen 
virtually every report that referenced this area, and Pell 
grants are the least cost sensitive or price sensitive of all 
the grant programs. They are more income sensitive, which is 
wonderful.
    When you move into the other programs, when you move into 
SEOG, when you move into the federally subsidized loan 
programs, when you move into the unsubsidized loan programs, 
and when you take into account state individual grant programs 
which are highly cost sensitive to the extent that many of them 
even have been started under the guise of tuition equalization 
programs, I would say that is not the case with most of the 
other programs, and it does tend to give institutions that have 
higher inflated sticker prices more aid or qualify their 
students for more aid, but that is outside of the Pell grant, 
and those are the other programs that exist.
    Mr. Courtney. You made a reference to the fact that New 
England was one of the places where the public support at the 
state level has been a little weak, and coming from Connecticut 
and being a former state legislator, I can plead guilty to that 
assertion because I think it is clear that that has occurred 
and there has been a corresponding increase in tuition.
    I think the chairman is right that having been a former 
state legislator, when you are doing budgets and you are aware 
of the fact that, you know, whether it is child and protection 
services or Medicaid budgets, if you are going to lose money, 
you tread carefully whereas, obviously, it does seem like an 
ATM card when you are looking for ways to sort of balance the 
budget.
    But I am still sort of waiting to get that specific 
suggestion about, you know, how you implement that maintenance 
of effort sword over a state legislature. I mean, what do you 
threaten them with if they do not adequately fund this part of 
state government?
    Mr. Alexander. Well, you have the carrot and the stick 
circumstance, and I am concerned, too, that down the road, if 
we do not address this issue, we are going to be back at this 
table every 5 years like we were in 1997, the college costs 
commission 4 years ago when I was here representing Kentucky 
and what we were doing.
    I think that there are lessons to be learned on how we have 
funded schools and poor students in Title 1 and how we have not 
supplanted state resources in Title 1 funds for K through 12 
education. We have not even ventured down this road, and, in 
fact, we do a better job at even knowing where our low-income 
students are in our K through 12 sector than we do in higher 
education.
    We have institutions who do not want to talk about their 
Pell grant eligible numbers and who do not want to talk about 
their income levels of the students that they serve, and they 
may give a lot of money and a lot of aid to a small number of 
students, which looks good for the small number of students, 
but with the nation with 25 percent children in poverty who are 
all going to need some form of access to higher education, I 
think a much more comprehensive system that rewards 
institutions based on state appropriation levels and sets it by 
tax effort, could actually encourage states like Connecticut, 
states like Colorado, quite frankly, who is a rich state that 
does very little to nothing for higher education. They simply 
rely on out-of-state students to come in and fund public higher 
education.
    I think that you could devise this quite easily, a system 
that rewards states or pulls lower-funded states up from lower 
areas or puts pressure on them to keep funding or put more 
money into higher education while at the same time rewarding 
those states that continue to fund publicly accountable systems 
of higher education in terms of keeping costs low, like North 
Carolina and California.
    Chairman Miller. Mr. Petri?
    Mr. Petri. Thank you very much, Mr. Chairman. I just have 
two questions of the panel, and the first one actually, Mr. 
Bassett, referred to briefly. I was going to mention that for 
the last 6 years or so, myself, Mr. Obey and others from 
Wisconsin have been working with our organization called 
WAICU--that is the Association of Independent Colleges and 
Universities--in an effort to help them consolidate backroom 
functions. Universities or colleges are a series of small 
businesses and they do not really need to replicate a lot of 
things back office that can be consolidated without merging the 
front and instructional classroom experience where it is not 
appropriate.
    They have done that with information technology, computer 
programs, with health care, I think, the dining halls and 
energy purchases and a number of other areas. Significant 
savings have been realized, and I just wonder if you would care 
to comment on that, whether that is a fruitful area. Is that 
being done in other states, or is this something that is only 
unique to Wisconsin?
    Mr. Bassett. It is being done. If done, it is done at a 
local consortium level. For example, we have 13 colleges in the 
College of Worcester Consortium, public and private, and a lot 
of those things are being combined, the back office, maybe not 
as far as they could go, but having both public and private at 
times in a state can limit the number of things you can put 
there.
    But the committee that I am now chairing in Massachusetts 
looking at public higher education in the state is beginning to 
raise that question about the public system in general, that 
there are all kinds of consortial savings that lie out there 
for combining some of the back-office operations that they have 
not yet begun to do in the public sector generally.
    So I think whether or not it is a public-private 
combination or public sector or just the private sector, there 
are a lot of things that those, as you say, small businesses 
can be doing that can lead to savings that are savings of 
efficiency and not as I was speaking before cost cuttings that 
will reduce quality. None of these things will reduce autonomy 
and they will not reduce quality either.
    And I think what we need again is a way of sharing our best 
practices around the country as to what exists out there that 
we can emulate and learn from each other.
    Mr. Petri. One other area is dealing with federal financial 
aid itself, and each school has staffs trying to learn all 
this. It actually can be done quite simply. The private 
financial guarantee agencies have kind of resisted that because 
one of the ways they have signed up colleges is to provide some 
of the services as a benefit to the colleges. The direct loan 
program does not do that. But this is an area where significant 
savings or efficiencies can be realized, and it actually will 
help save the federal taxpayer a little money if they adopt a 
more efficient program.
    My time is limited. Let me just switch to another subject 
that I did not hear mentioned that does, I think, drive up 
costs in many instances, or at least disrupts the normal 
planning process, maybe for good, maybe for bad, and that is 
the accreditation process, and I wonder if you could comment on 
whether accreditors place arbitrary burdens or policies that 
might be outdated or burdensome or even appropriate on 
institutions and whether the accreditation process is driving 
up costs in America.
    We all should be looking at it as a way of trying to, you 
know, make sure we have quality, but that we do not just let 
different people put their agenda in and say, ``You have to 
build this building or put in that library'' or whatever it is 
because some particular part of the university takes over and 
hijacks the whole process.
    Mr. Bassett. Actually, it is a good question. I thought it 
was going to go in a different direction. I thought you were 
going to ask what has been the increase to budget caused by 
state and federal regulations, which is not accreditation but 
sometimes those factors do increase costs also.
    Accreditation, generally speaking, I think, is probably one 
of the least expensive qualitative controls per hour in the 
sense that most of the accrediting agencies are working with an 
awful lot of volunteer consulting help coming from 
administrators and faculties in universities and associations.
    Whether it is the five regional accrediting bodies in 
America or whether it is the many, many professional 
accrediting bodies for nursing and law, physical therapy and 
everything else, there is--of course, most of this usually 
begins with a self-study, which does take resources to do, but 
asking the very questions that Congress and the Secretary have 
been asking us, how effectively are we operating as an 
institution. An outside body visits and comes up with a report, 
which, while it creates a bottom line of accountability, also 
provides a great deal of help to the institution in improving 
itself.
    So it is not clear to me at this point that accreditation 
is one of the excessively expensive operations that 
universities and colleges pay for, if they believe in 
accountability, but my colleagues may have other perspectives 
on that.
    Chairman Miller. The gentleman's time has expired. I have 
11 members waiting for----
    Mr. Andrews?
    Mr. Andrews. Thank you.
    I would like to thank the chairman and the committee for 
having the hearing.
    I think that one of the things I hear most frequently from 
my constituents is their stress and worry about the very high 
cost of paying for higher education, and this is a problem that 
needs to be approached by looking at data, and I think we have 
had three excellent witnesses this morning to help us do that.
    I have some questions and maybe if there is some data that 
we have not heard about, I could learn where to find it.
    What percentage of students in American higher education 
pay the sticker price? That is to say net of Pell grants or any 
institutional scholarships or grants, what percentage of 
American students either borrow or write a check for the whole 
amount themselves? Do we know?
    Ms. Wellman. Not off the top of my head, but I bet you 
roughly 60 percent or more get some form of financial aid at 
the higher number----
    Mr. Andrews. So my hypothesis would be that the relevant 
price comparison should not be the top line. The most relevant 
price comparison for a student is the bottom line of what he or 
she must borrow or write a check for to go to school.
    The second hypothesis: I think that there is a 
misconception that there is not much price differential in the 
marketplace for people to choose. In other words, all schools 
cost about the same. I do not think that is true. Are there 
data available that compare the price range for what I would 
call similar schools? And I would, I guess, President Bassett 
this question.
    Not all NAICU schools are alike, I understand that, but 
many of them are smaller, private, 3,000-4,000-or 5,000-student 
schools that focus on liberal arts or similar areas. Are there 
data on the price ranges for those kinds of choices?
    Like in my state, Drew University is a member of your 
association, as is Fairleigh Dickenson, I believe, and they are 
fairly similar schools. Are there data on the price range that 
one can choose from among types of schools like that?
    Mr. Bassett. I do not have the figure at my fingertips, but 
I believe if you go to the new U-CAN Web site, you could 
probably do a study of the 700-plus colleges that are involved 
on that Web site and do a study of the small liberal arts 
colleges in a certain part of the country, both for sticker 
price and for net tuition price.
    Mr. Andrews. And can any of you tell me if there are data 
that express the range of price? I mean, if you buy a mid-size 
car, right, I guess it ranges from a low of $27,000 to a high 
of $45,000, $50,000, depending upon what you put in the 
vehicle. Is there a similar discussion of the range of prices 
for similar categories of institutions?
    Mr. Bassett. Probably, although even among the liberal arts 
privates, there would be different categories depending on 
where they are in the market, I think.
    Mr. Andrews. Well, let me test another hypothesis and ask 
each of the three of you to respond to this. One of the reasons 
why tuition inflation has outpaced regular inflation is that 
there is this considerable amount of cross-subsidizing going on 
where students who cannot otherwise afford to go to the school 
are having their tuition cross-subsidized in the form of 
institutional aid by other students.
    Now I do not say that accusatorially. I think that is a 
good thing, but when we talk about, you know, other 
institutions pay higher health insurance bills, higher heating 
bills, higher energy bills, how come you are at 6\1/2\ percent 
and they are at 2 percent? Well, one of the reasons is that one 
of the areas that make up that difference is money that the 
school is collecting from students' tuition and then allocating 
it toward institutional aid.
    Here is my question: What percentage of the difference 
between tuition inflation and regular inflation can be 
attributable to institutional aid that is covering for what we 
are not doing in Pell grants and states are not doing in state 
budgets?
    Mr. Bassett. The answer would vary somewhat from college to 
college depending on the kind of endowment they have to put 
into the need-based scholarships for students. If they do not 
have a large endowment for that purpose, then it would be a 
larger percentage of that gap you are talking about that is 
being covered by the tuition that others are paying. If you 
have a huge endowment that can cover that need-based 
scholarship aid, that extra money is probably going into hiring 
extra chemistry professors and having a better laboratory.
    Mr. Andrews. Ms. Wellman, are you familiar with any answers 
to that question?
    Ms. Wellman. We can get the data. I do not have it in my 
head. I want to say it is the average discount, the gap between 
what revenue from sticker and what is obtained for spending, is 
close to 40 percent.
    Mr. Andrews. It is a lot of money.
    Ms. Wellman. Yes, it is a lot of money.
    Mr. Andrews. Mr. Alexander?
    Mr. Alexander. This is not true for most public 
institutions. It is a little different for public institutions, 
especially when we do have our rates posted and the ranges 
within our own institutions. Then we get into out-of-state 
issues, which most students have to go into the individual 
states.
    But one-third of every dollar that we increase in our fees, 
in our tuition in the State of California, it is mandated that 
we put into state grant institutional aid. If we increase $250, 
roughly $80 to $90 of that will go into an institutional aid 
that then we actually distribute within the CSU system to 
different students----
    Mr. Andrews. I appreciate it. I see my time has expired----
    Mr. Chairman, I would just say that I am glad the committee 
is looking at this--I think what we have created here is a 
situation where we have an implicit student tax where some 
students pay a higher fee to go to school to help their brother 
and sister students, which I think is a good thing, but we have 
to ask ourselves whether that is the most progressive and fair 
way to pay for that. Perhaps the system that raises more in 
Pell grants and public aid that is based on a more progressive 
and all-inclusive means of raising revenue is a fairer way to 
do that.
    I yield back.
    Chairman Miller. Mr. Bishop?
    Mr. Bishop of New York. Thank you, Mr. Chairman. Thank you 
very much for holding this hearing.
    I want to go back to this issue of cost drivers that we 
were talking about before. Ms. Wellman, perhaps you can help 
me, but when I worked with these numbers every day, these were 
approximately the case, that about 60 percent to 70 percent of 
an independent institution's annual expenditures were in salary 
and fringe, about 10 percent in operation and maintenance of 
plant, maybe about 5 percent in debt service, maybe about 15 
percent in unfunded student aid. Are these approximately right?
    Ms. Wellman. Its individual license can vary, but, yes, it 
sounds about right.
    Mr. Bishop of New York. Okay. So, if we are going to focus 
in on the issue of holding the line on price, the most fruitful 
area for trying to hold the line on expense would be in salary 
and fringe, correct? And we already have a situation in which 
the sticker price is less than the cost of providing the 
educational service to the student. So we have a real dilemma 
here.
    We also have a situation that is layered with complexity. 
Higher education is labor intensive. We know that. There is 
also an enormous amount of competition, particularly in the 
independent sector. There is also an enormous growth in 
discounting, particularly in the independent sector, so it is 
very difficult to chart, if you will, the right path.
    And what we are struggling with is, as the chairman said, 
we are putting money in at the top end, $20 billion more for 
Pell, and, hopefully, that will go a long way towards helping 
needy students attend, but what is the best role for the 
federal government to play beyond sharing of best practices in 
terms of helping institutions deal with this personnel cost 
issue? I mean, is there a role for the federal government to 
play?
    Ms. Wellman. My reaction is two--one is data. The federal 
government can make data about spending much more accessible, 
make it more readily benchmarked, get it in the hands of 
governing boards and institutions and state legislators so that 
the conversation is not just once every 5 years, but ongoing, 
about where you are spending your money, where you can do a 
better job. This is a topic that is way too shrouded in 
technical detail and not accessible, so the feds have a role to 
play there.
    The feds also have a role to play in tackling the root 
causes of increases in spending on benefits. One of the biggest 
areas of growth in spending is health care benefits, and you 
know that conversation, and I will not belabor it here. It goes 
well beyond the jurisdictions of most education committees or 
budget committees, and it is a complicated topic because 
everybody lives with the consequences and nobody controls it. 
But if the federal government could get the rate of increase in 
health care costs down, that would make a huge difference.
    Mr. Bishop of New York. Okay. Dr. Bassett?
    Mr. Bassett. Congressman, you put your finger on a main 
issue. Personnel costs are an enormous part of the budget, and 
even though all of those other factors have gotten more 
expensive, still a large part of our budget comes from 
education being so labor intensive.
    I would love to come up with creative ideas to allow a 
professor, for example, to work with more students per 
professor than they do now, while still keeping the quality of 
the student-student and student-faculty interaction at the 
level that we all would want in going to college, rather than 
it simply becoming a kind of factory there.
    I think health care costs are one factor there. There may 
be, however, certain kinds of pedagogical advances we can work 
together on that will help us change some of those ratios 
because I agree, 10 years from now, it may not be us back here, 
but somebody is going to be back here raising those same 
issues.
    But it is so personnel intensive, the value of higher 
education is personnel intensive, that unless we can find some 
ways to make ourselves more efficient on the personnel side--
and I say that knowing this can lead to reduced quality--we are 
not going to get our arms around this completely.
    Mr. Bishop of New York. I have very little time left. But, 
Dr. Alexander, you have made several comments this morning 
about the importance of focusing on needy students and seeing 
to it that low-income students represent the first priority, 
both of the federal government and, I believe, the state 
governments.
    Given that, can I just ask for your opinion? We have moved 
now to a merit-based component to Pell, some, I think, $400 
million. I am not sure what the number is in the current year. 
What is your thought on that? Is that the best use of a federal 
resource, to add a merit-based component to Pell, or would that 
money be better spent on additional need-based aid?
    Mr. Alexander. I think there is a merit-based movement in 
the United States that I think is also a backlash to the public 
and private tuition increases, and you are seeing this backlash 
in many forms, in HOPE scholarships in the State of Georgia. I 
know we have a presidential candidate who is advocating a 
national merit-based scholarship. I am very concerned about 
this direction as a nation, and many governors have been 
elected on the platform of merit-based scholarships and 
developing merit-based scholarships.
    I think, actually, the best use of funds, I believe, at 
this time is to create what I have been mentioning earlier 
today and discussing, is to create ways to reward the 
institutions and states for maintaining their commitment to 
public missions, which means enrolling, supporting, retaining 
and graduating low-income students, and I do believe that until 
we really address this issue that we are only going to see 
marginal gains down the road for higher education, and we will 
have another committee meeting at some point down the road.
    Mr. Bishop of New York. Thank you very much.
    Chairman Miller. Okay. Mr. Sestak?
    Mr. Sestak. Thanks, Mr. Chairman.
    My first question--I think both the chairman and I walked 
in while he was talking--may have already just been addressed 
here, but to make sure--2 weeks ago, I met with about a dozen 
presidents of universities and colleges in my district for a 
second meeting on the cost growth because it is what I heard 
throughout the campaign when I ran.
    And their statement was not unlike yours, Mr. Alexander, 
that we really need to grow need-based states, so to speak, you 
know, where the federal government's role here truly might be a 
carrot, yes, but a stick where the money in the grants or the 
loans, whatever we give to the states, actually forces them to 
focus more upon the lower income, the needs, and they say that 
because it was a mixture of private and public universities and 
colleges. There has been in my state of Pennsylvania a movement 
of those who can afford private, you know, going to state where 
they can more readily afford it.
    And so is that what you are talking about, is that it is 
conducive to the states to get more money or to get money only 
if X amount is going to needs-based. Now I know in my state we 
have so much set aside, but it is not near what it might be. Is 
that what you are suggesting?
    Mr. Alexander. Well, this is where the Pell grant 
differentiates from a lot of state need-based programs. The 
devil is in the details of these need-based programs. The Cal 
Grant B, for example, is very income-based. The Cal Grant A is 
perceived as a needs-based program, but is a very merit-based 
program.
    I think one mistake we make in higher education is not 
assuming that $85 billion in state appropriations are not need-
based support for students to keep costs low because that is 
truly, I think, the biggest issue, the biggest issue for us, 
and the dollars that the state puts into----
    Mr. Sestak. I apologize. You said it better than I did, is 
that the attraction to federal monies is that their 
appropriations is going towards need-based more. Is that 
correct?
    Mr. Alexander. I am sorry?
    Mr. Sestak. The incentive from federal legislation might be 
that the $85 billion that they are appropriating is more 
focused on need-based because, if it is not, they would not get 
X amount. There would be an attraction in the federal law.
    Mr. Alexander. Well, it should be as state appropriations 
are supposed to protect equal opportunity and to make sure 
costs are staying low. That is the main purpose, to offset 
those costs and to make sure that public institutions do not 
grow, escalate their increasing costs for higher education.
    So, in many ways, it was devised, state appropriations, for 
higher education. Initially, it was--certainly in California 
until the 1980s--to provide free education for as many people 
as possible. So protecting those resources and ensuring that 
states remain committed to those resources is, I think, the 
biggest concern for the public sector.
    Mr. Sestak. But you can do that by helping to make federal 
aid dependent upon focusing more of their $85 billion towards 
need-based. Is that wrong?
    Mr. Alexander. You can, and, you know, this is not 
precedent setting, by the way. The SSIG program was started to 
encourage states to adopt need-based programs in 1972 when only 
six states would allow them because of constitutional issues of 
public-private mixes, and rapidly 50 states quickly adopted 
them within the next 10 years.
    The difference now is that many of those need-based 
programs, some would argue might be more institutional need as 
opposed to student need, and the cost of attendance or the 
sticker prices that drive a lot of that aid can be fluctuated 
and can advantage higher-cost institutions and students who 
pick higher-cost campuses as opposed to focusing in more need-
based areas based on students and access and real need and 
income.
    Mr. Sestak. Ms. Wellman, in your testimony, you talked 
about incentivizing from the federal levels student attainment, 
and my limited understanding is that--and you kind of focus on 
not just getting them into college, but making sure they 
graduate--the best predictor of completing college is actually 
the income level of the family and if the parents have a 
college degree.
    And so I was taken by your testimony, it is just not 
getting them there, but how do you get them through, because if 
you are lower income, there is less success. Has anyone thought 
financially about a stepped type of an approach in aid so that 
if you complete your freshman year, there would be a more 
attractive loan grant or whatever to the second year, the third 
year and the 4 years, or that does not play in the field that 
you are----
    Ms. Wellman [continuing]. For the year first step was 
financial aid programs to front load grants, to provide the 
greatest assistance at the freshman year, or to increase 
granting aid as the student progresses through the degree. So--
--
    Mr. Sestak. Any studies of how well that does----
    Ms. Wellman. I am not aware----
    Mr. Sestak [continuing]. Particularly the one where you 
attract them to the next year?
    Ms. Wellman. I am not aware of one being systematically 
implemented with the goal of getting students through to 
graduation. In fact, I believe the tendency, the general 
pattern is for students to move away from grant increasingly 
toward grant-loan mixes as they move through their degree.
    And I think that one would want to look not just at student 
aid packages to encourage students to move through, but 
institutional financing strategies to move students through. 
You would want to do it on both sides.
    Mr. Sestak. Thank you.
    Chairman Miller. Mr. Hare?
    Mr. Hare. Thank you, Mr. Chairman. Thank you for holding 
the hearing.
    I have mentioned the City of Galesburg, Illinois, many 
times here. It is my home town, and it is a community that lost 
1,600 jobs when the Maytag plant went to Mexico.
    The challenge that I have is ensuring that the workers 
receive training and other assistance that they need to find 
new employment, you know, equal to the wages that they had, 
and, unfortunately for these workers, like many nontraditional 
students, they must balance, you know, school, family, part-
time, full-time work, and the federal student aid process, like 
FAS, tends to steer colleges towards offering programs that 
make it difficult for nontraditional students to access and 
complete college.
    So my question for the panel would be--one question would 
be--what changes do you think we can make in Title 4 of the 
Higher Education Act to help dislocated workers and other low-
income adults have access to college?
    Ms. Wellman. You know that better than anybody.
    Mr. Alexander. I think you are correct in asserting that 
the programs were really never designed to help those types of 
students. We need to carefully analyze the limitations and 
barriers of displaced workers, adult learners, part-time 
students and students where the families that are working full 
time. We do need more student-friendly programs of that kind, 
both by state programs as well as in federal discussions and 
federal directives.
    The only way we are going to start addressing these large-
scale numerical issues that I think that we are all dealing 
with and starting to slip in OSCD and just about everything is 
to address the adult worker issues, displaced worker issues and 
adult learning opportunities and graduate learning 
opportunities even from community college to graduate school.
    Mr. Bassett. One of the strengths of American higher 
education, one of the special strengths, is that it is just 
about the only country where if you do not begin college at 18, 
you still have a chance to begin college at 32, but that is 
only part of the workforce need that really you are addressing 
there. There are people that come back. They need retraining.
    We need to think about this on a statewide and regional 
basis, how we are really meeting our workforce needs with our 
educational system there and particularly for the older worker, 
and I think President Alexander is right. Some of these things 
were not set up with that in mind, and we need to rethink them.
    Mr. Hare. Thank you.
    Dr. Wellman, has the Delta Project looked into the costs 
and trends of higher education in rural communities? You know, 
I represent a large rural area, and I would imagine that these 
areas struggle with unique challenges that may not be seen in 
other parts, especially in terms of access or availability, 
resources and outreach. Could you speak about specific data for 
students who live in rural or geographically isolated areas? 
What does the data tell us and how can Congress address the 
challenges of the population to people in the rural 
communities?
    Ms. Wellman. I do not know. I do not know, and we can find 
out. We just put the data together to allow us to answer 
exactly questions like this. So we will look at that, and I 
will tell you what we find.
    Mr. Hare. Okay. That would be great.
    I am sorry. Go ahead.
    Mr. Alexander. Having been president of a rural institution 
in Western Kentucky for 4 years, there are significant 
differentiated issues in travel. The administrative costs, when 
most of the rural schools have about half the student 
enrollment that larger schools have, the economies-of-scale 
issue--larger institutions in more urban areas will have more 
resources for a number of reasons, and many of those rural 
areas also have to reach out into other communities through 
extended campus creations to address many of the issues that 
you just began to talk about in the first question.
    Mr. Hare. Just one final thing, I would be very interested 
if maybe you could get back with me or at some point maybe we 
could talk about--when we were talking about the first 
question, some of these programs for dislocated people--those 
are the kind of workers that are coming back into the 
workforce--because it is really difficult for them, and, you 
know, their lives have been turned upside down, and we are 
trying to get them back up on their feet, and they have health 
care to deal with and families and everything that goes with 
losing your job, and so if there is anything I can do to help 
or some ideas that you have and you can get them to me, I would 
love to have them and maybe we could proceed from there.
    So thank you very much, Mr. Chairman.
    Chairman Miller. Mr. Yarmuth?
    Mr. Yarmuth. Thank you, Mr. Chairman.
    And I would like to offer my welcome to Dr. Alexander and 
tell him we miss him in Kentucky. Thank you for everything you 
did.
    And for those who are not as familiar with you as we were 
in Kentucky, he took an institution in great need of help and 
elevated it to a considerable height.
    So thank you for your service to Kentucky.
    One of the things that I am curious about because we heard 
earlier in the discussion the issue of proprietary schools--and 
I guess from kind of a very uninformed position, you would say, 
``Well, there are schools that know how to make money out 
there,'' because there are profit-making schools out there, and 
you said the data was not very good on proprietary schools, but 
what is it about proprietary schools that allows them to 
control costs--I guess maybe this is a softball and a free 
shot, if you want to take it--allows them to at least control 
costs apparently better than nonprofit institutions do.
    Ms. Wellman. I am on the board of a proprietary school so I 
can speak to that model, and I think it is a typical one. It is 
a very different cost model than in a public or a private 
institution. The institution and the delivery system are very 
different. Faculty are used only for those things that only 
faculty will do well. They are used to teach.
    There is a much stronger complement of professional staff 
that put a lot more into student services and counseling. 
Students are given fairly aggressive curriculum plans and 
expected to stick to them, so the curriculum is more rigid and 
standardized. They use data. If students get in trouble, they 
get in touch with them fast.
    So they are very bottom-line oriented, they watch how they 
spend their money like a hawk, and their most expensive 
investment is in faculty are used only for the purposes that 
only faculty will do, whereas in other institutions, faculty 
are expected to provide a whole host of services, including 
curriculum development.
    In the proprietary sectors, the curriculum is developed 
centrally, modified by the faculty, but it is a very different 
cost model.
    Mr. Yarmuth. Well, I guess my follow-up would be for both 
the other members of the panel, is to what extent, if any, are 
those models applicable to the nonprofit sector, and is that 
something that institutions are trying to examine?
    Mr. Bassett. We are learning about how the for-profit 
sector works, the proprietary sector works. They are often very 
focused in ways that most of your universities are not focused 
on, certain kinds of curricula. They do not have the breadth. 
They, obviously, do not have the research dimension that some 
universities have as well. A whole set of student services--
some, they do spend time on. Others, there is not that sense of 
the larger student, the whole student that colleges focus on.
    I am interested in learning from any sector I can, whether 
it is the for-profit educational sector or the business sector 
generally or other countries, but I think some of it is new 
enough so there is very little longitudinal kind of data 
available as to how effective they are. So we will keep our 
eyes open and learn what we can and use what is applicable.
    Mr. Alexander. If I could add just, first of all, it is 
interesting that these institutions are the most reliant on the 
student aid when you look at percentages of students getting it 
and acquiring amounts and percentages.
    Secondly, they rely on part-time faculty, quite simply. I 
think Phoenix has 10 full-time faculty members. I think that 
makes, what, a 10,000 to 1 faculty-student ratio. We are in 
some ways moving in that direction, and the College Board study 
showed recently that in the last 20 years, public and private 
higher education have gone from 53 percent full-time faculty to 
40 percent full-time faculty. So, in some ways, we are already 
moving in that direction.
    We have not assessed the consequences of it, some good, 
some bad. In addition to that, the for-profit sector picks 
fields that they think they can succeed in and make a profit 
on. I am still waiting for the for-profit universities to 
produce 500 engineers a year. It is an expensive field of study 
that our nation needs very badly in very high-demand fields. 
Nursing, other medical services, other high-demand fields might 
not make them as much money. I know in the Cal State University 
system we produce 9,000 engineers a year for the economy of 
California. The high-demand fields are being neglected in some 
of those areas as well.
    Mr. Yarmuth. Probably a problem with philosophy, too.
    One quick question--I hope it is a quick question--one of 
the statistics I saw in the testimony was that the percentage 
of students who are on Pell grants actually graduating is 
relatively low, and I have some legislation actually to try to 
help create a grant program to provide support services for 
Pell grant recipients. How much does that noncompletion rate, 
that turnover of students, add to the overall cost of the 
system? Is it a factor in cost?
    Mr. Alexander. It is a very big factor in terms of remedial 
education that we provide for students, in terms of advising 
structures that we provide for students, and we are so heavy on 
Pell grant eligible students on our campus, with, as I 
mentioned, nearly 40 percent, it costs us a lot of money to 
particularly get them from freshman to junior year, and it 
takes a lot of attention because they are coming from schools 
where they have not had the backgrounds in many ways, and we 
have to get them college ready.
    We are working with our public schools even prior to 
getting to college, which costs resources for us, to get them 
college ready even prior to coming to the institution. So this 
is a very costly item. We know it is costly in K through 12 
schools. We have never really recognized it, though, in terms 
of what does it cost the institutions to get these students 
from freshman year to senior year or transfer junior year to 
senior year.
    Mr. Bassett. I agree. It costs an awful lot. There are two 
reasons why students do not continue and complete college. One 
is financial. The other is the rigor of their high school 
education. They come in unprepared. They do not stay. Either it 
takes remedial help or they do not stick with it, and that is 
something we cannot ignore, is the connection between the K 
through 12 education issues and higher ed.
    Chairman Miller. Mr. Payne?
    Mr. Payne. Thank you very much. Thank you for having this 
very important hearing, and I hope we can really come up with 
some ways that we can give more support to the whole question 
of costs.
    You know, there are a number--I missed most of the 
testimony, but did hear the HOPE scholarship mentioned about 
and I hear a lot of acclaim given to the HOPE scholarship 
because it is sort of merit, and a youngster doing all right in 
Georgia really has access to these schools.
    However, if you evaluate the HOPE scholarship, which is not 
based on income--the money comes from lottery and other kinds 
of gaming that, unfortunately, the lower end of the community 
participates in, and, as we all know, people that are doing 
worse sort of are looking to try to make that big win, and so a 
disproportionate amount of people who cannot afford the lottery 
play it.
    However, a person who might make $100,000 a year, $200,000 
a year as a couple or whatever, their child can take a test and 
get the HOPE scholarship, a person who might have gone to some 
other school and paid the tuition, but why not stay in 
Georgia--they have some good colleges--and let the public pay, 
let these people who play the lottery pay for my education? You 
know, I have not looked at it and, if I am wrong, tell me.
    And how do you see the kid who goes to the schools where 
all the children are left behind, so to speak? How do they 
compete, even though I understand the score is based on that 
school? However, once they get into the college, the diluted 
education from the poor schools are going to have the person 
wash out probably because they are going to be unable to 
maintain the scholastic level that they need.
    Maybe the one that mentioned the HOPE scholarship might 
want to deal with that. I am just curious.
    Mr. Alexander. I think the merit-based scholarships have a 
couple distinctive elements. In states that readily have a 
drain brain impact, like Kentucky, prior to the merit-based 
scholarship. It does have greater value to a state that has 
traditionally lost many of its students and many of their 
investments from kindergarten through high school. For states 
that have not been losing them, it puzzles me why they were 
incorporated in the first place.
    With regard to how they are financed, I think that in 
states that truly need them to keep the brain drain from 
leaving, then perhaps they should be funded through a much more 
progressive system. The use of lottery money to provide 
resources to merit-based scholarship programs perhaps is the 
most regressive funding structure we have ever adopted in 
American higher education.
    Mr. Payne. Thank you very much. I agree with you. Of 
course, that is why I asked the question.
    My last question: It was mentioned by you, Ms. Wellman, in 
your written testimony that--you point to productive problems 
at colleges and universities that create higher costs. Number 
one, could you just quickly define the productivity problems, 
and how do you think that this problem arises and what does it 
mean to the institution?
    Ms. Wellman. The short definition of a productivity problem 
is that we do not know how to reduce spending without 
compromising quality or access, and in order to meet the goal 
of increasing attainment without compromising quality or 
reducing access, we have to think about the production process 
very differently and getting students through to the degree, 
and there are ways to do that if we make the focus on degree 
attainment and resource use to get the student to the degree. 
It is not about cutting costs. It is about using the money to 
accomplish degree attainment.
    Mr. Payne. And just finally on that HOPE scholarship, the 
original purpose of HOPE-type scholarships, the one that they 
have in Georgia, is primarily to try to keep Georgia students 
in Georgia or keep Kentucky students in Kentucky that they do 
not go to other states and remain there or to stay there at the 
end of the day, more or less. That is what it was supposed to 
be.
    Mr. Alexander. Was Georgia a net loser of students prior to 
the program?
    Mr. Payne. Right.
    Mr. Alexander. Okay.
    Mr. Payne. Yes. Well, I really do not know, but I suppose 
they were and that may be one of the reasons that they did it.
    All right. Thank you, Mr. Chairman.
    Chairman Miller. Mr. Scott?
    Mr. Scott. Thank you. Thank you, Mr. Chairman.
    A question was asked about the proprietary schools, but it 
is my view they have a different message, a different mission. 
They are focused on getting a specific job. You come in, you 
get trained, you get a job. And it is just focused on that. 
They change the situation when they feel like it. They do not 
have tenured professors, academic freedom, research, college 
life, all the extracurricular activities and everything. And 
essentially it is just more expensive to educate the entire 
person holistically than train somebody for a job, and, 
actually, you are just getting what you are paying for, and you 
make your choice.
    I guess the question along those lines--I guess for Mr. 
Bassett and Mr. Alexander--we have shortages in certain career 
fields. Are you not fulfilling those positions because they are 
more expensive to do? Do you find that you are, because of 
financial considerations, having to have more slots in less 
expensive fields rather than the more demanding fields?
    Mr. Bassett. I do not want to speak for President 
Alexander, but I think he has tried to say that he is 
addressing those needs, actually, in areas like engineering and 
nursing.
    I think most universities are trying to address those needs 
in terms of their own capacity to do so. We do have a problem 
in education in America where fewer and fewer American students 
seem to be going into science and engineering to begin with, 
and, therefore, companies are hiring more and more of their 
engineers from India or China or somewhere else, and that is an 
issue we have to take back to K through 12 as well as higher 
ed.
    But I think in the nonprofit sector, both publics and 
privates do try to address the workforce needs in those areas 
up to their capacity. If they do not have the funding in areas 
to add engineering programs that they need to or nursing 
programs or teacher programs--we are certainly not attracting 
enough people into teaching, at least high-quality people into 
teaching--I do not think there are many universities that would 
not try to help solve that problem if they have the capacity to 
do so, but I defer to my colleague here.
    Mr. Alexander. Well, I think you have begun to address 
these, I think approximately so, creating incentives, the Teach 
grants, the SMART grants. The SMART grants are, I think, funded 
at about twice of what is being spent on them because we are 
not getting students in the SMART grants, but the Teach grants, 
I think, will help. We are already using Teach grants.
    I guess the question is: We know it is far more expensive 
to educate an engineer than it is a journalist or a historian. 
We in California are not differentiated by state appropriations 
either. But I can say from our perspective that we are working 
as hard as we can to meet these high-demand fields and to 
provide the workforce for California through these areas.
    The one challenge that we have that was brought up a little 
earlier, Congressman Petri brought up, was accreditation. Some 
accrediting bodies like high demand because it means high 
salaries. So engineering insists that our engineering students 
need 5 years of college education to get through the 
engineering curriculum. You need 5 years to become a speech 
pathologist, to be certified as a speech pathologist. Thus, our 
public schools suffer by not having enough speech pathologists, 
and our health care agencies suffer by not getting enough 
speech pathologists into the arena.
    Sometimes we face some internal issues within ourselves 
within academe to keep that demand at a very high level, while, 
at the same time, we are trying as rapidly as possible to get 
more students into these areas so that we can provide the needs 
for society.
    Mr. Scott. Thank you.
    I have heard substantial a number of low-income students do 
not go to college because they cannot afford it. What would the 
Pell grant have to be to eliminate the financial barriers for 
low-income students getting to college?
    Well, let me ask another question. [Laughter.]
    Mr. Alexander. We range from $3,000 a year to $50,000 a 
year now. The range is quite expansive.
    Mr. Scott. Let me get another question in. I think Mr. 
Bassett indicated some colleges have endowments. Others do not. 
Is there any way through technical assistance or otherwise that 
we could help colleges build their endowment?
    Mr. Bassett. Help colleges build their endowments?
    Mr. Scott. Right.
    Mr. Bassett. They are doing a pretty good job of building 
them right now, I would say. You know, the question came up as 
to whether colleges should be forced to spend more of their 
endowment or something like that. Endowment and annual giving, 
like tuition, are all part of a revenue stream that you are 
trying to put into manage your college there.
    I think the biggest change that has happened in fundraising 
and seeking endowments is how the public sector has found the 
need to create foundations to try to build their own endowments 
and build their annual funding stream, both to improve quality 
and to make up for the lack of state funding there.
    I think if the tax policies are not in place to encourage 
people to give to endowments, we probably are disincentivizing 
people from increasing college endowments. But at the moment, I 
think most colleges are working very aggressively to increase 
endowments.
    Mr. Scott. Well, thank you, Mr. Chairman. I think he just 
came out in opposition to the repeal of the estate tax, but I 
was not quite sure. [Laughter.]
    Chairman Miller. Mr. Hinojosa?
    Mr. Hinojosa. Thank you, Mr. Chairman.
    My first question is directed at Dr. Bassett. Should 
private colleges and universities participating in the federal 
student aid programs be obligated by Congress to enroll a 
certain percentage of Pell grant recipients?
    Mr. Bassett. Should those private colleges be required to--
I did not get the last part.
    Mr. Hinojosa. Should they be required to enroll a certain 
percentage of Pell grant recipients?
    Mr. Bassett. Well, to some extent, of course, the number of 
Pell grant recipients that we enroll depends on the number of 
Pell grant potential recipients that apply, and assuming that 
the same qualitative standards are used for them as would be 
used for all of the other students, we would be enrolling and 
funding with our own private scholarship dollars up to the 
level of need all of those students. The only thing we could 
not do is to require people that do not want to come to our 
college to apply.
    Mr. Hinojosa. No, you do not have to require, but you could 
recruit. You can recruit down in South Texas where the 
population is about 84 percent Hispanic and where we have 
schools that are listed in the top 100 best high schools in the 
country. But if these private schools do not go out, which they 
never do--the only ones that really go out there to recruit are 
more of our public universities.
    Mr. Bassett. Well, I would love to have more of those 
students come to Clark University. I cannot speak for all of 
the other privates. As I think I said earlier, we probably have 
a smaller percentage of families making over $100,000 than any 
of the other privates with which we compete for students. So we 
are happy recruiting those students.
    It gives us also greater diversity, which is one of our 
primary goals, is to increase the economic diversity, the 
ethnic diversity, the international diversity on campus. So 
that would be very much in line with our philosophy.
    Mr. Hinojosa. Well, we have a large pool, and many, 
especially the girls, wind up staying somewhere close to home 
because many of their parents prefer to see them stay within 
the region. But if somebody comes out and recruits and gives 
them all sorts of information, maybe that could be turned 
around.
    Mr. Bassett. We will be there.
    Mr. Hinojosa. My next question is for Ms. Wellman. Some 
public and private institutions have pursued a strategy of 
charging higher tuition to be able to fund higher institutional 
aid. In your view, what is the impact of this type of policy on 
the enrollment of low-income, first-generation college 
students?
    I cannot hear you.
    Ms. Wellman. Good question. I think it is a different 
experience in different institutions. In general, the upper-
income students respond better to that than low-income 
students. But it is a mixed bag.
    Mr. Hinojosa. Yes, Mr. Alexander?
    Mr. Alexander. I thought I would never see the day when a 
public university would actually charge all students the full 
out-of-state rate and then turn around and give what they call 
in-state institutional aid scholarship awards to everybody who 
lives in the state to offset the difference between the two. 
But that happened about 3 years ago at Miami University in 
Ohio.
    I think this is a dangerous trend, and I think it is 
devastating for low-income students, and it chases them into 
jobs earlier than they should be, and it just limits their 
opportunities in ways that we still have not done enough 
studies to fully understand.
    Mr. Hinojosa. Thank you for that advice.
    Mr. Alexander, since I have your attention, Title 3 and 
Title 5 institutions educate a large percentage of low-income 
minority students. I can tell you that easily 60 percent of all 
Hispanic students are in HSIs, and that is a fact. These 
institutions tend to be low cost and low resourced. Could you 
please elaborate on how your proposal for a cost of education 
allowance could benefit students at these minority institutions 
of higher learning?
    Mr. Alexander. I believe it would benefit those 
institutions, and it would also create incentives for other 
institutions to start enrolling those students as well, and 
that is, I think, two-faceted.
    The first is that those institutions need additional 
resources, and if this program had been adopted initially in 
1972, we probably would not see as many institutions that have 
moved away from low-income student populations as we have 
today. That incentive is very important to help those 
institutions not only enroll, but to retain and succeed with 
those students.
    We are an HSI at California State University, Long Beach, 
and 16 of our 23 universities are HSI institutions. We know how 
important those resources are and the programs that we need to 
put in place to help those students succeed on our campus. They 
cost money. We need help in providing those types of avenues 
and resources for those students.
    And just like in the K through 12 sector, we know at the 
federal level that these students require more additional and 
augmented assistance, and it would be a very good day for us to 
see when the federal government also recognizes additional 
assistance to those institutions that are committed to----
    Mr. Hinojosa. We recognize it, and we are trying and, 
hopefully, when we do the reauthorization of higher ed, there 
will be a component where Title 5 will have a Part B for 
encouraging Hispanic students to get into the graduate 
programs, master's and Ph.D.
    Do you see how you could utilize that state money that we 
would put out so that we could get more students? In many 
cases, some have 5 years experience and they just need a little 
bit of help to get into the master's or the Ph.D. programs.
    Mr. Alexander. It certainly would help and, I think, as we 
work to educate more and as we work to increase--we were sixth 
in the nation in number of Hispanic students graduating from 
our institution. We do have hundreds and hundreds of more 
students seeking graduate opportunities that are Hispanic, that 
are African-American, Asian-American, Cambodian and others. 
These resources are very important for us to help provide the 
type of programs that encourage them to pursue higher levels of 
educational attainment.
    Mr. Hinojosa. It is good to hear that.
    Thank you, Mr. Chairman.
    Chairman Miller. Thank you.
    Mr. Wu?
    Mr. Wu. Thank you, Mr. Chairman.
    On those occasions when I ask questions, they are genuine 
questions and they are very short to permit long answers, and I 
just want to say in advance that this time I intend to talk 
because I want to talk about three very different topics and 
then invite your comment on any of the three.
    First of all, the issue of outreach about financial aid, 
the most well-attended events that I have done in my 
congressional district are about college financial aid. Parents 
and students come. There is an insatiable demand for 
information about how to get college financial aid, and, you 
know, I could do college financial aid fora all the time, I 
mean, just do nothing else, but there are other things that a 
congressman needs to do at home also.
    So I would just encourage you all to do aggressive outreach 
about what college financial aid is available because so many 
people just do not know what is available, and programs may 
exist. They do not do any good if people do not know about 
them.
    Number two, a potential source of nongovernmental revenue 
for college financial aid, not within the jurisdiction of this 
committee--we almost got this passed in 1999--is an H-1B Visa 
proposal that couples high-tech workers with college financial 
and does so in the following way: If you are IBM and you want a 
H-1B worker, you come to an accredited college or university, 
you plunk down an amount of money equal to the then maximum 
Pell grant, you get a ticket from the college. The college is 
obligated to use 100 percent of that money for financial aid. 
There is no administrative fee to be drawn out from that. You 
take the ticket to ICE, and you get your worker in 15 days.
    Companies typically spend $100,000, $150,000, $200,000 to 
recruit a worker. To pay an additional $5,000 per year to get 
their H-1B worker is not a big deal for most of these high-tech 
companies, and the expedited processing has not worked in many 
other arenas at Immigration. I believe it would work in this 
instance because it turns out that roughly 80 percent of H-1B 
workers, I think, are already in the United States at American 
institutions, and all the background checks can be done because 
the person is available to be checked up on.
    This was a way of leveraging federal dollars and increasing 
college financial aid, making H-1B visas more palatable by 
coupling it to educating American students.
    And third and last point, as we approach HEA 
reauthorization, just as our college financial aid outreach 
programs are our most well-attended programs in my 
congressional district, the most mail that our office has ever 
gotten has been our work on the textbook pricing issue. Mr. 
McKeon and I asked for a GAO study on textbooks, and it turns 
out that materials and books average out to close to $1,000 a 
year per student, and if you are attending Harvard or 
Georgetown, $1,000 may not be a whole lot more money, but if 
you are at Portland Community College or at a CSU, $1,000 is a 
significant question.
    This is a matter of access and fairness because the reason 
why the issue came to our attention is because students got on 
the Internet and they found that the same book that is 
available at their bookstore for $150, you could get at Amazon 
U.K. for $50, and you can order it, ship it, and save a lot of 
money.
    Now a lot of different--and as I said, we have gotten more 
mail and email traffic on this issue, and we have gotten it not 
from my congressional district----
    Chairman Miller. You are going to give them about a minute 
here to respond.
    Mr. Wu [continuing]. But we have gotten it from all over 
the country. Professors have a role to play in this. If they 
put out their syllabus early, then they can order. Students 
have a role to play in this. Bookstores have a role to play in 
this. And the publishing industry has a role to play in this.
    The red light has gone on, but if the chairman will indulge 
the witnesses in commenting on any of the----
    [Laughter.]
    Mr. Wu. I will stop at this point.
    Mr. Bassett. I was going to start the response by 
responding to your comment on financial aid outreach because I 
think the student that comes from a first-generation college 
family and less wealthy is four steps behind at the beginning 
than the student coming from a college-educated family and 
probably going to a high school with a number of guidance 
counselors. The first student may have one guidance counselor 
for every 600 students.
    I would love to see either a nonprofit or some other agency 
set up specifically to help, going beyond what is in U-CAN, and 
I know we have our Web site, which is very important here, in 
helping to provide some of that personalized guidance 
counseling on what is the right fit for this student with the 
right college. So, on that issue, I am with you 100 percent.
    Mr. Alexander. I guess I get the textbook issue then. Okay.
    It is a complicated problem. Right now in the CSU, we are 
looking at ways of rental textbooks. We are looking at 
textbooks, and we need actually the help of the Congress to put 
pressure on publishers to put their versions online in 
affordable ways for students. Not only online, but I think 
there are only three or four publishers that are controlling 
basically the whole market of textbook production. We are quite 
frequently accused of getting lots of money from these 
textbooks in our own bookstore, and our margins are virtually 
nonexistent.
    It is a very controlled market. Our faculty do play an 
important role in getting our faculty to start using 
alternative sources, getting them to use Internet sources and 
others. It is a complicated problem that we are all moving 
into, but with your attention on this issue, we can certainly 
put some pressure on the publishers.
    They do not necessarily want to put all this online because 
they lose a lot of money, too. So the more that you could work 
with us on this agenda would be very important because it is 
over one-third of our entire cost of education.
    Chairman Miller. Thank you.
    Thank you, Mr. Wu, for your questions.
    And we are giving a lot of attention to the textbook issue 
in the consideration of the HEA.
    Ms. Wellman, in your testimony on page 6, you refer to the 
transparency issue and reference Secretary Spellings' 
commission and you mention at the bottom there in that 
paragraph, ``Spending information is almost completely absent 
from state report cards and on institutional Web sites offering 
consumer information. The focus,'' as you might expect, 
``remains on tuition and financial aid, not on how money is 
spent.''
    In the next paragraph, you say that ``There is no evidence 
that the resources are going to pay for student success or 
increasing degree attainment, and low-income students are most 
at risk.''
    What are you telling us there?
    Ms. Wellman. Two things. One we are not paying attention to 
spending, institutions are not looking hard at where the money 
is going, and that we can do a better job with data to get that 
information as readily accessible as we are now getting 
information about tuition and financial aid and that when we do 
that, it will begin a conversation within the institutions 
about where the money is going and whether the money is going 
where it needs to to enhance student success.
    Chairman Miller. How do you do that?
    Ms. Wellman. Well, the federal government can help with 
IPEDS. You can do it by requesting states, as true incentive 
resources or the condition of receiving funds, to build 
accountability systems that ventilate costs, attract 
expenditures and that identify where the money is going.
    So I think it is about transparency, and it is about 
documentation.
    Chairman Miller. Not to put you on the spot, but you say, 
``There is no evidence that the resources are going to pay for 
student success or increasing degree attainment.'' I sort of 
thought that was the theory of why they would show up at the 
campus, but----
    Ms. Wellman. The places----
    Chairman Miller. What does the evidence tell us?
    Ms. Wellman. The evidence tells us if you look at where 
spending is increasing in higher education and then ask what is 
that spending going is for--Do we see more degrees produced as 
a result? Are we seeing more students get through to graduate 
school? What are we buying for it?--there is zero evidence of 
increased degree attainment. We are not seeing evidence of poor 
student access increasing. The evidence about learning is not 
good, as you know, but--what we can tell about learning 
results.
    So it appears to be increasing the intrinsic quality of the 
educational experience. These are nice places to be. Is it 
educationally necessary? Is it bottom-line quality? Is there a 
better way to do it? We think there is.
    Chairman Miller. Well, there was a suggestion--and I do not 
suggest that this is a prime driver--in talking to some people 
yesterday who are deeply involved in these issues--said that, 
you know, students expect a different environment. They expect 
health facilities, common facilities, quality-of-life 
facilities, if you will, on campus and campuses are judged by--
--
    Ms. Wellman. I think in the high-end institutions----
    Chairman Miller [continuing]. What they----
    Ms. Wellman [continuing]. The amenities race is part of 
what is going on, and yet it is a leadership responsibility if 
there is a will to do it, to make some choices to dial that 
down and to hold the line as much as possible on increasing 
spending and to put every dollar possible into educational 
quality. Otherwise, the market now is going to continue to push 
us in this direction. So we are spending more, and we are not 
necessarily getting better quality or results because of it.
    Chairman Miller. Gee, that is not very good news.
    Ms. Wellman. Well, like anything else in higher education, 
it is not always true. So we can find good examples on the 
other side.
    Chairman Miller. Well, thank you.
    Ms. Wellman. It is a pattern that is disturbing.
    Chairman Miller. I feel much better now. [Laughter.]
    Well, it is a very serious concern, I think, because it 
sort of goes to the question, ``What is it you are buying with 
this expenditure of taxpayer dollars?'' People work very hard 
to pay those taxes, you know, and so I think would think what 
we are trying to facilitate here is the attainment of that 
degree, hopefully accompanied by the most knowledge available 
in that period of time, and you are suggesting that the trend 
is, in fact, going in the other direction.
    Ms. Wellman. The trend----
    Chairman Miller. That is a very troublesome trend, I would 
think, for the shareholders who are financing those 
institutions, and it also looks like a trend where, I mean, 
conceivably, I guess you could end up losing market share 
because if you make it more difficult to get degree attainment 
or it is not happening, I guess people will make other choices. 
I do not know.
    But, right now, you would not have the information 
available to know whether you would want to pick another system 
that may be more efficient, more resources dedicated to your 
attaining the degree.
    Ms. Wellman. Yes. It would require a cultural change to 
create----
    Chairman Miller. Most people think, you know, that that is 
the mission of the system, don't they? They would think the 
mission of the system is degree attainment and the resources 
necessary to do so.
    Ms. Wellman. Well, yes, sir.
    Chairman Miller. I do not know. I mean, maybe I am wrong. 
Maybe we----
    Mr. Alexander. I think if you----
    Chairman Miller. Buyer beware. I do not know.
    Mr. Alexander. I mentioned earlier I think if you just 
aggregate this data and the expenditures, you will find out who 
is doing a good job and who is not, and you will find out real 
quickly who is serving more students. You will find out which 
institutions are actually chasing perhaps what we call prestige 
maximization. I think the data is there to understand how these 
expenditure trends have grown and have not grown. It is not 
consistent throughout the United States.
    Ms. Wellman. Yes.
    Mr. Alexander. There are many systems that are doing a very 
good job with more students than they have ever had and they 
have graduated more students than they have ever done. I know 
we graduated more students than any other system in the history 
of American higher education last year with 90,000 graduates. 
Others are doing well, but I think these data are very 
important in understanding where you can point your finger and 
understanding who actually is serving these public needs in 
greater ways.
    Mr. Bassett. If I may take a little different slant on it, 
our retention rate and graduation rate have both improved 
recently. I have made at least four different kinds of 
investment to try to make that happen: an investment at Center 
for Excellence in Teaching and Learning which has worked with 
faculty on teaching; an investment in an advisor to work 
specifically with first-generation and minority students to 
improve their retention rates; an investment in making more of 
our kind of part-time teachers full-time so they are always 
there for students. I also know that the incoming students have 
been a little stronger during that period.
    What I do not know is which of those four things made a 
significant impact on our improved retention and graduate rate. 
It is hard to disaggregate them to learn exactly what made a 
difference. So it is not easy to do the kind of research always 
that we need to do on this, too.
    Chairman Miller. Do you want to say anything?
    Well, thank you----
    Yes, David? [Laughter.]
    Mr. Wu. Very briefly in the preparatory materials for this 
hearing, there is reference to sticker price and net price, and 
this is impressionistic, but I have seen this happen a lot. 
When the sticker price is really high, you know, even though 
more than 50 percent of students might have an institution 
where they would be getting financial aid, I think a lot of 
people self-disqualify, and I do not know how you get around 
that, you know, because if you wind up advertising net prices, 
you know, the parents who are paying full-price might not be 
very happy, but somehow getting that information out is a very, 
very important thing.
    Ms. Wellman. I agree.
    Mr. Alexander. I think that actually we have come a long 
way from when this first was part of the discussion 4 years 
ago. The CSU has in this document our net price, our sticker 
price and our net price, and we have it for every CSU 
institution, and we are going to make it available to every 
family member in the State of California, and we encourage 
other institutions, and we encourage you to ask these type of 
questions of institutions as well.
    Mr. Scott. Will the gentleman yield?
    Mr. Wu. Yes.
    Mr. Scott. You have sticker price, net price. You also have 
cost, which is another figure. Do you publish that, too?
    Mr. Alexander. We can publish costs. We could put our 
$13,200 on here to demonstrate how much it costs.
    Ms. Wellman. How much subsidy you get.
    Mr. Alexander. Right.
    Mr. Scott. Because you have the endowment and the other 
income toward the cost to educate.
    Mr. Alexander. Right. Well, Ms. Wellman raised that 
question earlier, and we said certainly, if that is what people 
want to see and people want us to do, we will certainly put 
that on there as well.
    Mr. Wu. I yield back the balance of my time.
    Chairman Miller. Thank you.
    Thank you very much for your testimony. I think you can see 
from the interest and the questions of the members that this is 
an issue that we clearly want to try and begin dealing with in 
the upcoming legislation.
    So thank you, and I hope that we may be able to continue to 
call upon your expertise as we wind our way through these next 
couple of weeks. Thank you.
    The committee will stand adjourned.
    [The statement of Mr. Altmire follows:]

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

    Thank you Mr. Chairman for holding this important hearing on the 
rising cost of a college education.
    On October 22, the College Board released its annual ``Trends in 
College Pricing'' report. The report confirmed what many of us have 
been saying, the cost of attending college is rising faster than 
inflation.
    In what is one of the most significant accomplishments of the 110th 
Congress, we took a dramatic step towards making college more 
affordable by enacting the College Cost Reduction and Access Act (H.R. 
2669). This legislation will provide $20 billion in student financial 
aid, making college more affordable for millions of students. As the 
Chairman and members of the Committee know, it raises the maximum Pell 
Grant award by $1,090, cuts interest rates on subsidized student loans 
in half over the next four years, and provides loan forgiveness to 
students who go into public service after graduation.
    While we addressed the critical issue of affordability, we have not 
addressed why tuition prices continue to rise. I look forward to 
hearing more about the factors driving the constant increase in college 
tuition and hope to learn what steps Congress can take to slow or 
turnaround this climb in cost.
    Thank you again, Mr. Chairman, for your continued attention to this 
critical issue. I yield back the balance of my time.
                                 ______
                                 
    [The statement of Mr. McKeon follows:]

Prepared Statement of Hon. Howard P. ``Buck'' McKeon, Senior Republican 
                Member, Committee on Education and Labor

    Thank you Chairman Miller.
    I'm pleased to be here this morning to discuss rising college 
costs, an issue I have focused on since coming to Congress almost 15 
years ago.
    For too many years, it seemed I was alone in my concern about ever-
rising tuitions and their impact on students and families. That's why 
I'm so pleased that Chairman Miller has convened this hearing and 
joined me in asking the tough questions about how we can finally get a 
handle on the skyrocketing cost of a college education.
    Rising college costs are a difficult issue. There are no easy 
answers. The higher education community is fiercely protective of its 
right to charge whatever it sees fit, and taxpayers are expected to 
foot the bill that families cannot by blindly increasing financial aid, 
year after year.
    I learned that lesson the hard way when I first proposed a modest 
effort to address college costs at the federal level by shining a 
spotlight on excessive tuition increases. The backlash was, speaking 
frankly, both surprising and hugely disappointing.
    Certainly some colleges and universities have taken steps to hold 
down costs. Community colleges in particular are a low-cost option for 
an increasing number of students and families. We have heard from 
institutions striving for greater administrative efficiencies, and even 
schools that allow students to rent textbooks, a small step that can 
save students hundreds of dollars each year. But for every story we 
hear about a commitment to affordability, it seems we hear dozens more 
about exploding tuitions.
    Today's hearing is a positive sign. Finally, it seems we are 
reaching consensus that rising college costs are a real problem in 
America. I'm hopeful that we can begin turning our attention now to 
solutions.
    Over the last four years I have refined my plan to address college 
costs based on feedback I have received from the higher education 
community. I have included provisions that recognize low-cost 
institutions and modified how cost increases are calculated. 
Ultimately, however, I do not believe it is too much to ask that 
students and parents be given clear, understandable information about 
how much tuitions are rising. And for those schools where tuition is 
rising rapidly, at more than twice the rate of inflation, it is 
reasonable for us to ask why, and what can be done about it.
    It's no secret that I was disappointed this year when the majority 
insisted on passing financial aid reforms through a process designed 
for deficit reduction. I had a number of concerns about the policies in 
that bill, but perhaps even more than that, I believe it was a 
tremendous missed opportunity.
    That bill added billions in additional support for Pell Grants--
something I support--but it did so without any accountability for 
colleges and universities to do their part in the affordability 
equation. I fear that by inflating federal subsidies without addressing 
costs, we may inadvertently have made the problem much worse.
    Will colleges simply raise tuition further, draining the value of 
our Pell Grant increases? Will states spend less on higher education, 
assuming the federal government has made up the difference? Will the 
Appropriations Committee undercut the discretionary funding base of the 
Pell Grant program, thereby erasing the increases we provided? I'm 
afraid the budget bill may have been a losing wager.
    While we missed the opportunity to provide meaningful solutions to 
the college cost crisis earlier this year, I am hopeful that we will 
not make the same mistake now. As we prepare to consider comprehensive 
Higher Education Act legislation, I believe we must undertake a genuine 
effort to address college costs.
    I'm pleased to have this distinguished panel of witnesses here 
before us. I want to thank each of you for your willingness to engage 
in a difficult discussion. Your involvement, and the involvement of all 
stakeholders, is imperative if we are truly committed to keeping 
college affordable.
    I want to thank Chairman Miller for holding this hearing and for 
working with me and my staff on this important issue. I yield back.
                                 ______
                                 
    [Whereupon, at 1:40 p.m., the committee was adjourned.]

                                 
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