[Senate Hearing 111-1039]
[From the U.S. Government Publishing Office]
S. Hrg. 111-1039
ACCESS AND AFFORDABILITY: HOW EXPANDING PELL GRANTS WILL OFFER HIGHER
EDUCATION TO MORE AMERICANS
COMMITTEE ON HEALTH, EDUCATION,
LABOR, AND PENSIONS
UNITED STATES SENATE
ONE HUNDRED ELEVENTH CONGRESS
EXAMINING ACCESS AND AFFORDABILITY, FOCUSING ON HOW EXPANDING PELL
GRANTS WILL OFFER HIGHER EDUCATION TO MORE AMERICANS
OCTOBER 5, 2009 (PHILADELPHIA, PA)
Printed for the use of the Committee on Health, Education, Labor, and
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COMMITTEE ON HEALTH, EDUCATION, LABOR, AND PENSIONS
TOM HARKIN, Iowa, Chairman
CHRISTOPHER J. DODD, Connecticut
BARBARA A. MIKULSKI, Maryland
JEFF BINGAMAN, New Mexico
PATTY MURRAY, Washington
JACK REED, Rhode Island
BERNARD SANDERS (I), Vermont
SHERROD BROWN, Ohio
ROBERT P. CASEY, JR., PennsylvaniaKAY R. HAGAN, North Carolina
JEFF MERKLEY, Oregon
AL FRANKEN, Minnesota
MICHAEL F. BENNET, Colorado
MICHAEL B. ENZI, Wyoming
JUDD GREGG, New Hampshire
LAMAR ALEXANDER, Tennessee
RICHARD BURR, North Carolina
JOHNNY ISAKSON, Georgia
JOHN McCAIN, Arizona
ORRIN G. HATCH, Utah
LISA MURKOWSKI, Alaska
TOM COBURN, M.D., Oklahoma
PAT ROBERTS, Kansas
J. Michael Myers, Staff Director and Chief Counsel
Frank Macchiarola, Republican Staff Director and Chief Counsel
C O N T E N T S
MONDAY ,OCTOBER 5, 2009
Casey, Hon. Robert P., Jr., a U.S. Senator from the State of
Pennsylvania, opening statement................................ 1
Piotrowski, Jessica Taylor, Doctoral Candidate, Annenberg School
for Communication, University of Pennsylvania, Philadelphia, PA 4
Baxter, Adalena, Student, Cheyney University, Philadelphia, PA... 6
Ryan, D.J., Student, Pennsylvania State University, State
College, Pennsylvania.......................................... 7
Krall, Clarita Anderman, Parent and Administrative Assistant,
Eastern Pennsylvania Conference of the United Methodist Church,
Philadelphia, PA............................................... 11
Prepared statement........................................... 13
Perna, Laura W., Ph.D., Associate Professor, University of
Pennsylvania, Graduate School of Education..................... 16
Prepared statement........................................... 18
Gillen, Andrew, Ph.D., Center for Affordability and Productivity,
Washington, DC................................................. 22
Prepared statement........................................... 24
Wagner, Anthony E., Senior Vice President, CFO and Treasurer,
Temple University, Philadelphia, PA............................ 26
Prepared statement........................................... 27
Statements, articles, publications, letters, etc.:
Response to question of Senator Coburn by Andrew Gillen,
ACCESS AND AFFORDABILITY: HOW EXPANDING PELL GRANTS WILL OFFER HIGHER
EDUCATION TO MORE AMERICANS
MONDAY, OCTOBER 5, 2009
Committee on Health, Education, Labor, and Pensions,
The committee met, pursuant to notice, at 1:00 p.m. in
Sullivan Hall, Temple University, 1330 West Berks Street, Hon.
Robert P. Casey, Jr., presiding.
Present: Senator Casey.
Opening Statement of Senator Casey
Senator Casey. Good morning.
We are here today to talk about access to higher education
and affordability as well.
The principal concern that so many of us have in the next
couple of months, in the next several years is to do everything
possible to make sure that every American who wants to go to
college can do so in a way that is affordable. That is a major
challenge. To a certain extent, we have been able to meet that
challenge in the past, but for far too many students today it
is not the case. And that is what brings us together today.
I do want to thank especially so many people here at Temple
who made this hearing possible. We are grateful for the
planning that went into this and the use of the facilities here
I also do want to thank the new chairman of our committee,
Senator Tom Harkin of Iowa, who is now the chairman of the
Health, Education, Labor, and Pensions Committee after Senator
Kennedy's death just recently. And we are grateful that he
allows hearings like this to take place in the field back in
various States around the country.
I come before you today like many of us wearing different
hats. I come before you as the U.S. Senator from Pennsylvania
but also as a parent with two daughters--two out of four
daughters--in college and also as someone who had loans when I
went to college and to law school. I have some sense of what
many of our families are challenged by but probably not nearly
with the same sense of difficulty and burden that a lot of
families are living through today. But, I do come before you as
someone who was the beneficiary of loans from the Pennsylvania
Higher Education Assistance Agency in particular.
We have today an opportunity to explore many of the
challenges that our students and our families and our
communities face when it comes to financing higher education.
I had the opportunity after college to be part of the
Jesuit Volunteer Corps and I taught at the Jesuit school not
too far from here and lived further in from Broad Street in
north Philadelphia, 23d and Tioga. In that year, I became
familiar with north Philadelphia as both a resident and as a
teacher. A lot of the students that I taught in that fifth
grade classroom had all of the talent and ability to continue
their education, but many of them did not. Part of the reason
for that is access to higher education is hampered--and there
are impediments created--by the cost of higher education.
It has been often said over the years that education is a
great equalizer, that no matter who you are, if you have an
opportunity and you can finance higher education, you can
achieve whatever you want in America. But, we cannot say that
higher education or any degree of education becomes the great
equalizer, equalizing those from different backgrounds if more
of our students don't have access, especially students who are
low-income and even middle-
income students as well.
President Obama was also a beneficiary of student loans to
finance his education over the years. President Obama has made
this issue a major priority in his presidency from the very
opening days and weeks of his presidency. He has spoken
consistently and with an awful lot of commitment to making sure
that we are not just creating opportunities for higher
education, but that we are focused on at least two elements,
persistence and completion, to make sure that we are doing
everything possible to make opportunities available for people
to finance higher education and to complete that education.
As many of you know, the Federal Pell Grant program is the
largest source of grant aid for post-secondary education that
is financed by the Federal Government. The average grant today,
unfortunately, covers less than half of tuition at a 4-year
Just a couple of brief numbers. We will hear a lot of
numbers today, but some stand out more than others.
According to recent data, only 13.1 percent of Pell Grant
recipients who obtained a bachelor's degree graduated without
debt. Out of all those individuals getting the benefit of a
Pell Grant, only 13.1 percent have graduated without any debt.
That is compared with those who have not received a Pell Grant,
49.7 percent of bachelor degree recipients who never received a
Pell Grant had debt. Often it is, unfortunately, true, the
lower the income, the higher the debt, and that in my judgment
The Federal student aid system currently expects low-income
students with exceptional financial need to assume more debt
for their education than their parents earn in a year, so said
a recent higher education expert in a paper that he wrote that
I will cite a little later. Mark Kantorwitz of financial.org
The challenge that we have is making sure that we are doing
everything possible to get more and more young people access to
financing for higher education. For so many of them, that will
mean Pell Grants. We have to get this right and we do not have
a lot of time to deliberate about this. We have to move
quickly. It is possible that before the end of this year, we
will be able to take a step forward on this, and that is why
this hearing is so important and so timely.
I will make two more comments before we will go to our
First of all, the period within which we are living right
now is a time of horrible economic reality for so many
families. We are living through a terrible recession, the worst
economy in more than 50 years. There are a lot of indicators of
that, a lot of manifestations of that. It is not just a very
high unemployment rate, inching up near 10 percent nationally,
high foreclosure rates, higher number of bankruptcies, health
care costs out of control for too many families and small
businesses. But in the midst of all that, we also have a
challenge with regard to higher education. And if there was
ever a time when we have to make sure that we concentrate our
efforts and our resources on a problem, it is now because when
a family is stressed because of a loss of income, wages that
are flat or declining, or some other of these parts of what
could only be called, as they used to call it, the ``misery
index,'' all those numbers going up that we would hope would be
stabilized are going down--in the midst of that, so many
families are having trouble financing higher education.
We have a lot of families out there that are already
leading lives of struggle and sacrifice, and we have to do
everything we can to be responsive to their concerns and to the
economic realities that they face.
I was struck by so many feelings and sentiments when I was
reading the testimony of our witnesses, but especially the
testimony from our students when they spoke of their own
challenges or their families' challenges, but also did it in a
way which was full of gratitude. So many examples of students
and families saying that they are grateful for the help of
various loan programs, especially the Federal Pell Grant
program. Even in the midst of difficulty, they are expressing
gratitude for the help that they get. They also feel a
tremendous sense of gratitude and responsibility for what their
families do, how their families help them finance their
education, how their families help them get through those
difficult years of higher education. They also feel a
compelling obligation to their families who have helped them
finance education, helped them get through those challenging
And finally, let me say if there is a Pennsylvanian out
there who thinks that, ``well, this does not involve me, no one
in my family is currently seeking higher education'' and if
there is a Pennsylvanian who says, ``well, I did not have to
struggle too much, I had enough resources, I did not have debt
or no one in my family had debt''--there are few Pennsylvanians
who can say that, but if they do say that, they also should be
very interested in this issue because when we talk about higher
education, we are not just talking about the career of one
person or the life of one person or an impact on a particular
family. We are literally talking about the economic destiny of
Pennsylvania and America. How we do on these issues, how we
confront these issues of getting more and more of our young
people, especially low-income Pennsylvanians, more and more of
them having access to higher education, will determine our
economic destiny because the skills of our workforce in a world
economy is directly linked or inextricably interconnected with
how we deal with this terribly difficult challenge. Our
workforce in the future and our future economy here in the
State is directly impacted by how we will resolve these issues.
I am grateful that we have had an opportunity to bring
together a number of students, first of all. On my left, we
have three. I will introduce them, and then we will introduce
the other members of our panel after that.
First of all, Jessica Taylor Piotrowski. Jessica is a
doctoral candidate at the Annenberg School of Communication at
the University of Pennsylvania. She completed her bachelor's
and master's degrees at Penn. She grew up in northeast
Philadelphia. And I understand her parents are here today. I
would like to extend a warm welcome to her parents as well, if
they can raise their hands. In the back. Thank you very much.
Second, Adalena Baxter is a senior at Cheyney University of
Pennsylvania here in southeastern Pennsylvania. She is a first-
generation college student. In addition to maintaining a 3.2
GPA as a full-time student, she has worked over 40 hours a week
while attending school.
Third, D.J. Ryan, a junior at Penn State University, grew
up in West Mifflin, PA in Allegheny County. He is studying
communication arts and sciences with a minor in civic and
community engagement and is also involved in student
I will introduce our other witnesses when they appear
We will start with Jessica and then we will just go to your
STATEMENT OF JESSICA TAYLOR PIOTROWSKI, DOCTORAL CANDIDATE,
ANNENBERG SCHOOL FOR COMMUNICATION, UNIVERSITY OF PENNSYLVANIA,
Ms. Piotrowski. Good afternoon, and thank you, Senator
Casey, for allowing me to tell my story today.
My name is Jessica Taylor Piotrowski, and I am currently a
doctoral candidate at the Annenberg School for Communication at
the University of Pennsylvania. I am scheduled to graduate in
May. In addition to my doctoral degree, I have also completed
my bachelor's and master's degrees at Penn. In other words,
Penn has been my home away from home for some time now. Thanks
to generous financial aid, all of those degrees have been paid
I have been invited here today to speak about my
experiences with paying for college, and I can tell you
wholeheartedly that I would not have been able to pursue higher
education without the generous financial aid that I received
from the University of Pennsylvania, the city of Philadelphia,
the State of Pennsylvania, and the Federal Government.
To help highlight the enormous role that financial aid has
played in my life, I would like to first describe a bit of my
back story. I grew up in northeast Philadelphia, the oldest of
six children. My upbringing was typical of a working class
family. My father worked a full-time job as a carpet installer
while my mother worked two part-time jobs, one as a crossing
guard and the other as front-end manager in the evenings at a
supermarket. Money was in short supply in our house. Each
month, there was an effort for my parents to make sure that all
of our bills were paid, that the children were fed and clothed,
and that all other necessities were met.
Looking back, I can clearly see the many different ways my
mother tried to shield her children from the financial concerns
of the household, whether it be wrapping six pairs of socks
separately so it looked like we had more presents on our
birthday, to creating movie nights in our house with microwave
popcorn, to using lay-aways at local stores for school supply
shopping, or by shopping at the local secondhand shop for her
own clothing and other household necessities. She worked very
hard to ensure that her children did not feel as though they
Education was always held in the highest regard in my
family. Neither of my parents hold a college degree. Yet, from
my earliest days, I can remember my parents telling me that I
was going to college. In fact, I can remember showing my father
a test in which I scored 100 and him telling me that I need to
keep studying just like that if I wanted to get into a good
college some day. My parents were the same with all of my
siblings. I grew up in a household where high school was not
viewed as an ending point, but merely a stepping stone toward
bigger things. My parents would consistently tell all of us
children that they did not want us to end up like them. They
wanted more for us and college was how to get there.
When the time came for me to apply to colleges, I had
already figured out where I wanted to go, the University of
Pennsylvania. I remember telling my parents this and I remember
seeing the color drain from their faces. They were barely
making ends meet at the time and I was choosing to apply to an
Ivy League University. The idea of how to afford college was
new to all of us, but I kept telling them I would figure out a
way. I spent time working with my high school physics teacher,
as well as my guidance counselor, and they helped me figure out
how to navigate the often complex world of financial aid
So, I began applying. While I nervously waited to find out
whether or not Penn would accept me, I gathered papers and
forms and I read and read. My parents and I sat at the kitchen
table pouring over tax documents, paper FAFSA forms, and more.
We called help lines numerous times as we tried to figure out
how to handle my father's self-employment status, and we wrote
letters explaining our family situation.
And then it happened. I remember the day so well that it
brings tears to my eyes as I think about it. I met the mailman
outside of my house and I saw the thick package he had in his
hand. I knew it was for me. I tore it open and read the first
line, ``Congratulations!'' And that was it. I was accepted to
one of the best schools in the country. My parents were
screaming. I was screaming and then the moment of reality hit.
Money. How were we going to pay for it?
There in black and white was a letter saying that all of my
financial needs had been met. With thanks from Federal grants,
State grants, and a city scholarship, I would be able to attend
Penn. I think it was at that point when my mom just started
crying. At that time, at that young age, excitement was my main
emotion. I only now realize just how important that financial
aid package was for me. If it was not for the financial aid I
was awarded, there would have been no way I could have attended
the university. I would have missed out on an incredible
education, an education that fueled my desire to pursue
graduate school. I would not be who I am today, a young woman
pursuing a doctoral degree at one of the top communication
schools in our country.
Of course, after me, there were a lot of other children
still coming, and the same financial concerns arose with each
one. Of my five siblings, four have elected to pursue higher
education at local universities, Penn, Holy Family, Temple, and
Manor, while the other sibling elected to pursue vocational
training. In each case, for each year there are many financial
aid applications. This past year, I helped my parents complete
four FAFSA applications, and all of my siblings are benefiting
from the aid.
While not all of them have received as generous of a
financial aid package as I did, all of them received some type
of Federal and State aid to help them pursue their study of
choice. In order to maximize financial aid, they all elected to
attend schools in the Philadelphia area. Thankfully, we live in
an area where so many incredible schools are right in our own
My sister will be graduating from Holy Family University
this year with a degree in education. If you met my sister, you
would quickly realize that education is the perfect field for
her. Her personality, her patience, her overall demeanor--it
just fits. And it is only through financial aid packages that
she is able to make her dreams a reality.
I grew up in a modest home with modest surroundings, but
with a family full of love and with parents who had a belief
that education is the only way to achieve your dreams. If they
could have afforded higher education for my siblings and I,
they would have. But that simply was not a reality for them. As
I know they are, I am so thankful that there were financial aid
resources available that have allowed me and my siblings to
reach for our dreams.
Congress is considering increasing Federal grant aid. I am
wholeheartedly in support of that plan. First, more grant aid
will inspire confidence in students from modest means that
there is a way to pay for college. And second, more grant aid
will mean that these students will not have to pay for school
on credit, which is costly to repay and risky for students who
have little financial safety net if they cannot repay for any
reason. I strongly support any initiatives that will help
others do the same because like my parents, I truly agree that
higher education is the key to incredible achievements.
Thank you. I would be happy to answer any questions.
Senator Casey. Thanks, Jessica.
STATEMENT OF ADALENA BAXTER, STUDENT, CHEYNEY UNIVERSITY,
Ms. Baxter. Good afternoon, Senator Casey, distinguished
guests, and fellow students. Hello. My name is Adalena Baxter
and I am a senior at Cheyney University pursuing a psychology
As a first-generation college student, I must say that I am
proud to have come this far, especially with the adversity that
I faced along the way. Before entering college, my main concern
was finding enough financial support to attend the college of
my choice. Thankfully, I was able to receive Pell and PHEAA
grants and take out loans to cover the remaining balance.
While I am extremely grateful to have access to those
funding sources, I am concerned that the funding will not be
enough to compete with the rising cost of tuition and other
expenses that have come with being a hard-working college
Currently I am a work-study student at Cheyney University
in the Office of the President, but I have often held two jobs
to help keep up with the rising costs of education. I have
found it difficult to maintain a 3.2 GPA as a full-time student
while working over 40 hours a week with two jobs just to buy
books and other necessary related school expenses.
Unfortunately, prices rarely go down and stay down,
especially not higher education. In particular, the rising cost
of tuition and books alone--it would only seem logical that
Pell Grants would increase as well to accommodate these rising
In the country that we live in, gas prices and the cost of
living are constantly on the rise, and to accommodate those
increases over the years, wages and even minimum wage have
risen to meet these needs.
Having access to financial aid has allowed me to attend
college and continue education in hopes of bettering myself and
eventually giving back to my community. However, I believe that
it is imperative to raise the Pell Grant level to allow
students to remain in school and to match the rising cost of
Thank you very much for your time.
Senator Casey. Thank you, Adalena.
D.J. Ryan is next.
STATEMENT OF D.J. RYAN, STUDENT, PENNSYLVANIA STATE UNIVERSITY,
STATE COLLEGE, PENNSYLVANIA
Mr. Ryan. Good afternoon, everyone. Thank you for inviting
me to testify here today and share my story. I commend Senator
Casey for recognizing the importance of college access and
affordability and the necessity of expanding the Pell Grant
My name is D.J. Ryan and I am a 20-year-old junior at
Pennsylvania State University. I am a resident of West Mifflin,
PA in Allegheny County. My mother works as a secretary at
Jefferson Regional Medical Center, and my father has not been
able to work for some time due to his health. I have an older
half-sister who attended some college, but I will be the first
in my extended family to obtain a bachelor's degree.
I am currently studying communication arts and sciences
with a minor in civic and community engagement. I am also
involved in student government and currently hold a position as
the Governmental Affairs Director for the Pennsylvania State
University Council of Commonwealth Student Governments, an
organization representing over 33,000 students at Penn State's
19 commonwealth campuses.
My parents always had the intention of sending me to
college. I had a college fund set up several times, only to see
it used on several different occasions to keep my family
financially afloat. The first time my college fund was used up
was when my father injured his back and required two surgeries
to fix it. The second time was when he developed heart problems
which required even more medical care and surgery. My mother's
salary was not enough to cover our living expenses, let alone
sending me to college.
My family made a decision to open our own business, a take-
out restaurant, in the fall of 2007. My mother works her day
job and then goes to our shop to work during the night. I spend
the time coordinating the marketing and advertising from my
apartment in State College, and my father helps out when his
health allows, doing administrative work. Since I started
attending school, it has been an increasingly difficult task to
keep things moving. My family has been struggling with the
business and financing my education, and I fear we will soon be
forced to choose between the two.
During my freshman year, I attended Penn State's Altoona
campus where I received a small number of academic
scholarships, additional funds from State grants, and even more
aid in the form of Federal Pell Grants. This aid was a
phenomenal form of assistance, and it is the primary reason I
was able to attend school. However, with the increasingly high
cost of college, I took out both subsidized and unsubsidized
Federal loans. My parents took out personal loans as well.
I changed campuses to Penn State Greater Allegheny in
McKeesport, PA during my sophomore year in order to be able to
commute from home and save money. Although I did enjoy Penn
State-Altoona and the thought of living on my own, the burden
on both my family's finances and mine was too much to bear.
While at Greater Allegheny, I received an academic
scholarship to continue my education. This, combined with my
Federal Pell Grants, was enough to cover school for my
sophomore year. I consider myself very lucky because
scholarships are very hard to come by, especially in times
where everyone has an extra financial burden on their
The biggest problem for me has not even been with the
actual payment of tuition, but with the other costs associated
with college. On-campus living is high demand at Penn State and
is considerably expensive. I chose to live off campus in an
apartment I share with three friends. I must worry about paying
the rent, nearly $5,000 for the year. Also, meal plans are not
a reasonable idea unless one lives on campus. I have to buy
food, put gas in my car, and deal with all the other day-to-day
living expenses that any person living on their own would have.
I think the biggest problem with college costs is that many
times people do not realize how many extra expenses there are
when sending a child to college. It is not just tuition and
books. To cover these extra costs, I obtained a job through the
Federal work-study program. I work nearly the maximum of 20
hours each week in addition to my full-time school schedule and
extracurricular activities. All these things put together with
out out-of-class studying time required of a student means that
I have little to no free time to do anything on my own. But I
have been able to manage so far, even though many other
students I know have not been able to juggle everything they
need in order to pay for school.
After I complete my degree, I want to pursue a career in
college student affairs working specifically with
extracurricular activities. For most positions in that field, a
master's degree is mandatory. Then the cycle begins all over
again. More FAFSA applications will need to be filled out to
obtain more State and Federal grants, and then more student
loans will be applied for. At the end of what will be at least
6 years of college, I will have taken out student loans in
excess of $20,000, not including the loans my parents have
taken out. I will begin repaying these after graduate school,
about the same time I should be saving to start my life. The
starting salary for the position I want is not high, and I
clearly cannot rely on a family safety net in the event that I
will not be able to repay my loans later on.
The scenario I will face is simply unfair. Coming from the
background that I come from, I would have liked to have avoided
loans altogether. And as an aspiring college administrator, I
would love to see college students spend their time worrying
about the hard classes and not worrying about how hard it is to
pay for it.
I want to take a moment to reemphasize the significant
contribution that Federal Pell Grants have made on my
educational career. So far, I have received $9,671 in Pell
Grants during my 3 years of college. Receiving the Pell Grant
has been one of the main factors in allowing me to continue my
college education on to graduation. If I had even more grant
aid, I would be graduating with even less debt. I cannot think
of a better vote of confidence that the Federal Government can
give to aspiring students everywhere than to boost scholarship
Thank you for the opportunity. I will be glad to answer any
Senator Casey. Thanks so much, D.J.
Just a few questions and one observation first. What is
striking about your testimony, all three of you, when I read it
and when I heard it again, was a couple of problems we
highlighted earlier: lots of work hours. I mean, 40 hours and
going to school cannot be easy. That is a difficult assignment.
Second, one question that keeps coming up in these contexts
is out-of-pocket costs. By one measurement, out-of-pocket,
meaning the net between--after you subtract the grant dollars--
out-of-pocket costs represent--this is a national number for
those families that have someone financing higher education.
Out-of-pocket costs represent 61.3 percent of total income for
low-income families earning less than $50,000 a year. If you go
up a little bit higher on the income scale between $50,000 and
$100,000 in income for those families financing higher
education, just a little less than 23 percent of total income.
You can see just by that data how difficult it is for low-
income families to afford not just the tuition at a school but
also the out-of-pocket costs that go with it.
Any of the three of you want to comment on out-of-pocket
costs or anything else about something you did not cover or we
did not cover earlier?
Ms. Piotrowski. I could speak a little bit to out-of-pocket
costs. What is great about the university that I attended is
that they actually did factor in some out-of-pocket costs in
your overall package. That being said, the amount of money we
spend between books--books each semester alone--I do not think
anyone is aware of how much college students spend for books.
Senator Casey. I am a little bit familiar.
Ms. Piotrowski. It is unbelievable.
The other area is--I can tell you personally--I obtained a
residential advisor position on campus so I could live on
campus for free in the dorm because of the costs associated
with living in a dorm. And that package also allowed me to have
a free dining plan on campus. That is the only reason that was
possible for me.
One of my sisters is actually a student here at Temple now,
and I know how much out-of-pocket we are paying so that she can
live here because it is easier for her to attend classes. Then
you factor the cost of living on campus, books, eating on
campus, and then students have other smaller expenses that do
add up, and when you are talking about coming from a low-income
family, where you have been responsible for those expenses all
along as a high schooler, they do add up as well. Sometimes it
is easy to look at the tuition amount and say that is how much
it costs for school, but that is not true. It costs a lot more
to attend college than people sometimes think.
Senator Casey. Thank you, Jessica.
D.J., do you have something?
Mr. Ryan. I think that is a very accurate assessment of the
situation that I am facing as well. I mean, the nice thing
about being able to receive aid is the fact that I take out a
very high amount of loan dollars, and that money goes toward
the general living expenses, my books, and things like that.
Now that that loan money is dwindling because my expenses
increased, I am having a little more trouble, but when I first
move in, the purchase of books and all the supplies that you
need to have in your own apartment--this is the first time in a
while I have lived away from home--those expenses are covered
by loan dollars, but I still have to pay those back when I am
done with school. It is just money now that I have to give back
Senator Casey. And Adalena?
Ms. Baxter. I would just like to also add that with the
high cost of books, there are also papers that you have to
write, and when you want good research literature, it costs.
Working to buy those books and other necessary expenses that
you absolutely need as a college student, gas prices, they are
always fluctuating but they are high. And when you are trying
to, I guess, accommodate those costs, I guess it can be a bit
overwhelming with other just miscellaneous expenses.
Ms. Piotrowski. One brief story, if you do not mind, that I
would like to highlight----
Senator Casey. Sure.
Ms. Piotrowski [continuing]. To give you an example of some
of the frustrations.
My youngest sister is, as I mentioned, a student here at
Temple, and she is a freshman. She called me a couple weeks
ago. She is having a very hard time in her one history course.
It is a very tough course. I had asked her how she was
studying. She said that because she is trying to make sure she
can sell back her textbooks, she does not want to highlight in
them or take notes in the books. And I said to her that is not
a choice you need to make. I said to her I will help you anyway
I can. My husband will help you anyway he can. You highlight in
that book. You take notes in that book. You do whatever you can
to learn the content. That sort of choice that a student has to
make, saying ``I need to sell back the book, should I take
notes in it,'' is an unfair choice for an undergraduate to have
Senator Casey. That is a good observation. It is hard to
learn it if you cannot provide that kind of note-taking and
Well, we are going to try to move because we have other
panelists, but you are welcome to stay as long as you can.
Jessica, I know you said you might have to leave early, but you
can stay for as long as you can or want. We are grateful for
your testimony because you are giving us an insight into what
it is to be a college student today who is trying to finance
their education and has had to work a lot of hours just to make
ends meet. We are grateful for your testimony.
We will move to our second panel. We have four more
individuals and we will try to do a little shift right now.
As they are transitioning, let me make a note that we have
a representative from Congressman Brady's office. He was here.
Thank you very much. I appreciate your being here.
We will do a quick transition here. I do not have any
commercials, so we will do it as quickly as we can.
I will begin to introduce. I know we have three more
individuals after Clarita. Clarita Anderman Krall is an
administrative assistant at the Eastern Pennsylvania Conference
of the United Methodist Church and resides in Philadelphia. Her
husband is a member of the clergy, and she has five children.
The oldest began college 15 years ago and her youngest started
his third year of college this fall.
Ms. Krall. And he is here.
Senator Casey. He is here. Can you point him out?
Ms. Krall. There he is.
Senator Casey. OK. He is in the back.
Well, you must be happy, Clarita, that you are getting to
the end of that educational road.
Ms. Krall. Yes, I am.
Senator Casey. I cannot even imagine because I am not quite
at the midpoint of that as a parent.
We are grateful you are here and look forward to your
STATEMENT OF CLARITA ANDERMAN KRALL, PARENT AND ADMINISTRATIVE
ASSISTANT, EASTERN PENNSYLVANIA CONFERENCE OF THE UNITED
METHODIST CHURCH, PHILADELPHIA, PA
Ms. Krall. I am glad to be here.
I am honored to be able to share with you today some
highlights from the written testimony that I submitted
regarding how my family has been able to see our five children
To give some context, my testimony begins with a
description of my family as being middle class and as valuing
higher education. It shows our income levels in 1995 when our
oldest began college and we were a family of seven and last
year's when our youngest finished his first year of college and
started his second and we had become a family of three.
My husband and I both hold undergraduate degrees and my
husband holds a master's. We began our marriage 39 years ago
with our own student debt. Since my husband's graduation from
seminary in 1976, he has served in full-time appointments as a
pastor in the United Methodist Churches. For these past 33
years, we have lived in church-owned residences and have not
had the encumbrance of a mortgage. By the same token, we do not
now have any equity in a home.
Our oldest child graduated from a public university. Her
education was financed with grants from PHEAA, financial aid,
scholarships, student loans, and her work as a resident
assistant. During her first year, we made payments in the
amount of $500 per month on an installment plan offered by the
university. We did not have to take out any parent loans.
Our second child attended a State university and financed
his education through PHEAA grants, student loans, and his
savings from summer work. We did not have to take out any
When our third child transferred from a public university
in Pennsylvania to a State college in a non-bordering State for
his sophomore year, we took out a parent loan for $4,000. That
year his PHEAA grant dropped to an amount that was barely
enough to buy a textbook per semester. Still, this was not
Our fourth child decided to attend a small private college
in Pennsylvania. With contributions from PHEAA, scholarship
assistance, and student loans, we took a parent loan for $4,000
to make final payments on her freshman year. When she was
unable to secure a resident assistant position, she transferred
to a less expensive public university. Not wanting to saddle us
with further parent loans, she took a full-time job at a movie
theater and worked nights while she carried a full load of
courses during the day until she graduated in 2008.
Our youngest, who is here, who is currently in his third
post-high school year, enrolled first in a private university
in a bordering State. There was no PHEAA assistance with his
bill. After some financial aid, scholarship assistance, and the
maximum student loans available to him, we borrowed almost
$16,000 to pay for his first year. For his second year, he
transferred back to Pennsylvania to a public university, for
which we borrowed another almost $7,000. This year, with taking
the maximum student loans and paying one-third of the bill from
his own earnings at a part-time job, we are paying the
remaining two-thirds of the bill, with the final payment of
$3,000 due tomorrow.
This student's transfer cost him almost a full year of
credits, and he will need to pay for a fifth year of tuition in
order to receive a 4-year degree.
Within 2 years or so, my husband will probably retire at
age 66. We are now facing the situation of having to find
affordable housing for our retirement years and to be approved
for a first-time mortgage late in life.
In conclusion, while we feel very good about having been
able to see these offspring through their college years, from a
realistic point of view, we do not believe that it would have
been a prudent decision for any of our five children to choose
a 4-year undergraduate education at a private college or
university. Though two of our five children tried to, neither
continued past their first year. Had each of them on their own
not chosen to leave the private setting, we as parents would be
facing a considerably larger debt than we have now.
I am ready for your questions.
[The prepared statement of Ms. Krall follows:]
Prepared Statement of Clarita Anderman Krall
To give my story a context, I would introduce my family as being of
middle-class status. My husband is a clergyman. He holds a Bachelor of
Arts degree from Lycoming College in Williamsport, PA and a Master of
Divinity from the School of Theology at Boston University. For the past
33 years of my husband's working life in the ministry of The United
Methodist Church, we have lived in church-owned residences. I am
employed in an administrative assistant position for a non-profit. I
also hold a Bachelor of Arts degree from Lycoming College. After
working on and off at part-time jobs when our oldest children were
young, I went back to work full-time in 1994. That is the year that our
oldest started college. In 1995, our joint income for our family of
seven was $49,140. Last year, our joint income for our family of three
This year, our baby, Child #5, started his third year of college.
Unfortunately for us, as each child has ``flown the coop,'' the
evaluation by financial aid assessors has deemed that the family
contribution should increase.
Fifteen years ago, when our oldest began college, with a
Pennsylvania Higher Education Assistance Agency (PHEAA) grant and other
financial aid, scholarships, grants and student loans she received from
various sources, our parent contribution was approximately $500 per
month, and we paid that on a payment plan offered by the university.
While she, herself, did borrow the maximum amount available to her as a
student, we, as parents, did not have to take out a parent loan. Her
tuition costs were manageable because she attended a public university.
Her second year was easier for us as she served as a Resident
Assistant, thus cutting the cost of her housing which was included as
part of her remuneration.
As Child #1 began her senior year, our second child enrolled in a
Pennsylvania State university. Again, with two in college and three
still at home, Child #2's financial aid package, including student-
assumed loans, was significant enough that, added to his own personal
savings from a lucrative summer job in a union warehouse, we were
spared from having to take out a parent loan. We got through the second
child's 4-year education with no parent loans.
Child #3 chose to enroll in a public university. A PHEAA grant,
plus the university's financial aid was sufficient, with student-
assumed loans, to prevent us, as parents from having to take parent
loans. That was a pretty good situation, but it was soon to change for
us when he decided to transfer to a State college in a non-bordering
State for his second year, and the expected contribution for our
family, now a family of 5 rather than 7 (as the oldest two had by now
received their undergraduate degrees), was now increased. For his
second year of studies, the financial award received by #3 from PHEAA
was reduced to an amount for each semester that was not enough to cover
the cost of one textbook. Now we were looking at not only student
loans, but parent loans. Still, the parent loans we incurred were
modest at a total of $4,000 by the time he received his degree from an
out-of-state State college.
Child #4 started her college career the year that #3 started his
4th year. She decided to attend a small, private college in
Pennsylvania. With contributions from PHEAA, financial aid and
scholarship assistance from the college, and a student loan, we parents
still had to take out a parent loan in the amount of $4,000. When Child
#4 was not selected for a Resident Advisor position, she decided to
transfer to a less expensive public university so that neither she nor
us, her parents, would be strapped with more loans than absolutely
necessary. In order to finish her degree and to keep us, ``the old
folks,'' from incurring more debt, this child worked a full-time job
while carrying a full-time academic course load. Her college experience
was not what you think of as being typical. It was not very much of a
social experience at all, and she may very well be the better for it.
Her social life was made up more of friends she had from her job than
from friends she made at college. She did manage to do a study abroad
semester in Rome which was probably closer to being the typical college
life experience than the semesters when she was working full-time.
Child #5 began his first year of college as #4 began her fourth
year. No. 5 decided to go to a private university in a bordering State.
There was no PHEAA grant at all to assist with his costs. To pay for
his first year, he received some financial aid and scholarship from the
university, took out the maximum student loan allowable, and we, his
parents, borrowed the remainder--$15,678--for 1 year. At the end of a
successful academic first year, he made the practical decision to
transfer to a public Pennsylvania university to lessen the cost of his
Back in Pennsylvania for his second year of college, a much more
affordable year than his first, his bill was paid with very minimal
financial assistance, none of which was received from PHEAA, with the
maximum student loan and with a parent loan of $6,717--less than half
the loan amount of the previous year.
This year, so far, with his taking the maximum student loan, we are
assisting him in paying the balance owed. He is paying approximately
one-third using money he earns as a server at a popular restaurant and
we are paying the remaining two-thirds. The final payment of $3,038 is
This situation will probably continue for another 2\1/2\ years as
Child #5 lost a good number of credits which were not transferable when
he left the first, very costly, out-of-state university to continue his
education at a Pennsylvania institution. His 4-year degree program is
going to take 5 years to complete, costing a year's worth of tuition
more than what it should.
My testimony is not meant to complain, but is meant simply to share
my family's experience. We feel very fortunate to have seen these 5
offspring through their years of undergraduate work. The oldest two
have since completed Master's degrees at their own expense. No. 3 is
working on his, No. 4 is planning for hers, and No. 5 takes his plans
to complete his master's degree for granted.
However, now that we have accomplished, for the most part, our
children's educations, my husband and I are facing his probable
retirement at age 66 in about 2 years. We have reached this stage in
our lives, having assisted in seeing our children through their
educations, but without having equity in a home of our own. We have
been fortunate, on one hand, to have had our housing provided as part
of my husband's compensation package, but the drawback is that we have
not been able to build up any equity in a home. We are now facing the
situation of having to be approved for a mortgage late in life, to then
find affordable housing for retirement years, and to continue to work
at paying off the educational debt we have incurred.
In conclusion, though both my husband and I had the privilege to
receive our own undergraduate educations in a small, private
Pennsylvania college, and know that experience to be unique in its own
way, from a realistic point of view, taking into consideration our
family's financial situation, we do not believe that it would have been
a prudent decision for any of our five children to choose a 4-year
undergraduate education at a private college or university. Though two
of our five children tried to, neither continued past their first year.
Truthfully, had each of them, on their own, not chosen to leave the
private setting, we, the parents, would be facing a considerably larger
debt than we have. Private education did not seem to us to be a choice
our family could afford to make.
Senator Casey. Clarita, thanks very much. You give real
meaning, by way of your testimony, to what it means to have the
challenge of paying for higher education in the context of a
family where it involves not just the student but also the
entire family. Your testimony reminds us of that today.
In particular, over those years, what was the biggest
challenge? Just being to make ends meet with every child?
Ms. Krall. Just being able to sleep at night thinking that
somehow it will get all paid back.
Senator Casey. And you were talking about how--in your
testimony, the early part of it, you make reference that your
joint income in 1995 for a family of seven was $49,000.
Ms. Krall. Correct.
Senator Casey. Now you have a higher income, but I am not
sure it has increased at the rate of incomes across the board,
just a little more than $70,000. And you are on your fifth
child with education?
Ms. Krall. Yes, that is right.
Senator Casey. Anything else that you want to tell us about
how you think Federal policy or State policy should change to
help a family like yours if they're facing similar
circumstances? You are an expert now. It is not an expertise I
know you wanted.
Ms. Krall. I do not really know what to add. I feel very
grateful for what we have, and I know somehow we are going to
be OK. I do not feel that it has been as hard for us as it may
have been for people with less income or more children. I feel
grateful for what we have been able to use in terms of loans
that have been subsidized with interest rates that do not move
around and that kind of thing.
Senator Casey. So when your son finishes college, it will
be time for celebration.
Ms. Krall. It will be.
Senator Casey. Thanks so much for your testimony.
Ms. Krall. Thank you.
Senator Casey. Appreciate it.
Now we will move to our final three witnesses, and I will
begin to introduce them as they take their seats. Dr. Laura
Perna will start us off. She is an Associate Professor at the
University of Pennsylvania where she received an undergraduate
degree in psychology, as well as an economics degree from the
Wharton School. She completed her master's in public policy and
a Ph.D. in education at the University of Michigan. Dr. Perna,
thank you for being here.
Dr. Andrew Gillen is the Research Director for the Center
for College Affordability and Productivity in Washington. He
received his bachelor's degree from Ohio University and his
Ph.D. in economics from Florida State University. Doctor, thank
you for being with us today.
And finally, Anthony E. Wagner. I know him, so I can call
him Tony. Tony is the Senior Vice President and Chief Financial
Officer and Treasurer here at Temple University. We are
grateful to Temple again for hosting us here. Tony is a native
of Chambersburg, PA, graduated from Penn State after serving
his country in the U.S. Navy. He has a distinguished career in
government, including serving as Deputy State Treasurer for
Investments and Programs in the Pennsylvania Treasury
Department. That is where we worked together, in the interest
of full disclosure, as they say. He has been at Temple since
2007. Tony, we are grateful you are here, and thanks for having
us here today.
Mr. Wagner. Thank you, Senator.
Senator Casey. Doctor, you may start.
STATEMENT OF LAURA W. PERNA, Ph.D., ASSOCIATE
PROFESSOR, UNIVERSITY OF PENNSYLVANIA,
GRADUATE SCHOOL OF EDUCATION
Ms. Perna. Thank you. Thank you very much for having me
here today, Senator.
Senator Casey. Sure.
Ms. Perna. I am really pleased to have the opportunity to
talk on this really critically important topic. I commend your
efforts to raise the maximum Pell Grant, ensure future growth
in the maximum Pell Grant, and fully fund the Pell Grant.
In my remarks, I would also like to urge you to support
efforts to simplify the process for receiving financial aid and
also to increase knowledge about the availability of aid.
I am going to speak from the point of the data and the
research, and these data largely contextualize the stories that
we have heard so far.
As you articulated, Senator, post-secondary education is
increasingly important to the well-being of individuals and
society. As we shift from an industrial economy to an
information- and knowledge-driven economy, we need to have
higher levels of education. If we look at demographic trends,
we also see the increasing need for more people to have higher
levels of education.
Although increasingly important, the United States is
losing ground in its educational attainment compared to that of
other nations. President Obama has recognized the importance to
do better with regard to educational attainment. Nonetheless,
achieving the required levels of education require a whole lot
of effort. We not only need to increase the overall levels of
educational attainment, but we also need to reduce the
substantial gaps that exist across groups in educational
attainment. These gaps exist largely on family income, race/
ethnicity, and other demographic factors.
Clearly, insufficient financial resources limit educational
attainment for a substantial number of individuals. Money
clearly matters. Research consistently shows a positive
relationship between family income and a whole host of college-
Known as the foundation of our Nation's student financial
aid system, Pell Grants have long played a critical role in
addressing the financial barriers that limit educational
attainment for students from low- and moderate-income families.
Research also documents the importance of need-based grants
like Pell Grants to promoting college enrollment, and this
research shows that these grants are particularly effective in
helping to reduce the gaps in college attainment for low-income
families and African-American families.
Nonetheless, as you mentioned, the effectiveness of the
Pell Grant has been diminished over time because of the decline
in the purchasing power.
Both the availability of Pell Grants and the emphasis of
Pell Grants on awarding aid based on financial need is also
increasingly important, given trends in the criteria for
receiving other financial aid. For example, the share of State
grant money that is available nationwide that is being awarded
based on criteria other than financial need, namely academic
criteria, has been increasing substantially over the past 2
decades. Awarding financial aid based on academic merit raises
troubling questions for equity as we know these traditional
measures of academic attainment positively correlate with
family income. In other words, students who are
disproportionately low-income, black, and Hispanic are less
likely to receive these nonneed-based forms of aid.
Although research shows the importance of grant aid to
students' college enrollment, as we heard already, available
aid is now typically insufficient to meet 100 percent of
students' financial needs. As a result, more and more students
are borrowing and working to pay college costs. Borrowing
certainly pays off for most students, especially those who are
able to complete their degrees and obtain jobs that allow them
to repay their loans.
Nonetheless, the need to borrow to pay college prices has
important negative consequences for a number of students. For
example, the emphasis of the U.S. financial aid system on loans
limits college opportunity for those who are unwilling or
unable to take on debt. Blacks and Hispanics have been found to
be less willing to borrow than whites, and students from low-
income families are less willing to borrow than higher-income
A second worry with regard to loans pertains to the
negative consequences of borrowing when you do not finish your
educational programs. So again, most people are able to borrow
successfully, but a substantial share of students who borrow do
not complete their programs but they still have their
educational debt to repay.
In addition, as we heard, more and more students are
working to pay college prices. Nationwide about 1 in 10
undergraduates who are under the age of 25 and enrolled full-
time is working at least 35 hours per week. Research
consistently shows that working off campus and working more
than 15 hours per week, as substantial percentages of students
are now doing, reduces the likelihood of persisting to degree
completion. Moreover, working off campus and more than 15 hours
per week also increases the length of time to a degree and
consequently increases both the direct costs and the
opportunity costs of attaining that degree.
In terms of recommendations, increasing the maximum Pell
Grant and fully funding the Pell Grant will help to ensure that
students from low- and moderate-income families have the
financial resources that are needed to pay college prices and
help to reduce the potential negative consequences of borrowing
In addition, I would like to urge you to support efforts to
simplify the process for applying for Federal aid. A
substantial number of students who are eligible for Pell
Grants, for example, fail to complete the FAFSA thereby
foregoing need-based aid for which they are eligible.
I also urge you to support efforts to improve knowledge and
information about the availability of Pell Grants and other
financial aid. Currently students do not learn about the amount
of need-based aid that they will receive until they have taken
a number of steps, including applying for admission as a
student, submitting a financial aid application, and receiving
a response from a college or university. Increasing knowledge
and information about available aid may improve educational
attainment directly by ensuring that more eligible students
apply for the available aid and receive that aid. In addition,
these efforts may improve educational attainment indirectly.
For example, when high school students know that financial aid
and other resources are available to help pay for college, they
will be more likely to engage in the types of behaviors that we
know are required to enroll and succeed in college, including
having high aspirations for high levels of education and
becoming adequately academically prepared.
[The prepared statement of Ms. Perna follows:]
Prepared Statement of Laura W. Perna, Ph.D.
The Importance of Pell Grants to Improving Higher Education Attainment
Thank you for the opportunity to offer testimony on the role of
Pell grants in promoting higher education attainment. Pell grants
clearly play a critical role in promoting educational attainment.
Therefore, I urge you to support efforts to raise the maximum Pell
grant, ensure future growth in the maximum Pell grant over time, and
ensure full funding for Pell grants. I also urge you to support efforts
to simplify the process for receiving this aid and increase knowledge
of the availability of this aid.
the united states must raise educational attainment
Postsecondary education is increasingly important to the Nation's,
and Pennsylvania's, continued economic prosperity and global
competitiveness, given the shift from an industrial economy to an
information and technology-driven economy (Advisory Committee on
Student Financial Assistance, 2006; Carnevale & Desrochers, 2003). New
jobs increasingly require at least some post-secondary education and
the educational requirements of all jobs, including those that once
required no more than a high school education, have been rising
(Carnevale & Desrochers, 2003).
Projected demographic trends suggest that the demand for college-
educated workers will continue to increase in the near future. Over the
next 20 years, baby-boomers will retire from the labor force, resulting
in a substantial shortage of workers, especially workers with the most
education and experience (Carnevale & Desrochers, 2003). Although the
total number of high school graduates nationwide is projected to
increase between 2001-2002 and 2018-2019 (Western Interstate Commission
for Higher Education, 2008), this growth will likely be insufficient to
meet labor market demands. Carnevale and Desrochers (2003) estimate
that, in 2020, the demand will exceed the supply by 20 million for
workers overall, and by 14 million for workers with at least some
Although increasingly important, the United States is losing ground
in the educational attainment of its population (Baum & Ma, 2007;
National Center for Public Policy and Higher Education, 2008a). The
educational attainment of the U.S.-adult population has increased over
time, as 28 percent of adults age 25 and older in the United States
held at least a bachelor's degree in 2006, up from 26 percent in 2000
and 21 percent in 1990 (Baum & Ma, 2007). But, other nations are
increasing the educational attainment of their populations at a faster
rate (National Center for Public Policy and Higher Education, 2006).
The share of the 25- to 34-year old population that has completed at
least an associate's degree is now lower in the United States than in a
number of other developed nations, including Canada, Japan, Korea, New
Zealand, Ireland, Belgium, Norway, France, and Denmark (National Center
for Public Policy and Higher Education, 2008a). In Pennsylvania, the
percentage of adults age 25- to 34- who hold at least an associate's
degree is lower than in Canada, Japan, Korea, and New Zealand (National
Center for Public Policy and Higher Education, 2008b).
Recognizing these trends, President Barack Obama has articulated an
ambitious but critical goal: ``By 2020, America will once again have
the highest proportion of college graduates in the world.'' Achieving
this goal will require not only raising the overall educational
attainment of the U.S. population but also reducing persisting gaps in
educational attainment based on family income, race/ethnicity, and
other demographic characteristics.
Since the mid-1980s, college enrollment rates have been between 25
and 30 percentage points lower for high school graduates in the lowest
family income quintile than for those in the highest (Baum & Ma, 2007).
Even after controlling for academic ability, educational attainment
rates continue to be substantially lower for students with the lowest
than highest socioeconomic status (Baum & Ma, 2007). Only 29 percent of
1992 high school graduates with the lowest socioeconomic status and
highest test scores had attained at least a bachelor's degree by 2000,
compared with 74 percent of those with the highest SES and highest test
scores (Baum & Ma, 2007).
Mirroring national patterns, Pennsylvania also suffers from
persisting gaps in measures of college preparation, participation, and
degree completion based on race/ethnicity, family income, and other
demographic characteristics. For example, in Pennsylvania, only 13
percent of Hispanics and 15 percent of Blacks between the ages of 25
and 64 have earned at least a bachelor's degree, compared with 30
percent of Whites (National Center for Public Policy and Higher
insufficient financial resources limit educational attainment
Although other forces also play a role (Perna, 2006), insufficient
financial resources continue to limit educational attainment for a
substantial number of individuals. The Advisory Committee on Student
Financial Assistance (2006) estimates that, between 2000 and 2010, 1.4
million to 2.4 million students from low- and middle-income families
will be academically qualified for college but will not complete a
bachelor's degree because of financial barriers. Money clearly matters,
as research consistently shows a positive relationship between family
income and such outcomes as number of college applications submitted,
enrollment in a 2-year or 4-year institution, and a number of years of
schooling completed (Ellwood & Kane, 2000; Hofferth, Boisjoly, &
Duncan, 1998; Kane, 1999; Perna, 2000).
Known as the ``foundation'' of our Nation's student financial aid
system (College Board, 2008), Pell grants have played a critical role
in addressing the financial barriers that limit educational attainment
for students from low- and moderate-income families. Over the past
decade, the number of Pell recipients rose by 46 percent, increasing
from 3.7 million in 1997-1998 to 5.4 million in 2007-2008 (College
Board, 2008). Reflecting the emphasis of Pell eligibility criteria on
financial need, two-thirds of all dependent students who received Pell
grants in 2007-2008 came from families with incomes below $30,000
(College Board, 2008). Research consistently shows that need-based
grants--like Pell grants--promote college enrollment, particularly for
students from low-income families and Black students (Kane, 1999; Perna
& Titus, 2004; St. John ET al., 2004).
Nonetheless, the effectiveness of the Pell grant has been
diminished by the decline in its purchasing power. Although Federal
spending on Pell grants increased in constant dollars by 75 percent
over the past decade (from $8.2 billion in 1997-1998 to $14.4 billion
in 2007), so too have college prices. The maximum Pell Grant covered
only 32 percent of average total tuition and fees at public 4-year
colleges and universities nationwide in 2007-2008, down from 50 percent
in 1987-1988 (College Board, 2008).
The emphasis of Pell on awarding aid based on students' financial
need is increasingly important, given trends in criteria for other
types of aid. The share of State financial aid awarded based on
criteria other than financial need increased substantially over the
past two decades, rising from 17 percent in 1987-1988 to 28 percent in
2006-2007 (College Board, 2008). Looked at another way, between 1996-
1997 and 2006-2007, the amount of non-need-based State grant aid
awarded to undergraduates increased in constant dollars by 250 percent,
while the amount of need-based State grant aid increased by only 58
percent (NASSGAP, 2008). Awarding financial aid based on academic merit
raises troubling questions for equity, as, by definition, students with
lower average levels of academic achievement, i.e., students who are
disproportionately from low-income families, Black, and Hispanic) are
less likely than other students to receive merit-based aid (Heller &
Marin, 2002). Moreover, research shows that grant aid that is awarded
based on financial need has a larger positive effect than grant aid
that is awarded based on non-need criteria (St. John ET al., 2004).
increased funding for pell grants has many benefits to
Although research shows the importance of grant aid to students'
college enrollment, available aid is now typically insufficient to meet
100 percent of financial need for all students (Choy & Berker, 2003).
In 1999-2000, about half of all full-time, full-year dependent
undergraduates nationwide had some amount of unmet financial need
(defined as a student's expected family contribution less all financial
aid, including grants and loans), regardless of the type of institution
attended (Choy & Berker, 2003). Moreover, unmet financial need is
especially common among undergraduates from lower and lower middle-
income families (Choy & Berker, 2003).
Most students, especially those from low- and middle-income
families, are not able to cover their unmet financial need from current
income or savings. As a result, when funding from Pell grants and other
grants is insufficient, students typically use two mechanisms to pay
these costs: loans and employment. Numerous indicators describe the
pervasiveness of loans. For example, between 1997-1998 and 2007-2008,
total education loans (including subsidized and unsubsidized Federal
Stafford loans, PLUS loans, and non-Federal loans) increased by more
than 100 percent in constant 2007 dollars, increasing from $41 billion
in 1997-1998 to $85 billion in 2007-2008 (College Board, 2008).
Bachelor's degree recipients averaged $12,400 in debt in 2006-2007, up
from $10,600 in 2000-2001 (College Board, 2008).
Borrowing ``pays off '' for many students, especially those who
successfully complete their degree programs and obtain jobs that enable
them to repay their loans (Gladieux & Perna, 2005). Nonetheless, the
need to borrow to pay college prices
has several negative consequences. First, although the use of loans to
finance post-secondary educational expenses seems commonplace, the
emphasis of the U.S. financial aid system on loans limits college
opportunity for individuals who are unwilling or unable to incur this
type of debt (Perna, 2008). Willingness to borrow is positively related
to college enrollment (Callender & Jackson, 2005). Willingness to
borrow appears to vary across groups, as Blacks and Hispanics have been
found to be less willing than Whites, and students from low-income
families have been found to be less willing than higher income
students, to borrow to pay college prices (Callender & Jackson, 2005;
ECMC Group Foundation, 2003; Linsenmeier, Rosen, & Rouse, 2006).
A second caution about the reliance on loans pertains to potential
negative consequences of borrowing for students who do not complete
their educational programs. Most students who borrow complete their
degree programs, obtain jobs, and receive sufficient salaries to repay
their loans. A substantial share of students who borrow to pay post-
secondary educational expenses ``drop out'' before completing their
educational programs (Gladieux & Perna, 2005). About one-fifth of
first-time undergraduates nationwide in 1995-1996 who borrowed to help
pay college prices were not enrolled and did not complete a degree
within 6 years but still had an educational debt to repay (Gladieux &
A third worry about the heavy reliance on loans to pay college
prices pertains to potential negative consequences of borrowing for
students' persistence and degree attainment. Research suggests that,
although unrelated to degree attainment, receiving a loan may reduce
the likelihood of persisting from year-to-year at both community
colleges (Dowd & Coury, 2006) and 4-year institutions (DesJardins,
Ahlburg, & McCall, 2002). Moreover, the negative consequences of loans
for educational attainment appear greater for Blacks than for Whites
and for low-income than high-income students (Kim, 2007).
In addition to borrowing, students are also working more hours
while enrolled in order to pay college expenses that are not covered by
financial aid (Perna, in press). In 2003-2004, about 75 percent of
dependent undergraduates and 80 percent of independent undergraduates
worked while enrolled (Perna, Cooper & Li, 2007). Working dependent
undergraduates averaged 24 hours of employment per week while enrolled,
while working independent undergraduates averaged 34.5 hours per week
(Perna, Cooper & Li, 2007). In 2006, nearly 1 in 10 (8 percent)
undergraduates under the age of 25 and enrolled full-time was employed
at least 35 hours per week (U.S. Department of Education, 2008).
Much about the effects of working on students' educational outcomes
is unknown. Nonetheless, research consistently suggests working off-
campus and more than 15 hours per week--as substantial percentages of
students are now doing--reduces the likelihood of persisting to degree
completion (Perna, Cooper & Li, 2007). Moreover, working off-campus and
more than 15 hours per week also increases the length of time to
degree, and consequently increases the direct costs and opportunity
costs of attaining that degree (Perna, Cooper & Li, 2007).
With the emphasis on awarding grant aid based on students'
financial need, Pell grants play a critical role in reducing the
financial barriers to college enrollment and degree attainment,
especially for students from low- and moderate-income families.
Increasing the maximum Pell grant, and fully funding the Pell grant,
will help ensure that students from low- and moderate-income families
have the financial resources needed to pay college prices and will help
reduce potential negative consequences associated with borrowing and
In addition to increasing the maximum Pell grant and fully funding
the Pell grant program, I also urge you to support efforts to simplify
the process for applying for Federal aid. A substantial number of
students now fail to complete the FAFSA, thereby forgoing need-based
aid for which they are eligible. In 1999-2000, 1.7 million low- and
moderate-income undergraduates who were enrolled for credit at higher
education institutions nationwide did not complete the FAFSA (King,
2004). About one-half of these individuals were estimated to be
eligible to receive a Federal Pell grant. Research suggests that using
existing data from the Internal Revenue Service to populate the FAFSA
increases the likelihood of applying for and receiving aid, as well as
the amount of aid received (Bettinger, Long, & Orepoulos, 2009).
I also urge you to support efforts to improve knowledge and
information about the availability of Pell grants and other aid for
low- and moderate-income students. Currently, students do not learn
about the amount of need-based aid that they will receive until after
they have completed a number of steps, including applying for admission
to college, submitting a financial aid application, and receiving a
response from a college or university (Kane, 1999). Increasing
knowledge and information about available aid may improve educational
attainment directly by ensuring that more eligible students apply for
and receive the aid (Bettinger ET al., 2009). These efforts may also
improve educational attainment indirectly. High school students who are
aware of the availability of financial resources to pay for college are
more likely to engage in the types of behaviors that are required to
enroll and succeed in college, including aspiring to high levels of
education and becoming adequately academically prepared (Perna &
Steele, in press).
Thank you for your consideration of these remarks. I welcome your
comments and questions.
Advisory Committee on Student Financial Assistance (2006). Mortgaging
our future: How financial barriers to college undercut America's
global competitiveness. Washington, DC: Author.
Baum, S., & Ma, J. (2007). Education Pays 2007. Washington, DC: The
College Board. Retrieved October 3, 2009 from http://
Bettinger, E., Long, B.T., & Oreopoulous, P. (2009). The role of
simplification and information in college decisions: Results from
the H&R Block FASFA experiment. Washington, DC: National Bureau of
Economic Research (NBER Working Paper No. 15361).
Callender, C., & Jackson, J. (2005). Does the fear of debt deter
students from higher education? Journal of Social Policy, 34, 509-
Carnevale, A.P., & Desrochers, D.M. (2003). Standards for What? The
Economic Roots of K-16 Reform. Princeton, N.J.: Educational Testing
Choy, S., & Berker, A. (2003). How families of low- and middle-income
undergraduates pay for college: Full-time dependent students in
1999-2000. Washington, DC: U.S. Department of Education, National
Center for Education Statistics. (NCES 2003-162)
College Board (2008). Trends in student aid 2008. Retrieved October 4,
2008 from http://professionals.collegeboard.com/profdownload/
DesJardins, S.L., Ahlburg, D.A., McCall, B.P. (2002). A temporal
investigation of factors related to timely degree completion.
Journal of Higher Education, 73, 555-581.
Dowd, A. & Coury, T. (2006). The effect of loans on the persistence and
attainment of community college students. Research in Higher
Education, 47, 33-62.
ECMC Group Foundation. (2003). Cultural barriers to incurring debt: An
exploration of borrowing and impact on access to post-secondary
education. Santa Fe, NM: Author.
Ellwood, D.T., & Kane, T.J. (2000). Who is getting a college education?
Family background and the growing gaps in enrollment. In S. & W.J.
Danzinger (Eds.), Securing the future: Investing in children from
birth to college (PP. 283-324). New York : Russell Sage Foundation.
Gladieux, L., & Perna, L. (2005). Borrowers who drop out: A neglected
aspect of the college student loan trend. San Jose, CA: National
Center for Public Policy and Higher Education.
Heller, D., & Marin, P. (Eds.) (2002). Who should we help? The negative
social consequences of merit scholarships. Cambridge, MA: The Civil
Rights Project at Harvard University.
Hofferth, S.L., Boisjoly, J., & Duncan, G.J. (1998). Parents'
extrafamilial resources and children's school attainment. Sociology
of Education, 71, 246-268.
Kane, T.J. (1999). The price of admission: Rethinking how Americans pay
for college. Washington, DC : Brookings Institution Press.
Kim, D.B. (2007). The effect of loans on students' degree attainment:
Differences by student and institutional characteristics. Harvard
Educational Review, 77(1), 64-100.
King, J.E. (2004). Missed opportunities: Students who do not apply for
financial aid. Washington, DC: American Council on Education.
Linsenmeier, D.M., Rosen, H.S., & Rouse, C.E. (2006). Financial aid
packages and college enrollment decisions: An econometric case
study. Review of Economics and Statistics, 88, 126-145.
McCormick, A.C., Nunez, A.M., Shah, V., & Choy, S.P. (1999). Life after
college: A descriptive summary of 1992-1993 bachelor's degree
recipients in 1997. Washington, DC: Office of Educational Research
and Improvement (NCES 1999-155).
National Association of State Student Grant and Aid Programs (2008).
38th annual survey report on State-sponsored student financial aid,
2006-2007 academic year. Retrieved October 13, 2008 from
National Center for Public Policy and Higher Education (2008a).
Measuring up 2008: The national report card on higher education.
Retrieved October 3, 2009 from http://
National Center for Public Policy and Higher Education (2008b).
Measuring up 2008: The State report card on higher education,
Pennsylvania. Retrieved October 3, 2009 from http://
Perna, L.W. (2000). Differences in the decision to enroll in college
among African-Americans, Hispanics, and Whites. Journal of Higher
Education, 71, 117-141.
Perna, L.W. (2004). Understanding the decision to enroll in graduate
school: Sex and racial/ethnic group differences. Journal of Higher
Education, 75, 487-527.
Perna, L.W. (2006). Studying college choice: A proposed conceptual
model. In J.C. Smart (Ed.), Higher Education: Handbook of theory
and research, Volt. XXI (pp. 99-157). Springer.
Perna, L.W. (2008). Understanding high school students' willingness to
borrow to pay college prices. Research in Higher Education, 49,
Perna, L.W. (Ed., in press). Understanding the working college student:
New research and its implications for policy and practice. Herndon,
VA: Stylus Publishing, LLC.
Perna, L.W., Cooper, M., & Li, C. (2007). Improving educational
opportunities for students who work. E. P. St. John (Ed.), Readings
on Equal Education, Volt. 22, 109-160.
Perna, L.W., & Steele, P. (in press). The role of context in
understanding the contributions of financial aid to college
opportunity. Teachers College Record.
Perna, L.W., & Titus, M. (2004). Understanding differences in the
choice of college attended: The role of State public policies.
Review of Higher Education, 27 (4) 501-525.
Project on Student Debt (2008). State by State data. Retrieved October
22, 2008 from http://projectonstudentdebt.org/state_by_state-
St. John, E., Gross, J.P.K., Musoba, G.D., & Chung, A.S. (2005). A step
toward college success: Assessing attainment among Indiana's
Twenty-first Century Scholars. Indianapolis, IN: Lumina Foundation
U.S. Department of Education (2008). Condition of education.
Washington, DC: Author.
Western Interstate Commission for Higher Education (2008). Knocking at
the college door: Projections of high school graduates by State and
race/ethnicity, 1992-2022. Retrieved October 13, 2008 from http://
Senator Casey. Thank you very much.
STATEMENT OF ANDREW GILLEN, Ph.D. CENTER FOR AFFORDABILITY AND
PRODUCTIVITY, WASHINGTON, DC
Mr. Gillen. I would like to thank Senator Casey for holding
this hearing and inviting me to talk today. This hearing is
drawing attention to the depressing trends in college
affordability, a topic whose importance grows every year, as we
have heard from the previous panelists.
As most of you are aware, we have been experiencing an
alarming increase in tuition rates in recent years. Over the
past 3 decades, tuition has increased at an average rate of
about 3 percent a year after adjusting for inflation. Over the
same period, median household income has increased by an
average of just .3 percent. As a result, college affordability
has declined in every sector. Tuition as a percentage of median
household income more than doubled at all types of 4-year
colleges, increasing to about 12 percent at public schools and
about 43 percent at private colleges. Community colleges did
not go up quite so much, less than double, but they are not at
4.1 percent. Even when focusing on net tuition, we still see a
massive increase in the financial burden on students and
Tuition continually rises because college's expenditures
continually rise, and Bowen's Revenue Theory of Cost gives the
best explanation of why expenditures keep going up. It
essentially holds that institutions of higher education strive
for excellence and have an insatiable appetite for money in
their pursuit of that excellence and that, therefore, whenever
their revenues rise, costs will increase as well. It should,
therefore, come as no surprise that former Harvard President
Derek Bok compares universities to ``compulsive gamblers,'' and
higher education scholar Ronald Ehrenberg describes them as
``cookie monsters'' devouring any resources they can get their
The effect of this ravenous spending on the pocketbooks of
students, parents, and taxpayers is striking. Unfortunately, we
cannot even be sure that all of this extra spending is leading
to better educational outcomes. As a matter of fact, much of
the spending does not even go toward things that could
conceivably improve education. For instance, from 1995 to 2006,
total operating expenditures per student increased by $3,600 at
public research universities. Yet, spending per student on
instruction increased by just $750, and tuition increased by
$2,200. In other words, while tuition rose dramatically
throughout those years, close to 80 percent of the additional
spending went to things other than instruction.
Seeking to combat these trends, the Government has devised
a number of programs to provide financial aid to students, of
which the Pell Grant is the crown jewel. Because they are well
targeted, Pell Grants do not provide fuel for the academic arms
race to the extent that other programs do. The fact that the
percent of the tuition that the average award covers has been
steadily declining and is now just 45 percent at public 4-year
schools has given rise to calls to make the Pell Grant an
entitlement and have it increase at the rate of inflation plus
In my opinion, I think this is somewhat misguided. The
biggest issue with the Pell Grant right now is not that the
maximum authorized award is not high enough because most
students do not get that anyway. The actual maximum is much
lower than the authorized maximum anyway. Moreover, the average
award is quite tiny, as Senator Casey mentioned in his opening
remarks. In the 2007-2008 school year, close to 40 percent of
students at or below the poverty line did not receive a Pell
Grant, and part of this was due to the complexity of applying
for financial aid that we have heard several times. And of
those that did--remember that these are still people under the
poverty line--the average award was just $3,000. I think that
addressing these issues should be of the highest priority.
Having said that, I think the Pell Grant program is
currently the best method of providing financial aid to
students and that increased funding of the program is certainly
to be applauded. And Senator Casey's efforts in that direction
are certainly welcome.
[The prepared statement of Mr. Gillen follows:]
Prepared Statement of Andrew Gillen, Ph.D.
I would like to thank Senator Casey for holding this hearing and
inviting me to testify.
This hearing is drawing attention to the depressing trends in
college affordability, a topic whose importance grows every year. As
most of you are aware, we have experienced an alarming increase in
tuition rates in recent years. Over the past three decades, tuition has
increased at an average rate of about 3 percent per year, after
adjusting for inflation. Over the same period, median household income
has increased by an average of just 0.3 percent. As a result, college
affordability has declined in every sector. Tuition as a percentage of
median household income more than doubled at all types of 4-year
colleges, increasing to 11.8 percent at public and 43 percent at
private colleges. Community colleges saw slightly less than a doubling,
to 4.1 percent. Even when focusing on net tuition, we still see a
massive increase in the financial burden on students and families.
Tuition continually rises because college's expenditures
continually rise, and Bowen's Revenue Theory of Cost gives the best
explanation of why expenditures keep going up. It essentially holds
that institutions of higher education strive for excellence, have an
insatiable appetite for money in their pursuit of excellence, and that
therefore, whenever revenues increase, costs will increase as well. It
should therefore come as no surprise that former Harvard president
Derek Bok compares universities to ``compulsive gamblers'' and higher
education scholar Ronald Ehrenberg describes them as ``cookie
monsters'' devouring any resources they can get their hands on.
The effect of this ravenous spending on the pocketbooks of
students, parents, and taxpayers is striking. Unfortunately, we cannot
even be sure that all this extra spending is leading to better
educational outcomes. As a matter of fact, much of the spending does
not even go towards things that could convincingly improve education.
For instance, from 1995 to 2006 total operating expenditures per
student increased by $3,600 at public research universities, yet
spending per student on instruction increased by just $750, and tuition
increased by $2,200. In other words, while tuition rose dramatically,
close to 80 percent of the additional spending went to things other
Seeking to combat these trends, the government has devised a number
of programs to provide financial aid to students, of which the Pell
grant is the crown jewel. There are some problems however.
First, Pell grants account for only 15 percent of all Federal aid,
while loans account for 70 percent. Loans not only must be repaid by
students, but they also contribute to the explosion in college
expenditures by providing fuel for the academic arms race.
Second, the average grant awarded does not go as far as it used to.
When the program was first started, the real average award was more
than enough to cover tuition, but this is no longer the case, with the
average Pell covering just 45 percent of tuition at public 4-year
Third, the authorized maximum award is largely meaningless. The
actual maximum is typically between two thirds and three quarters of
the authorized maximum, and the average real award is smaller still,
having not exceeded 50 percent of the authorized maximum since 1990.
Fourth, the awards for the very poorest should be larger.
Currently, those at or below the poverty line get an average award that
is less than $600 more than those who are up to twice the poverty line.
Fifth, many eligible students do not even receive a Pell grant.
These five points shed some light on the proposal to make the Pell
grant an entitlement and increase it at the rate of inflation plus one.
The first two constitute the main argument in support of the proposal.
The last three indicate that this would have little effect, and point
to even more urgent problems in need of attention.
Thus, in my opinion, it would be a mistake to make the Pell grant
an entitlement that increases at the rate of inflation plus one. The
biggest issue with Pell grants right now is not that the maximum award
isn't high enough, but that many eligible students do not receive a
grant, and even when they do, it is not for the maximum amount. In the
2007-2008 school year, close to 40 percent of students at or below the
poverty line did not receive a Pell grant, and of those that did, the
average award was just $3,000. Addressing these issues should take
precedence over tinkering with a ``maximum'' that has little impact on
the overwhelming majority of students.
Having said that, the Pell grant program is currently the best
method of providing financial aid to students, and increased funding of
the program is certainly to be applauded.
Senator Casey. Thank you, Doctor.
STATEMENT OF ANTHONY E. WAGNER, SENIOR VICE PRESIDENT, CFO AND
TREASURER, TEMPLE UNIVERSITY, PHILADELPHIA, PA
Mr. Wagner. Senator Casey, thank you very much for the
opportunity to testify.
Just a few highlights from the written testimony that I
provided. Temple University is like a lot of universities,
public universities, around the country, and this is especially
true in Pennsylvania. The burden of funding the cost of the
university has shifted dramatically over the last 30 years from
the State to the student. In 1972, Temple received
approximately 60 percent of its operating funds from State
appropriations. That number today is about 20 percent.
As that burden has shifted to our students, so has the debt
that our students have to incur to fund their education gone
up. Our undergraduate students that incur debt incur an average
of about $30,000 worth of debt to complete their undergraduate
degree. Of the $525 million of tuition that Temple received
last year, about half of that came through loans that our
students are receiving from a variety of sources, and some of
those loans are not subsidized loans, but they are alternative
About 70 percent of all of our students come from families
that have family incomes that are lower than $100,000 a year.
With all of the other things--especially in this region of the
State--that families face, the cost of housing and all of the
other things they face, the cost of higher education on top of
that is a significant amount of money.
One of the things that really needs to be focused upon in
the area of public policy is what is going on with the funding
of public higher education in the United States today. One of
the things that does not come out in the health care debate
that is going on in Washington is really the direct connection
between the defunding of public higher education and what has
been happening with the health care funding in the United
States. It is not a coincidence that since the inception of the
big Federal entitlement programs, especially Medicaid and
Medicare, that really since that time, State budgets have
essentially been restructured to meet the Federal entitlement
programs. Just really about every State across the country is
spending less on funding public higher education and more on
meeting their requirements under the matching of the Federal
Temple has been very responsive. I do not know about the
higher education arms race that might be going on with some of
the elite private institutions, but at Temple last year, we cut
our operating budget by $40 million. We restructured the way we
allocate some of our expenses so that we were able to increase
our student financial aid budget by $7 million this year. That
is for grants. We take 12.5 percent of all of our tuition
revenue and use it for financial aid, and we were able to
increase that by $7 million this year, which is a financial aid
budget for grants that is just a little bit above $70 million a
year. It is a significant commitment by the university.
One of the key issues that we face as a nation is solving
the health care issues that we face because until States are
able to figure out how to control their share of Medicaid
funding, what is happening to public higher education in this
country is going to continue to happen, and that is, we are
going to continue to have to shift the burden more toward
students and less from the State.
[The prepared statement of Mr. Wagner follows:]
Prepared Statement of Anthony E. Wagner
Mr. Chairman and members of the committee, thank you for the
opportunity to present this testimony. I am Anthony Wagner, Senior Vice
President, Chief Financial Officer and Treasurer at Temple University,
the Nation's 29th largest university.
Temple University has provided educational opportunities in north
Philadelphia and beyond to students without regard for their station or
status in life for 125 years.
Enrollment has grown steadily with more than 37,000 students
enrolled at the start of the academic year. These figures represent the
highest enrollment in nearly three decades. Temple's enrollment
includes more than 8,000 graduate and professional students, making us
the fifth largest provider of professional education in the Nation with
programs in medicine, pharmacy, podiatry, law, dentistry and health
Our student population is rooted in Pennsylvania and accounts for
more than 78 percent of the Temple's 7,104 freshmen and transfer
students. This academic year Temple's new student population includes
20.7 percent from the city of Philadelphia, 39.1 percent from its
nearby suburban counties and 16.8 percent from across the State. The
top feeder schools for Temple freshmen continue to be Philadelphia area
high schools. Although the majority of our student population is
representative of Pennsylvania, we are increasingly global, with
students from 49 States and 118 nations.
More than half of Temple's 243,200 alumni live and work in the
Greater Philadelphia area and nearly 60 percent live in Pennsylvania.
Approximately one out of every eight college-educated residents in the
Philadelphia metropolitan region holds a Temple degree. In addition to
the brain power that Temple infuses into the region, the university
generates billions for the economies of Philadelphia, the Greater
Philadelphia area and the Commonwealth of Pennsylvania. Annual direct
expenditure provides $3.2 billion to the Commonwealth and generates
33,000 jobs including 18,500 in Philadelphia alone.
Temple is committed to putting the opportunity of a great education
within reach of students at every income level. The university focuses
on maintaining affordability and containing tuition increases, and
dedicates substantial funding to financial aid each year. However,
Temple serves a population in which an exceptional number of families
demonstrate financial need.
Although Temple has significantly increased its efforts toward
affordability, we are still not currently meeting our students' full
demonstrated need. In the past 5 years, the total number of awards has
increased 8.7 percent and the total amount of aid awarded has increased
26 percent to $438,982,947. Although loans continue to comprise a large
percentage of total aid, Temple has worked hard to increase the number
of grants and scholarships to students. Over the past 5 years, Temple
grants and scholarships have increased by 43 percent, the highest
percentage increase of any aid source over those years.
I have included charts at the end of my testimony that provide
further information about our students and their needs that I would
like to go over briefly.
One of the key factors to Temple's affordability is its
appropriation from the Commonwealth. In the past, this funding has
helped close the gap between the true cost of a Temple education and
the price students are asked to pay. This Commonwealth appropriation
has been cut in 5 of the last 10 years. In 1972, 60 percent of our
education and general budget came from the Commonwealth appropriation
and 25 percent from tuition. Today, 70 percent comes from tuition and
23 percent from the Commonwealth. In advance of the current economic
crisis, Temple has been actively working to diversify our revenue
streams through grants and partnerships, cut costs without sacrificing
the quality of programs and increase private fund-raising to meet our
When the first signs of the economic crisis became evident, Dr.
Hart and the Board of Trustees took immediate steps to address the
impact on the university and our students. The university initiated a
hiring freeze, suspended all non-essential out-of-state travel,
cancelled a 2-percent inflationary increase for noncompensation-related
costs and reduced spending throughout the university. These measures
resulted in savings of $11.6 million in the current fiscal year to meet
Dr. Hart directed administrative leadership to prepare a budget for
the fiscal year 2009-2010 reducing recurring operating expenses by 5
percent, for a total reduction of approximately $40 million. The
priorities were to minimize a tuition increase, significantly increase
financial aid and limit the adverse effect on our employees.
Work-force efficiencies were realized primarily through the
elimination of vacant positions, reorganizations and attrition. There
were also faculty workload adjustments, strategic reorganizations and a
more efficient use of operating resources.
This budget which was adopted early by the Board of Trustees will
add $21 million over the next 3 years to the financial aid budget. This
is the largest increase in Temple's history. The budget also included a
historically low tuition increase of 2.9 percent. This budget was
passed 2 months early in an effort to facilitate the financial
commitment of our students and their families for the upcoming academic
Temple's commitment to provide quality and affordability in
education started with Temple's founder, Russell Conwell in 1884, when
he offered to teach one student and seven eager students appeared for
class. Since that time, Temple has been providing access to excellence
for students in the Commonwealth of Pennsylvania. We look forward to
working with the Commonwealth to ensure that there are ample
educational opportunities for all Pennsylvania citizens.
Thank you again for this opportunity and I am happy to take any
temple student financial profile*
More than 70 percent of Temple undergraduates come from families
with annual family income under $100,000.
* Source: 2007-2008 National Post-Secondary Student Aid Study,
National Center for Educational Statistics, Institute of Educational
Sciences, U.S. Department of Education.
National average is 63 percent in public doctorate-
74 percent of Temple undergraduates receive financial aid.
National average is 71 percent in public doctorate-
75 percent of Temple undergraduates have outstanding educational
loans upon graduation (includes Federal, State and private loans).
50 percent of tuition paid to Temple comes from loans.
More than 70 percent of undergraduates come from families
with annual family income under $100,000.
National average is 63 percent for students attending
public doctorate-granting universities.*
74 percent of our undergraduates receive financial aid
(scholarships and grants).
National average is 71 percent for students attending
public doctorate-granting universities.*
75 percent of undergraduates have outstanding educational
loans upon graduation (includes debt from Federal, State and private
National average is 47 percent for students attending
public doctorate-granting universities for students receiving loans
from State and/or Federal loan programs, but this figure does not
include private loan debt holders.
50 percent of the tuition Temple collects comes from
Rising Student Debt Loads at Graduation
Statistics depicted here are for undergraduate students.
90 percent of professional degree students have
outstanding educational debt upon graduation, with the average debt
load ranging from $73,000 for law to $173,000 for dentistry.
Senator Casey. Thanks very much.
A couple questions for each of you. Dr. Perna, I wanted to
start with you with regard to some of the numbers that you had
cited and some I may be drawing from your testimony.
Just so you know and just so our other witnesses know, any
testimony submitted that you were not able to cover completely
will be made part of the record of this hearing for the Health,
Education, Labor, and Pensions Committee.
There were a couple numbers in here I wanted to highlight.
Doctor, this is from your testimony, I think, citing the
National Center for Public Policy and Higher Education. Twenty-
eight percent of adults aged 25 and older in the United States
held at least a bachelor's degree in 2006, up from 26 percent
in 2000 and 21 percent in 1990. But other nations are
increasing the educational attainments at a faster rate. We are
at basically aged 25 and older in the United States, a
bachelor's degree at least: 21 percent in 1990; 26 percent in
2000; and 28 percent in 2006. Not very high. Some people think
those numbers are higher than they are.
Sometimes I have seen data that when you go across
Pennsylvania or across almost county by county, the numbers
are, depending on what year you are looking at, closer to 25
percent of the population or lower.
Also cited in this section, was the percentage of adults in
Pennsylvania--this is just one age group, 25 to 34, who hold at
least an associate's degree--is lower than Canada, Japan,
Korea, and New Zealand.
Anything you want to add to that in terms of just the
Ms. Perna. Just a couple things. I think they are
surprisingly low in part because our college enrollment rates
are higher. We have to do more with college completion as well.
Many who enter are not able to complete a degree because of
financial and other types of reasons. So that is one thing to
The other point to underscore is that these are averages.
We do have tremendous variation both within and across States.
When we break out those numbers by race/ethnicity and family
income, they are a lot lower. This is a really important
Senator Casey. The other number I was looking at here--this
is from a 2007 paper by the College Board and just one or two
Pennsylvania numbers here. This is as of 2007.
Thirteen percent of Hispanics and fifteen percent of
African-Americans between the ages of 25 and 64, a much broader
category than the earlier Pennsylvania number I cited, have at
least a bachelor's degree, compared with 40 percent of
Pennsylvanians who happen to be white. So 40 percent for
whites, 15 percent for African-Americans, 13 percent for
Hispanics, which, I think, gives urgency to the question of how
we are going to expand the number of Pennsylvanians and
Americans that have access to Pell Grants.
Ms. Perna. Right. Well, we know that income is related to--
it is not perfectly related, but it is related to race/
ethnicity. So this is one important policy lever. It will not
solve the problem completely, but it is an important step.
Senator Casey. I wanted to highlight this question that we
have talked a little bit about today, which is the connection
between access to higher education and completion and being
able to have more and more of our young people actually
complete, not just have access, but to complete their
education. Can you talk for a moment about that, about the
connection between the access questions, as well as rising
rates of completion?
Ms. Perna. There are a lot of reasons why people are not
completing their degrees once they enter. The research shows
that income and aid are disproportionately important for low-
income students, African-American students, and Hispanic
students both entering and completing. For example, we know
that loans have a greater negative effect on completion for
students of color and low-income students than for other
This issue of working while in college--you know, we heard
very poignant and amazing stories about the barriers that some
students are able to overcome in order to stay on the path to
degree completion, but many more students are not able to
successfully do that. Certainly colleges and universities have
a role in helping to ensure that students successfully complete
their degrees, but we also need to be sure that people have the
structural support like financial aid. So that is another
There are others, of course, academic readiness for college
Senator Casey. In terms of completion.
Ms. Perna. Yes, right.
Senator Casey. You had mentioned some data with regard to
the number of hours worked as impacting this question. Can you
recite that again, the 15 or more hours a week number?
Ms. Perna. There is a lot that we do not know about
working. Working is now the reality for most college students.
So 75 percent of dependent undergraduates, 80 percent of
independent undergraduates are working while enrolled. The
average number of hours for dependent students is 24 hours per
week, while for independent students averaging 34.5 hours per
week. These are really high numbers.
Senator Casey. Say that again. The average--
Ms. Perna. Dependent undergraduates who are working--they
are enrolled part-time and full-time, but among those who are
working are averaging 24 hours per week. Independent students,
again who are enrolled full-time and part-time, are averaging
34 hours a week of work.
Senator Casey. We heard today a couple are working 40.
Ms. Perna. That is right.
We know from research that if you work less than 15 hours
per week on campus, that can have some benefits to your
integration into the campus community, but clearly most
students are not following that recommendation. The research
that we have available on this topic shows that those who work
more hours off campus are less likely to finish their degree,
and those who do, take longer to complete their degree as well,
which also increases the costs of attending both in terms of
tuition and the direct costs of books and things like that, but
also the opportunity costs of being out of the labor market on
a more regular type of basis as well.
Senator Casey. I will try to come back to you, Dr. Perna,
but I also wanted to ask Dr. Gillen. In part of your testimony,
you talked about the question of costs as it relates to
institutions of higher education. You have pointed to a
question that a lot of people have asked me over the years. Why
do these numbers keep going up? Whether you compare it to wages
or other costs, I mean, other than health care, there are very
few costs that seem to have gone up as much.
Based upon your research and based upon what you have seen
in terms of public policy responses to that, what do you think
are some methods to control those costs, if any, if you are
able to identify some of those?
Mr. Gillen. That is a really great question that I am going
to spend several years of my life trying to address.
One of the most important things is to kind of clearly
define what exactly we want colleges to be doing because right
now they try to do everything very well. It is very hard to do
one thing very well, let alone everything. It is very easy to
spend a lot, almost an obscene amount of money, if you are
trying to do everything excellently. Do we want them to be
focusing on educating our students, providing public service,
doing research? Right now the answer is we want them to be
doing all that, and so they are trying to do all that, and they
are spending gobs of money doing that. That is a large part of
the problem, kind of the unfocused nature of a lot of spending,
not necessarily Temple.
Senator Casey. Can you point to, based upon the work you
have done, your research, a difference on a couple of these
questions between public and private universities?
Mr. Gillen. Yes. Well, public universities are subject to a
lot more constraints whether it be by their State legislature
or just the board of trustees tends to be more representative
of the community. There are definitely a lot of differences,
and the public sector seems to have controlled its spending a
bit more, at least at the research universities. But you still
see the massive increase in tuition pretty much across the
board regardless of the type of school. It is quite depressing.
Senator Casey. Any ideas that you might have about incenti-
vizing institutions to reduce costs?
Mr. Gillen. That is a good question.
Right now we are really pushing for a lot of other types of
programs to be structured more like the Pell where the money is
given directly to the students. We feel that that would provide
more of a disciplining incentive for a lot of schools because
the students would kind of be actively shopping as opposed to
just kind of receiving a basket of money from the schools.
Senator Casey. I wanted to see if Tony had any response to
some of those questions. Tony pointed to the differential in
State support over really a generation now, going from, you
said, 60 percent down to 20 percent since 1972?
Mr. Wagner. That is right. There has been a massive shift
in the funding of public higher education away from the States
and to the students. Temple is a people-intensive enterprise.
About 70 percent of our operating budget is spent on salaries
and benefits. Temple is also a heavily unionized environment.
So we meet agreement with our unions over the collective
Health care costs--for instance, the university spends
somewhere in the neighborhood of 15 to 20 percent of our budget
providing health care for our employees. Once again, not only
is the State's ability to fund Temple because of what Medicaid
in particular has done to the State budget--health care impacts
the State's ability to fund public higher education. It also
impacts the university's operating budget in a very significant
way because we provide health care benefits for our employees.
One of the things that I do want to point out, though, is
that Temple is a very big recipient of the Pell Grant program
because of the nature of the cohort that we serve. Just this
year alone, with what you have been able to accomplish in
Washington, we will receive about $6 million more in Pell
Grants to our students, and we will be able to increase the
number of our students that receive Pell Grants from about
8,000 students to about 9,000 students. I did want to make----
Senator Casey. From year to year?
Mr. Wagner. Yes, from year to year, from last year to this
year because of the stimulus funding.
The one thing that is clear, across all the sectors in
higher education, public and private, is that we exist in a
marketplace. Temple students volunteer to come here. They do
not have to come here. We are very cognizant of that. It is the
reason why we were able to reduce our budget last year on the
administrative side, shift resources to financial aid, and hold
a tuition increase last year to 2.9 percent, which was the
lowest it has been in a while. We are very cognizant of the
fact that an education is difficult to finance and that we want
our students to understand that the university is committed to
trying to do everything we can on our side to hold the costs
There are some big public policy questions that you are
aware of, and they will not be solved by the university. They
will be solved in Harrisburg and at the Federal level.
Senator Casey. That connection between the costs of running
Temple or any other institution of higher education, as well as
you could apply this to businesses, especially smaller
businesses--the connection between that challenge and health
care costs is so readily apparent now, giving more reason and
more urgency for us to get a bill passed.
Tony, you mentioned Temple health care costs between 15 and
20 percent of the overall budget.
Mr. Wagner. That is our total benefits budget and the
biggest chunk of that is health care costs.
Senator Casey. And that, I guess, has gone up in the last
Mr. Wagner. Yes. There is just tremendous upward pressure
on health care costs, and it is driven by a lot of factors. One
of the things that, as you know, we have experienced in this
region of Pennsylvania was a fairly significant medical
malpractice issue over the last, say, 5 or 6 years. Temple as a
university has a health system. Last year we spent $60 million
on medical malpractice insurance in our health system, and that
is common for what academic medical centers experience,
particularly in this region of Pennsylvania. There are just a
lot of factors on the health care side.
When people ask me what is the single biggest issue that
will help universities be able to manage this issue of
affordability, it is health care. It is health care on a number
of different levels.
Senator Casey. On Pell Grants, you said the number of
Temple students that will have access to Pell Grants will go
from, did you say, 8,000 to 9,000?
Mr. Wagner. Yes, from approximately 8,000 to 9,000. And it
is about $6 million. It is a really significant increase.
Senator Casey. That is through the recovery bill.
Mr. Wagner. That is through the recovery bill. The total
this year will be about $33 million in Pell Grants that will be
part of that $525 million in tuition that we will collect.
Senator Casey. I guess back to Dr. Perna. I wanted to ask
you as well on the question of Pell Grants. What is your sense
in some of the research you have done other than the obvious
question or the obvious challenge of having access to enough
sources to fund a higher education? What other lessons can we
draw from your research as it relates to Pell Grants?
Ms. Perna. I guess a couple of things. One, Pell Grants are
a critical source of need-based aid. The targeting of low-
income students is really quite unique among the available
sources of aid, especially when you consider all sources, State
government sources, institutional aid, and things like that. So
that is on the positive side.
On the negative side is just the complexity. Trying to
understand in advance how much you might be able to anticipate
in Pell Grant funding is a challenge, and that lack of
understanding that there may be need-based financial aid out
there--I think it is hard to establish this conclusively
through the research, but intuitively if students are not aware
in high school that there may be this need-based aid of some
amount based on some level of qualification that is hard to
understand until you actually apply for admission and complete
the FAFSA, I think it limits college opportunity for students.
If there were a way to communicate more clearly and make it
more obvious that there is this need-based aid available, there
would be that motivation to engage in more behaviors that
promote college success--like taking the right courses during
high school, things like that.
Senator Casey. In terms of the knowledge or the
availability of information, is that a question of how we are
disseminating or communicating the information or the timing?
In other words, are students and families getting information
or concentrating on this question too late in their high school
career or is it just the way that we are providing information,
or is it both? Maybe they are not exposed to it early enough
and we are not communicating that well.
Ms. Perna. I think it is both. With need-based financial
aid, there is not any reason to go through any procedures to
learn about whether you will get it until you are actually at
the point of enrollment. For some students that may be too late
if you have not done what you need to do in order to ensure
that you are academically qualified to enroll and succeed. It
is too late to get that information at that point. So that is
The second aspect is what happens in high school. The
students who most need to have the information and the
guarantee that need-based financial aid is available tend to
have parents who have not gone to college or are not in
communities where college-going is the norm. Nationwide the
average ratio of students to high school counselors is quite
high. It is remarkable how few counselors there are. In the
high schools where students most need to have college-related
help from their counselors, those counselors are focusing on
things other than college counseling, ensuring that students
are in school and they are safe and they are taking the State-
mandated tests and things that are not related to college-
Then coupled with that is just the complexity of it. It is
not easy for high school teachers and counselors to easily tell
a student if your family income is this and there are this many
people in your family, then you can count on getting this
amount of aid.
Senator Casey. I wanted to ask you about that
Ms. Perna. We need to go in that direction. There is an
interesting study by Eric Bettinger and Bridget Terry Long that
was released about using H&R Block to--having people who use
H&R Block have their FAFSA form populated by that data that
they need to complete anyhow for the IRS. Their study shows
that when that process happens, students are more likely to
apply for aid, they are more likely to receive aid, they
receive higher amounts of aid. So, there may be some lessons
there. We are collecting a lot of data from students and their
families about their financial well-being. Why can we not
coordinate that so students do not have to report information
Senator Casey. I guess if you are faced with the complexity
of a lot of other systems, this becomes an added burden of
paperwork and detail. It becomes a nightmare. And I guess with
more and more families having two incomes and people working
longer and longer hours and a longer week, they do not get to
the paperwork as readily as they might. It is complicated.
Ms. Perna. Right. And certainly from a policy perspective,
we want to ensure that those who are most needy or most
deserving are getting the resources, but on the other hand,
these are the populations that we are often over-burdening in
all kinds of other ways to prove that they are poor or moderate
income and they have a need for resources. There are some
important questions there about how that works.
Senator Casey. Dr. Gillen or Tony, do you want to add
anything to that?
Mr. Gillen. Yes. I would just like to second what she said.
Simplifying the FAFSA is probably one of the highest priority
things that the Government could be doing right now. Whether it
is partnering with H&R Block or just having the IRS provide the
data to the Department of Education so that the students do not
have to, that would lift a significant paperwork burden off of
the students. It is probably silly for us to pretend like this
paperwork burden is small because just ask them. They had to
fill out five, was it, applications in 1 year. This is written
in arcane Government language. It is impossible to decipher.
Senator Casey. They are all shaking their heads.
Mr. Gillen. That would be helpful.
Senator Casey. I know those Government forms get
Tony, anything you wanted to add to that?
Mr. Wagner. No. I agree. The relationship that higher
education has with the Federal Government is so important. It
was great news this year with what happened in the Recovery Act
with Pell Grants, and hopefully that is a harbinger for the
future. But with just the enormity of some of these public
policy issues, especially with respect to health care, That is
kind of the logjam, getting health care solved. That will go a
long way toward helping the State and the universities to help
Senator Casey. When you consider some of the costs, I mean,
just getting the Pell Grant numbers up--I was looking at some
data here. If you look at the maximum appropriated Pell Grants,
when you add up both the appropriations and the add-ons for
economic year 2007-2008, 4,310; 2008-2009, 4,731; and 2009-
2010, 5,350. We are trying to keep that number going up, but it
still leaves some gaps, some big gaps for some families.
Doctor, do you have anything more to add?
Ms. Perna. Thank you for your efforts. This is really
Senator Casey. We have got a long way to go, but this
Dr. Gillen, thank you, and Tony. We are grateful for so
many people being here, and I know we have been here about 90
minutes. We will wrap up and we can stay around for a little
while to take questions, or if anyone wants to add anything, if
our students want to say anything--nothing to add? This is your
chance. You have a microphone.
We are so grateful for all of our students who are here, as
well as the information we received from those who happen to be
in this field, Dr. Gillen, Dr. Perna, and Tony Wagner. Clarita,
thank you for being here and sharing your own family's story.
I wanted to also make a note for other Senators who are on
our committee, if they wanted to add to the record, this record
will be open for other Senators to submit questions, which some
of you may have an opportunity to answer. Of course, you will
not have to appear somewhere. You can actually answer them in
writing. That record will be open for about a week for the
Health, Education, Labor, and Pensions Committee.
Anyone else, if you wanted to submit something that you
wanted to make part of the record, certainly the record will be
open for that information.
With that, we will stand adjourned. I want to thank you for
this opportunity and thank Temple University.
[Additional material follows.]
Response to Question of Senator Coburn by Andrew Gillen, Ph.D.
October 19, 2009.
Dr. Andrew Gillen,
The Center for College Affordability and Productivity,
1150 17th Street NW, Suite 910,
Washington, DC 20036.
Dear Dr. Gillen: Thank you for your testimony before the Committee
on Health, Education, Labor, and Pensions at the hearing entitled,
``Access and Affordability: How Expanding Pell Grants Will Offer Higher
Education to More Americans'' on Monday, October 5, 2009 in
In followup to your testimony, Senator Tom Coburn, a member of the
committee has requested that you respond to the following question for
the hearing record:
Currently in Congress, there are legislative proposals that seek to
index the Pell Grant maximum to inflation, plus 1 percent. However,
tuition costs, as well as the costs of textbook and supplies, continue
to outstrip inflation (tuition and child care rose 5.4 percent in the
past year while textbooks and supplies rose 6.8 percent). In your
expert opinion, will these proposals do anything to meaningfully
address the underlying college cost issue at institutions across the
country? Please explain.
Please submit your written response to the committee at the
Committee on Health, Education, Labor, and Pensions,
SD-428 Dirksen Senate Office Building,
Washington, DC 20510.
Attn: Lory Yudin, Chief Clerk.
If you have any questions, please call Bryn McDonough on my staff
at (202) 228-5024. Thank you again for your testimony and response.
Your assistance to the HELP Committee is greatly appreciated.
Robert P. Casey, Jr.,
The Center for College Affordability
October 30, 2009.
To: Senators Coburn, Casey, and members of the Senate HELP Committee
From: Dr. Andrew Gillen, Research Director, Center for College
Affordability and Productivity
Re: Response to follow-up question
Senator Coburn: Thank you for your thoughtful question concerning
whether proposals to have the Pell grant increase at the rate of
inflation plus 1 percent would meaningfully address college costs in
light of their rapid historical increase.
My short answer to the question is somewhat mixed. At the
individual level, larger Pell grants will certainly help recipients pay
for college. At the aggregate level however, we should take into
consideration any affect the program might have on the escalation of
college costs. The Pell grant program as currently structured, and as
it would operate for a short time after adoption of the proposal, would
not adversely affect the cost escalation problem within higher
education. After a time, there is reason to believe that this proposal
could actually exacerbate the problem, leading to higher costs.
To explain, let me first reiterate that for the low-income students
that receive them, it is undeniable that Pell grants help cover the
cost of college. However, the cost of college keeps going up,
indicating that trying to use Pell grants to solve the affordability
issue is at best an uphill battle. As long as the costs of colleges
continue to increase, we should expect for the cost for the students
attending them to increase as well. Thus, to ultimately address the
issue of college affordability, we must address the phenomenon of
continually higher costs for colleges.
This leads to the question of what's driving costs higher for these
institutions. The best explanation begins by noting that it is in the
colleges' best interests to spend as much as possible in the ``pursuit
of excellence.'' \1\ While excellence is certainly desirable, there is
a problem in defining it. Since we don't measure learning outcomes in a
value-added sense, colleges cannot demonstrate their excellence by
showing that students will learn more than they would at another
college. When measures of outputs are unavailable as they are in higher
education, it seems reasonable to focus on inputs, on the grounds that
higher quality inputs will lead to higher quality outputs. This is
precisely what we observe in higher education, as colleges engage in an
arms race for inputs (Nobel worthy faculty, bigger stadiums, more
luxurious libraries and dorms, etc.). Because schools can only
demonstrate their ``excellence'' (more accurately, the perception of
excellence) by buying costly inputs, it is always in their interests to
spend more money. Thus, anything that results in higher revenues per
student will lead to higher costs per student as the money is spent.
This is known as Bowen's revenue theory of cost.\2\
\1\ Clotfelter, Charles T. (1996) ``Buying the Best: Cost
Escalation in Elite Higher Education.'' Princeton: Princeton University
\2\ Bowen, Howard R. (1981) ``The Costs of Higher Education: How
Much Do Colleges and Universities Spend Per Student and How Much Should
They Spend?'' The Carnegie Council Series.
One unfortunate implication of this theory is that financial aid
programs designed to ease the financial burden on families can actually
make matters worse. As I explain in detail in a recent study,\3\ when
aid is given to relatively well off students, colleges can (and have an
incentive to) raise their tuition to ``harvest'' the aid, leaving the
financial burden on families unchanged while increasing the financial
burden on taxpayers. For the college, this increases their revenues,
and therefore their expenditures. At this higher spending level, even
more aid is needed. This could lead to a spiral \4\ of an increase in
aid money leading to higher revenues, leading to higher costs, leading
to calls for yet more aid. In fact, that scenario bears an eerie
resemblance to what we've observed over the years.
\3\ Gillen, Andrew. (2009) ``Financial Aid in Theory and Practice:
Why It Is Ineffective and What Can Be Done About It.'' Center for
College Affordability and Productivity.
\4\ Martin, Robert. (2009) ``The Revenue to Cost Spiral in Higher
Education.'' The John William Pope Center.
Federal financial aid is structured in such a way that some
programs are more likely than others to contribute to the problem. For
instance, programs that are restricted to relatively low-income
students and give modest amounts of money, such as the Pell grant
program, are unlikely to lead to higher costs. On the other hand,
programs that are not restricted to low-income students and/or provide
too much money most likely contribute to the academic arms race,
driving up costs. For instance, the Department of Education reports
that more than one-third of dependent students from families making
$100,000 or more received a Stafford loan,\5\ and the Government
Accountability Office reports that just under a third of all
unsubsidized Stafford loan dollars went to these families.\6\ Thus, the
design of financial aid programs is of the utmost importance.
\5\ Wie, Christina Chang; Berkner, Lutz; He, Shirley; and Lew,
Stephen. (2009) ``2007-2008 National Post-Secondary Student Aid Study
(NPSAS:08).'' Department of Education, National Center for Education
\6\ Government Accountability Office. (2006) ``Multiple Tax
Preferences and Title IV Student Aid Programs Create a Complex
Education Financing Environment.'' Testimony before the Committee on
Finance, U.S. Senate.
Fortunately, the Pell grant program, as currently implemented does
not lead to higher costs. But the proposal to have it increase at the
rate of inflation plus 1 percent threatens to change that.
To see why, consider where we would be today if that had been the
law from the beginning of the program in 1973. By 2008, the maximum
award would have been more than $46,000, and the average award would
have exceeded $20,000. Not only would the Federal Government have
needed to come up with almost $100 billion more in 2008, but with those
award levels, it is hard to imagine that tuition wouldn't have
skyrocketed to absorb the $46,000 checks students were bringing to
To sum up, the Pell grant is currently a great program that helps
low-income students attend college, and doesn't contribute to the arms
race in spending among colleges. As such, more funding for the program
is highly desirable. But, as is often the case, too much of a good
thing can be bad. Proposals to make the Pell grant an entitlement set
to increase at the rate of inflation plus one will lead to highly
undesirable consequences that render the proposal ill-advised in spite
of its good intentions.
Thank you for the opportunity to be of service, and please note
that I would be happy to answer any other questions you may have.
[Whereupon, at 2:28 p.m., the hearing was adjourned.]