[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

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


                             FIELD HEARING

                                 OF THE

                    COMMITTEE ON HEALTH, EDUCATION,
                          LABOR, AND PENSIONS

                          UNITED STATES SENATE

                     ONE HUNDRED ELEVENTH CONGRESS

                             FIRST SESSION

                                   ON

  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 
                                Pensions


      Available via the World Wide Web: http://www.gpo.gov/fdsys/




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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

                                  (ii)






                            C O N T E N T S

                               __________

                               STATEMENTS

                        MONDAY ,OCTOBER 5, 2009

                                                                   Page
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

                          ADDITIONAL MATERIAL

Statements, articles, publications, letters, etc.:
    Response to question of Senator Coburn by Andrew Gillen, 
      Ph.D.......................................................    37

                                 (iii)




 ACCESS AND AFFORDABILITY: HOW EXPANDING PELL GRANTS WILL OFFER HIGHER 
                      EDUCATION TO MORE AMERICANS

                              ----------                              


                        MONDAY, OCTOBER 5, 2009

                                       U.S. Senate,
       Committee on Health, Education, Labor, and Pensions,
                                                  Philadelphia, PA.
    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 
at Temple.
    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 
public institution.
    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 
is unacceptable.
    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 
said that.
    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 
witnesses.
    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 
years.
    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 
government.
    I will introduce our other witnesses when they appear 
before you.
    We will start with Jessica and then we will just go to your 
left.

  STATEMENT OF JESSICA TAYLOR PIOTROWSKI, DOCTORAL CANDIDATE, 
ANNENBERG SCHOOL FOR COMMUNICATION, UNIVERSITY OF PENNSYLVANIA, 
                        PHILADELPHIA, PA

    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 
for.
    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 
went without.
    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 
applications.
    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 
back yard.
    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.
    [Applause.]
    Next, Adalena.

   STATEMENT OF ADALENA BAXTER, STUDENT, CHEYNEY UNIVERSITY, 
                        PHILADELPHIA, PA

    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 
degree.
    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 
student.
    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 
costs.
    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 
education.
    Thank you very much for your time.
    [Applause.]
    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 
program.
    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 
shoulders.
    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 
aid.
    Thank you for the opportunity. I will be glad to answer any 
questions.
    Senator Casey. Thanks so much, D.J.
    [Applause.]
    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.
    [Laughter.]
    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 
later.
    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 
to make.
    Senator Casey. That is a good observation. It is hard to 
learn it if you cannot provide that kind of note-taking and 
those opportunities.
    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 
testimony.

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 
through college.
    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 
parent loans.
    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 
unmanageable.
    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 
was $70,637.
    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 
education.
    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 
due tomorrow.
    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-
related outcomes.
    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 
families.
    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 
and working.
    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.
    Thank you.
    [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 
college education.
    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 
Education, 2008b).
     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 
                         educational attainment
    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 & 
Perna, 2005).
    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).
                            recommendations
    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 
working.
    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.
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Bettinger, E., Long, B.T., & Oreopoulous, P. (2009). The role of 
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Callender, C., & Jackson, J. (2005). Does the fear of debt deter 
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Carnevale, A.P., & Desrochers, D.M. (2003). Standards for What? The 
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Choy, S., & Berker, A. (2003). How families of low- and middle-income 
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College Board (2008). Trends in student aid 2008. Retrieved October 4, 
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DesJardins, S.L., Ahlburg, D.A., McCall, B.P. (2002). A temporal 
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Dowd, A. & Coury, T. (2006). The effect of loans on the persistence and 
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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? 
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Gladieux, L., & Perna, L. (2005). Borrowers who drop out: A neglected 
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Heller, D., & Marin, P. (Eds.) (2002). Who should we help? The negative 
    social consequences of merit scholarships. Cambridge, MA: The Civil 
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Hofferth, S.L., Boisjoly, J., & Duncan, G.J. (1998). Parents' 
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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 
    www.nassgap.org.
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://
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    2006.pdf.
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://
    measuringup2008.highereducation.org/print/NCPPHEMU
    NationalRpt.pdf.
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, 
    589-606.
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.
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    22, 2008 from http://projectonstudentdebt.org/state_by_state-
    data.php.
St. John, E., Gross, J.P.K., Musoba, G.D., & Chung, A.S. (2005). A step 
    toward college success: Assessing attainment among Indiana's 
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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://
    www.wiche.edu/policy/knocking/1992-
    2022/knocking_complete_book.pdf

    Senator Casey. Thank you very much.
    Dr. Gillen.

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 
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 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 
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 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 
1.
    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 
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. 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 
schools.



    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.
    Tony Wagner.

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 
loans.
    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 
Medicaid program.
    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.
    Thank you.
    [The prepared statement of Mr. Wagner follows:]
                Prepared Statement of Anthony E. Wagner
                              introduction
    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 
professions.
    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 
students' needs.
    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 
Commonwealth rescissions.
    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 
year.
    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 
questions.
                                 ______
                                 
                   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-
---------------------------------------------------------------------------
        granting universities.

    74 percent of Temple undergraduates receive financial aid.

         National average is 71 percent in public doctorate-
        granting universities.

    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 
loans).
     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 
loans.
                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 
numbers?
    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 
underscore.
    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 
problem.
    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 
students.
    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 
factor.
    There are others, of course, academic readiness for college 
success.
    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.
    [Laughter.]
    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 
bargaining table.
    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 
down.
    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 
couple years.
    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 
one aspect.
    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-
going.
    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 
simplification question.
    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 
twice?
    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.
    [Laughter.]
    Mr. Gillen. That would be helpful.
    Senator Casey. I know those Government forms get 
complicated.
    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 
themselves.
    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 
important.
    Senator Casey. We have got a long way to go, but this 
hearing helps.
    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.
    [Laughter.]
    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.]

                          ADDITIONAL MATERIAL

     Response to Question of Senator Coburn by Andrew Gillen, Ph.D.
                                       U.S. Senate,
                                          October 19, 2009.
Dr. Andrew Gillen,
Research Director,
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 
Philadelphia.
    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 
following address:

    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.
            Sincerely,
                                      Robert P. Casey, Jr.,
                                                      U.S. Senator.
                                 ______
                                 
              The Center for College Affordability 
                                    & Productivity,
                                          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 
Press.
    \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.
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    \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.
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    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.
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    \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 
Statistics.
    \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.
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    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 
campus.
    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.
                                             Andrew Gillen.

    [Whereupon, at 2:28 p.m., the hearing was adjourned.]

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