[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]






     KEEPING COLLEGE WITHIN REACH: SIMPLIFYING FEDERAL STUDENT AID

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

                                HEARING

                               before the

                         COMMITTEE ON EDUCATION
                           AND THE WORKFORCE
                     U.S. HOUSE OF REPRESENTATIVES

                    ONE HUNDRED THIRTEENTH CONGRESS

                             FIRST SESSION

                               __________

           HEARING HELD IN WASHINGTON, DC, NOVEMBER 13, 2013

                               __________

                           Serial No. 113-36

                               __________

  Printed for the use of the Committee on Education and the Workforce

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                COMMITTEE ON EDUCATION AND THE WORKFORCE

                    JOHN KLINE, Minnesota, Chairman

Thomas E. Petri, Wisconsin           George Miller, California,
Howard P. ``Buck'' McKeon,             Senior Democratic Member
    California                       Robert E. Andrews, New Jersey
Joe Wilson, South Carolina           Robert C. ``Bobby'' Scott, 
Virginia Foxx, North Carolina            Virginia
Tom Price, Georgia                   Rubeen Hinojosa, Texas
Kenny Marchant, Texas                Carolyn McCarthy, New York
Duncan Hunter, California            John F. Tierney, Massachusetts
David P. Roe, Tennessee              Rush Holt, New Jersey
Glenn Thompson, Pennsylvania         Susan A. Davis, California
Tim Walberg, Michigan                Rauul M. Grijalva, Arizona
Matt Salmon, Arizona                 Timothy H. Bishop, New York
Brett Guthrie, Kentucky              David Loebsack, Iowa
Scott DesJarlais, Tennessee          Joe Courtney, Connecticut
Todd Rokita, Indiana                 Marcia L. Fudge, Ohio
Larry Bucshon, Indiana               Jared Polis, Colorado
Trey Gowdy, South Carolina           Gregorio Kilili Camacho Sablan,
Lou Barletta, Pennsylvania             Northern Mariana Islands
Martha Roby, Alabama                 Frederica S. Wilson, Florida
Joseph J. Heck, Nevada               Suzanne Bonamici, Oregon
Susan W. Brooks, Indiana             Mark Pocan, Wisconsin
Richard Hudson, North Carolina
Luke Messer, Indiana

                    Juliane Sullivan, Staff Director
                 Jody Calemine, Minority Staff Director
                 
                 
                 
                 
                 
                 
                 
                 
                 
                 
                 
                 
                 
                 
                 
                 
                 
                 
                 
                 
                 
                            C O N T E N T S

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                                                                   Page

Hearing held on November 13, 2013................................     1

Statement of Members:
    Hinojosa, Hon. Rubeen, a Representative in Congress from the 
      State of Texas.............................................     7
        Prepared statement of....................................     8
    Kline, Hon. John, Chairman, Committee on Education and the 
      Workforce..................................................     5
        Prepared statement of....................................     6

Statement of Witnesses:
    Baum, Dr. Sandy, senior fellow, the Urban Institute; research 
      professor of education policy, the George Washington 
      University Graduate School of Education and Human 
      Development................................................    79
        Prepared statement of....................................    82
    Conklin, Kristin D., founding partner, HCM Strategists.......    10
        Prepared statement of....................................    12
    Delisle, Jason, director, federal education budget project, 
      New America Foundation.....................................    99
        Prepared statement of....................................   101
    Mishory, Jennifer, deputy director, Young Invincibles........    92
        Prepared statement of....................................    94

Additional Submissions:
    Barletta, Hon. Lou, a Representative in Congress from the 
      State of Pennsylvania, prepared statement of the 
      Pennsylvania Association of Private School Administrators 
      (PAPSA)....................................................   142
    Ms. Conklin, report, ``Doing Better for More Students,'' 
      Internet address to........................................    79
    Mr. Hinojosa, letter, dated Nov. 13, 2013, regarding 
      committee business.........................................     3
    Chairman Kline, prepared statement of the Education Finance 
      Council (EFC)..............................................   141

 
     KEEPING COLLEGE WITHIN REACH: SIMPLIFYING FEDERAL STUDENT AID

                              ----------                              


                      Wednesday, November 13, 2013

                     U.S. House of Representatives

                Committee on Education and the Workforce

                             Washington, DC

                              ----------                              

    The committee met, pursuant to call, at 10:03 a.m., in room 
2175, Rayburn House Office Building, Hon. John Kline [chairman 
of the committee] presiding.
    Present: Representatives Kline, Petri, Wilson, Foxx, 
Thompson, Walberg, Guthrie, DesJarlais, Rokita, Heck, Brooks, 
Messer, Andrews, Scott, Hinojosa, Tierney, Holt, Davis, 
Grijalva, Bishop, Courtney, Fudge, Polis, Sablan, Wilson, 
Bonamici, and Pocan.
    Staff present: Janelle Belland, Coalitions and Members 
Services Coordinator; James Bergeron, Director of Education and 
Human Services Policy; Amy Raaf Jones, Education Policy Counsel 
and Senior Advisor; Nancy Locke, Chief Clerk; Brian Melnyk, 
Professional Staff Member; Daniel Murner, Press Assistant; 
Krisann Pearce, General Counsel; Nicole Sizemore, Deputy Press 
Secretary; Emily Slack, Legislative Assistant; Alex Sollberger, 
Communications Director; Alissa Strawcutter, Deputy Clerk; 
Tylease Alli, Minority Clerk/Intern and Fellow Coordinator; 
Kelly Broughan, Minority Education Policy Associate; Jacque 
Chevalier, Minority Education Policy Advisor; Eamonn Collins, 
Minority Fellow, Education; Jamie Fasteau, Minority Director of 
Education Policy; Rich Williams, Minority Education Policy 
Advisor; Michael Zola, Minority Deputy Staff Director; and Mark 
Zuckerman, Minority Senior Economic Advisor.
    Chairman Kline. A quorum being present, the committee will 
come to order.
    Before we proceed with this morning's hearing I would like 
to recognize Mr. Hinojosa for an announcement.
    Mr. Hinojosa. Thank you, Chairman Kline.
    It is a privilege and I want to welcome our newest member 
to the Education Committee. Congressman Mark Pocan, who 
represents Wisconsin's 2nd district, is filling the vacancy on 
this committee left by Congressman John Yarmuth, who is now on 
the Energy and Commerce Committee.
    Congressman Pocan is tailor-made for working on this 
committee. He is a small business owner and he is a union 
member. He knows how to work across political divides and he 
knows how to legislate.
    He served seven terms in the Wisconsin State Assembly. His 
successes earned him the Best Legislator Award from Milwaukee 
Magazine.
    This is Congressman Pocan's first term in the House of 
Representatives and he has already proven to be a strong voice 
for students and working families from his home state and 
across the country.
    With his assignment to this committee I am submitting 
senior Democratic Member Miller's letter announcing the new 
subcommittee assignments for Democratic members.
    And Congresswoman Wilson will be moving from Early 
Childhood to the Higher Ed Subcommittee. Congresswoman Bonamici 
will be moving from Workforce Protections to the HELP 
Subcommittee. And Congressman Pocan will be joining the Early 
Childhood and Workforce Protections Subcommittee.
    I urge all my colleagues to join me in welcoming 
Congressman Pocan. [Applause.]
    Mr. Petri. Would the gentleman yield?
    Mr. Hinojosa. Yes. I yield to you.
    Mr. Petri. I would like to join in welcoming my colleague, 
who I am very happy is a member of this committee, my colleague 
from Wisconsin, who represents--has within his district one of 
the great educational institutions really in the world, the 
University of Wisconsin. It is internationally famous in many 
areas and I suspect that may be one of his priorities. And we 
look forward to working together on helping the university.
    Mr. Hinojosa. Mr. Pocan, I would like to yield time to you.
    Mr. Pocan. Sure. I just want to say thank you very much. 
I'm looking forward to serving on the committee and looking 
forward to the work we have to do that is ahead of us.
    Thank you very much.
    Mr. Hinojosa. That is the briefest speech I have ever 
heard.
    Mr. Chairman, I ask unanimous consent that this letter 
advising the chairman of our revised subcommittee assignments 
be included in the record.
    [The information follows:]
   
   [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
   
                                ------                                

    Chairman Kline. Without objection.
    Mr. Hinojosa. Okay. I think this is--and I yield back.
    Chairman Kline. Gentleman yields back.
    Mr. Pocan, I also welcome you to the Committee on Education 
and the Workforce. I know you, like I and Mr. Petri, are 
looking forward to a football game on Saturday. I have 
different expectations, I am sure, than you do, but we are glad 
to have you.
    I would like to thank our witnesses for joining us today. 
We look forward to your testimony.
    In preparation for the upcoming reauthorization of the 
Higher Education Act, the committee has held nearly a dozen 
hearings to explore the challenges and opportunities facing our 
nation's colleges and universities.
    We have discussed the value of transparency and data in 
helping prospective students choose the postsecondary 
institution that best meets their unique needs. We have 
examined factors that contribute to rising college costs and 
reviewed the consequences of burdensome federal regulations and 
paperwork requirements. And we have highlighted the critical 
importance of promoting innovation and academic freedom in our 
nation's higher education system.
    Without question, ensuring more students have access to an 
affordable, quality postsecondary education is a top priority 
for everyone in this room. But despite the best of intentions, 
the federal efforts to expand aid programs over the past 50 
years have resulted in an overly complex system that is 
difficult to navigate.
    Today, with the help of our witnesses, we will explore 
opportunities to streamline the federal aid system, making it 
easier for students to evaluate federal aid options and make 
smart investments in postsecondary education.
    I would like to take a moment to share with you the process 
students and families must go through when trying to access 
federal aid. First, students must complete the Free Application 
for Federal Student Aid, or FAFSA, which includes more than 100 
detailed questions on a range of topics including earnings and 
savings, parental education attainment, receipt of government 
benefits, and assets.
    After completing the lengthy FAFSA application, students 
must try to understand the available aid options while also 
deciphering the differences between loans and grants. To make 
an informed decision about financial aid, students and their 
families need to grasp what makes each program unique, 
including the terms and conditions, eligibility requirements, 
and aid amounts awarded by individual institutions.
    And finally--excuse me--when a student chooses an aid 
package he or she must also begin thinking about how to 
eventually repay the loans. As we saw with the recent student 
loan interest rate debate, far too many students don't fully 
understand their loan obligations until after they after they 
graduate, and students often miss opportunities to take 
advantage of federal repayment initiatives simply because they 
don't know such programs exist.
    During the 2008 reauthorization of the Higher Education 
Act, Congress took an important first step toward improving the 
federal aid system by simplifying the FAFSA, but the still-
cumbersome application proves there is more work to be done. 
Fortunately, the higher education, business, and policy 
communities, in coordination with the Bill and Melinda Gates 
Foundation's Reimagining Aid Design and Delivery initiative, 
have put forth a number of interesting ideas to restructure the 
system.
    One proposal suggests further streamlining the FAFSA by 
dramatically simplifying the need analysis formula used to 
determine student eligibility. Instead of calculating a 
student's expected family contribution through detailed 
questions, a modernized formula would only use a family's size 
and adjusted gross income to determine eligibility. 
Additionally, the new formula would build on past efforts to 
rein in the FAFSA through partnerships with the IRS, allowing 
applicants to retrieve financial information more easily.
    To reduce confusion and complexity in the federal aid 
system, another proposal calls for the consolidation of all 
existing federal postsecondary aid programs into a ``one loan 
and one grant'' structure. In this scenario, students would 
have access to a single loan with a market-based interest rate 
and one universal repayment plan. Other proposals focus on 
helping students access more transparent information about 
their federal aid options, which has long been a Republican 
priority.
    Before I yield to the distinguished ranking member--today, 
Mr. Hinojosa--I would like to note that I am proud of the work 
we did earlier this year to revamp federal student loans. 
Though it was a difficult battle, eventually we came together 
on a bipartisan solution that has resulted in lower interest 
rates for millions of loan borrowers.
    We now have the opportunity to build on this success and 
find the common ground necessary to reauthorize the Higher 
Education Act. I look forward to working with my colleagues on 
both sides of the aisle to strengthen the law and ensure more 
students can realize the dream of a college degree.
    And with that, I would now like to recognize Mr. Hinojosa 
for his opening remarks.
    [The statement of Chairman Kline follows:]

Prepared Statement of Hon. John Kline, Chairman, Committee on Education 
                           and the Workforce

    Good morning and welcome. I'd like to thank our witnesses for 
joining us today. We look forward to your testimony.
    In preparation for the upcoming reauthorization of the Higher 
Education Act, the committee has held nearly a dozen hearings to 
explore the challenges and opportunities facing our nation's colleges 
and universities.
    We've discussed the value of transparency and data in helping 
prospective students choose the postsecondary institution that best 
meets their unique needs. We have examined factors that contribute to 
rising college costs and reviewed the consequences of burdensome 
federal regulations and paperwork requirements. And we've highlighted 
the critical importance of promoting innovation and academic freedom in 
our nation's higher education system.
    Without question, ensuring more students have access to an 
affordable, quality postsecondary education is a top priority for 
everyone in this room. But despite the best of intentions, federal 
efforts to expand aid programs over the past 50 years have resulted in 
an overly complex system that is difficult to navigate.
    Today, with the help of our witnesses, we will explore 
opportunities to streamline the federal aid system, making it easier 
for students to evaluate federal aid options and make smart investments 
in postsecondary education.
    I'd like to take a moment to share with you the process students 
and families must go through when trying to access federal aid. First, 
students must complete the Free Application for Federal Student Aid, or 
FAFSA, which includes more than a hundred detailed questions on a range 
of topics including earnings and savings, parental education 
attainment, receipt of government benefits, and assets.
    After completing the lengthy FAFSA application, students must try 
to understand the available aid options while also deciphering the 
differences between loans and grants. To make an informed decision 
about financial aid, students and their families need to grasp what 
makes each program unique, including the terms and conditions, 
eligibility requirements, and aid amounts awarded by individual 
institutions.
    And finally, when a student chooses an aid package, he or she must 
also begin thinking about how to eventually repay the loans. As we saw 
with the recent student loan interest rate debate, far too many 
students don't fully understand their loan obligations until after they 
graduate. And students often miss opportunities to take advantage of 
federal repayment initiatives simply because they don't know such 
programs exist.
    During the 2008 reauthorization of the Higher Education Act, 
Congress took an important first step toward improving the federal aid 
system by simplifying the FAFSA--but the still-cumbersome application 
proves there's more work to be done. Fortunately, the higher education, 
business, and policy communities, in coordination with the Bill and 
Melinda Gates Foundation's Reimagining Aid Design and Delivery 
initiative, have put forth a number of interesting ideas to restructure 
the system.
    One proposal suggests further streamlining the FAFSA by 
dramatically simplifying the need analysis formula used to determine 
student eligibility. Instead of calculating a student's expected family 
contribution through detailed questions, a modernized formula would 
only use a family's size and adjusted gross income to determine 
eligibility. Additionally, the new formula would build on past efforts 
to rein in the FAFSA through partnerships with the IRS, allowing 
applicants to retrieve financial information more easily.
    To reduce confusion and complexity in the federal aid system, 
another proposal calls for the consolidation of all existing federal 
postsecondary aid programs into a 'one loan and one grant' structure. 
In this scenario, students would have access to a single loan with a 
market-based interest rate and one universal repayment plan. Other 
proposals focus on helping students access more transparent information 
about their federal aid options, which has been a longstanding 
Republican priority.
    Before I yield to the distinguished ranking member, George Miller, 
I'd like to note that I am proud of the work we did earlier this year 
to revamp federal student loans. Though it was a difficult battle, 
eventually we came together on a bipartisan solution that has resulted 
in lower interest rates for millions of loan borrowers. We now have the 
opportunity to build on this success and find the common ground 
necessary to the reauthorize the Higher Education Act. I look forward 
to working with my colleagues on both sides of the aisle to strengthen 
the law and ensure more students can realize the dream of a college 
degree.
    With that, I would now like to recognize the senior Democrat member 
of the committee, Mr. Miller, for his opening remarks.
                                 ______
                                 
    Mr. Hinojosa. Chairman Kline, thank you. Thank you for 
holding this hearing on student aid simplification, an 
important topic as we begin to reauthorize HEA.
    We know that now, more than ever, a higher education is the 
gateway to the American dream and a middle-class life. 
Unfortunately, we also know that rising costs are pushing a 
college degree out of reach for too many families.
    After many years of skyrocketing tuition, state budget 
cuts, and stagnant household incomes, students and their 
families are turning to loans to pay for college at 
unprecedented rates. Student loan debt has almost tripled in 
the last 8 years, as more students need to borrow more money to 
go to college. The average student now graduates with $26,000 
in debt.
    This year, the Consumer Financial Protection Bureau found 
that total student debt in this country was more than $1.2 
trillion--higher than the nation's total credit card debt.
    And it isn't just young people borrowing for school. Those 
40-year-olds and older carry more than 34 percent of our 
nation's student loan debt.
    Falling behind on monthly payments will maim a borrower's 
credit rating and open the door to wage, Social Security, and 
tax refund garnishment. This debt threatens the upward mobility 
that higher education once guaranteed.
    We must make it as easy as possible for current and former 
students to dig out from underneath these burdens.
    For example, this committee can make student loan repayment 
easier. While federal loan borrowers enjoy a variety of payment 
plans, we have heard that borrowers can find the sheer number 
of options confusing. Repaying college loans should not be a 
troublesome, arduous process.
    This committee should examine if consolidating seven 
different repayment options into fewer, more robust plans would 
benefit borrowers.
    Other options to explore are whether distressed borrowers 
could be automatically placed into an income-based repayment 
plan before the harsh penalties of default and collections 
occur.
    Recent initiatives to simplify the financial aid process 
and make college costs more transparent for students, such as 
the Financial Aid Shopping Sheet or the College Scorecard, and 
FAFSA simplification have improved access to a higher 
education. But they alone cannot make the process of repaying 
student loans easier.
    As we look at ways to simplify the repayment process, we 
must also take care not to cut student aid programs nor 
eligibility. Such changes would only increase student loan 
debt.
    We must not lose sight of the fact that these borrowers are 
the nation's future. If they are shackled by unmanageable debt 
our economy will invariably suffer.
    In closing, I want to say we have a moral and economic 
obligation to ensure that all qualified students who want to 
attend college can afford to go. I look forward to hearing from 
our witnesses on ways Congress can work together to address 
these questions and reduce student loan debt.
    Thank you, Mr. Chairman, for--thank you to the panelists, 
rather. Thank you for joining us today and I look forward to 
hearing your presentations.
    With that, I yield back.
    [The statement of Mr. Hinojosa follows:]

    Prepared Statement of Hon. Rubeen Hinojosa, a Representative in 
                    Congress From the State of Texas

    Good morning, Chairman Kline. Thank you for holding this hearing on 
student aid simplification, an important topic as we begin to 
reauthorize the higher education act.
    We know that now, more than ever, a higher education is a gateway 
to the American Dream and a middle class life.
    Unfortunately, we also know that rising costs are pushing a college 
degree out of reach for too many families.
    After many years of skyrocketing tuition, state budget cuts, and 
stagnant household incomes, students and their families are turning to 
loans to pay for college at unprecedented rates.
    Student loan debt has almost tripled in the last eight years as 
more students need to borrow more money to go to school. The average 
student now graduates with $26,000 in debt.
    This year, the Consumer Financial Protection Bureau found that 
total student debt in this country was more than $1.2 trillion--higher 
than the nation's total credit card debt.
    Repaying this massive debt complicates other life decisions.
    It affects where people can work, whether they can save enough 
money to purchase a home, whether they can afford to take a risk and 
start a business, or whether they can get married or start a family.
    And it isn't just young people borrowing for school--those 40 years 
old and older carry more than 34 percent of our nation's student loan 
debt.
    Older borrowers may be forced to delay saving for their child's 
education or their retirement.
    Falling behind on monthly payments will maim a borrower's credit 
rating and open the door to wage, Social Security, and tax refund 
garnishment.
    This debt threatens the upward mobility that higher education once 
guaranteed.
    We must make it as easy as possible for current and former students 
to dig out from underneath these burdens.
    For example, this committee can make student loan repayment easier.
    While federal loan borrowers enjoy a variety of payment plans, we 
have heard that borrowers can find the sheer number of options 
confusing. Repaying college loans should not be a troublesome, arduous 
process.
    This committee should examine if consolidating seven different 
repayment options into fewer more robust plans would benefit borrowers.
    Other options to explore are whether distressed borrowers could be 
automatically placed into an Income Based Repayment Plan--before the 
harsh penalties of default and collections occur.
    Recent initiatives to simplify the financial aid process and make 
college costs more transparent for students--such as the Financial Aid 
Shopping Sheet, the College Score Card, and FAFSA simplification--have 
improved access to a higher education.
    But they alone cannot make the process of repaying student loans 
easier.
    As we look at ways to simplify the repayment process, we must also 
take care not to cut student aid programs or eligibility. Such changes 
would only increase student loan debt.
    We must not lose sight of the fact that these borrowers are the 
nation's future. If they are shackled by unmanageable debt, our economy 
will invariably suffer.
    We have a moral and economic obligation to ensure that all 
qualified students who want to attend college can afford to go.
    I look forward to hearing from our witnesses on ways Congress can 
work together to address these questions and reduce student loan debt.
    Thank you for joining us today. I yield back.
                                 ______
                                 
    Chairman Kline. Thank the gentleman.
    Pursuant to committee rule 7(c), all committee members will 
be permitted to submit written statements to be included in the 
permanent hearing record. And without objection, the hearing 
record will remain open for 14 days to allow statements, 
questions for the record, and other extraneous material 
referenced during the hearing to be submitted in the official 
hearing record.
    It is now my pleasure to introduce our distinguished panel 
of witnesses.
    Ms. Kristin Conklin is a founding partner of HCM 
Strategies, LLC and a government relations and strategy 
development firm. Prior to starting HCM, Ms. Conklin served as 
senior advisor to the undersecretary of the U.S. Department of 
Education.
    Dr. Sandy Baum currently serves as a research professor at 
the George Washington University Graduate School of Education 
and Human Development and a senior fellow at the Urban 
Institute.
    Ms. Jennifer Mishory is the deputy director of Young 
Invincibles, a national nonprofit organization dedicated to 
expanding opportunities for young adults.
    And Mr. Jason Delisle serves as the director of the Federal 
Education Budget Project at the New America Foundation. 
Previously, Mr. Delisle was a senior analyst on the Republican 
staff of the Senate Budget Committee and a legislative aide in 
the office of Mr. Thomas Petri.
    Before I recognize each of you to provide your testimony 
let me briefly explain our high-tech lighting system.
    You will each have five minutes to present your testimony. 
When you begin, the light in front of you will turn green; when 
1 minute is left, the light will turn yellow; and when your 
time is expired, the light will turn red. At that point I ask 
you to wrap up your remarks as best you are able.
    After everyone has testified members will each have five 
minutes to ask questions of the panel.
    I now recognize Ms. Conklin for 5 minutes.

    STATEMENT OF KRISTIN D. CONKLIN, FOUNDING PARTNER, HCM 
                        STRATEGISTS, LLC

    Ms. Conklin. Thank you, Chairman Kline, Ranking Member 
Hinojosa, and members of the committee, for the opportunity to 
discuss how federal financial aid investments can work better 
for students, families, and taxpayers.
    My name is Kristin Conklin and I stand before you as a Pell 
Grant recipient--the first in my family to graduate college. As 
a result of the education I received, I am the first in my 
family to start a business and create jobs.
    I am here to share the work of HCM Strategists, a public 
policy and advocacy consulting firm.
    For millions of students, financial aid clears the path to 
the American dream. If I can leave you with one point it is 
that simpler is better. Simpler is the best way to improve 
outcomes and more efficiently spend the billions of dollars in 
aid we already invest.
    Simpler requires a holistic look at all programs. This can 
be accomplished with a blank-slate approach to reauthorizing 
the Higher Education Act next year.
    After decades of tinkering we now have four different grant 
programs and five different loan programs, each with different 
eligibility criteria, different standards for maintaining the 
awards, different lengths of time a student can receive the 
awards, and different repayment terms. The average student 
completing the FAFSA faces 61 questions. No wonder nearly two 
million students eligible for aid never even apply.
    We can do better. This January, HCM released the American 
Dream 2.0 Report. The report is a product of diverse leaders 
such as Indiana Governor Mitch Daniels; former director of the 
CBO, Robert Reischauer; president of the National Urban League, 
Marc Morial; and Tom Snyder, of Ivy Tech Community College; as 
well as two of the co-panelists testifying with me today.
    The report received coverage in the New York Times and 280 
other media outlets for its three overarching recommendations: 
one, make aid simpler and more transparent; two, spur 
innovations in higher education that can lower costs and meet 
the needs of today's students; and asked institutions, states, 
and students to share responsibility for producing more 
graduates.
    The technical panel of experts HCM led went a step further, 
and offered specific recommendations needed to deliver on the 
coalition's recommendations. Our report, ``Doing Better for 
More Students,'' offers the most exhaustive modeling of options 
and impacts of any financial aid report.
    Our principal recommendations: students, families, and 
taxpayers would be much better served with one grant, one loan, 
and one tax benefit.
    Through pilot improvements tested in the last 4 years, we 
know it is possible to give students an instant lookup table 
powered by a smartphone app. Congress, however, will need to 
radically simplify needs analysis to make this vision a 
reality.
    We propose reducing needs analysis to four variables. 
First, if you receive federal means-tested assistance you are 
automatically eligible for student aid. Two other variables, 
adjusted gross family income and family size, would be 
retrieved by the IRS.
    Our final variable would apply to students with more 
complex financial situations. Information regarding their 
assets can also be retrieved by the IRS.
    According to the Urban Institute, Brookings modeling, HCM 
Commission, these changes can save between $37 billion and $73 
billion.
    We also call for a single income-based loan repayment 
program with common annual and aggregate borrowing limits--for 
undergraduates, $8,750 a year and $35,000 total; for graduate 
students, $30,000 a year and $90,000 total. Savings from this 
simplification are projected to be $38 billion over 10 years.
    For both the single grant and loan programs we recommend 
shared responsibility for college completion.
    To get a maximum annual grant or loan students should 
complete 30 credit hours in a calendar year--enough to finish a 
bachelor's degree in four or an associate's degree in two 
years. For colleges, we recommend adding measures of equity and 
success to institutional Title IV eligibility. Ten-year savings 
are projected to be $39 billion.
    Public opinion supports an emphasis on completion and 
simplification. Last year, HCM Strategists commissioned Hart 
Research Associates and the Winston Group to survey voters.
    They found 84 percent of voters agree that earning 
credential is very important. Ninety-five percent of African 
American parents and 97 percent of Hispanic parents agreed.
    More than three in five voters think streamlining is a good 
approach.
    What can we expect from these changes? More needy students 
will believe that college is possible.
    Redefining full-time status will mean more students 
progress and graduate faster, requiring fewer total years of 
support. Financial aid counselors will spend less time on 
regulatory compliance and more time helping students succeed. 
Savings can be found that shore up the Pell Grant for another 
decade.
    Thank you for allowing me to talk on this important topic 
and I look forward to your questions.
    [The statement of Ms. Conklin follows:]
    
    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
    
                                ------                                

    [The report, ``Doing Better for More Students,'' may be 
accessed at the following Internet address:]

    http://hcmstrategists.com/wp-content/themes/hcmstrategists/docs/
                        Technical_report_fnl.pdf

                                 ______
                                 
    Chairman Kline. Thank you.
    Dr. Baum?

 STATEMENT OF DR. SANDY BAUM, RESEARCH PROFESSOR OF EDUCATION 
  POLICY, GEORGE WASHINGTON UNIVERSITY, SENIOR FELLOW, URBAN 
                           INSTITUTE

    Ms. Baum. Thank you.
    Chairman Kline, Mr. Hinojosa, members of the committee, I 
am very pleased to have an opportunity to speak with you today 
about simplifying the student aid system. I am a research 
professor at the George Washington University Graduate School 
of Education and a senior fellow at the Urban Institute, but 
the comments that I am making today reflect my own opinions and 
are not the opinions of the organizations with which I am 
affiliated.
    I could talk all day about student loans but I am going to 
focus on simplifying the federal grant system, and in 
particular, the Pell Grant program. I agree with everything 
that Kristin said--almost.
    But I really want to focus on the Pell Grant program 
because the Pell Grant program is the bedrock of the federal 
student aid system. For 40 years it has transformed the lives 
of many students and it can continue to do so. It can do better 
over the next 40 years if we simplify it, if we make it more 
transparent, if we make it more predictable for students, and 
if instead of just handing students money we make sure that it 
involves the right incentives and the right supports for 
students and the institutions in which they enroll to achieve 
their goals.
    So what we need to do is we need to think carefully about 
how to reform the program using the principles of 
simplification, and predictability, and appropriate incentives. 
So we should simplify the application process so students don't 
have to provide information not available from the IRS. We 
should determine eligibility once, before students begin their 
studies, so that they don't have to reapply every year.
    We should simplify the formula with a simple lookup table 
that applies to most students. We should simplify the way 
enrollment is linked to the amount--enrollment intensity, the 
amount of courses you take and credits for which you enroll is 
linked to the amount of money you get.
    We should think about the standards for academic progress 
more carefully and we should consolidate federal aid programs.
    So as background, I know everyone is worried about how much 
the Pell Grant program spends. Pell Grant spending doubled very 
quickly over a few years and the number of recipients also 
increased dramatically.
    But it is important to note that 2010-2011 was a peak; it 
is not that we were on a trajectory. The recovery in the 
economy and some of the changes that Congress made, made 
spending fall, made the number of recipients fall. We can argue 
about whether that is good or bad, but it is not that it is 
going to keep doubling.
    So let me talk a little bit about some specific proposals 
for reforming the Pell Grant program. And one important thing 
is that these are based on the ideas of how students and how 
human beings behave. We know a lot from behavioral economics 
about how people respond to information and opportunities, and 
in particular, we know that they respond to complexity by just 
withdrawing from making decisions and taking the path of least 
resistance.
    For young people growing up in middle-and upper-income 
families the path of least resistance is going straight to 
college. But for people growing up in low-income households, it 
is not; it is going to the workforce.
    So we need to simplify the system so that we make the path 
of least resistance going to college and knowing that you will 
be able to afford it.
    We can make the application process simple by saying, ``We 
already know your information either through the IRS or through 
needs-based programs that you are available for.'' This would 
save the difficulty of verifying the information that people 
put on their FAFSA.
    We can simplify by saying you apply once. For juniors in 
high school, we could calculate their Pell eligibility and tell 
them about it. This would make not going to college and not 
taking a Pell Grant a loss, and people respond more strongly to 
losses than they do to being given certain amounts of money.
    One very important issue is how we allocate the amount of 
Pell Grant funds that students have to pay for their courses. 
Right now, if you are enrolled for 12 credit hours you get the 
maximum Pell Grant if you have maximum need, and if you want to 
enroll for 15, we won't give you any more money, whether you do 
it over the summer or in the following semester.
    This means that students enroll for 12 credit hours and 
they take five years to get a bachelor's degree or longer than 
two years to get to an associate degree. We don't understand 
why students don't complete on time. This would help them to 
complete if we would give them additional funding when they 
enroll for the number of courses that they need in order to 
complete.
    Satisfactory academic progress is designed to make sure 
that students progress towards their goals, but right now if 
you don't meet the standards at one school you can go across 
the street to another school and get a new Pell Grant. That 
doesn't help students who borrow money who spend their time 
going from school to school and not making progress. We need to 
make rules and regulations that will support students in 
meeting their goals.
    We also need to consolidate programs. Instead of having 
multiple federal grant programs--and that would exclude things 
like veterans' programs and specifically targeted programs--we 
should have the Pell Grant program.
    The funds that are now in the campus-based programs should 
go to campuses, but they should be allocated to campuses to 
help them support the success of low-income students. We need 
to experiment with programs like this, get rigorous evidence 
about how to make them work well, but we can do this.
    To make the Pell Grant program work better it has to be 
simpler, it has to be clearer, and it has to be designed to 
support students in meeting their goals.
    Thank you.
    [The statement of Ms. Baum follows:]
    
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    Chairman Kline. Thank you.
    Ms. Mishory, you are recognized.

  STATEMENT OF JENNIFER MISHORY, J.D., DEPUTY DIRECTOR, YOUNG 
                          INVINCIBLES

    Ms. Mishory. Thank you.
    Chairman Kline and Ranking Member Hinojosa, I thank you for 
having this important hearing today and for inviting me to 
share the student perspective on simplifying financial aid.
    My name is Jennifer Mishory. I am the deputy director of 
Young Invincibles. We are a nonprofit dedicated to expanding 
economic opportunity for young adults. We engage with students 
around college affordability and access, elevate their stories, 
and ensure that our leaders understand the experience of 
today's student.
    This generation understands that higher education is 
essential, but faces growing challenges. States are spending 28 
percent less per student on higher education than they were in 
2008, leading to a 27 percent increase in tuition at 4-year 
public colleges.
    As a result, in 1980, the Pell Grant covered more than half 
the cost of a 4-year school. It now covers less than a third 
and it forces two-thirds of graduates to take out student 
loans. Many struggle to navigate the aid system in doing so.
    Take Robin, a college freshman at a 4-year school studying 
to be a physical therapist. Robin grew up in a low-income 
community in Chicago, and as a first-generation student she 
struggled to obtain an education and gain financial security.
    Like most college students, she relied on a maze of grants 
and loans. However, at the end of her first semester she found 
herself with an overcharged account and nowhere to turn.
    She reached out to a mentor, a former high school teacher 
who happened to be a friend of mine. I spent literally days 
working through all of the paperwork that she had and that I 
myself found very confusing and finally realized she simply 
didn't have enough aid to cover her costs. The complex system 
meant it took months for the unmet need to become clear.
    Robin couldn't afford to pay the shortfall. Private loans 
were not an option for her. And this college freshman with so 
much potential dropped out.
    I am hopeful that she enrolled in a 2-year school but I 
don't know how her story will end.
    This story illustrates how an overly complex aid system can 
limit access and success. But it also illustrates that 
simplification cannot result in cutting aid to students working 
to educate themselves into the middle class.
    Students support making aid simpler but oppose cutting aid. 
In a 2011 poll, eight in 10 students opposed cutting Pell or 
loan subsidies to reduce the deficit--important to keep in mind 
as we discuss these reforms.
    I want to talk about three reforms specifically: first, 
simplifying the aid application process on the front end; 
second, ensuring that students can make good choices in dealing 
with financial aid; and third, streamlining repayment on the 
back end.
    First, applying for financial aid through the FAFSA, a 106-
question form, leaves many confused and deters some from 
applying. About 2 million students who would have qualified for 
financial aid failed to even file a FAFSA in 2007. We urge this 
committee to reduce the number of questions on the FAFSA to 
make it simpler.
    And once students are making decisions on aid, students 
also need better information. Over 90 percent of students in 
one survey agreed that financial aid award letters should be 
standardized.
    Second, understanding aid can also be daunting, as we saw 
with Robin. In a recent survey, 40 percent of high-debt 
respondents to this survey reported they did not receive 
federally mandated loan counseling. It is possible that some 
students didn't receive the counseling, but it is also likely 
that many benefited so little that they didn't remember it or 
didn't consider what they received to be counseling.
    I urge this committee to explore reforms that provide 
clear, consumer-tested materials to students and provide them 
with much more help from counselors.
    Third, loan repayment is also challenging and the seven 
different repayment plans mean that borrowers frequently 
struggle to choose a plan that is right for them or to even 
know about their options. As a result, many debtors struggle to 
afford the standard payments and we face a sky-high 15 percent 
default rate.
    Income-based repayment has helped some borrowers but we can 
do more. We are pleased that the Department of Education will 
begin proactively reaching out to students about IBR and 
believe that this committee could build on that.
    We recommend either automatically enrolling all students in 
income-based repayments or allowing them to opt out of an 
income-based repayment plan rather than having to opt in. A 
survey conducted by Y.I. found that 89 percent of respondents 
agreed with automatically being enrolled in IBR.
    We could also alter the formula, helping students pay 
faster if they can, and we could potentially streamline 
repayment through the payroll tax system. While most students 
would still pay off their loans in a similar amount of time, it 
would cushion debtors facing financial distress, ultimately 
lowering default rates. It would make repayment less confusing 
and reduce the risk perceived by students who hesitate to 
pursue a degree in the first place.
    Finally, in this system schools must be held accountable to 
keep tuition low. We are encouraged that some members of this 
committee have expressed an interest in repayment reform.
    We have concerns, however, about proposals that strip 
necessary protections. Caps on interest rates and forgiveness 
for public service employees or debtors who have been paying 
for decades are vital elements in the current system. We can 
simplify financial aid and preserve those elements.
    Thank you for exploring these important issues, and I look 
forward to the discussion.
    [The statement of Ms. Mishory follows:]
   
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    Chairman Kline. Thank you.
    Mr. Delisle?

STATEMENT OF JASON DELISLE, DIRECTOR, FEDERAL EDUCATION BUDGET 
                PROJECT, NEW AMERICA FOUNDATION

    Mr. Delisle. Chairman Kline, Ranking Member Hinojosa, and 
committee members, thank you for inviting me to testify about 
the need to simplify the federal student loan program.
    From the borrower's perspective, the loan program is 
unnecessarily complex and many of its important benefits are 
difficult to access, are hidden, or require the borrower to opt 
in. Some terms and benefits even overlap or cancel one another 
out.
    When a student applies for his federal loans, he will 
confront a mix of types, terms, and names. Some may make sense, 
others will confuse him, and some he may not even know exist.
    Will he know that a Stafford Loan is a loan from the 
federal government? Will he understand that ``unsubsidized'' 
doesn't mean he is getting a bad deal?
    When he repays his loans, he will have up to nine different 
plans to choose from--that is my count, others said seven--each 
with its own set of terms and eligibility rules. But here is 
the kicker: the Department of Education, by law, will 
automatically enroll him in a plan where he will make the 
highest monthly payments--the 10-year standard repayment plan.
    To be sure, this policy signals to borrowers that they 
should repay their loans quickly. Yet, policymakers need to 
recognize its inherent tradeoff: borrowers who really need to 
make lower payments may not understand that they have such an 
option or may not be able to successfully navigate the 
enrollment process. That seems like a high price to pay in 
order to nudge borrowers to repay quickly under the 10-year 
repayment plan.
    So as Congress considers the reauthorization of the Higher 
Education Act in the coming months, lawmakers should make it a 
priority to remedy these issues. Briefly, they should minimize 
the different names, types, and terms of the loans and then 
offer just one plan when borrowers repay--the existing income-
based repayment plan, or what the Obama Administration calls 
``Pay As You Earn''--but only after making essential 
modifications to that plan.
    In its current form, Pay as You Earn is a massive tuition 
assistance program for graduate students masquerading as a 
means-tested safety net program.
    So let me provide you with a few examples of the 
complexities and optional benefits in the federal loan program 
that I mentioned earlier. The program offers two different 
types of loans to undergraduates: unsubsidized and subsidized 
Staffords. Many borrowers qualify for both, and they receive 
both.
    An undergraduate could also have a third type of federal 
loan, called a Perkins Loan. And if he goes on to graduate 
school, he could end up with a fourth type of federal loan, 
called a Grad PLUS Loan.
    Earlier I mentioned that a borrower, once out of school, 
can choose from up to nine repayment plans. He might not be 
eligible for all of them, although that is actually possible, 
but he probably qualifies for at least four of them. Many of 
these plans have hidden benefits or confusing names that make 
them difficult to distinguish.
    I wonder if even the committee members can keep the 
differences straight between graduated repayment, income-
contingent repayment, income-based repayment, and Pay as You 
Earn.
    And I would bet that everyone is surprised to learn that 
the biggest benefit of the consolidation repayment plan has 
nothing to do with consolidating debt. Nope. That plan lets 
anyone with a balance of just 7,500 or more reduce his monthly 
payment by extending the term of his loan to anywhere from 12 
to 30 years depending on the balance.
    And now that I have said that I am sure someone, somewhere 
is wondering why, then, the program also offers an extended 
repayment plan, which, by the way, is not the same as the 
consolidation plan but it will extend the term of the loan, and 
by a completely different set of rules.
    The written testimony that I submitted today includes some 
specifics on how to minimize the different terms on federal 
loans. It also includes changes lawmakers should make to Pay as 
You Earn so that the plan does not let high-income borrowers 
walk away from their debts, does not allow graduate students to 
finance most or all of their educations using loan forgiveness, 
and does not indemnify or reward schools when they charge more 
and students when they borrow more.
    Before making Pay as You Earn the only repayment option, 
which is what I am recommending today, Congress must ensure 
that its loan forgiveness benefit is truly and only a safety 
net and that the public service loan forgiveness benefit is 
subject to limits.
    Making Pay as You Earn the only repayment plan available 
would greatly simplify the program. It would also automatically 
provide benefits that exist right now in the current program 
and it would provide them to those who need them most. 
Borrowers who still want to pay their loans off on a 10-year 
plan could do so by making repayments in amounts automatically 
calculated on their statements.
    Now, I should note that under the modified version of Pay 
as You Earn that I am recommending, some borrowers would make 
higher monthly payments--that is, they would repay faster than 
under today's system--particularly high earners and those with 
smaller loan balances. Yet, that is a tradeoff worth making in 
order to achieve a student loan program where benefits for 
those who need it the most are automatic and obvious rather 
than obscure and optional.
    That concludes my testimony today. I look forward to 
answering your questions.
    [The statement of Mr. Delisle follows:]
    
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    Chairman Kline. Thank you very much.
    Thanks to all of you.
    I didn't hear any of you say that you thought we ought to 
have a more complicated system. Just when I am convinced that 
it would be impossible for us to make a more complicated 
system, I look around and we have done so.
    So, I am delighted that there seems to be a consensus among 
you and I am guessing among our colleagues here on both sides 
of the aisle--but we will see as we go forward--that what we 
have now is too complicated and so it doesn't get used in some 
cases, it gets abused in other cases. Mr. Delisle sort of 
challenged the members of the committee to explain the four, 
five, nine, hike different ones, and nobody here is going to 
take that challenge I don't think--maybe Mr. Hinojosa, but--
    So I think that there is a growing consensus that we have a 
complicated system that must be changed.
    So let me start with you, Ms. Conklin. You must have heard 
from some people that oppose creating a single source of loan 
and grant funds. Who are those people and what do you say to 
them?
    Ms. Conklin. I hear most people object to the idea of 
picking and choosing from options. So what we recommend, 
through this HCM technical panel, is a holistic look at the--at 
a single grant and a single loan program because it can promote 
college affordability so much better than the alternatives.
    It can make it much easier for students to apply. We expect 
many more students will be eligible. We can pay for that with 
savings in the loan program in the ways that Jason has 
identified, where we transfer the subsidy to the back end of 
the loans.
    It finds savings that will allow us to shore up the Pell 
Grant program beyond 2014, when deficits are projected again. 
According to the Southern Education Foundation, half of our 
students in school today are on free and reduced lunch. It is 
highly likely that they will be needing a Pell Grant and we 
need to find savings to make sure and support them.
    Three, it helps more students graduate and graduate on 
time. The biggest college affordability issue we face is 
students who graduate--who fail to graduate but have debt, so 
this debt with no degree, or who take five, six, seven, eight 
years, and every year they are paying more tuition and losing 
income. That is an affordability crisis.
    And last, again, the significant loan aversion we see for 
low-income students who don't understand this process. Again, 
if you look at this holistically instead of picking and 
choosing different provisions, you can create a program that is 
much simpler, we think that many more of the Pell Grant 
students who turn down loans today will be inclined to borrow 
and, therefore, go full-time and complete on time.
    Thank you.
    Chairman Kline. I think I understand the arguments for 
this, but I guess let me try the question again. When you--HCM, 
you put your report out there and you explain this program, you 
never run up against somebody who says, ``No, we shouldn't do 
that''?
    Ms. Conklin. We were surprised by how remarkable the 
consensus was for the general recommendations we proposed.
    Chairman Kline. Okay. Fair enough. As I said in my remarks 
just a minute ago, there does seem to be a growing consensus 
that what we have now is just awful.
    Dr. Baum, you limited your remarks to the Pell Grant 
program. It is huge.
    And I think one of you--somebody noted that it has 
essentially doubled over the last few years but is leveling, 
and it looks like we are actually going to see a dip and make 
money, if you will. That is a poor choice of words, but that 
probably won't continue.
    So if we go to simplification as one of our goals here, not 
just for loans but for others, will that help to stabilize the 
Pell Grant--keep this kind of thing from going on? And how 
would that work?
    Ms. Baum. Well, I think that simplification can help all 
aspects of the program. Let me just say, in response to the 
question that you asked about why there is opposition to 
simplification, nobody is opposed in principle to 
simplification, but the fact is, any changes that you make are 
going to have--change the benefits that some people get. And it 
is very difficult for people who are used to a system being the 
way it is not to focus on the loss that individual students 
might experience.
    And I think that Congress has to be very careful in 
modifying the program to look at who is going to benefit and 
who is going to be hurt. But we will be immobilized if we think 
that if we find an individual student who ends up worse off we 
can't move forward.
    One important issue and one of the issues that I have 
focused on a lot is that Pell Grant recipients and student aid 
recipients altogether include not just our vision of young 
people from low-income households but also adults. I mean, this 
is really a workforce education program that pays to get people 
the skills that they need to be productive workers, and I think 
people focus either on one group or another. Both groups are 
very important.
    But it is the kind of thing where people are focused on 
what will happen to one group if we make a small change, and I 
think that a careful analysis and careful approach to reform 
will help that.
    In terms of simplification and the budget, if we can 
predict--if students can predict ahead of time what they are 
going to get, we will be more able to predict who is going to 
benefit. If students have incentives to progress in a timely 
manner we should be able to give students more money to cover 
their studies while giving them money for a shorter period of 
time, and that can save money.
    If we are careful about defining who is eligible for 
benefits, for example, in the ways that Jason discussed, making 
sure that the loan program works correctly--we can target the 
program effectively and we can control its costs without 
depriving the students who really need the funding from those 
benefits.
    Chairman Kline. Thank you.
    My time is expired.
    Mr. Hinojosa?
    Mr. Hinojosa. Thank you.
    I have lots of questions and want to start with Jennifer 
Mishory.
    Ms. Mishory, some proposals to link loan repayment to a 
borrower's wages would eliminate student loan forgiveness 
options, something that I consider to be very important, 
especially those of us who represent regions with a high 
percentage below the national poverty level. Are loan 
forgiveness options important if a borrower is repaying based 
on a percentage of their income?
    Ms. Mishory. We think that loan forgiveness options are 
very important in any reform. They both give students and 
borrowers a light at the end of the tunnel, so if someone has 
been paying for 20, 25 years, they are at a point when they 
should be starting to think about retirement--should have 
started to think about retirement before then. And we want 
borrowers to be able to move on with their life.
    The system perhaps didn't work for them. You know, they 
paid for 20 years and they didn't get the returns that they 
expected when they entered school. So we think that kind of 
forgiveness is very important.
    And we think that public service loan forgiveness is very 
important. You know, it provides students from low-and 
moderate-income families with the ability to serve their 
communities, to serve their country. It provides us with 
students who may be interested in entering the workforce and 
filling jobs where we actually need more public service workers 
and really giving them the ability to do that.
    And it allows those talented and dedicated young people who 
may, again, be from low-and moderate-income families to really 
find a good skills match for their skills in the public 
service.
    Mr. Hinojosa. Thank you.
    Ms. Conklin, in your testimony you recommend moving to a 
single income-based loan repayment system. When other countries 
have moved to similar systems they are frequently paired with 
strong, front-end protections for the students to control the 
college costs.
    Could an automatic income-based repayment system reduce 
pressures on colleges to control costs? And likewise, could it 
reduce the pressures on students to borrow less?
    Ms. Conklin. Thank you, Mr. Hinojosa.
    So one of the recommendations that is implicit in one loan 
program is to eliminate both the PLUS and the Grad PLUS loan 
programs, which don't have time limits and we think create an 
incentive for institutions to not restructure their costs in 
the way they need to do to get tuition to a more moderate rate.
    So again, what we do in creating one default income-based 
repayment program is we actually raise the loan limits within 
that program. We set one for undergraduates, one for graduates, 
and we hope that while that is lower than what is currently 
available if you are availing yourself of a PLUS loan program, 
that that will be sufficient to pay for school for most 
students and will create some downward pressure on the higher-
priced institutions to restructure their costs.
    We also look at the role of states. The American Dream 2.0 
Coalition was very clear that the role of states is to create 
more low-cost pathways, and so it is very important for states 
to do that. I don't think that is a federal role; I think that 
is the states stepping up on their historic role, sir.
    Mr. Hinojosa. Thank you.
    Dr. Baum, you propose determining Pell eligibility just 
once when students are juniors in high school and allowing that 
eligibility to last through age 24. Could you elaborate on how 
this simplification would encourage more low-income students to 
apply to college while reducing the burden on institutions of 
higher education?
    Ms. Baum. So the idea of having people apply just once is 
important because it means that people don't go through this 
bureaucracy over and over. It means that they know ahead of 
time how much money they will get.
    And, again, as I said in my testimony, if you--it is sort 
of--you are saying to people, ``You have this money,'' and it 
is theirs not to spend. And that can make a significant 
difference.
    The amount of bureaucracy that goes on now at institutions 
to verify what people say on their FAFSAs--I mean, you can 
write anything you want to on your FAFSA, right, and so what we 
have to do is compare it to the tax forms and it is all very 
complicated. And that is a waste of everyone's resources and we 
could eliminate that.
    Mr. Hinojosa. I understand.
    I am running out of time but there are two questions that 
are very important to me. One is that in the years of 2002 
through 2010, under the Bush administration, there were Pell 
Grants of 3,000 to 3,400, and two years I remember they wanted 
to either eliminate it or cut it in more than half because we 
needed that money for war.
    Yet, when they lost the majority I remember having 
presidents and chancellors come to my office, because by then I 
was chairman of the committee, and they said that one of their 
highest priorities was to raise the Pell Grant because middle-
income families were hurting badly. And all of this to say that 
we were trying to get out of recession.
    So, I want members of our committee to be able to see that 
chart in your remarks and understand why that happened. And 
lastly, that we increased minorities--Hispanics and African 
Americans--going to community colleges and to universities 
because it became more affordable and accessible. Thank you.
    Chairman Kline. Gentleman's time has expired.
    Mr. Petri?
    Mr. Petri. I thank you, Mr. Chairman.
    I noticed in your prepared testimony that everyone except, 
I think, Dr. Baum, who was more talking about grant programs, 
endorsed making some form of income-based repayment the 
automatic or sole repayment option for federal student loans. 
And I would really like to ask each of you--and, Dr. Baum, if 
you would care to comment on it as well--if you could elaborate 
on your thinking regarding the potential benefits of making 
income-based automatic, in terms of simplification and other 
goals that we are pursuing in the reauthorization.
    Who would like to start?
    Ms. Baum. I will start, since I didn't say anything about 
it. I totally support that proposal.
    It is too complicated for students. Not enough people are 
participating in the program. And making it the default option 
would make more students be able to benefit from it, but we do 
need to make the kinds of revisions that Mr. Delisle has 
proposed in order to make this an efficient program, and many 
of those provisions are in the bill that you have proposed 
about income-based repayment.
    Mr. Petri. Ms. Mishory?
    Ms. Mishory. Sure. I mean, I think that for students who 
are trying to figure out their options when they leave school, 
having a simple, streamlined process can be huge and can be 
very helpful. We were actually down in Miami last week doing 
roundtables with students and talking about the kinds of 
information that they need and what they know about different 
programs, and none of the students we talked to had actually 
heard of income-based repayment.
    And, so you know, that is the problem, right? This is a 
program that can be very helpful to a lot of students and we 
need to make sure that we are providing this policy in a way 
that students know that it is there for them so they can 
understand what types of risks they may be taking on and really 
encourage them to go to school and take out loans when they 
need to.
    And then when they--on the back end, when they might be 
struggling to repay those loans, we do face a high default rate 
for student loans and we want to make sure that we can cut into 
that by doing things like streamlining this process.
    Mr. Delisle. So I hear a lot of people say, when we talk 
about our student loan system in the United States they point 
to other countries, like the U.K. or Australia, that have 
income-based repayment programs, and then they say, ``Why don't 
we have something like that?'' We do. We do have something 
exactly like that, it is just not automatic.
    So I think when people ask that question what they are 
saying is, ``Why don't we just make it automatic then, if we 
already have it?''
    So what we have done is we have--I mentioned in my spoken 
testimony about the Department of Education automatically 
enrolling people in the 10-year standard repayment, which is 
basically your highest monthly payment, and then we sort of let 
them maybe find their way to the more generous, more beneficial 
options in the loan program. But if they are there, why not 
just start people in those programs to begin with and why not 
just make that the only program, especially since it provides 
people who need the most help with it automatically?
    Now, there are people using the income-based repayment 
program. People who have figured this out, that this is 
available, are graduate students. The average outstanding loan 
balance in income-based repayment right now is about $57,000.
    Now, we heard at the beginning the average amount of debt 
that an undergraduate leaves with is around $25,000, and in 
fact, the federal government caps how much an undergraduate can 
borrow well below $57,000. So what we have got is we have got a 
program here where the graduate students have figured it out 
and the people who really need the help--the undergrads--aren't 
necessarily using the program.
    Ms. Conklin. Mr. Petri, I want to echo what my group has 
said and again, what we--I said to the chairman that there is a 
remarkable amount of consensus in the reform community for the 
proposals that, frankly, you were an early leader on, and so I 
commend you for that.
    I am actually going to respond that one of the reasons for 
the income-based repayment and the simplification and the 
default option we talk about is to put student success at the 
center of what we do. We see there is some really good data out 
of Wisconsin looking at individual students, and at least 20 
percent of Pell Grant students fail to even take a single loan 
and up to half of students do not take the amount they are 
eligible for.
    What does that mean? They are much less likely to go full-
time. They are much less likely in that first year to make the 
progress they need to make that we know is associated with 
success.
    Some of them are much less likely to go to the more 
selective institutions we know they are likely to attend. That 
is that undermatching phenomenon you may have been reading 
about lately.
    So really understanding early, whether you are a 
traditional or nontraditional student, that this is a single 
loan repayment option, and what your repayment terms will look 
like is, I think, a way to put student success at the center of 
our loan programs.
    Mr. Petri. Thank you, thank you all.
    I just have 20 seconds left so I just want to make one 
comment that was touched on, I think, especially in Ms. 
Mishory's testimony, and that is where and how, if we simplify 
the program, we focus the subsidies that--there are inevitably 
going to be subsidies that people who just can't repay their 
loans, and if--and whether they are--and how we should be--if 
we should be applying subsidies also to higher-income people 
and others because they are doing something that sounds good, 
but--anyway, that is a discussion for another day.
    But if we have a pot of subsidies, we should have a 
rational discussion as to on what basis they should be given 
rather than just have an automatic preference for some people 
who, when you have analyzed the situation, may not deserve it.
    Chairman Kline. Gentleman's time is expired.
    Mr. Bishop?
    Mr. Bishop. Thank you very much, Mr. Chairman. You know, 
you said before the--who are the people that are opposed to one 
grant, one loan, and I hate to see you disappointed, Mr. 
Chairman, so I thought that I would--
    Chairman Kline. Will the gentleman yield?
    Mr. Bishop. Of course.
    Chairman Kline. I knew I could count on you.
    Mr. Bishop. Thank you, Mr. Chairman.
    But before I talk about my skepticism regarding one grant, 
one loan, one work, I sincerely do want to thank you for this 
hearing and thank the panel. This has been great. Lots of great 
ideas.
    I think in all seriousness, Mr. Chairman, we should be 
doing a couple of these. Because there are lots of issues here. 
We are not going to be able to cover them all in one hearing.
    So thank you all very, very much.
    And, Dr. Baum, I am going to kind of focus on you because 
you are proposing the elimination of the campus-based programs, 
which, I will say respectfully, I think is a bad idea. And let 
me tell you why.
    I used to administer campus-based programs. I was a 
financial aid director for 7 years way, way back. And what I 
found was the most helpful about the campus-based programs is 
that they were a way of, you know, what I always call putting 
out fires. They were a way of dealing with students whose 
circumstances had changed, or that the traditional programs, 
the external programs, the entitlement programs didn't give 
them what they needed.
    And so to give the financial aid officer the discretion 
that he or she could then apply to save enrollments--I mean, we 
have two problems here. We have an access problem, and I think 
you could make an argument that one grant, one loan, one work 
would be assessed with an access problem, but we also have a 
completion problem, and I think if you were to eliminate 
campus-based there would be a serious concern with respect to 
completion.
    Because if you look at it, the traditional private, not-
for-profits, they discount aid, they have institutional aid, so 
they could address that issue. But the state schools don't 
really discount aid, and so unless they have endowment income 
or, you know, philanthropy, they are not going to have their 
own resources to provide. And the for-profits do very little in 
the way of discounting aid or what we would call traditional 
institutional grant aid.
    So I am concerned that in the overall heading of 
simplifying, that what we are really going to do is deny a 
resource to the campus aid officer that has used it, you know, 
millions of times a year to save enrollments.
    I would like to hear your comment.
    Ms. Baum. Well, I would note that I am not proposing taking 
this money away from campuses. I am proposing distributing it 
to campuses differently.
    Right now some campuses get a lot of the campus-based money 
just by historical reasons, and many of the campuses that 
enroll many needy students don't get much of it. So if we 
allocate the funds to institutions based on their success with 
low-income students, they will have the opportunity to use the 
money to put either directly into students' pockets or to 
support the students--
    Mr. Bishop. If I may, but if we go to one grant, one loan, 
one work, which is what I am hearing, one grant presumably is 
Pell, right? And unless we are going to restructure the way we 
award Pell, then, that is going to money that, I mean--and yes, 
we are going to add to the funding for it, but that is money 
that is going to be available to the student up front.
    Ms. Baum. No, so my proposal would put money in the 
institutions that they could use to give institutional grants 
to students. It wouldn't interfere with the--
    Mr. Bishop. I am not trying to be argumentative. So you are 
not, then, advocating one grant, one loan, one work?
    Ms. Baum. In my view, I am advocating one grant to students 
from the federal government.
    Mr. Bishop. Now I am thoroughly lost, but with this as a 
discussion perhaps we can continue.
    I want to go to a point that Ms. Mishory made, which I 
think is really, really important and none of us should lose 
sight of this. What you said--what I heard you say--was that 
the aid process ought to be simpler. I think we all agree with 
that. But we ought not to reduce supporting--we ought not to 
reduce the total amount of student financial aid that is 
available.
    And I think what is important for us to all recognize is 
that is precisely what we are doing. We are reducing the total 
amount of aid that is available to students.
    Current law: Pell Grant will go down by $310 next year and 
$400 the year after unless we change current law. Sequestration 
is current law. That has resulted in a $37 million reduction in 
SEOG in the current year, and a $40-some million reduction in 
SEOG next year.
    College Work Study: There has been a $49 million reduction 
in College Work Study this year, and next year another $79 
million unless we change current law. That is what we are 
dealing with.
    And current law, the Perkins Loan program goes away in 
2015. That is $1.2 billion a year taken out of the student loan 
program.
    So we can simplify all we want, and I would urge us to do 
so, but let us not do so at the cost of the assistance that 
students very badly need. Yet, that is precisely what we are 
doing and we ought not to let a focus on simplification be, in 
effect, a fig leaf for what we are really doing to students, 
which is taking away resources.
    With that, Mr. Chairman, I will yield back.
    Chairman Kline. I thank the gentleman.
    Ms. Foxx?
    Ms. Foxx. Thank you, Mr. Chairman.
    At a recent meeting, I had an agreement with Ranking Member 
Miller, and I have to say that I have a little bit of an 
agreement with Mr. Bishop in terms of keeping campuses involved 
in ways that they are dealing with students. Having worked on a 
campus myself and worked with--I wasn't a financial aid 
director, but I worked with Upward Bound, special services, and 
orientation and academic advising--
    Mr. Bishop. Will the gentlelady yield?
    It is only a very select group that are chosen to be 
financial aid directors.
    Ms. Foxx. But I think he makes a really good point about 
the need to keep campuses involved with what is happening with 
the students in terms of aid.
    But, Ms. Conklin, I would like to ask you a question. The 
committee has been grappling with the question of what 
information the federal government should make public to help 
students and families make informed decisions about their 
postsecondary education options, and there are certainly 
plenty.
    If we were to drill down to five or six data points that 
are absolutely necessary for students to have to make good 
decisions, what do you think those points would be? And maybe a 
little bit about how they could be presented to the students? 
Some people have expanded a lot on what should be made 
available, but just brief comments about that.
    Ms. Conklin. Thank you for your focus on transparency. 
Again, the Hart research that we did with the Winston Group 
showed that this was the most important issue to voters--was to 
increase transparency and improve their decisions.
    HCM led a project called the Voluntary Institutional 
Metrics Project and we had a group of, very diverse group of 
institutions--not-for-profit, for-profit, and public--come 
together and agree on five metrics. Those are useful metrics to 
answer your question.
    The first are progression and completion metrics--the kind 
that a number of states have voluntarily agreed to report 
already; loan repayment, input-adjusted of course, if possible; 
cost per degree or net price, two sides of the same--two 
important metrics; recent wages of recent graduates; and a 
learning metric. And so I would start with that.
    I think from an investor perspective at the federal level 
you also need to know what--regularly how many--the percentage 
of Pell students an institution enrolls and how well they do, 
what is their completion statistics.
    Ms. Foxx. Thank you very much.
    Mr. Delisle, your testimony raises some interesting 
suggestions, but you didn't really touch upon ideas about how 
to encourage completion. And I realize in this whole debate we 
have been having in the last couple years how the emphasis has 
changed from access to all of a sudden everybody is interested 
in completion.
    Is there a way for the federal government to encourage 
college completion with the needs of nontraditional students, 
many of whom have to balance family or jobs with their 
academics?
    And I am going to give a prize to anybody who can come up 
with a way to stop using the word ``nontraditional students'' 
because what we talk about as traditional students make up like 
27 percent of the student body now, and something is wrong with 
this picture. So anybody on the panel, if you can come up with 
a good word, I am looking for one.
    Mr. Delisle?
    Mr. Delisle. So, I wanted to keep my testimony today--you 
are correct, I didn't mention anything about incentivizing 
completion explicitly. I wanted to keep the testimony very much 
so focused on the message of simplification and highlighting 
the complexities that exist in the program now.
    Also, when you start talking about adding in provisions 
that might incentivize completion, you tend to start to make 
the program more complicated rather than simplify it, so there 
is a very difficult tension there between those two goals that 
I--it seems like my testimony skirts them a little bit.
    But I would point out that there are parts of my 
recommendations that would implicitly incentivize completion,--
for example, the messages around loan limits. For example, you 
know, parents, for example, can borrow whatever the school 
charges in federal loans through the Parent PLUS loan program--
whatever the school charges and for as long as the student 
wants to attend. There is no aggregate; there is no annual; 
there is no lifetime limit on the amount of money the federal 
government will lend a parent whose student is attending an 
undergraduate school.
    Well, putting some limits on that or eliminating that 
program and putting higher loan limits in the undergrad limits 
sends a message that there is a limit to the amount of time you 
can use federal aid to attend college. There are other examples 
where students can borrow for their full cost of living even if 
they are only attending part time. Well, that seems not to make 
sense and that is another--
    Chairman Kline. I hate to interrupt, but the gentlelady's 
time has expired.
    Ms. Bonamici, you are recognized.
    Ms. Bonamici. Thank you very much, Mr. Chairman, and thank 
you for holding this important hearing. Thanks to you and Mr. 
Hinojosa.
    Thank you to the witnesses for being here. I actually 
worked my way through community college, college, and law 
school using a combination of grants, loans, and Work Study, 
and although that was more than a few years ago, I think you 
have certainly made the case that simplification is needed.
    But I have to say that simplifying the financial aid 
process is an important step, but only one step in helping more 
students access college, and how we simplify, of course, is 
what we will be discussing, and whether that simplification 
results in more or fewer students attending college is going to 
be important.
    But as a committee we should always be looking for new and 
creative ways to help lower the cost of college, and that 
includes allowing colleges to work together to increase 
institutional need-based aid, and also doing what we can to 
promote reversal of the trend of state disinvestment in higher 
education.
    I want to start by asking Ms. Mishory--and I agree with you 
that too many students are taking on too much debt, and they 
need to be included in this conversation so thank you for your 
work. Is there any part of the financial aid system right now 
that does a good job of listening to students' needs? And if 
so, will you briefly discuss that?
    Ms. Mishory. Sure. I mean, I think that the Pell Grant 
program itself is a very important program. It helps millions 
of students access higher education who wouldn't otherwise have 
been able to do soand it has been a bedrock of the program. So 
the Pell Grant program is incredibly important for students and 
I would urge the committee to continue and to really prioritize 
that as we are looking at reauthorization.
    You know, I think that there are--programs that I think 
have a lot to offer but we could also think about how we could 
actually improve them, and the Federal Work Study program is 
actually something we have been looking at a lot. There is a 
lot of potential there.
    You know, there is the potential to be working and actually 
getting experience while you are studying and really combining 
those two processes. I think right now--and Dr. Baum mentioned 
this earlier--the Federal Work Study program isn't always 
targeted in a way that we would like to see it targeted. Some 
institutions might get it because they have been around for a 
long time; some higher-earning families might get it when we 
really want to see it targeted at lower-and moderate-income 
families.
    So I think there are things that are absolutely working for 
students. There are things that we can improve. And there are 
certainly things we can simplify.
    Ms. Bonamici. Great. Thank you.
    And I actually have a bill, Opportunities for Success, that 
will help Pell Grant-eligible students get internships that 
will help them get job experience. So we can talk about that at 
another time.
    So many of you are likely aware that my home state of 
Oregon recently passed legislation to study an innovative 
proposal, Pay it Forward, Pay it Back, and we have, actually, 
representatives from Portland State University with us today. 
So under this system, which Oregon is studying--has not 
implemented, just to make that clear--, students would pay no 
upfront cost for tuition but then after graduation would pay 
back a certain percentage of their income for a certain length 
of time. All of these elements are going to be considered in 
the study.
    And frankly, I applaud our state legislature for passing 
that legislation to embark on that study because we really need 
some big-picture, creative thinking about better ways to make 
college more affordable and more workable for students. So, I 
want to hear your thoughts on how both Congress could think 
more creatively about affordability and retention, and how can 
we encourage institutions of higher education to do the same?
    And I want to start maybe with Ms. Conklin. And I know that 
your report--your second recommendation is for spurring 
innovation, so can you talk about some--let's think outside the 
box. What are some other ideas to help with college 
affordability?
    Ms. Conklin. So there were three--thank you very much. I 
appreciate that question and agree with you that that idea in 
Oregon is big and creative, and I understand that the study is 
being carefully watched nationwide.
    A couple ideas. One I would talk about just today and refer 
you to the report for a couple of others. But the first one is 
to recognize that a significant way we lose students, and they 
don't succeed and the significant way that college becomes more 
expensive for them, is when they spend a lot of time in 
remediation.
    And so one of the innovative ideas we proposed is to create 
a new Pell-ready grant worth 1,800; test it in five or six 
states; rigorously evaluate it; portion out the money on the 
basis of how students attain those college-ready skills; allow 
them to be regularly tested; create some competition for 
providers--have the states select those providers; really kind 
of set aside 80 percent for low-income students in the high 
schools, 20 percent for adults who need basic skills--we saw 
the OECD report yesterday, there are 23 million Americans who 
need basic skills.
    So try this way to get students the remediation they need 
at a much lower cost than when at the full price in a 
traditional public--a postsecondary institution.
    Ms. Bonamici. Terrific.
    And my time is about to expire and I want Ms. Mishory to 
respond, as well. Thank you.
    Ms. Mishory. Sure. And we have looked at the Pay it Forward 
proposal and I think that, you know, it is a bold, innovative 
idea. I think we--there are both positives and negatives to the 
idea. You know, I think that we are also carefully watching 
that.
    But I think we have looked at some ideas around campus aid 
and how we can better send some of that aid to schools that are 
doing a better job with students, and so that is something that 
we are particularly interested in.
    Ms. Bonamici. Thank you.
    Chairman Kline. Gentlelady's time has expired.
    Ms. Bonamici. Yield back. Thank you, Mr. Chairman.
    Chairman Kline. Mr. Messer?
    Mr. Messer. Thank you, Mr. Chairman. I appreciate the 
opportunity to be here and this important hearing. I certainly 
understand the importance of the federal student loan program; 
I am very much a product of the federal student loan and 
student financial aid program. Stafford loans, Perkins, Pell 
Grants, all those things were part of my life.
    And I want to maybe give Mr. Delisle--is that right?--an 
opportunity to finish his answer from just a few minutes ago 
and just say this: I think one of the things that has changed 
in the way we approach federal student aid or at least needs to 
change is we had a system that was always based on access, and 
that made sense because by and large the numbers were that if 
you had some college you were going to be better off 
economically in your life than no college at all. Clearly that 
is changed now, and if--unless you have a degree of completion 
in a degree that adds value in the marketplace, you are not 
going to do any better academically--I mean, you are not going 
to do any better economically than you would otherwise have 
done.
    And sadly for many students, if you--leave with tens of 
thousands of dollars in debt and have no degree then you are, 
by definition, much worse off because you don't have a better 
economic opportunity and you have a lot of debt. And so, I 
think reforms that drive us towards completion are at least 
something we ought to give strong consideration.
    So invite Mr. Delisle to finish, maybe, your answer from a 
minute ago, and any others on the panel that would like to talk 
about what we could do to--or to motivate completion.
    Mr. Delisle. Sure. What I was talking about was that there 
are places where, you know, I think that we have probably gone 
overboard or haven't thought very carefully about the signals 
that we send to people in the amount of aid that is available 
and when it is available and under what circumstances that are 
perhaps too open-ended. So, for example, on the students who 
attend part time but then can borrow the full loan amount as if 
they were attending full time, so essentially what they are 
doing is they are using up a huge chunk of their loan 
eligibility for cost of living or whatever it might be rather 
than paying tuition, and we cut that off, and then on the 
graduate side we just let it go and go and go and go.
    Mr. Messer. Sure.
    Ms. Baum. I would like to add that I think that discussions 
about how to structure student aid programs to incentivize 
completion are important, but we shouldn't just take as given 
where students are. Students have to select programs and 
institutions that are appropriate for them, and right now 
students don't have the information or the assistance in doing 
that--particularly older students who don't have high school 
guidance counselors, who don't have people around them to 
really help them.
    We need to make sure that students have assistance in 
making the decisions about what to study, where to study, and 
when to study, and then they will be more likely to complete.
    Ms. Mishory. I would just like to echo the comment on 
counseling. I think that it can't be underscored enough. I 
think right now our high school counseling rate is perhaps one 
counselor to every 476 students in a public high school, and so 
a student really trying to make good decisions for themselves 
is not getting the kind of help that they need.
    Ms. Conklin. Mr. Messer, I think it is important to 
recognize that failing to complete a college credential is not 
a demographic destiny, that it is due in some part to what 
public policy pays for.
    A recent survey out of Complete College America, based in 
your home state, found that fewer than a third of full-time 
community college students are actually taking enough courses 
to graduate on time. They are taking the Pell Grant and they 
are taking our cue that 12 credit hours is sufficient. So in a 
sense, we are not telling them that the expectations are much 
higher than you realize.
    And in fact, because of the way we price college, where we 
are doing it a la carte by credit, you actually are penalized 
and you get a bigger rebate if you take the fewer credits than 
if you took the 15. So we really ask you to examine what are 
the incentives based in what we define as full time.
    Mr. Messer. And not knowing how much time exactly I have 
left, I would just make one other quick comment. If we have 
time I hope to get your response. Hopefully we can explore it 
in a different hearing.
    I think a second area is that many of these programs tend 
to only incent four-year degrees in the right--you know, in 
sort of the traditional college where you show up and go to 
four homecomings, you are carrying a backpack. And at least in 
my district, which is 19 mostly rural counties with agriculture 
or manufacturing-based economies, folks that could take a 
technical degree or maybe even a trucking course that gave them 
a 3-month trucking course but gave them a job right away and 
the ability to pay back many of these programs right away--what 
could we do to look at broadening the array of programs that 
these financial aid is eligible for?
    Ms. Baum. Well, students are actually able to use their 
financial aid for those programs now. It is just that they 
don't know how to pick the right program. Some of them are 
great and some of them are not.
    Mr. Messer. I mean, I will tell you, our community colleges 
and others have said that--have talked to me directly about the 
restrictions on those kinds of programs. So you are saying you 
don't believe those restrictions are there?
    Ms. Baum. As long as they are credit-bearing. There are 
non-credit courses for which aid is not available and that is 
an issue at community colleges.
    Mr. Messer. Okay.
    Chairman Kline. Gentleman's time has expired.
    Mr. Pocan?
    You know, new members to the committee are limited to 30 
seconds, so--
    [Laughter.]
    Mr. Pocan. Thank you. I try to do that at the beginning, be 
very brief to make up for now.
    I do just want to say, if I can, before I start with the 
questions, I really am glad to be on this committee, not only, 
as mentioned, my background--I have been a small business owner 
for 25 years, it is also of a union shop, so when it comes to 
labor and employment issues, hopefully I can bring some of that 
background to the committee.
    But also, I have about 75,000 students in my district. Not 
only do we have the flagship University of Wisconsin--flagship 
of our system, a world-class university, but we also have 
private colleges like Beloit College, which were started before 
our statehood, 1846. We have Edgewood College, Madison College, 
a technical college, many small private colleges. So I'm 
especially glad to be on this committee and I thank you very 
much for that opportunity.
    I think one of the questions or areas I would like to get 
to, when--I went around this past period and I was at Beloit 
College, and I was at U.W. Madison, I was at a number of high 
schools, I am going to Edgewood College this Saturday, so I do 
spend a lot of time talking to students and folks going to 
universities.
    You know, we talk about the three parts. One is the 
affordability of school, and I think there is still a lot more 
conversation around that, although, Ms. Mishory, I really 
appreciate the comment you said about public universities. When 
we got the economic hit and the states--49 states got hit--I 
was the chair of a finance committee at the time. We did 
decline our support and we have continued to decline our 
support to our state university, like we have seen in many 
other states, and that has had a really big impact.
    We talk about the availability of financial aid, making 
sure we have got loans available--and as Mr. Bishop said, 
things like Pell Grants and things that are being hit because 
of the sequester. I am a Pell Grant recipient, loan recipient. 
That is how I got through college. It is real important.
    But one of the things that came up, the third area I talk 
about, is how you make sure that you are able to pay for those 
loans afterwards. When I went to school it wasn't as many years 
you had to pay it off. Between 1982 and 1986 when I went to 
school, you know, it was a little bit easier.
    Now they have become longer-term loans, much more debt. And 
we have got a group in Wisconsin that has helped us look at the 
thinking around this a little bit. I talked to a student when I 
was home this last period who has some loans at 6.8 percent, 
literally left college to go join the military so they could 
come back and get a free education after that point, but they 
still have the 6.8 percent.
    And I think one of the issues that came up from a group in 
Wisconsin and we have done a bill on, and it hasn't really been 
addressed but I would love to hear your perspectives, is the 
potential to be able to make it easier to refinance loans. You 
know, one of the things is if people are paying either higher 
interest rates or longer-term loans they are having a used car 
instead of a new car and not helping the economy; they are 
renting rather than buying--again, not necessarily stimulating 
the economy.
    And, Ms. Mishory, you specifically talked about that 15 
percent not paying, but I would love to hear any of your 
perspectives on the idea of maybe making it easier to refinance 
at current rates and what that might be able to do to help 
overall.
    Mr. Delisle. Well, first of all, there--you can refinance 
the loans just like you can a mortgage. There is no prepayment 
penalty on a federal student loan, so you can take out a loan 
from somebody else at a lower interest rate and pay off your 
entire federal student loan without a penalty. So in that 
regard, there is no barrier to refinancing the loan.
    Now, the issue is you have to find someone who wants to 
make you an unsecured loan--
    Mr. Pocan. Right.
    Mr. Delisle [continuing]. At a fixed interest rate around 4 
or 5 percent for the next 10, 20 years. Nobody wants to do that 
with their own money. So in that regard, there is no 
opportunity to refinance the loan.
    So what you would have to do essentially is provide 
borrowers another chance to get a different interest rate on 
their current student loan. But what you are doing, then, is 
you are saying the borrower is receiving a subsidy and let's 
just increase it. But then the question becomes, well, how much 
and why and for whom and how do you determine that.
    And then I would argue that if you can pay back your loan 
based on your income, which everybody can in the federal 
student loan program, then the payments are, by definition, 
affordable and the interest rate does not dictate whether or 
not you can make your payments.
    Ms. Mishory. I would add to that--I would say that there 
certainly are students that are facing high interest rates on 
their federal loans, which is concerning. I just wanted to add 
and make the point there is also a lot of students that are 
facing incredibly high interest rates on their private loans, 
and so that is something to think about, as well. And those 
interest rates, actually, they are not capped so they can be 
sky-high, they can be double digits.
    So that is something, as you are thinking about refinancing 
interest rates, to think about as well.
    Mr. Pocan. Okay.
    Ms. Baum. If we had interest rates moving with the market 
on loans then you wouldn't run into this problem, and it is 
upsetting that students are now locked into loans with high 
interest rates. When interest rates are high in the economy 
then we might be concerned about some people, depending on when 
they went to school, having a subsidy because they have a low 
interest rate locked in, whereas people who go to school when 
interest rates are high end up with a higher interest rate.
    Mr. Pocan. Thank you. I am going to yield back.
    Chairman Kline. Welcome, again, to the committee. Anybody 
who yields back is a rarity and we are glad to have--
    Mr. Pocan. I am trying to get bonus points today. Thank 
you.
    Chairman Kline. You just got them.
    Mrs. Brooks, you are recognized.
    Mrs. Brooks. Thank you, Mr. Chairman.
    And I, too, like Congressman Messer, was a recipient of 
student loans, but one of the important parts of my loan 
package in both undergrad and graduate school was work study, 
and I would like to talk a bit more about work study. And in 
fact, I was a work study student in the financial aid office, 
which was an interesting place to be a work study student both 
in undergrad and in my first year of law school.
    But yet, I am curious about what your thoughts are with 
respect as we are all talking about reforming the student loan, 
you know, programs, where should the discussion--there has been 
very little about work study and the advantages of work study, 
not only particularly for younger people--the time management 
skills, the actual working, you know, the work experiences they 
can get. And so I am curious what kind of--starting with you, 
Ms. Conklin, where are we with respect to work study?
    And as you probably know, I have come from Ivy Tech 
Community College prior to running for Congress and coming 
here, and my other issue that I am curious about with respect 
to the older students who have jobs, as many of the community 
college students have jobs, how does work Sstudy, where they 
don't have to repay a loan when you get a work study-type of 
grant, how does that work for those students who are working 
outside of school?
    Ms. Conklin. Mrs. Brooks, with all respect, actually, our 
proposal did call for merging all of the different grant 
programs into one grant program, so in that sense we were 
silent on work study or explicit that we really think the extra 
dollars should go into Pell Grants. But I know that my 
colleagues at the table have thoughts about that and so I defer 
to them.
    Ms. Baum. The work study program is not very well funded 
and not very many students receive it. It is about 10 percent 
or a little bit more than the number of Pell Grant recipients. 
So if we really thought Work Study was terrifically important 
and all Pell Grant recipients should have access to subsidized 
work on campus, we would have to dramatically increase the work 
study program. That doesn't seem to be in the cards.
    Right now, as I said before, the funds are allocated to 
institutions in a sort of irrational way, and one of the things 
that work study--I mean, it is great for students to have jobs, 
but really, many students are working much more than they could 
under work study and they need to earn more than they can under 
work study, and for them this is earnings. They don't care that 
the federal government is paying part of the money.
    These are earnings and I don't think that it needs--it 
should be considered part of what they are given to help them 
pay; this is what they are earning to help them get through, 
and they need other aid to meet their financial need.
    Ms. Mishory. We think that the federal work study program 
has a lot of benefits and can really help a lot of students. I 
think that there are also a lot of ways that we can improve it. 
We can make it better-targeted; we can make sure that it is 
actually going to students who need it the most. Right now it 
is not always going to students who need it the most and we can 
improve that formula.
    We think that it can go to schools based off of who they 
are serving and not necessarily based off of how long they have 
been in the work study program, which is how the formula is set 
now. And we think it can go to schools that are providing 
programs to low-and moderate-income students who are actually 
getting really good skills and learning--basing their work off 
of also what they are studying at school.
    So there are definitely ways that we can improve this 
program and make it work even better.
    Mr. Delisle. I think I caught you saying that you got the 
work study while you were going to law school?
    Mrs. Brooks. I believe. My recollection. I could be wrong 
on that. That was a long time ago.
    Mr. Delisle. So this brings up a really good point. The 
campus-based aid programs are available to graduate students, 
and there is not a lot of money to go around in the campus-
based aid programs. And there are plenty of undergraduates who 
could benefit from work study, yet the federal government is 
providing work study to graduate students, which seems like a 
really sort of the wrong set of priorities.
    Remember, these are students who already have an 
undergraduate degree. So you are essentially subsidizing people 
who already have an undergraduate degree.
    Secondly, work study is means-tested, correct? You are 
providing a means-tested benefit to a graduate student? Does 
anybody know a graduate student who isn't poor? I mean, that is 
sort of a--it is sort of a crazy concept to think we are going 
to have a means-tested program for people in graduate school.
    So I think that there are ways to reform the campus-based 
aid programs. One place to start is stop providing them to 
graduate students.
    Mrs. Brooks. I am curious, however, whether or not you all 
agree in the benefits of a work study program or are you 
opposed to work study? I am unclear. I heard some of you say 
that you believe that there are benefits to it, but I am 
curious, rather than, you know, increasing grants and loans and 
so forth, is there not a benefit to work study?
    And I am curious why it was eliminated from your study, Ms. 
Conklin, just out of curiosity.
    Chairman Kline. The gentlelady's time has expired, but we 
would like the answer to that for the record if we could.
    Thank you very much.
    Mrs. Davis, you are recognized.
    Mrs. Davis. Thank you, Mr. Chairman.
    Thank you to all of you.
    You know, one of the things that you have mentioned, I 
think, throughout the discussion is that students need more 
information. We know that there should be more sophisticated 
databases and Web sites that students can go to, and I know 
there has been an--I think we have had some discussion of that 
here in the committee, as well--something that is a little more 
foolproof, I think, and really cites the right metrics or, you 
know, that are important for students, that are agreed upon, 
kind of a universal consensus among schools.
    But I also get the feeling that, you know, there ought to 
be some other way of doing that. And, do you have any ideas 
about that?
    And let me just share very quickly. I had a number of folks 
come to me the other day on veterans issues and veterans 
support within schools, universities, colleges, community 
colleges, et cetera. And, there is a feeling that more 
education is needed to really understand how--whether it is the 
additional dollars that they are receiving as a result of being 
veterans or other means, that they don't have that information. 
And so it is very hard to really make good comparisons.
    Is that as big an issue as--I think you have mentioned, but 
maybe that is not the focus of this discussion. How would you 
do that? Because one of their interests was in having a 
mandated course--maybe not even a--well, could be a full 
semester--if a university takes dollars then they ought to be 
providing that in a way that students can get that information 
where they have counselors on hand there, it is more than a Web 
site, to be able to make those decent decisions.
    What do you think? I mean, is that something that--because 
certainly tuition is the bigger issue here but we are not going 
to answer that question. I know universities are working on 
that when it comes to the total package that students are 
having to deal with.
    Ms. Mishory. So I agree that tuition is a huge issue and 
investing in the aid programs up front is a huge issue, but 
obviously counseling and providing information is also a huge 
issue for students. You know, I think that--we were talking to 
students the other day and one--you know, one said, ``You know, 
I am studying biology and I think this is going to get me the 
financial security I need but I just don't know.'' She didn't 
have the information about her school, her program, the labor 
market where she was looking to go.
    And so, you know, there are some Web sites out there and 
there are some tools out there. They are not always great or 
they are not always provided--
    Mrs. Davis. How would you do it?
    Ms. Mishory [continuing]. To students in ways that they 
know that they are out there. So I think it is really important 
to be thinking about first of all getting the kind of data that 
students need to make good decisions, providing it in a way 
that is clear for students and that students can also access 
very easily. You know, there are some--there is a bill in the 
Senate that looks at how we can provide consumer-tested 
information to students, so we actually know when you are 
providing it at a certain platform it actually works for that 
student and they can understand their options; ensuring that 
maybe if schools aren't providing the best outcomes they--you 
can actually trigger a system where you provide more counseling 
to students and they are required to provide more counseling.
    So I think there is a variety of ways to do it, but I think 
that including student feedback in that process is incredibly 
important.
    Ms. Baum. Unfortunately, I don't think there is a foolproof 
method, but one thing is there are lots of websites out there 
that have sort of basic indicators and lots of information, and 
the sophisticated students go to those websites and the 
students who really need the information don't. So we need to 
think beyond just the information. It would be helpful if we 
didn't focus so much on what do first-year graduates earn, 
because that is not really a very valuable piece of information 
for people to make choices.
    But there is a lot of information about how if you really 
want to get to students, if you send them a text message with a 
small amount of information they will pay attention to it, 
whereas if you put something complicated on a Web site they 
won't. So we need to figure out not so much how to provide more 
information as how to provide it in ways that students can 
process it and that the students who need it most will get 
personalized help to make decisions about the best course for 
them.
    And it is a risky investment. It is a great investment to 
go to school, but it is not going to pay off for everyone and 
you can't know when you make a decision 100 percent that it is 
going to pay off.
    Ms. Conklin. So Mrs. Davis, I think you have hit on a point 
of consensus among the community, as well, that simplification 
by itself won't replace the need for good counseling. In our 
Doing Better by More Students you can find our recommendation 
that actually we want to see local, third party, independent 
groups provide this counseling, that we cannot rely entirely on 
institutions to provide counseling about whether you should 
borrow and how much. That doesn't encourage that kind of good 
choice that we are looking for.
    Mrs. Davis. Yes.
    Mr. Delisle, did you want to say something quickly?
    Mr. Delisle. Well, I just wanted to say that, you know, one 
of the recommendations, you know, that we put out--and there is 
some consensus around this, around making the income-based 
repayment program the only repayment option or at least the 
automatic repayment option. And I think that is important when 
people are making decisions about what school to attend, will 
this work out, will I be able to make payments, to be able to 
tell them, ``Well, your payments will automatically be 
calculated based on your income and the loan should be 
affordable.'' That should take a lot of pressure off on knowing 
what is available and how to make decisions.
    Chairman Kline. Gentlelady's time has expired.
    Mr. Thompson?
    Mr. Thompson. Thank you, Chairman, and thanks for this 
hearing. You know, we are talking today about providing--we're 
talking about America's competitiveness, actually, in terms of 
making sure that folks have access to the education to--so we 
have a qualified and trained workforce.
    I want to start out my first question, Dr. Baum or Mr. 
Delisle: One of the questions I often have is how we as 
policymakers can empower students to be good consumers in 
postsecondary education, in higher education, you know, whether 
it is a certificate program, whether it is associate degree, 
whether it is a four-year, whether it is graduate studies.
    So beyond the tools currently available by the Department 
of Education, what recommendations could you make?
    Ms. Baum. Well, one of the things, as I said before, I said 
I think that people really need personalized information so 
that they can make choices fitting their own circumstances, and 
that is a hard thing for the government to figure out how to 
provide, but they can fund third parties to provide better 
information, really understanding how students process that 
information.
    It is also true that students assume that if they are 
allowed to take their federal aid to an institution, that 
institution basically has the approval of the federal 
government, and the federal government should figure out how to 
make sure that it doesn't grant that approval to institutions 
that serve very few students well.
    Mr. Delisle. So there is a provision in federal law right 
now that requires colleges and universities to report the 
graduation rate of Pell Grant recipients, which is a really--
that is an important factor. That is an important piece of 
information that if I have a Pell Grant I want to know how many 
people like me are going to graduate from this institution.
    Except the--universities and colleges don't comply with 
this rule--not very well. They bury the information or they 
don't even know that they have to provide it.
    And so it would seem that there are places where the laws 
that are already on the books could essentially bebeefed up and 
the enforcement could be improved such that this information is 
made available. I think that is one example where we have 
already had those ideas, they just haven't been implemented 
effectively and more attention needs to be given to them.
    Mr. Thompson. Okay. Thank you.
    I would argue that we are measuring the wrong metric. It is 
success in life; it is where that education takes those folks 
to. Measuring graduation doesn't necessarily constitute success 
nor being an ability to pay off loans, and so--I do believe 
that--I agree with the premise of we have got to do some 
measurements, but I don't think we are measuring the right 
things if we just stop at graduation rates.
    Ms. Conklin, I noticed that the group assembled by HCM had 
a lot of diverse perspectives on how--best to improve student 
aid. I was curious, what were the guiding principles that led 
everyone to come together around the one loan and one grant 
proposal?
    Ms. Conklin. Thank you. So the coalition itself, the 
national leaders I referenced, some of them, they came together 
around three overarching principles and released their report 
in January: simpler and more transparent aid; more innovation 
to promote lower-cost options for today's students; and a 
shared responsibility for completion among states, students, 
and institutions.
    The technical panel of experts, some who had decades of 
experience with financial aid, some economists, former 
congressional staffers sitting at the witness table with me, 
sat around and said, ``Now, taking those guiding principles, 
how do we translate that into a set of specific 
recommendations?'' And so we--they advised the coalition, 
helped them come to that consensus on those three overarching 
principles, and then they tried to translate it and that is the 
technical report you have in front of you.
    Mr. Thompson. All right. Thank you.
    I have about a minute left. I want to go back to Mr. 
Delisle.
    I am interested in learning more about the streamlining of 
repayment options, including an idea out there to have student 
loan payments tied to income, withheld automatically from the 
borrower's paychecks. Does income-based repayment plans have to 
be implemented that way, or are there other ways to do it?
    Mr. Delisle. The income-based repayment plan that we have 
right now is not payroll withholding. It works like all the 
other repayment plans, where you have to submit your payment. 
You can do that automatically through, you know, auto debit or 
something like that, but it does not come out of your paycheck 
like your income taxes.
    Doing payroll withholding may be a better way to collect 
payments in that people sort of repay their loans somewhat 
inadvertently, simply by working, but there are a lot of 
administrative challenges to doing that and I would argue that 
the main hurdle to that or the test on whether or not you can 
do that is if that system is as easy or easier for the majority 
of borrowers.
    Mr. Thompson. Thank you, Chairman.
    Ms. Foxx [presiding]. Thank you very much.
    Mr. Courtney, you are recognized.
    Mr. Courtney. Thank you, Madam Chairman.
    Mr. Delisle, reading your somewhat scathing comments about 
graduate student programs--you know, and I think, you know, 
there is some valuable insight that we can take from that. 
There still, though, is a thing that nags me, which is that we 
know right now in the workforce, particularly in areas of 
health care pediatric subspecialties, there are acute shortages 
in terms of making sure that we have got pediatric 
psychiatrists, you know, specialties up and down the 
profession.
    And if we were to eliminate Grad PLUS, you know, as part of 
the greater good in terms of, you know, more efficient use of 
resources, as you have argued, and cap the amount under 
Stafford and basically drive students into the private student 
loan market in terms of ways to fill the gap, you know, where 
does that leave the medical student who, again, wants to 
practice in an area where insurance payments are low, where, 
again, just--there are just huge obstacles in terms of trying 
to show an originator that youhave got a really strong 
financial future, as opposed to another student at Yale, maybe 
in the same class, who is going to become an orthopedic surgeon 
in New York City.
    And so, you know, we have got a problem, right now, in 
terms of trying to staff up in critical professions, and where 
does your proposal leave us in terms of being able to meet 
those challenges?
    Mr. Delisle. So I don't disagree that that is a problem, 
but what you have done is you have created an income-based 
repayment program with loan limits and no caps on forgiveness 
that provides the benefits you are trying to target to a 
certain sector of workers in the economy to everyone.
    Mr. Courtney. No, I--
    Mr. Delisle. So that is essentially the issue.
    Mr. Courtney [continuing]. To that fact that your, you 
know, larger proposal were to be enacted.
    Mr. Delisle. Right.
    Mr. Courtney. Where does that leave us in terms of trying 
to address these shortages?
    Mr. Delisle. So prior to 2006, I would argue that we had 
doctors. We had lots of doctors prior to 2006, right? And so 
people were able to go to medical school and they were able to 
partake in those types of jobs.
    But prior to 2006 there was no Grad PLUS. Grad PLUS is a 
very new program, so I think it is a fairly weak argument to 
say that we need it and the world would look very different if 
we didn't have it even though it is brand new.
    Mr. Courtney. I am not arguing for preserving the status 
quo, you know, based on, you know, one discrete part of the 
workforce. I am just saying we have got a problem in terms of 
one discrete part of the workforce and if we--if we basically 
are saying we are going to just let the private student loan 
market be the way that a student who wants to go into an area 
that is underserved and that is not highly compensated, you 
know, where does that leave our country in terms of being able 
to address those needs?
    Mr. Delisle. So you can borrow $20,500 a year in the 
Stafford program right now. You could increase that limit a bit 
where you think it is appropriate so that those people can 
borrow those loans.
    And I haven't proposed eliminated loan forgiveness in my 
proposal. It includes loan forgiveness. But for public service, 
I suggest limiting the amount that can be forgiven to around 
$30,000 to $40,000 for anybody that qualifies for public 
service.
    I don't think most people think that $40,000 in the 
government grant to have your loan forgiven is too little. And 
then the issue is you can still repay your loan using income-
based repayment after you receive your public service loan 
forgiveness.
    Mr. Courtney. Okay. You know, I would just say that I think 
it is important to understand the kind of professions I am 
talking about are not public sector jobs, okay? These are 
people who have private practices and who, you know, provide 
services for child agencies and are not sort of government 
employees.
    So to sort of say that that--I just think you need to think 
that--
    Mr. Delisle. So I didn't--
    Mr. Courtney [continuing]. You need to think that through.
    Mr. Delisle. Well, but I didn't--but I have loan 
forgiveness in my proposal for them.
    Mr. Courtney. I understand--
    Mr. Delisle. They would receive loan forgiveness after 25 
years.
    Mr. Courtney. What you said was for, you know, public 
professions.
    Mr. Delisle. And for non-public. There is loan forgiveness 
in current law--
    Mr. Courtney [continuing]. Follow up on that because--
    Mr. Delisle. Right. That is current law.
    Mr. Courtney [continuing]. Frankly, we, in my opinion, 
can't just sort of accept the status quo in this area. We need 
to ramp up in terms of--you know, if you look at the graduating 
class of Yale's medical school and seeing where people are 
going, the costs and the challenges of financing are driving 
people away from parts of the profession where there is a 
critical need.
    I yield back.
    Ms. Baum. Oh, I am sorry. Could I just say I think public 
subsidies for the people you are talking about are totally 
appropriate. They should be targeted at those people. We should 
just give public subsidies to people for going into those 
occupations.
    Mr. Courtney. Well, I think thatis, you know, I guess that 
is a good idea. I mean, the problem is, who decides? And that 
is, you know, something that, you know, we--is sort of left out 
of some of the discussion that is being talked about here.
    So I yield back.
    Ms. Foxx. Mr. Andrews, you are recognized.
    Mr. Andrews. Thank you, Madam Chairman. I want to enter 
your contest for a new name for nontraditional students. I 
would call them survivors.
    And I want to ask Ms. Conklin--you or anyone else on the 
panel--the following question: Let's take a woman who makes 
$30,000 a year, works full time, and she has two children. And 
she has an associate's degree now, and her goal is to earn a 
bachelor's degree in accounting because she thinks she could 
make another $10,000 or $15,000 a year if she did that.
    Under the one grant, one loan idea, how much would she get 
if your idea were adopted and how much does she get now? Let's 
say she is taking two courses per semester, because, you know, 
when you look at her, full-time work and full-time mom that is 
about--she sleeps very little but she takes two courses a 
semester. How does the proposal affect her?
    Ms. Conklin. Okay. Thank you, Mr. Andrews. I want to make 
sure I get this.
    So that is my mom. She made $30,000 a year. There were two 
of us. She had three jobs.
    Mr. Andrews. She was--
    Ms. Conklin. She was not able to get back into--
    Mr. Andrews. She was obviously a very good mom.
    Ms. Conklin. Thank you, sir.
    In the--current system, that person gets a maximum Pell 
Grant probably as an independent student and gets 50 percent of 
the award because they are going approximately part time at two 
courses. What we are proposing to do is to create--there are 
several options that lay out on the table. We are proposing one 
of two options.
    Without a doubt, we want the Pell Grant to value full-time 
attendance and we want her to get out as soon as possible 
because she is losing that promotion that she could otherwise 
get if she has the bachelor's--
    Mr. Andrews. Yes, but you don't understand. Full time is 
not an option for her.
    Ms. Conklin. Okay, so actually, sir--
    Mr. Andrews. She has to pay the bills so she--you know, 
every waking hour she can take those two credits. That is it. 
Or two courses.
    Ms. Conklin. You have actually asked the right question. 
The play for Congress is to get your grant and loan programs to 
value competencies and completion.
    Mr. Andrews. Right.
    Ms. Conklin. And what you can do--that woman--I would 
advise her, I would advise my mom: Western Governor's 
University. Kids go to bed, full-time program, self-paced, get 
your maximum award--
    Mr. Andrews. But with all due respect, she doesn't want to 
do that. She wants to go to Rowan University in my district and 
sit in a classroom. She doesn't want to go online. That is what 
she wants to do.
    If I read this proposal correctly, she gets less under your 
proposal than she does now, doesn't she?
    Ms. Conklin. No, sir. There is actually several ways to 
look at how to invest in that, and these are choices for 
Congress to make. We actually identify sufficient savings that 
she could actually get; that the maximum Pell Grant would go to 
$7,000--that you could afford to pay that with no new dollars.
    Mr. Andrews. But she doesn't--
    Ms. Conklin. And so she would not receive any different 
benefits.
    Mr. Andrews. But she doesn't get the maximum Pell, does 
she, because she doesn't meet your--
    Ms. Conklin. No, but her average Pell would not change, 
sir, under this system if you choose to reinvest savings 
because you have adopted this comprehensive set of 
simplification options.
    Mr. Andrews. Does she still qualify for the American 
Opportunity Tax Credit the way she does now? She can get $2,500 
refundable now.
    Ms. Conklin. She would actually get up to $10,000 because 
we actually propose one lifetime learning tax credit--one tax 
benefit modeled on the lifetime learning tax credit up to 
$10,000.
    Mr. Andrews. But there is no limit on the tax credit now. 
She can get it every year $2,500, can't she?
    What is the limit now, Mr. Delisle?
    Mr. Delisle. I believe it is 4 years.
    Mr. Andrews. So she is limited to $10,000 now?
    Mr. Delisle. No, I believe that the number of years you 
could claim the AOTC is 4 years. But also, the AOTC expires in 
a few years.
    Mr. Andrews. Well, that is a different question.
    But, can anybody tell me definitively whether she is better 
off under the new proposal or the old one?
    Ms. Baum. I haven't heard anybody propose cutting the--any 
of the reform proposals involve cutting the aid that a student 
like that would receive. It is very clear that there are many 
students who have to enroll part time. They get Pell Grants 
now; they should continue to get Pell Grants and those Pell 
Grants should be funded as generously as we can manage to fund 
them.
    Mr. Andrews. And I understand this is a conceptual 
proposal, but we don't legislate concepts; we legislate 
statutes and they have real impact on real people. And the one 
thing I am alarmed with reading this is this--look, I think 
people should finish as quickly as they can, but my concern 
here is for people for whom full-time going to school is not a 
viable option. Does this proposal penalize them? Yes or no?
    Ms. Baum. No proposal that I am aware of here penalizes 
those students, no. No one proposes making a cut in the grant 
that a half-time student would receive.
    Mr. Andrews. So she would get the same that she does now, 
or more?
    Ms. Conklin. If you elect to make the other changes to 
simplification we recommend, which generate savings which can 
be reinvested in a larger Pell Grant, and then she gets exactly 
the same award.
    Ms. Mishory. And just real quick, I mean, I can't speak to 
Ms. Conklin's proposals, but I do appreciate the question 
because I think it raises a really important point, which is 
proposals that look at bringing students up from, say, 12 
credits to 15 credits, and how can we encourage people to go 
full time or change the definition of that, they offer real 
drawbacks to students like that.
    They may not be able to take more classes because they have 
kids. They may not actually be able to take more credits 
because their school can't offer those credits because their 
school is underfunded.
    So I think those are really important questions to be 
asking as we are thinking about that.
    Mr. Andrews. And I appreciate the answers.
    I would just say to the chair before I yield back that, you 
know, I think this goes to her point. The so-called 
``traditional student'' is a minority these days. The majority 
of students are the people that we are talking about in this 
line of questioning.
    I think this committee wants to be very, very vigilant that 
someone in that position is not disadvantaged in any way and I 
think you do too.
    I yield back.
    Ms. Foxx. Mr. Polis, you are recognized.
    Mr. Polis. Thank you, Madam Chair. I appreciate the time 
and appreciate you and Chairman Kline doing this hearing.
    At a time when college degrees are increasing in 
importance, we need to make sure that students have more 
information about their options and an easier way to repay 
their loans when they have completed their degree. Right now 
there are seven options that borrowers select when entering 
repayment.
    Even worse, the default option is very rarely the best. In 
fact, the most expensive at a time when their income is the 
lowest--likely to be the lowest and the least flexible. I 
appreciated Ms. Mishory's remarks that said that many haven't 
even heard of some of the better options that might be 
available, including income-based repayment.
    Students would benefit tremendously from a simpler way to 
repay their student loans as the default without having to 
worry about managing complicated paperwork and needlessly 
missing a payment. That is why I have introduced the ExCEL Act, 
along with Congressman Petri, who asked a few questions 
earlier. I believe that is a strong step in the right direction 
toward a more flexible, student-centered, and success-centered 
financial aid system.
    Under the ExCEL Act, students would pay back their loans on 
a simple, income-contingent basis. Payment obligation is 15 
percent of a borrower's income starting above 150 percent of 
the poverty line until the loan is repaid. It has strong 
borrower protections so our neediest students would be paying 0 
percent when they are out of college.
    My first question for Ms. Mishory is, like the student you 
described in your testimony, I speak with many students in 
Colorado who are very frustrated by our complicated, often 
unforgiving student aid system. As you mentioned, a survey your 
organization conducted found 89 percent of respondents agreed 
or strongly agreed with being enrolled in an income-based 
repayment program.
    How can streamlining the system of automatic and universal 
income-based repayment help students navigate the complicated 
student aid system and avoid defaulting on debt?
    Ms. Mishory. Thank you. Yes. I mean, I think it can do a 
lot. I think that it can ensure that students, as they are 
leaving school, perhaps facing a tough economy, as they have in 
the last few years, and struggling to figure out their next 
step, really be able to manage those payments and manage a 
system that has otherwise been complex.
    I think one important point to make is thatwhen you are in 
an income-based repayment program you can pay more. So you can 
pay it down faster. So if that makes sense for you then you can 
go ahead and do that. And so we want to--
    Mr. Polis. So it empowers a student if they want to pay 
even up to the amount they would under the 10-year repayment 
program if they want to. Just like you can pay down your credit 
bill early, you can, if you want to, pay it down.
    Ms. Mishory. That is right. Yes. And so we would--
    Mr. Polis. One more point: You get the advantages--to be 
clear, you get the advantages of the 10-year repayment program 
and the flexibility to do that if you want with additional 
flexibility to pay less if you so choose. Is that correct?
    Ms. Mishory. That is right.
    Ms. Baum. I would--oh, I am sorry.
    Mr. Polis. Yes? Go ahead, Dr. Baum.
    Ms. Baum. I was just going to also point out that in--
another advantage is that with the discussion of the Oregon 
programs, if we had a program like the one you have proposed or 
others here have proposed in place and everyone knew about it, 
we wouldn't have individual states trying to develop programs 
that loan students all this money and don't tell them that it 
is a loan.
    Mr. Polis. And I appreciate Ms. Mishory's point in that 
last one that this gives students the option to pay less but if 
they choose to they can actually do the same 10-year repayment 
program, which is the default now.
    Next question for Mr. Delisle: I would like you to address 
the most needy borrowers, those who stand to benefit the most 
from affordable access to quality education. You mentioned that 
subsidized Stafford loans don't always provide low-income 
students with the greatest benefits, and of course there is a 
tranche of students just outside of the eligibility that, of 
course, rely on student loans, might go into, depending on 
their degree, lower-and middle-paying jobs.
    How do you feel about the simplified universal system of 
income-based repayment? How do you feel that can be more 
effective when it comes to serving the students who are most in 
need and most at risk?
    Mr. Delisle. Well, it does a better job than the current 
system because it is essentially looking at what their income 
is when they leave school and setting their payment based on 
that.
    You mentioned the subsidized Stafford--we have a subsidized 
Stafford loan and we have an unsubsidized Stafford loan; this 
is part of the confusion I was talking about earlier. The 
subsidized Stafford loan has this interest rate benefit--has an 
interest benefit where the interest doesn't accrue while the 
borrower is in school, but that, again, is a benefit that they 
are receiving based on their family's income when they enter 
school, and an income-based repayment program targets benefits 
based on their income when they are out of school, which makes 
much more sense.
    The other sort of complicating thing is that those benefits 
can sometimes cancel one another out. You can only earn one. 
You can only get the benefit from income-based repayment and 
not the subsidized Stafford, even though you have it nominally, 
and that is an example where we have got just too much overlap 
and complexity in the program.
    Mr. Polis. And you think that more simplicity would work to 
the benefit of the students?
    Mr. Delisle. Absolutely.
    Mr. Polis. I thank the chairlady and I yield back the 
balance of my time.
    Ms. Foxx. And the gentleman made an unmitigated commercial 
for his and Mr. Petri's bills. You are very good. That is why 
we know you came from the private sector.
    Mr. DesJarlais?
    Mr. DesJarlais. Thank you, Madam Chairwoman.
    And I thank the witnesses.
    A problem that we have seen evolving over the past couple 
decades is the amount of time it takes for students to complete 
college degrees. You know, often times it used to be four 
years; a 16-credit hour was standard. Now kids are actually 
being sold prices for a 12-credit hour, which graduates them in 
5\1/2\ and maybe six years. So we are not getting people into 
college and back out into the workforce in a timely fashion.
    I think one great way to lessen costs for college students 
and taxpayers is to graduate students in as timely a manner as 
possible while still making sure they gain knowledge and 
appropriate skills to excel in the economy. I know in my 
district back in Tennessee, Bridgestone North America and 
Motlow Community College, along with local stakeholders, 
created a program--in this case a mechatronics program--in 
which high school students can gain college credit and 
technical credentials while gaining real-world work experience.
    Ms. Conklin, if you wouldn't mind, can you talk about 
programs like dual enrollment credentialing and competency-
based education?
    Ms. Conklin. I can, but can I give a shout out to Tennessee 
first?
    Mr. DesJarlais. You can. Is this another infomercial--
    Ms. Conklin. This is.
    So HCM, since 2010, has led a state reform network that 
Lumina Foundation supports called Strategy Labs. Tennessee is a 
superstar in it, and the reason why I say this is that they are 
the only state with an outcomes-based funding formula that 
rewards all of the state's subsidy to institutions based on how 
well they do improving outcomes for students, particularly most 
disadvantaged students.
    By having such clear, few metrics--again, a simple system 
that is incentive-based around success. They have one of the 
best in the nation policies around prior learning assessment; 
they have a growing appetite for competency-based education and 
a way to fund that through their premium on completion, not on 
courses completed, not on courses attempted, not on students 
enrolled.
    They are seeing institutional--they are seeing faculty and 
presidents kind of analyze the data, embrace data, analytic 
techniques, in ways that really we see at scale and we want to 
embrace, and then again, I was saying, kind of bringing back 
into Mr. Andrews' question, the Tennessee Tech Centers have 
completion rates that are so far above the national average and 
it is because they have a structured cohort program. And so 
indeed, the way they approach structure is actually great for 
nontraditional students and they do well under this outcomes-
based funding formula.
    Now on dual enrollment, we, in this technical panel report, 
didn't speak directly to it, but dual enrollment is, indeed, if 
the courses that you take in high school count for college 
completion, it is a way to reduce the cost of college. If you 
are a student in an early college high school, for instance, 
where you can, in high school, earn an associate's degree, you 
can save 50 percent on your associate's degree.
    So it is a phenomenal option. But again, that is a state 
pathway, and that is why I come back to Tennessee and 
recognizing where--the role of state leadership in our nation's 
college attainment problem.
    Mr. DesJarlais. I appreciate that, and if you need more 
time to brag on Tennessee, you are welcome to take it.
    But I would just ask, how can we encourage students to 
spend less time in school and more time building their skill 
sets in the workforce?
    Ms. Baum. Well, one of the things I think that we have to 
understand is that students are a very diverse group of people. 
And it used to be that most students were young, full-time, 
traditional-aged students. That has for a long time not been 
the case and we can't expect that the single mother of two 
children is going to be able to progress through a program at 
the same rate that someone with fewer responsibilities can, but 
we have to help them to select the right programs.
    And all of these ways of making it possible for people to 
do multiple things at the same time or to get credits for 
things they already knew are important, but we have to be very, 
very careful about making sure that students get a quality 
education, that they really learn something with the process of 
getting their degree and that we aren't just handing out pieces 
of paper to students.
    Mr. DesJarlais. Thank you.
    Does anyone else have anything to add?
    Ms. Mishory. I mean, one way is to make sure that we are 
supporting our aid programs and ensuring that we are investing 
in things like the Pell Grant that allow students to go to 
school and maybe work a few hours less because they are able to 
actually attend school and pay their bills.
    Mr. Delisle. Amy Laitinen, in our office at the New America 
Foundation, has done a lot of work around the credit hour and 
competency-based education, and she has done a very good job of 
pointing out that the way the--federal student aid programs are 
structured is they essentially endorse a system that is based 
on the credit hour and it makes it very difficult for 
institutions to do something different.
    But there are ways in existing statute, such as the 
experimental sites, where institutions can come up with 
different ways to provide federal aid that is not necessarily 
based on these standard delivery models. But I think it is 
really important for the committee to realize that when you 
make these rules and the ways the laws get written, if you are 
sort of codifying an educational system of today and not 
allowing for the flexibility that we want to be there, it is 
problematic.
    Mr. DesJarlais. I thank the panel for their perspective and 
I yield back.
    Ms. Foxx. Thank you very much.
    I would like to thank, again, our witnesses for taking the 
time to testify before the committee today. I realized that 
when I made my remarks I did not properly thank you and I will 
correct that now and also thank you on behalf of the chairman, 
who had another obligation.
    I would like to see if Mr. Hinojosa has any closing 
remarks.
    Mr. Hinojosa. Yes. Thank you.
    In closing, I thank our expert witnesses for sharing their 
views on how the federal government can simplify the federal 
financial aid process in order to lower costs and improve 
access to higher education. I think that your presentation was 
excellent and we thank you for that.
    While I applaud President Obama and Secretary Duncan for 
working to make college costs more transparent, I believe that 
Congress and the federal government must make student loan 
repayment options easier for students and families to navigate 
and understand. As this committee moves forward to reauthorize 
the Higher Education Act, I intend to continue to explore ways 
in which Congress can simplify the federal student aid process 
and ensure that students and families fully understand their 
funding options.
    I plan to introduce an innovative amendment when we go to 
marking up this legislation as part of reauthorization of the 
Higher Education Act. That amendment will require that the 
Financial Literacy Education Program for high school students 
and their parents include this new component, which informs and 
teaches them about the new, improved federal student college 
financial aid that we have been discussing here this morning so 
they can make better choices for their family.
    And with that, I yield back.
    Ms. Foxx. Thank you, Mr. Hinojosa.
    I have realized, as a result of this hearing today and 
perhaps some of the other discussions that we have had, but 
particularly in this one, I think, that I am really a failure, 
because it took me seven years to get my undergraduate degree 
and we are so focused now on completion, it is obviously a 
failure if you take more than four years or even more than six 
years to get your degree.
    But I appreciate the comments that have been made today. I 
will make just a couple of brief comments.
    Dr. Baum, I appreciated very much what you said about the 
fact that if we focus on one student--and I think Mr. Andrews 
gave a great example of that--if you focus on only one student 
and the impact of change on a particular student, it is very 
difficult to move forward, and I think that has been a real 
problem in terms of making changes that need to be made in this 
area. And I am--again, I appreciate the fact that Mr. Andrews 
gave the example, I think that you were pointing out in your 
comments.
    I also appreciate your saying that we need to really 
emphasize that students should be getting a degree that is 
useful to them or skills that are useful to them when they 
graduate. We focused on many different things today--we focused 
on inputs; we focused on getting students the information. But 
in other hearings, we have focused on that area, and so I 
appreciate your bringing that up.
    We realize this issue of loans and debt and financial aid 
become an even greater issue when 53 percent of the students 
who have recently graduated have not been able to get jobs. Ms. 
Mishory mentioned the terrible economy, and of course, some of 
us think the economy has suffered tremendously because of 
policies that have been implemented in recent years.
    I am concerned, though, about another issue, Dr. Baum, that 
you brought up, and that is if students going to college or in 
college cannot understand from websites on the campus and the 
colleges what it is that is happening, what about the 
completion rates, what about loans and all that, I am not sure 
what--but they can understand it from a text message--I am not 
sure what that is saying about our college population these 
days.
    How much simpler can we make things? And maybe we need to 
look at who is being admitted to college if they can't 
understand the information.
    And what you continue to talk about, the obligation of the 
federal government, to have the material out there that they 
can understand, but very little has been said about the 
obligation of the student to understand what is out there.
    So anyway, I want to thank all of you for being here today. 
I think we have all learned a lot.
    The committee is now adjourned.
    [Additional submission of Chairman Kline follows:]

       Prepared Statement of the Education Finance Council (EFC)

    The Education Finance Council (EFC) is the trade association 
representing nonprofit and state agency student loan organizations 
across the country. EFC commends the Committee for examining ways to 
simplify the federal student aid system and reduce burdensome 
complexities for students and families. The members of EFC share the 
Committee's overarching goals of improving postsecondary access, 
success, and affordability. We believe one of the cornerstones to 
student success is their access to and understanding of different 
options and pathways. Particularly, students must have access to an 
array of options to finance their education.
    EFC agrees that there is redundancy and complexity in the federal 
student aid system that must be eliminated. However, we disagree with 
the recent calls to switch to a single-loan federal student aid system, 
which would collapse all federal loan programs into one. Each student's 
financial situation is unique and each student should have access to 
options that fit their varying needs. The alternative student loan 
programs provided by nonprofit and state agency student lenders serve 
as good examples of successful loan programs with several financing 
options. Most EFC members' programs include different interest rate 
options for loans, depending upon the repayment option the student 
chooses.
    Members provide choices of variable- and fixed-rate loans; loans 
for students, parents, and families; consolidation loans; and loan 
programs for specific majors or professions. For example, many offer 
programs for teachers, doctors, and other high-need professions in 
their states. The programs provide incentives for studying in such 
fields and terms and benefits tailored to the profession.
    A multitude of options is only useful to students and families in 
conjunction with effective financial literacy education and 
individualized counseling. Students must have access to tools and 
programs to help them evaluate each option and make an informed 
decision on which will best fit their needs now and in the future. EFC 
members work with students and families in-person and virtually to 
ensure they understand their options for financing their education and 
encourage them to only take on debt they will be able to manage by 
incorporating over-borrowing prevention strategies into their 
alternative loan programs and comprehensive financial literacy tools. 
These financial literacy tools provide information on financial aid 
options and processes, budgeting, credit scores, identity theft, 
default aversion, the impact of debt on lifestyle, responsible 
borrowing decisions, and consequences of over-borrowing.
    There is room for much improvement in the federal student aid 
system. Students and families deserve an easier-to-understand process 
of paying for college with fewer complexities, affordable options, and 
financial education that works. EFC members have played a significant 
role in helping students and families finance higher education for 
decades and stand ready to help coordinate and implement beneficial 
changes to the student aid system.
                                 ______
                                 
    [Additional submission of Mr. Barletta follows:]

 Prepared Statement of the Pennsylvania Association of Private School 
                         Administrators (PAPSA)

    The Pennsylvania Association of Private School Administrators 
represents the more than 300 for-profit career schools, colleges and 
universities in the Commonwealth.
    Like the rest of the country, PAPSA is deeply concerned about the 
complexity of federal student aid, and may have a partial solution to 
the problem. PAPSA believes that if schools were allowed to limit the 
amount of aid a student receives, it would greatly ``streamline'' the 
repayment process. With smaller and fewer loans, there would be less to 
pay back, and pay back would be done in less time. The outcome: less 
complexity and less student debt.
    Allowing schools to limit the amount of aid to students will help 
to simplify the ``complex patchwork of grants, loans, and institutional 
support programs'' as the committee so aptly puts it. Limiting loans 
will reduce the confusion of applications, redundant paperwork, and the 
many different loan programs and repayment initiatives, making the 
whole process easier for students AND schools.
    Currently, many schools just process all of the aid available to a 
student so they are not cited by the Department. This can be confusing 
for families, especially if they did not want all of the loans 
available.
    Furthermore, schools have been reporting for years stories of 
students asking for all the financial aid they are entitled to, paying 
their tuition and then walking away with thousands of dollars which 
ends up paying for a newer car, Christmas presents, plastic surgery or 
big parties which the school usually ends up hearing about. These cash 
stipends can be, in one case, as high as $24,000 for an associate 
degree.
    Despite the best efforts of schools to curb overborrowing, the U.S. 
Department of Education mandates that schools must disclose to students 
all the loan money they are entitled to borrow. What schools in 
Pennsylvania have found is that over borrowing is a big part of the 
loan debt problem, especially among unsophisticated borrowers. And it 
is increasing despite aggressive loan counseling.
    The problems PAPSA sees now with overborrowing will only be 
exacerbated in the future. PAPSA would like to see Congress or the US 
Department of Education consider additional methods beyond counseling 
for limiting student borrowing. These methods will help simplify the 
student aid process and in the end, save student and taxpayer monies.
                                 ______
                                 
    [Whereupon, at 12:06 p.m., the committee was adjourned.]

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