[Senate Hearing 113-861]
[From the U.S. Government Publishing Office]


                                                        S. Hrg. 113-861
 
                 THE ROLE OF STATES IN HIGHER EDUCATION

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

                                 HEARING

                                 OF THE

                    COMMITTEE ON HEALTH, EDUCATION,
                          LABOR, AND PENSIONS

                          UNITED STATES SENATE

                    ONE HUNDRED THIRTEENTH CONGRESS

                             SECOND SESSION

                                   ON

            EXAMINING THE ROLE OF STATES IN HIGHER EDUCATION

                               __________

                             JULY 24, 2014

                               __________

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                                Pensions
                                
                                
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          COMMITTEE ON HEALTH, EDUCATION, LABOR, AND PENSIONS

                       TOM HARKIN, Iowa, Chairman

BARBARA A. MIKULSKI, Maryland			LAMAR ALEXANDER, Tennessee
PATTY MURRAY, Washington			MICHAEL B. ENZI, Wyoming
BERNARD SANDERS (I), Vermont			RICHARD BURR, North Carolina
ROBERT P. CASEY, JR., Pennsylvania		JOHNNY ISAKSON, Georgia
KAY R. HAGAN, North Carolina			RAND PAUL, Kentucky
AL FRANKEN, Minnesota				ORRIN G. HATCH, Utah
MICHAEL F. BENNET, Colorado			PAT ROBERTS, Kansas
SHELDON WHITEHOUSE, Rhode Island		LISA MURKOWSKI, Alaska
TAMMY BALDWIN, Wisconsin			MARK KIRK, Illinois	
CHRISTOPHER S. MURPHY, Connecticut		TIM SCOTT, South Carolina
ELIZABETH WARREN, Massachusetts
                      Derek Miller, Staff Director

        Lauren McFerran, Deputy Staff Director and Chief Counsel

               David P. Cleary, Republican Staff Director

                                  (ii)

  
                           C O N T E N T S

                               __________

                               STATEMENTS

                        THURSDAY, JULY 24, 2014

                                                                   Page

                           Committee Members

Harkin, Hon. Tom, Chairman, Committee on Health, Education, 
  Labor, and Pensions, opening statement.........................     1
Alexander, Hon. Lamar, a U.S. Senator from the State of 
  Tennessee, opening statement...................................     2
Franken, Hon. Al, a U.S. Senator from the State of Minnesota.....     4
Isakson, Hon, Johnny, a U.S. Senator from the State of Georgia...    31
Warren, Hon. Elizabeth, a U.S. Senator from the State of 
  Massachusetts..................................................    32
Murphy, Hon. Christopher, a U.S. Senator from the State of 
  Connecticut....................................................    34
Murray, Hon. Patty, a U.S. Senator from the State of Washington..    40

                               Witnesses

Kaler, Eric, Ph.D., President, University of Minnesota, 
  Minneapolis, MN................................................     6
    Prepared statement...........................................     7
Lubbers, Teresa, Commissioner, Indiana Commission for Higher 
  Education, Indianapolis, IN....................................    12
    Prepared statement...........................................    14
Madigan, Hon. Lisa, Attorney General, State of Illinois, Chicago, 
  IL.............................................................    16
    Prepared statement...........................................    18
Perna, Laura, Ph.D., Professor and Chair of the Higher Education 
  Division, University of Pennsylvania, Philadelphia, PA.........    21
    Prepared statement...........................................    23

                          ADDITIONAL MATERIAL

Statements, articles, publications, letters, etc.:
    Georgia State University, Complete College Georgia, 2013 
      Status Report..............................................    49
    Letters:
        Coalition of Higher Education Assistance Organizations 
          (COHEAO), Washington, DC...............................    56
        Campus Partners, Winston-Salem, NC.......................    58

                                 (iii)
                                 


                 THE ROLE OF STATES IN HIGHER EDUCATION

                              ----------                              


                        THURSDAY, JULY 24, 2014

                                       U.S. Senate,
       Committee on Health, Education, Labor, and Pensions,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 10:05 a.m., in 
room 430, Dirksen Senate Office Building, Hon. Tom Harkin, 
chairman of the committee, presiding.
    Present: Senators Harkin, Alexander, Murray, Franken, 
Murphy, Warren, and Isakson.

                  Opening Statement of Senator Harkin

    The Chairman. Good morning. The Health, Education, Labor, 
and Pensions Committee will come to order.
    The hearing today is on the role of States in higher 
education. Since the establishment of State land-grant 
universities, our country has rightly recognized higher 
education as an essential public good, in the national 
interest. But States have also played a critical role to an 
affordable college education through investing and being a key 
player in oversight and developing strategies to increase 
degree attainment.
    So there is a lot of our history to be proud of, but I 
think it's time to re-examine the States' role in light of 
today's challenges. Now, the steady erosion of State investment 
in public higher education over the last few decades reflects a 
stunning abdication of responsibility on the part of States to 
preserve college affordability. Also, too few low-income and 
minority students graduate from college, and States can and 
must play a more ambitious role in boosting degree attainment 
among these students.
    One of the biggest takeaways from our committee's many 
hearings that we've had on college affordability is the direct 
link between rising college costs and long-term State 
disinvestment in higher education. There have been a lot of 
reasons why tuitions have gone up and kids are borrowing more 
money. But the single largest factor, at least as it's come 
through in our hearings, has been the State abdication of that, 
State disinvestment. For example, when measured per student, 
State funding for public higher education is actually lower 
today than it was in 1980, adjusted for inflation. Public 
colleges have responded by raising tuition, leaving the 
students and their families to borrow more money and take on 
that financial burden.
    Public institutions of higher education, which educate over 
70 percent of students in this country, are now approaching an 
historic turning point: for the first time ever in nearly half 
of the States, students will be paying more than their State 
governments for their public higher education. I think we must 
stem this tide and get States back in the game and meeting 
their responsibility for higher education.
    So today, we will also examine the critical role that 
States play in providing oversight and consumer protections in 
our higher education system. From abuses in student loan 
servicing to predatory practices at many for-profit colleges, 
we have seen State law enforcement officers fill a consumer 
protection void that has hurt students and student loan 
borrowers. Recently, we have seen a bipartisan group of nearly 
three dozen State attorneys general, including one of our 
witnesses here today, the attorney general of Illinois, take a 
leading role in standing up for students and taxpayers by 
undertaking investigations and initiating lawsuits to end these 
practices.
    States can also play a leading role in developing 
innovative practices to help students stay in school and attain 
a degree, and we'll be hearing about that again from Dr. Kaler 
from Minnesota. We need to help more States pursue these types 
of innovations to help more students complete postsecondary 
education.
    In my recently released discussion draft to guide 
reauthorization of the Higher Education Act, I have put forward 
proposals specifically designed to get States back in as a 
partner in higher education. I'm not saying that's the end-all 
and be-all, but I'm saying that we have to find some creative 
ways to incentivize States to invest more robustly in public 
higher education and to help students, especially low-income 
students and first-generation students, to get through college.
    As I have said, we have plenty to celebrate as we look back 
at our investment in higher education in this country, but new 
challenges today demand new solutions. I look forward to 
working with this committee, with our Ranking Member, Senator 
Alexander, and my colleagues to ensure that a pathway to the 
middle class is strongly in place for future generations.
    With that, I will yield to Senator Alexander for his 
opening statement.

                 Opening Statement of Senator Alexander

    Senator Alexander. Thanks, Senator Harkin.
    I want to thank Senator Harkin for a series of really good 
hearings that we've had on reauthorizing the Higher Education 
Act, and I want to thank our witnesses for coming today. I look 
forward to learning from you.
    One thing we agree on is that we should strive to have more 
Americans with a college degree. The President agrees with 
that. The Governor of Tennessee agrees with that. I agree with 
that. Senator Harkin agrees with that. It might be Associate's 
or Bachelor or beyond, but we need more graduates for the era 
we're in.
    But we need to keep in mind that in achieving that, the 
Federal Government plays a limited role. States must lead the 
way. As Senator Harkin said, three out of four undergraduate 
students attend public 2-or 4-year institutions governed by 
States that receive substantial State funding. They attend 
those institutions because they're good and, in part, because 
they're affordable. The average in-State tuition fees are 
$8,600 for a 4-year institution, $3,100 for a 2-year 
institution. The Federal Government provides some funding to 
help students gain access. The Pell grant goes up to $5,700. It 
averages about $3,600 for a typical low-income student. The 
first 2 years of college, therefore, are basically free. 
Students are eligible for more in grants than the cost of 
tuition.
    The Federal Government also makes about $100 billion in 
loans available to students. That can be up to about $7,500 a 
year for a typical dependent undergraduate student.
    But despite all of those Federal dollars, the Federal 
Government is still a minority investor in higher education. 
According to the State Higher Education Executive Officers 
Association, public colleges and universities, these are the 
ones that three out of four Americans attend--received about 
$143 billion in 2013; $81 billion of that came from State and 
local revenues, $61 billion from tuition. That includes Pell 
grants and Federal loans.
    States continue to play the biggest role financially. Every 
Governor knows that and knows how important that is, and many 
are doing very innovative work. For example, the Governor of 
Tennessee, Bill Haslam, has a Drive for 55 campaign aimed at 
having 55 percent of Tennesseans with a postsecondary degree. 
As a part of that effort, he signed legislation this year 
making Tennessee the first State to make 2 years of community 
college free for every high school graduate in the State.
    Many States are implementing performance-based or outcomes-
based funding models. I imagine we'll hear about that today. 
Tennessee has one of those. One hundred percent of the money is 
distributed that way. Other States are working to create new 
programs for adults and veterans. I'm especially interested in 
how the Federal Government is getting in the way of State 
innovation.
    One way is the complexity of the Federal financial aid 
system. Senator Bennet and I have announced our effort to 
reform the Federal application--the FAFSA, which is 108 pages 
long, and I just got today this book that respected educators 
have written for the 20 million families that are filling this 
absurd thing out when we've had testimony from witnesses that 
say that we can get 95 percent of what we need to know by 
asking two questions--what was your income, and what's your 
family size. That's one example of how we're getting in the 
way, and together I think we might be able to change that.
    A second is too many Federal regulations. The former 
President of Stanford said it cost 7 percent of their budget to 
fill all the regulations out. The current President of Stanford 
was by this week and he said that 42 percent, according to a 
National Science Foundation study, 42 percent of a principal 
investigator's time is spent on administrative matters. That's 
probably twice the amount of time that it ought to be. That's 
billions of dollars wasted.
    And we hear a lot, and Senator Harkin and I have gone back 
and forth about this a little bit in the past, maybe we will 
some more today, about States not spending as much on higher 
education. That's true. When I was Governor, States spent 70 
percent, Tennessee did. We paid for 70 percent of a student's 
college education. The student paid 30. That has flipped. Now 
it's 30 percent is paid by the State, 70 percent by the 
student. But the principal culprit is Medicaid. It's the 
Federal requirements on States to pay for Medicaid. It was 30 
years ago when I was Governor. Thirty years ago, Medicaid was 8 
percent of the State budget. Today it's 30 percent of the State 
budget, and those dollars come mostly out of higher education. 
That's not just my opinion. Peter Orszag, Thomas Kane of 
Brookings have written extensively about that. Mr. Orszag was 
President Obama's budget director. Lieutenant Governor Ravitch 
of New York has written extensively about how the Federal 
requirements for Medicaid on States has the effect of taking 
money away from higher education, and that's why tuitions go up 
around the country.
    We can talk more about that, but the stimulus bill made 
that worse, the health care law expansion made that worse. 
Federal strings are well intentioned, but the unintended 
consequence is higher tuition and higher costs for students.
    I look forward to what the witnesses have to tell us today, 
and I thank Senator Harkin for having another excellent 
hearing.
    The Chairman. Thank you very much, Senator Alexander.
    I will now introduce our panelists, and then we'll take 
testimony. But I would invite Senator Franken to introduce our 
first witness, Dr. Kaler.
    Senator Franken.

                      Statement of Senator Franken

    Senator Franken. Thank you, Mr. Chairman.
    I'm very pleased to introduce Dr. Eric Kaler, the president 
of the University of Minnesota. President Kaler brings 
extremely valuable experience to this hearing as a witness. He 
served as president of EU for the past 3 years. In addition to 
that, just last April President Kaler was elected a member of 
the American Academy of Arts and Sciences. He was elected in 
two categories for his work as a chemical engineer and as a 
higher education administrator.
    In his first budget request to the Minnesota legislature, 
President Kaler worked with Governor Dayton to institute a 
tuition freeze for undergraduates for the 2013-2014 academic 
year, and the second tuition freeze was just approved for 
another academic year, a significant victory for Minnesota 
students and their families.
    In addition, President Kaler has been extremely successful 
in attracting research dollars to the University of Minnesota. 
He has brought in $35.8 million in research investments from 
the State of Minnesota. I'm particularly excited about his 
initiative called MnDRIVE, which makes sure that university 
research is more aligned with the State's most pressing needs 
and key industries.
    In 2010, President Kaler was elected to the National 
Academy of Engineering. In 2012, then Secretary of Homeland 
Security Janet Napolitano named him to the U.S. Department of 
Homeland Security Academic Advisory Council.
    Dr. Kaler received his Ph.D. in Chemical Engineering from 
the University of Minnesota in 1982. Before coming back to the 
university he served in 2007 to 2011 as Provost and Senior Vice 
President for Academic Affairs at Stony Brook University in New 
York.
    President Kaler is a knowledgeable champion for students, 
and I'm very pleased that he is a witness here today.
    The Chairman. Thank you very much, Senator Franken.
    I might add that my wife is a graduate of the University of 
Minnesota. Her sister is a graduate of Minnesota. Her sister is 
a graduate of the law school, and my niece just graduated from 
law school at the University of Minnesota. So, a lot of 
Minnesota contacts.
    Our next witness is Teresa Lubbers, who serves as Indiana's 
Commissioner for Higher Education. Prior to joining the 
Commission in 2009, Commissioner Lubbers served in the Indiana 
State Senate for 17 years, including service as Chair of the 
Senate Education and Career Development Committee.
    You should feel right at home here then.
    As Commissioner, Ms. Lubbers has worked to increase college 
completion, improve productivity, and ensure academic quality 
while also controlling college costs. She holds an 
undergraduate degree from Indiana University and a Master's in 
Public Administration from the Kennedy School of Government at 
Harvard.
    Our next witness is the attorney general of Illinois, Lisa 
Madigan, the first woman elected to serve as attorney general 
of that State. Since taking office in 2003, Attorney General 
Madigan has been a national leader in protecting consumers, 
safeguarding communities and advocating for students. She has 
been outspoken about the consumer risk, including excessive 
student debt, associated with for-profit colleges.
    Prior to becoming attorney general, she served in the 
Illinois Senate, worked as a litigator for a Chicago law firm, 
earlier in her career was a teacher, I understand, developing 
after-school programs to keep kids away from drugs and gangs.
    Attorney General Madigan is a graduate of Georgetown 
University and Loyola University School of Law.
    Our final witness would be Dr. Laura Perna. Dr. Perna is 
executive director of the Alliance for Higher Education and 
Democracy and professor in the Graduate School of Education at 
the University of Pennsylvania. She is past vice president for 
Postsecondary Education at the American Educational Research 
Association and is president-elect of the Association for the 
Study of Higher Education.
    Her research examines the ways that social structures, 
educational practices, and public policies promote and limit 
college access and success, particularly for individuals from 
lower-income families and ethnic minority groups.
    Dr. Perna holds a Bachelor's degree in Economics and 
Psychology from the University of Pennsylvania, a Master's in 
Public Policy, and a Ph.D. in Education from the University of 
Michigan.
    We have a very distinguished panel, very knowledgeable in 
the areas in which we're concerned.
    All of your statements will be made a part of the record in 
their entirety.
    What I'd like to ask--we'll start with Dr. Kaler--if you 
could sort of give us a summary in 5 minutes or so, and we'll 
go down the line, and then after that we'll open it for 
questions and discussion.
    Dr. Kaler, welcome, and please proceed.

   STATEMENT OF ERIC KALER, Ph.D., PRESIDENT, UNIVERSITY OF 
                   MINNESOTA, MINNEAPOLIS, MN

    Mr. Kaler. Thank you, Senator Harkin; and thank you, 
Senator Franken. I thank you on behalf of all Minnesotans, 
including those above-average ones from Lake Wobegon, for your 
service and your regular visits with students on our campus.
    Good morning, Senator Alexander, and members of the 
committee.
    I come before you today to share how the University of 
Minnesota is addressing the most critical issues in higher 
education today: first, ensuring access and affordability; 
second, forging strong partnerships to achieve student success; 
and third, establishing programmatic innovations to assure 
students, particularly low-income students, get their degrees 
in a timely fashion.
    I also come here to urge you to fully support our students 
and our State through reauthorization of the Higher Education 
Act legislation, and I thank you for this opportunity.
    I think we all know the value of a public college degree 
for our students and our States; in fact, for the entire 
Nation's vitality. It has never been higher. The cost, too, has 
also never been higher. As States have reduced their support, 
families and students have borne the brunt of tuition 
increases. The burdens of student debt have become central to a 
national conversation about the cost of going to college. But 
our experience in Minnesota provides some perspective on the 
national narrative about debt which tends to focus on the 
outliers, that small number of students with $75,000 or even 
$100,000 in undergraduate student debt.
    In a perverse definition of ``average,'' most analyses only 
include those with debt, ignoring, at the University of 
Minnesota, for example, 37 percent of our students graduate 
with no debt at all. But still, this trend of increased higher 
education costs for families, especially middle-class families, 
cannot continue. Since becoming president of the University of 
Minnesota in 2011, I have put accessibility and affordability 
at the top of my agenda. My first budget included the lowest 
tuition increase in more than a decade, and for the past 2 
years we achieved an historic tuition freeze for Minnesota 
resident undergraduates.
    This was a significant achievement, especially given State 
disinvestment which, over the past decade, was among the 
largest nationally. Since then, the State and the university 
have developed a partnership of shared accountability. First, 
the university pledged to tackle administrative costs. We 
pledged to redirect $90 million, $90 million over a 6-year 
period from administrative activities to our missions, and 
we're ahead of schedule in doing that.
    The university also agreed to accountability targets. We 
invested in financial aid to assist students and families. We 
award our students nearly $340 million of financial aid 
annually. Counting all students, those with debt and those 
without, the average per-capita burden on our students when 
they graduate is about $16,500. That, to me, is a good 
investment, particularly when you consider the lifetime 
earnings of college graduates.
    Our commitment to student support includes a series of 
innovative programs designed specifically to support low-income 
students, students of color, and first-generation college 
students. I outlined them in my written testimony, and I'm 
proud of our work in this area.
    But as you noted, applying for financial aid should be 
easier. Students and their families are burdened by a confusing 
collection of forms and websites in the process of seeking 
financial aid, and I urge you to help simplify the financial 
aid process.
    In closing, I offer these thoughts as you consider 
reauthorizing the Higher Education Act. I encourage you to 
create incentives to stop the decline of State investment, to 
promote affordability and access, to support partnerships, and 
to fuel innovative programs like those at Minnesota. I urge you 
to ensure Federal financial aid funding is targeted to 
institutions with high retention and high graduation rates. And 
finally, I urge you to look at the regulatory burdens imposed 
on us by the Federal Government not only related to financial 
aid but throughout our research enterprise as well.
    Mr. Chairman, members of the committee, we are all in this 
together to assure higher education's accessibility and the 
success of the next generation of our Nation's leaders.
    Thank you again, Chairman Harkin, for your focus on 
affordability and our students and an opportunity for me to be 
with you today.
    [The prepared statement of Mr. Kaler follows:]

               Prepared Statement of Eric W. Kaler, Ph.D.

                                summary
    President Kaler's testimony will focus on ways his administration 
has strengthened the University's partnership with the State of 
Minnesota, and he will detail programs the University developed to 
enhance retention and graduation rates among students of color and low-
income students.
    He will detail the impact of the Great Recession on State funding 
of his university and others, but also point out that student financial 
debt burdens at the University of Minnesota and other land-grant 
universities, are not as onerous as the popular narrative has 
suggested. The value of a college degree must be measured against any 
debt.
    He will offer insights into the various partnerships required for 
low-income and students of color to succeed in gaining degrees in 4 
years. He will emphasize the need for a five-way partnership to drive 
down costs and debt. Those partnerships require the support and 
commitment of the higher education institutions, their respective 
States, business and industry, students and their parents, and also 
Congress and the Federal Government.
    He will report on specific efforts his administration has 
undertaken to reduce costs, freeze tuition and invest in support 
services for students.
    He will detail the changing role of State support for his 
university, moving more deeply into a research funding partnership, a 
role usually reserved for the Federal Government.
    Finally, he will offer recommendations to the Higher Education Act 
that can help all States improve their systems of higher education and 
financial aid.
                                 ______
                                 
    Thank you, Senator Franken. I am honored to join you here today. I 
am used to seeing you on our campuses, visiting regularly with 
University of Minnesota students, and sharing your concerns about their 
lives, their families, and the affordability and value of a college 
education. Thank you for always focusing on our students.
    Good morning, Senator Harkin, and members of the committee. It's an 
honor to testify before a committee chaired by a graduate of Iowa State 
University, one of our neighboring land-grant peer institutions. And 
it's a pleasure to be before Ranking Member Senator Alexander of 
Tennessee, birthplace of my wife, Karen, a proud graduate of another 
land-grant university, the University of Tennessee.
    I come before you today to share how the University of Minnesota is 
addressing three of the most critical issues in higher education today:

     First, ensuring access and affordability;
     Second, forging strong partnerships to achieve student 
success;
     And third, establishing programmatic innovations to ensure 
students--particularly, low-income students--get their degrees in a 
timely fashion, prepared for life and work.

    I also come here to urge you to find the will and the way to more 
fully support our students and our State through the reauthorization 
Higher Education Act legislation. While I am focusing on our experience 
in Minnesota, I know it is similar to that of public higher education 
institutions across the country. Many of my peers in your home States 
are also engaged in addressing these critical issues. Thank you for 
this opportunity.
                                overview
    The value of a public college degree for our students and our 
States--for the entire Nation, really--has never been higher. More jobs 
than ever require a degree. But costs are higher than ever, too.
    Since the Great Recession, State disinvestment in public higher 
education has been profound. As a consequence, tuition has risen 
dramatically. The burden of student debt has become central to a 
national conversation--sometimes driven by emotion and not facts--about 
the cost and value of higher education.
    Meanwhile, we are leaders in investing in innovative ways to teach 
and for our students to learn, be it in thoughtfully designed ``active 
learning'' classrooms, through so-called ``hybrid'' or ``flipped'' 
courses, through online options, or through somewhat trendy and still 
developing MOOCs, or Massive Open Online Courses. We are on the 
frontlines of pedagogical change.
    While the Higher Education Act focuses on our teaching mission, we 
have at least two other missions that are equally critical for our 
students and our Nation's vitality: research and public engagement.
    Public land-grant institutions have long been this Nation's most 
logical and critical partners with States and the Federal Government 
for groundbreaking discoveries and cures, and for developing new 
knowledge, new products and new processes to keep the United States 
competitive. Our research mission is inextricably linked to our 
educational mission. If you want a strong and robust education, we must 
ensure our Federal research support is also robust.
    Public higher education institutions and their States are also 
active partners in public engagement and community outreach, be it via 
rural nutrition and wellness programs, dental clinics for New 
Americans, or helping to close the economic and educational achievement 
and opportunity gaps, a social inequality crisis that must be narrowed 
for our Nation to continue to prosper. This public engagement mission, 
too, benefits students who are actively engaged in civic and community 
projects for academic credit.
    As you consider reauthorizing HEA, I urge you to keep in mind the 
tripartite mission of America's great land-grant universities. Consider 
all that we do.
                        university of minnesota
    For context, let me tell you a bit about the University of 
Minnesota. Our flagship Twin Cities campus has more than 48,000 
undergraduate, graduate and professional students, and our four other 
campuses across Minnesota educate another 15,000 students annually. Our 
research enterprise is ranked as the 9th most active among public 
universities in the United States, with annual expenditures of about 
$700 million.
    Every year, we award a wide range of degrees to about 15,000 
students, fueling Minnesota's workforce and driving the State's and 
region's very healthy economy. Indeed, as Senator Harkin knows, the 
Upper Midwest is among the Nation's most vibrant regions.
    In our classrooms, laboratories and recital halls, we prepare the 
next generation of leaders--including Members of Congress. Former 
Senators and Vice Presidents Hubert Humphrey and Walter Mondale are 
among our alumni, as are current members of the House of 
Representatives Keith Ellison and Rick Nolan.
    Through our research we tackle the grand challenges of our State, 
Nation and the world--from climate change to diabetes to safely feeding 
the world. And we partner with our communities to help our citizens 
face critical problems, from the future of urban density to viruses 
devastating the pork industry.
                        affordability and access
    Affordability and access may be the most pressing issues facing 
higher education today. When I became president in 2011, I put these 
issues at the top of my agenda and they are still there. My first 
budget included the lowest tuition increase at our University in more 
than a decade, and for the past 2 years we achieved an historic tuition 
freeze for resident undergraduate students. That is, a zero increase in 
tuition for most of our students.
    This was a significant achievement, especially given State 
disinvestment, which, over the past decade, was among the steepest 
nationally. As you may know, from 1999 to 2011, the investment per 
capita that States allocated to higher education declined about 23 
percent. But in Minnesota, over that same 12-year period, the decline 
was 48 percent, putting us well below the national average of funding 
students in higher education and headed toward the lower quartile. We 
had begun that 12-year span in the upper quartile.
    Put another way: 15 years ago in Minnesota you showed up with a 
dollar to put toward the cost of a University education and the State 
showed up with two dollars. Now, a student and her family show up with 
a dollar, and the State of Minnesota shows up with just 50 cents. That 
is the magnitude of the cost shift from State support to increased 
tuition that our students and their families experienced.
    Today, while we have successfully reinvigorated our partnership 
with the State of Minnesota and it is reinvesting in its only land-
grant university, we're still 14 percent below the level of State 
support we received 6 years ago.
    In the wake of such disinvestment, it was time for creativity and 
action. I'm thankful to Governor Mark Dayton and members of our 
legislature--on both sides of the aisle--for strengthening the State of 
Minnesota's relationship with us.
    Specifically, we achieved that tuition freeze through shared 
accountability. First, the University pledged to tackle administrative 
costs. We pledged to redirect $90 million over a 6-year period from 
administrative activities to support our missions. I'm pleased to 
report we're ahead of schedule. We are doing more with less. We are 
teaching more students and graduating them at a far better 4- and 6-
year rate. At the same time, our employee head count has remained 
relatively flat.
    The University also agreed to accountability targets. We pledged to 
State leaders that we would increase the number of invention 
disclosures by faculty, confirming our role as fueling the State's 
innovation culture. We also pledged to increase the number of total 
graduates, the number of Science, Technology, Engineering and Math 
(STEM) students, and the graduation rates of students of color. We've 
kept our pledges.
    On the affordability front, we have also invested in financial aid 
to assist students and families. Overall, we award our students nearly 
$340 million of financial aid annually. If you are from a family with 
no ability to contribute to your education, State, Federal and 
institutional grant aid will cover your full cost of attendance at the 
university.
    While student debt is a critical national issue, these programs 
have helped offset the impact at Minnesota. Among our undergraduate 
class of 2013, 37 percent completed their degrees carrying no debt at 
all. Let me repeat: Zero debt. That is 6 percentage points better than 
the national average of 31 percent of students graduating with no debt.
    Counting all students--those with debt and those without--the 
average per capita burden on our students when they graduate is about 
$16,500. That, to me, is a good investment, particularly when you 
consider that the lifetime earnings of college graduates are 
considerably greater than those in the workforce without degrees. 
Perhaps that's why our students default at a rate of only about 3 
percent, significantly below the national average.
    Our experience and data counters much of the national narrative 
about debt, which tends to focus on the ``outliers,'' the very small 
number of students with $75,000 or $100,000 in undergraduate debt. For 
students from families earning less than $30,000 per year, we are 
Minnesota's most affordable higher education option, public or private.
    Our institutional commitment to financial aid includes the 
University of Minnesota Promise Scholarship Program (U Promise), which 
provides more than $30 million annually in scholarships to more than 
13,000 low- and middle-income Minnesota resident students. Eligible 
freshmen and new transfer students--including those eligible for the 
Minnesota Dream Act--with family incomes of up to $100,000 receive a 
guaranteed, multi-year scholarship, ranging from $570 to $4,000 
annually.
    We proactively award work-study funds to all new, eligible freshmen 
students. Our aim is to ensure that eligible students, especially low-
income students, have an opportunity to receive not only the financial 
benefits of a work-study-funded position, but also the academic and 
social benefits of working on campus.
    Affordability is a shared responsibility. The State of Minnesota 
provides a robust State Grant program. The Federal Government supplies 
Pell grants. And the University provides hundreds of millions of 
dollars in institutional aid, much of it through the generosity of 
donors. But we also must rely on another important team of partners--
parents and students--who, if they are able, save for college, live 
prudently while they are enrolled, and complete their degrees in 4 
years.
    One additional point that's a pet peeve of mine: students and their 
families are regularly burdened by an often confusing and classically 
Byzantine collection of forms, applications, websites and passwords in 
the process of seeking financial aid. It is enough to discourage them 
from gaining access to aid. I urge the Federal Government to help 
simplify the financial aid process and regulatory burdens.
                       promoting student success
    To lower the cost of education for students, we made investments to 
enhance retention and increase graduation rates. If you don't earn a 
degree at all, or it takes 6 or more years, it's simply more expensive. 
It adds years of tuition--and, often, onerous debt--to one's personal 
balance sheet.
    Mr. Chairman, you can't graduate students if you don't retain them. 
Our first-year student retention rate is now at about 91 percent, 
comparable to top-flight private schools. There is only a 0.5 percent 
difference in first-year retention rates between students of color and 
the rest of our freshmen.
    We are now focused on improving graduation rates for low-income and 
first-generation students. We have invested in programs specifically 
designed to achieve that goal. The President's Emerging Scholars 
Program (PES) is an initiative designed for students who have faced 
challenges that may have negatively affected their high school metrics, 
but whose personal experiences and high school records indicate 
potential for collegiate success.
    The President's Emerging Scholars Program ensures that students 
have the academic and personal support necessary to achieve academic 
success. It is built around three programmatic elements:

    (1) Activities that create a strong sense of belonging to the 
University community, including a summer seminar;
    (2) Academic guidance and support to ensure a successful and timely 
degree completion, including peer mentoring and professional advising;
    (3) And financial aid support to make a University education 
possible for eligible students if they remain on track.

    A related initiative--Retaining all Our Students--builds upon the 
success of the President's Emerging Scholars Program. I was honored to 
attend the White House College Opportunity Summit last January to 
introduce this initiative. It focuses on improving the first-year 
retention of low-income University students, defined as Pell grant 
recipients, and is built around four components:

    (1) An enhanced financial literacy program specifically designed to 
meet the needs of low-income students and their families. When compared 
to other students, low-income students are less familiar with the many 
possible sources of scholarships and other financial support, are less 
comfortable with taking out loans to support their education, and are 
less familiar with on-campus employment opportunities;
    (2) Incentives for low-income students to participate in a summer 
seminar to keep them educationally engaged when classes are not in 
session;
    (3) The development of better success-tracking tools for academic 
advisers to monitor the academic progress and enhance the advising of 
these students during their critical first year;
    (4) And promoting available services and connecting low-income 
students with peer tutors.

    These efforts build on State and Federal investments and help to 
guide low-income students toward graduation in a timely fashion, 
reducing debt and changing their lives.
                        shared responsibilities
    Let me turn now to the shared responsibility for an affordable, 
accessible and excellent higher education system in our State and 
Nation. In my view, those of us determined to positively shape the 
future of public higher education--particularly for our land-grant, 
major research universities--must forge a strong five-way partnership.
    As this hearing today suggests, the States are central to this 
partnership. But, so, too, are universities, the Federal Government, 
business and industry, and students and families themselves.
    Specifically:

    The role of colleges and universities is to educate and graduate 
our students, along the way helping to transform them into lifelong 
learners and leaders, but we must demonstrate accountability for our 
costs, and innovation in delivering education;
    The role of our respective States is as critical as ever to invest 
in higher education and our students, and to partner with us and the 
private sector in economic development, job creation and workforce 
development;
    The role of industry and businesses is to work with institutions 
and government to help fund, prepare and hire our graduates, who are 
the States' and Nation's talent force;
    The role of students and their families is to aspire to success, 
and to strive to complete their degrees in 4 years, making smart and 
informed financial choices along the way;
    And, finally--but not least--you in Congress and the Federal 
Government have a critical role to fully and creatively support access 
for low-income students, support groundbreaking research, and, in so 
doing, advance larger national strategic goals for the common good.
    Each of us has responsibilities to strengthen this partnership and, 
in some cases, to adjust our past roles to address the needs of today--
but more importantly, tomorrow and the years to come. It is not 
alarmist to State the Nation needs a diverse and highly educated 
workforce. It is a fact of global life. And we are all in this 
together.
                     promoting economic development
    Another way in which the University of Minnesota has been 
innovative is to forge a strong partnership with the State of Minnesota 
and its business community to promote economic development by matching 
the State's needs with our world-class research.
    Last year, the State of Minnesota recognized that some areas of 
research impact its citizens directly, and the State is now playing a 
role in helping to invest in University projects that align with some 
of Minnesota's key and emerging industries. In 2013, the legislature 
established the landmark Minnesota Discovery, Research InnoVation 
Economy initiative, or MnDRIVE.
    We identified four areas of opportunity that leveraged the 
University's intellectual strengths with Minnesota's business and 
industry strengths:

     Robotics and sensors for advanced manufacturing at a time 
when Minnesota and the Nation need to rebuild our manufacturing base;
     Global food ventures, a natural for a State in which 
nearly 20 percent of our economy is tied to agribusiness, and where we 
have a deep tradition in world-leading food production, protection and 
safety;
     Water quality issues around mining, agriculture and other 
industries;
     And brain conditions, mostly around neuromodulation, which 
will build on Minnesota's strengths as the center for medical devices 
in the United States and the world.

    MnDRIVE is a new way for our State to partner with its flagship 
research institution. But, in the long run, I don't believe that States 
can or should be expected to ever assume the critical research funding 
role historically played by the Federal Government through, among 
others, the National Institutes of Health, the National Science 
Foundation, the Department of Defense or the Department of Energy.
    We need the Federal Government to be an unwavering partner in this 
area. We need the Federal Government to strongly support the creation 
of knowledge at land-grant institutions at which it's increasingly 
difficult for top researchers to gain grants, where junior researchers 
are struggling to obtain funding, and where, in the aftermath of the 
American Recovery and Reinvestment Act of 2009, research dollars have 
dried up.
                      recommendations/suggestions
    In closing, where does this leave us? As you reconsider the Higher 
Education Act, I would encourage you to examine incentives to stop the 
decline of State investment, to promote affordability and access, to 
support partnerships, and to fuel innovative programs that aid our 
students.
    Specifically, the University of Minnesota supports incentives to 
award Federal financial aid funding to institutions with high retention 
and graduation rates. Congress needs to make sure that Federal funds go 
to institutions that see their students succeed, advance in a timely 
fashion toward a degree, and, so, not incur unnecessary and excessive 
debt.
    The University of Minnesota would also support a move to a One 
Grant/One Loan/One Work program. As I mentioned earlier, the financial 
aid process is often confusing and cumbersome. One Grant/One Loan/One 
Work would streamline a system that is overly complicated for the 
student and overly burdensome for the institution. We would also 
support simplification of the Free Application for Student Aid Form, or 
FAFSA. These changes would result in no additional expense to the 
taxpayer.
    Finally, we urge you to look at the regulatory burdens imposed on 
us by the Federal Government on financial aid matters and throughout 
our extensive research enterprise. Excessive regulatory burden is 
expensive, adding to our administrative costs and draining funds from 
our educational and research mission.
                               conclusion
    Mr. Chairman, higher education is often accused of being aloof, of 
being ``academic,'' of residing in that mythical ``ivory tower.'' We 
are far from that. We are here on the front lines of innovation and job 
creation, of saving lives and nurturing new knowledge and ideas. 
Despite the historic cutbacks in our States, we continue to be called 
on everyday to solve our State's and Nation's Grand Challenges. In new 
and efficient ways, we are fulfilling our land-grant mission as first 
envisioned by Congress and President Abraham Lincoln 152 years ago.
    Members of the committee, we are worthy of your continued and 
increased support. We want to be your partners. We're all in this noble 
endeavor--to provide affordable excellence that leads to timely 
graduation for students from all economic backgrounds--together. It's 
our shared responsibility so that the next generation can share in our 
Nation's successes.
    Thank you for this opportunity.

    The Chairman. Thank you very much, Dr. Kaler.
    Mrs. Lubbers, welcome. Please proceed.

 STATEMENT OF TERESA LUBBERS, COMMISSIONER, INDIANA COMMISSION 
             FOR HIGHER EDUCATION, INDIANAPOLIS, IN

    Ms. Lubbers. Chairman Harkin, Senator Alexander, and 
members of the committee, thank you for this opportunity to 
testify. I serve as commissioner of Indiana's Coordinating 
Board of Higher Education. My testimony will emphasize that 
higher education is a shared responsibility among the States, 
institutions and students, and will underscore the importance 
of aligning Federal policies and funding with State student 
success agendas.
    I just returned from the annual meeting of the State Higher 
Education Executive Officers. Across the country we have many 
common challenges. Too few students make it to the finish line. 
On-time completion is the exception, especially for low-income 
and first-generation students. Our work across State lines 
helps us learn from each other, including in difficult areas 
such as ensuring academic quality.
    Indiana's sense of urgency may be greater than some States 
since we face an economy that no longer guarantees a good 
quality of life without education or training beyond high 
school. It's no coincidence that Indiana's per capita personal 
income and education attainment levels are nearly the same, 
around 40th in the Nation. We must convince Hoosiers that hard 
work and postsecondary credentials are required for the jobs 
that propel individuals and families up the economic ladder.
    Our goal in Indiana is to ensure that more students 
complete postsecondary credentials on time and at the least 
possible cost. Today I will highlight what we're doing to reach 
this goal, share how our colleges are responding, and offer a 
few recommendations based on the lessons we learned.
    What have we done in Indiana? First, we measure what we 
value. We publish three annual reports that are simple to 
understand and focus on our most important success metrics. The 
first indicates whether our students are ready for college. The 
second shows whether they graduate, and how those results 
differ by income, race, and ethnicity. The third conveys 
graduates' return on investment, their career opportunities 
balanced against the cost and debt they incur.
    Our reports demonstrate that affordability is not just 
about tuition, though efforts like Purdue University's 3-year 
tuition freeze certainly help. Costs escalate unnecessarily 
when students take longer than they need and borrow more money 
than they should.
    Further, many of the stumbling blocks students face are not 
of their own making. In Indiana, we reined in ``credit creep,'' 
extra credits that extended program length and time to degree. 
This commonsense change saved students time and money, about 
$35 million per year.
    Another recent law provides each student with a degree map 
that guarantees courses are available and prevents scheduling 
snafus that delay graduation. We also discovered that many 
students, even our student leaders, think that 12 credits per 
semester is enough to graduate on time, so we are rolling out a 
15-to-Finish campaign to make it clear that full-time is 15.
    We also pay for what we value. Our performance funding 
model rewards college completion and on-time graduation while 
embracing differing missions and upholding our commitment to 
at-risk students. We recently restructured State financial aid 
so that students take and complete the 30 credits they need 
each year to graduate within the 4-years the State will 
finance.
    How are colleges responding? They are changing the message 
they send to students. Indiana University reduced borrowing 11 
percent in 1 year by telling students how much debt they had 
accumulated and what their monthly payment would be. Their 
Indianapolis campus doubled the percent of students taking 15 
credits by changing their advising protocol to make 15 the 
default.
    Colleges are removing other stumbling blocks. Our community 
college system improved the success rate of students unprepared 
in math from 9 percent to 50 percent by delivering remediation 
at the same time students take credit-bearing work.
    Colleges are being proactive to help students succeed. 
Indiana State University now alerts students who are falling 
short of meeting the new State credit completion requirements, 
offering them free summer tuition and discounted housing so 
they can catch up.
    What have we learned, and what do we recommend? We learned 
that what we measure demonstrates what we value. We encourage 
the Federal Government to continue its progress toward 
measuring all students' success, not just that of first-time, 
full-time students.
    We learned that we can move stubborn numbers in a big way 
with the messages we send. We recommend that the Federal 
Government provide the same straightforward ``truth in 
lending'' for student loans that it has previously backed for 
mortgages and credit cards.
    We learned that financial aid policies drive institutional 
structures, which in turn drive student choices. We recommend 
that the Federal financial aid system do its part to increase 
affordability in three key ways: define full-time as 15 credits 
per semester, not 12; pay for completed courses, not attempted 
courses; and, as proposed, fund summer Pell so that summer can 
be used to either catch up or get ahead.
    I thank you for this opportunity to testify and will 
happily answer any questions.
    [The prepared statement of Ms. Lubbers follows:]

                  Prepared Statement of Teresa Lubbers

                                summary
    Across the country we have many common challenges: too few students 
make it to the finish line. On-time completion is the exception, 
especially for low-income and first generation students. Our work 
across State lines helps us learn from each other. Our goal in Indiana 
is to ensure that more students complete postsecondary credentials on 
time and at the least possible cost.
                     what have we done in indiana?
We measure what we value and use data to drive policy change.

     Reined in ``credit creep''--extra credits that extended 
program length and time to degree.
     Provide each student with a degree map that guarantees 
courses are available and prevents scheduling snafus that delay 
graduation.
     Rolling out a 15-to-Finish campaign to make it clear that 
full-time is 15.

We pay for what we value.

     Performance funding model rewards college completion and 
on-time graduation.
     State financial aid restructured so that students take and 
complete the credits they need to graduate on-time.
                  how are indiana colleges responding?
     They are changing the message they send to students--IU 
loan advising, advising protocols.
     They are removing other stumbling blocks--Ivy Tech 
remediation reform.
     They are being proactive to help students succeed--ISU 
outreach and free summer tuition.
            what have we learned, and what do we recommend?
     What we measure demonstrates what we value. Recommend: 
support ongoing efforts to expand IPEDS reporting beyond first-time, 
full-time students.
     We can move stubborn numbers in a big way with the 
messages we send. Recommend: the Federal Government provide ``truth in 
lending'' for student loans.
     We learned that financial aid policies drive institutional 
practices, which in turn drive student choices. Recommend: changes to 
Federal financial aid to increase affordability by limiting time to 
degree.

        Define full-time as 15 credits, not 12.
        Pay for completed courses, not attempted courses.
        Fund summer Pell so that summer can be used to either catch up 
        or get ahead.
                                 ______
                                 
    Chairman Harkin, Ranking Member Alexander and members of the 
committee, thank you for the opportunity to testify. My name is Teresa 
Lubbers, and I serve as Commissioner of Indiana's coordinating board 
for higher education. My testimony will emphasize that higher education 
is a shared responsibility among the States, institutions and students, 
and will underscore the importance of aligning Federal policies and 
funding with State student success agendas.
    I just returned from the annual meeting of the State Higher 
Education Executive Officers. Across the country we have many common 
challenges: too few students make it to the finish line. On-time 
completion is the exception, especially for low-income and first-
generation students. Our work across State lines helps us learn from 
each other, including in difficult areas such as ensuring academic 
quality.
    Indiana's sense of urgency may be greater than some States since we 
face an economy that no longer guarantees a good quality of life 
without education or training beyond high school. It's no coincidence 
that Indiana's per capita personal income and education attainment 
levels are nearly the same--around 40th in the Nation. We must convince 
Hoosiers that hard work AND postsecondary credentials are required for 
the jobs that propel individuals and families up the economic ladder.
    Our goal in Indiana is to ensure that more students complete 
postsecondary credentials on time and at the least possible cost. Today 
I will highlight what we're doing to reach this goal, share how our 
colleges are responding, and offer a few recommendations based on the 
lessons we learned.
                     what have we done in indiana?
    First, we measure what we value. We publish three annual reports 
that are simple to understand and focus on our most important success 
metrics. The first indicates whether our students are ready for 
college. The second shows whether they graduate, and how those results 
differ by income, race and ethnicity. The third conveys graduates' 
return on investment: their career opportunities balanced against the 
cost and debt they incur.
    Our reports demonstrate that affordability is not just about 
tuition, though efforts like Purdue University's 3-year tuition freeze 
certainly help. Costs escalate unnecessarily when students take longer 
than they need and borrow more than they should. Further, many of the 
stumbling blocks students face are not of their own making. In Indiana, 
we reined in ``credit creep''--extra credits that extended program 
length and time to degree. This common-sense change saved students time 
and money--about $35 million per year. Another recent law provides each 
student with a degree map that guarantees courses are available and 
prevents scheduling snafus that delay graduation. We also discovered 
that many students--even our student leaders--think that 12 credits is 
enough to graduate on-time, so we are rolling out a 15-to-Finish 
campaign to make it clear that full-time is 15.
    We also pay for what we value. Our performance funding model 
rewards college completion and on-time graduation while embracing 
differing missions and upholding our commitment to at-risk students. We 
recently restructured State financial aid so that students take and 
complete the 30 credits they need each year to graduate within the 4-
years the State will finance.
                      how are colleges responding?
    They are changing the message they send to students: Indiana 
University reduced borrowing 11 percent in 1 year by telling students 
how much debt they had accumulated and what their monthly payment would 
be. Their Indianapolis campus doubled the percent of students taking 15 
credits by changing their advising protocol to make 15 the default.
    Colleges are removing other stumbling blocks: Our community college 
system improved the success rate of students underprepared in math from 
9 percent to 50 percent by delivering remediation at the same time 
students take credit-bearing coursework.
    Colleges are being proactive to help students succeed: Indiana 
State University now alerts students who are falling short of meeting 
the State's new credit completion requirements--offering them free 
summer tuition and discounted housing so they can catch up.
            what have we learned, and what do we recommend?
    We learned that what we measure demonstrates what we value. We 
encourage the Federal Government to continue its progress toward 
measuring all students' success, not just that of first-time, full-time 
students.
    We learned that we can move stubborn numbers in a big way with the 
messages we send. We recommend that the Federal Government provide the 
same straightforward ``truth in lending'' for student loans that it has 
previously backed for mortgages and credit cards.
    We learned that financial aid policies drive institutional 
structures, which in turn drive student choices. We recommend that the 
Federal financial aid system do its part to increase affordability in 
three key ways:

     Define full-time as 15 credits, not 12;
     Pay for completed courses, not attempted courses; and
     As proposed, fund summer Pell so that summer can be used 
to either catch up or get ahead.

    I thank you for the opportunity to testify today and would happily 
answer any questions.

    The Chairman. Thank you very much, Ms. Lubbers. Great 
testimony.
    All right. Attorney General Madigan.

  STATEMENT OF HON. LISA MADIGAN, ATTORNEY GENERAL, STATE OF 
                     ILLINOIS, CHICAGO, IL

    Ms. Madigan. Chairman Harkin, Ranking Member Alexander, and 
members of the committee, thank you for giving me an 
opportunity to share the problems I see at the State level that 
relate to your work on higher education at the Federal level.
    As the chief consumer advocate for the State of Illinois, I 
have seen an increasing number of fraud complaints from current 
and former higher education students over the past several 
years. The most frequent complaints involve for-profit schools, 
loan servicing, and student loan debt relief scams.
    Complaints against for-profit schools this year are over 50 
percent of the complaints my office has received regarding 
higher education. Given the committee's work in this area, I 
know you are well aware of the billions of taxpayer dollars 
that have gone to funding for-profit schools that heavily 
advertise their high-cost and poorly accredited programs. Too 
often, these schools are failing to provide students an 
opportunity to attain a job in the field they seek and instead 
are responsible for a disproportionately high rate of loan 
defaults.
    I've testified on these concerns before, so let me simply 
again urge the committee to address the pervasive problems with 
some of these so-called schools that have undermined the 
chances of too many students, squandered billions of our tax 
dollars, and put a drag on our economy. You have the power to 
put an end to for-profit abuses, and you should not hesitate to 
do so.
    Another area where we are seeing a growing number of 
complaints is Federal student loan servicing. This area is 
extremely problematic and extremely confusing for borrowers to 
contend with. There are many kinds of Federal loans, and there 
are a variety of repayment programs available. Unfortunately, 
the complaints we are seeing are reminiscent of those we saw 
during the mortgage and foreclosure crisis.
    Borrowers who contact us are usually seeking help with 
repayment options because the companies operating as Federal 
student loan servicers are not meeting the needs of these 
borrowers. When we've told struggling borrowers to contact 
their servicers for help, they call us back and report that 
instead of the servicers explaining their options and working 
to assist them to choose the best one, borrowers are pressured 
to get their loans current instead of being given information 
about repayment options.
    Due to the growing number of these types of complaints and 
the expertise we gained during the mortgage and foreclosure 
crisis, Illinois is currently leading a multi-State 
investigation into Sallie Mae's practices.
    Because of the complexity and confusion surrounding Federal 
loan programs and repayment options, the millions of Americans 
struggling to make their payments have become targets of the 
most recent wave of debt relief scams. Scammers are filling the 
airways with ads making too-good-to-be-true claims about how 
they can reduce your student debt by half or have your loans 
completely eliminated. Needless to say, when desperate 
borrowers call the number in the ads, they're pressured to make 
large up-front payments, often in excess of $1,000 for services 
that borrowers should receive at no cost because they are 
government programs provided for free by the Department of 
Education.
    Last week, I filed the first two lawsuits going after these 
student loan debt relief operations. However, investigations 
and enforcement actions at the State level are only part of the 
solution. Let me make some suggestions for action at the 
Federal level as well.
    Most importantly, higher education students need to be 
better protected under Federal law. With respect to for-profit 
schools, Congress must place better controls over Title 4 funds 
to ensure they are only used to help students achieve 
affordable, quality higher education. And Congress should 
support the Department of Education's rulemaking to increase 
accountability of for-profits.
    For companies engaged in student loan servicing, Congress 
should create a uniform process for all student loan servicers 
to follow. I would propose following the detailed model that we 
drafted for mortgage servicers in the National Foreclosure 
Settlement.
    Servicers should be required to tell struggling borrowers 
all their options, and borrowers need assistance to determine 
which option is best for their situation. To facilitate this, 
Congress should seriously consider making counselors available 
to student borrowers, just as counselors are available to help 
homeowners struggling to pay their mortgages.
    In addition to the reforms needed in student loan 
servicing, people struggling to repay their student loans need 
better and easier access to Federal student loan repayment 
options available through the Department of Education. The rise 
of student debt relief scams can be attributed to the fact that 
borrowers are unaware of Federal programs or have a difficult 
time understanding and accessing the programs available to 
them. These options need to be transparent, accessible, and 
streamlined. The Department of Education should increase public 
awareness to current and former students so they know there are 
free government programs available to help them. We should also 
prevent them from contacting the growing number of scammers who 
only seek to take their money.
    Finally, Congress should pass a bill allowing students to 
refinance their Federal loans to take advantage of the lower 
interest rates available today. When homeowners were struggling 
to pay their mortgages, the Federal Government stepped in to 
offer loan modifications and refinancing options. At the very 
least, we should offer these options to our country's young 
people who are struggling to pay back their loans. Student loan 
debt should not prevent millions of them from fully 
participating in the economy or ever achieving financial 
security.
    I appreciate the work this committee has done to address 
the problems current and former students are facing paying for 
their higher education, and I look forward to answering your 
questions. Thank you.
    [The prepared statement of Ms. Madigan follows:]

                Prepared Statement of Hon. Lisa Madigan

                                summary
    The testimony is divided into three parts: (1) the role of the 
Attorney General in higher education; (2) the office's work protecting 
higher education students; and (3) recommendations for the committee to 
consider as it works to reauthorize the Higher Education Act.
    Role of the Attorney General in Higher Education. As a State 
attorney general, I have the responsibility to protect the consumers of 
my State. My role in higher education is no different than my role in 
other areas where I work to protect consumers.
    Protecting Illinois Students. In recent years, my office has 
received higher education complaints from students with increasing 
regularity. Overwhelmingly, these complaints are against three types of 
companies involved in higher education: for-profit schools; student 
loan servicers; and, more recently, companies purporting to offer 
student debt relief services.

          For-Profit Schools. Through my office's work, we have learned 
        that some for-profit schools are gaming our higher education 
        system.

          Student Loan Debt Relief Scams. Because many former students 
        are having a difficult time paying down their student debt, a 
        new scam looking to take advantage of these students has been 
        created--it is called student loan debt relief.

          Student Loan Servicing Companies. My office continues to 
        investigate student loan servicing--including leading a 
        multistate investigation of the student loan servicer, Sallie 
        Mae, now called Navient.

    Recommendations for the Committee. My office's work in these 
areas--for-profit schools, student debt relief scams, and student loan 
servicing--is having an impact. State attorneys general can and do 
change the behavior of industry through our investigations and 
lawsuits. These outcomes certainly apply to higher education as well. 
However, our role at the State level is only part of the equation. We 
need action at the Federal level.
    Most importantly, higher education students need to be better 
protected under Federal law. Congress should make stronger consumer 
protections apply to the private companies that play a role in higher 
education. These companies include both for-profit schools and student 
loan servicers.
    The Department of Education should create a public awareness 
campaign to get through to current and former higher education students 
so they know there are programs available that can help them.
    Finally, Congress should pass a bill allowing students to refinance 
their Federal loans to take advantage of the lower interest rates 
available today.
                                 ______
                                 
    Chairman Harkin, Ranking Member Alexander, and members of the 
committee, thank you for inviting me to testify today.
    At the State level, one of our foremost concerns and priorities is 
to have a highly qualified workforce available to attract and retain 
businesses that provide our residents jobs.
    The only way to achieve that goal is to ensure affordable, high 
quality higher education opportunities for our residents.
    I appreciate the opportunity to share what we have learned about 
the challenges facing higher education students in Illinois--first, as 
they seek higher education, and, later, as they work to pay off the 
debt they accumulated obtaining that education.
    In recent years, my office has seen a significant increase in the 
number and scope of complaints from current and former higher education 
students.
    To assist the committee today, I am dividing my testimony into 
three parts:

     I will explain my role in higher education as the Attorney 
General of Illinois;
     I will share my office's work protecting higher education 
students; and
     Finally, I will provide recommendations for the committee 
to consider as it works to reauthorize the Higher Education Act.
            role of the attorney general in higher education
    As a State attorney general, I have the responsibility to protect 
the consumers of my State. My role in higher education is no different 
than my role in other areas where I work to protect consumers. When 
high school students or non-traditional students begin the process of 
pursuing higher education, it often marks one of the biggest purchases 
they will make in their lives. They are taking on loans that can add up 
to tens of thousands of dollars, if not more.
    While we call them ``students,'' they are acting as consumers when 
they seek higher education and these students deserve protections, like 
all consumers.
    In my role, I have ensured that my office understands the 
challenges facing higher education students and that we take steps to 
protect them. Unfortunately, I have repeatedly seen circumstances where 
companies involved in higher education are taking advantage of 
students.
                      protecting illinois students
    In recent years, my office has received higher education complaints 
from students with increasing regularity. Overwhelmingly, these 
complaints are against three types of companies involved in higher 
education: for-profit schools; student loan servicers; and, more 
recently, companies purporting to offer student debt relief services.
            For-Profit Schools
    My office currently has one active lawsuit against a for-profit 
school, as well as a number of open investigations into the conduct of 
other for-profit schools operating within Illinois.
    I have also joined a multistate investigation into the conduct of 
for-profit schools with 17 other State attorneys general.
    While I cannot go into detail on the specifics of each 
investigation, I can share why State attorneys general across the 
country, from both political parties, are suing and investigating for-
profit schools.
    Since 2010, over a thousand current and former higher education 
students have filed complaints with my office about the practices of 
for-profit schools. These students wanted nothing more than to go to 
school and better their lives. But too many of them ended up struggling 
to pay for an expensive education that did not give them the skills 
necessary to obtain meaningful employment.
    Through my office's work, we have learned that some for-profit 
schools are gaming our higher education system. They are using 
aggressive marketing tactics to lure unsuspecting students, who have 
access to Federal loans, into entering exorbitantly priced programs 
that will not help them secure employment. In fact, tuition prices can 
be so high that Federal student aid is often not enough, and students 
are steered into high-cost institutional loans that saddle them with 
more debt while maximizing profits for schools.
    For example, we have heard from students who paid tens of thousands 
of dollars to obtain degrees or certificates from for-profit schools, 
only to find out that employers did not recognize the certificates or 
degrees from the for-profit schools the students attended. The schools 
did not have the proper accreditation, but they led potential students 
to believe that they did.
    For our State and the Federal Government, outcomes like these mean 
lost opportunities to train individuals for the workforce and wasted 
taxpayer dollars. The Federal Government has provided billions of 
dollars of loans to students attending these for-profit schools.
    And for the students, it means tens of thousands of dollars of debt 
with no better chances at finding employment.
    This dangerous combination of high debt and few job prospects means 
that a lot of these students have a hard time paying off their student 
loans. And the statistics confirm it.
    Students of for-profit schools are more likely to default on their 
loans than their counterparts at public institutions and private, non-
profit institutions.
    But we cannot ignore the fact that default is a problem for 
graduates of all kinds of higher education programs and that 
unscrupulous companies are now targeting students who are struggling to 
pay off their Federal loans.
            Student Loan Debt Relief Scams
    Because many former students are having a difficult time paying 
down their student debt, a new scam looking to take advantage of these 
students has been created--it is called student loan debt relief.
    These companies offer student loan debtors bogus services or charge 
for services that the Federal Government already offers for free. And 
they are making empty promises in TV and radio ads and on the Internet, 
including claims to provide:

     Help with enrollment in the ``Obama forgiveness program,'' 
which is not an actual government program;
     Free help to anyone with at least $10,000 dollars in 
student loan debt; and
     Free loan forgiveness information for teachers, nurses, 
government employees, police officers, firefighters and employees of 
non-profit companies.

    For these so-called services, the companies charge huge up-front 
fees--sometimes more than $1,000. And in some instances, we discovered 
they provided no assistance to the people who paid for their help, or 
the companies charged students for simply providing government forms 
easily accessible for free on the Federal Government's websites.
    We have seen these kinds of scams before.
    When the recession hit, people had trouble paying off their credit 
card debt. In response, companies began offering bogus credit card debt 
relief services that took advantage of people and left them worse off 
financially.
    When the housing crisis hit, the same scammers targeted homeowners 
who were having trouble making payments on their mortgages.
    Student loan debt relief is just the latest iteration of an ongoing 
scam.
    The scam violates a number of Illinois laws, including a law on 
debt settlement that my office crafted and the legislature passed in 
2010, which bans up-front fees--the Debt Settlement Consumer Protection 
Act.
    Last week, my office filed lawsuits against two companies engaging 
in this scam. We will continue to pursue companies like these until we 
put a stop to these practices.
    However, the companies that engage in these scams are mere symptoms 
of a larger problem. Too many former students are having a hard time 
paying down their student debt.
    In many cases, they are not aware of the options available to them. 
Student loan debtors can have a hard time getting the right person on 
the phone. And they are not receiving information on the options 
available to them for repaying their loans.
    This massive confusion provides an easy opening for scammers.
            Student Loan Servicing Companies
    That is why, in addition to these lawsuits my office continues to 
investigate student loan servicing--including leading a multistate 
investigation of the student loan servicer, Sallie Mae, now called 
Navient.
                   recommendations for the committee
    My office's work in these areas--for-profit schools, student debt 
relief scams, and student loan servicing--is having an impact. State 
attorneys general can and do change the behavior of industry through 
our investigations and lawsuits. These outcomes certainly apply to 
higher education as well. However, our role at the State level is only 
part of the equation. We need action at the Federal level.
    Most importantly, higher education students need to be better 
protected under Federal law. Congress should make stronger consumer 
protections apply to the private companies that play a role in higher 
education. These companies include both for-profit schools and student 
loan servicers.
    With respect to for-profit schools, Congress must place better 
controls over title IV funds to ensure they are only used to help 
students achieve high quality, affordable higher educations. These 
funds are too important to be misused. For those institutions that do 
misuse funds, Congress should ensure there are strong civil penalties 
for doing so.
    For companies engaged in student loan servicing, Congress should 
create standards that all student loan servicers must follow. To 
protect borrowers, we need protections in place that are above and 
beyond the general prohibitions against unfair and deceptive practices 
in State consumer fraud acts. These standards need to ensure that 
servicers make clear to borrowers what their repayment options are.
    Standards would help eliminate the confusion and lack of 
information that borrowers are currently experiencing. Congress should 
also make sure counselors are made available to student loan borrowers, 
just as they are made available to borrowers with mortgages.
    In addition to the reforms needed in student loan servicing, people 
struggling to repay their student loans need better and easier access 
to student loan repayment options available through the Department of 
Education.
    The rise of student debt relief scams can be attributed to students 
being unaware of Federal programs or having a hard time understanding 
the programs available to them. This system needs to be streamlined and 
it needs to be more accessible.
    At the very least, the Department of Education should create a 
public awareness campaign to get through to current and former higher 
education students so they know there are programs available that can 
help them. The scammers have advertisements and these advertisements 
are working. We need ads highlighting real programs to counteract them.
    Finally, Congress should pass a bill allowing students to refinance 
their Federal loans to take advantage of the lower interest rates 
available today. This bill recently stalled in the Senate and there is 
no justification for Congress's failure to help these students.
                               conclusion
    Student debt poses a large and growing threat to our economy. In 
Illinois, and across the country, because too many people are 
unemployed or underemployed, they are having a hard time keeping up 
with their student debt obligations. And if Congress can take steps--
like lowering the interest rates on student loans--to help those 
people, it should do it.
    I have seen what happens to people when they fall behind on their 
student loan payments. It can take years for them to get themselves 
back on solid financial ground.
    Just as the housing crisis has trapped millions of borrowers in 
mortgages that are underwater, student debt could very well prevent 
millions of Americans from fully participating in the economy or ever 
achieving financial security. The warning signs are there. Just like 
they were there before the housing crisis. And Congress needs to act 
before it is too late.
    As an attorney general, I can bring cases against bad actors. And I 
will continue to do so. But we need more effort on the front end, to 
prevent those bad acts from happening in the first place and to prevent 
students from falling into the vicious cycle that unpaid debt brings.
    I am available to answer any questions you have. Thank you.

    The Chairman. Thank you very much, Attorney General 
Madigan.
    And now we turn to Dr. Perna.

STATEMENT OF LAURA W. PERNA, Ph.D., PROFESSOR AND CHAIR OF THE 
    HIGHER EDUCATION DIVISION, UNIVERSITY OF PENNSYLVANIA, 
                        PHILADELPHIA, PA

    Ms. Perna. Chairman Harkin, Ranking Member Alexander, and 
members of the committee, thank you for inviting me to offer 
comments on the role of States in improving higher education 
attainment, especially for students from historically 
underrepresented groups. I have devoted my career to conducting 
research on these topics, and I'm delighted to have the 
opportunity to speak with you.
    My written comments have more detail on some of my relevant 
research, including results of an in-depth study of the 
relationship between public policy and educational attainment 
in each of five States. In my 5 minutes, I'd like to underscore 
five points.
    First, as a Nation, we must do more to close the 
considerable gaps that persist across groups and the 
opportunity to enroll in college and complete a degree. Whether 
someone attends and completes college should not depend on 
their family income, the color of their skin, or the State and 
locality where they happen to live. These differences in 
college attainment contribute to a society that is highly 
stratified based on demographic characteristics between the 
haves and the have-nots. Closing gaps in college opportunity 
and attainment is important for social justice reasons. It's 
also important for the economic and social well-being of our 
communities.
    Second, we must recommit to the public purposes and 
benefits of higher education. Our Nation's approach to funding 
the costs of higher education increasingly reflects an emphasis 
on the private benefits--that is, the ways that individuals who 
participate in college are benefiting. These benefits to 
individuals are clearly substantial, and they've been growing 
in recent years. An emphasis on the private benefits provides a 
rationale for explaining why students and families are 
responsible for growing shares of the cost of attending college 
and why more and more students are borrowing ever larger 
amounts. But a narrative that emphasizes the private benefits 
of higher education obscures the many ways that the public also 
benefits when educational attainment increases and gaps in 
attainment close.
    Certainly, many demands compete with higher education for 
available public resources, but investing the resources we have 
into promoting higher education attainment and closing gaps in 
attainment is one of the best investments we can make.
    The third point I'd like to emphasize, through the student 
financial aid programs and other components of the Higher 
Education Act, the Federal Government plays an important role 
in leveling the playing field of higher education. Despite the 
critical role of Federal programs, however, States have the 
primary responsibility for raising the attainment of their 
populations as each State develops its own public higher 
education and K-12 education system.
    Fourth, if we are to make meaningful progress in raising 
attainment and closing gaps in attainment, we need a more 
comprehensive approach. There is no silver bullet for solving 
higher education attainment that will fit the circumstances of 
all States. Aligning policies at the Federal and State levels 
will help to maximize the benefits of the resources that are 
allocated toward higher education and help ensure that State 
and Federal policies do not work at cross-purposes. A more 
comprehensive approach would specify the roles and 
responsibilities of the Federal Government, State governments, 
and colleges and universities.
    Fifth, Federal-State partnerships are one potentially 
productive mechanism for developing this more comprehensive 
approach. Through such partnerships, Federal policymakers, 
including the White House, congressional leaders, and the 
Department of Education, can encourage an ongoing public dialog 
with State Governors that advances more purposeful planning for 
the future of higher education.
    Federal-State partnerships should be oriented toward 
addressing what we know are the primary barriers that limit 
higher education attainment for too many students. If we are to 
raise overall attainment and close gaps in attainment, we need 
public policies that ensure that college is affordable. We need 
policies that ensure that students can move successfully from 
K-12 into higher education and transfer among higher education 
institutions without loss of academic credit. We need policies 
that ensure that students have access to high-quality higher 
education opportunities.
    We also need to do more to ensure that students and their 
families have the knowledge, not just the information required 
to successfully navigate our Nation's large and diverse system 
of higher education. We also need to ensure that students learn 
about and understand the many nuances of student financial aid 
and that they are not over-burdened by debt when they leave 
higher education.
    We also need to ensure the availability of data that enable 
us to monitor the effectiveness of the public policies that are 
in place so that we can make adjustments. Any Federal-State 
partnerships to achieve these goals should be designed to 
incentivize States, not regulate States or create price 
controls. Through incentives, Federal-State partnerships can 
encourage States to develop and adopt more effective systemic 
and comprehensive approaches. Particularly productive would be 
partnerships designed to improve college affordability and 
finding innovative approaches to the many complex problems that 
are driving up the challenges in higher education.
    Thank you for your attention. I welcome additional 
conversation.
    [The prepared statement of Dr. Perna follows:]

              Prepared Statement of Laura W. Perna, Ph.D.

                                summary
    The Higher Education Act is a key mechanism for raising the 
Nation's overall higher education attainment and closing the 
considerable gaps in higher education attainment that persist across 
groups. I applaud the committee for its attention during this 
reauthorization process to the topic of today's hearing: The Role of 
States in Higher Education.
    Drawing from a recent comprehensive in-depth examination of the 
relationship between State policy and educational attainment in five 
States, I offer five conclusions that are particularly relevant to 
understanding the role of States in higher education. First, the 
relationship between public policy and higher education attainment 
cannot be understood without considering the State context, including 
the characteristics of a State's higher education system and governance 
structures. Second, improving higher educational attainment requires 
State policy leadership and steering of higher education institutions 
to achieve statewide goals. Third, State policies must be oriented 
toward ensuring that college is affordable, that students can move from 
K-12 schools into higher education institutions and can transfer among 
higher education institutions without loss of academic credit, and that 
high-quality higher education options are available to all State 
residents. Fourth, public policies must be oriented toward leveling the 
playing field for higher education attainment. Finally, States must 
continually monitor the extent to which their collection of public 
policies is effectively promoting the State's overall higher education 
attainment and closing gaps in attainment across groups, and make 
necessary adjustments in these policies.
    Based on this and other research, I recommend that the Higher 
Education Act be amended to include ``Federal-State partnerships'' for 
raising overall higher education attainment and reducing gaps in 
attainment across groups. Explicit Federal-State partnerships would 
recognize that a comprehensive approach with specified roles of 
multiple actors is required if we are to successfully raise overall 
rates of higher education attainment and close gaps in attainment 
across groups. One productive Federal-State partnership would focus on 
improving college affordability. A second type of Federal-State 
partnership would encourage the development of more effective and 
innovative approaches to addressing the complex, systemic issues that 
limit college opportunity especially for students from low-income 
families, racial/ethnic minority groups, and other groups that are 
underrepresented in higher education. In a third type of Federal-State 
partnership, the Federal Government would incentivize States to promote 
college-related knowledge among prospective college applicants.
                                 ______
                                 
    Thank you for the opportunity to offer comments on the role of 
States in improving higher education attainment, especially for 
students from historically underrepresented groups. As I have devoted 
my career to conducting research designed to understand how to improve 
college access and success especially for students from 
underrepresented groups, I am delighted to have the opportunity to 
speak with you today.
    Improving higher education is critically important to both 
individuals and our society. In this global, technologically driven 
economy, available jobs increasingly require some education beyond high 
school. But, the United States cannot achieve the levels of educational 
attainment that are required for international competitiveness without 
closing the gaps in attainment that persist based on family income, 
race/ethnicity, and other demographic characteristics. Students from 
low-income families are less likely than students from higher-income 
families to enroll in college, and when they do enroll, they tend to 
attend less selective postsecondary education institutions and have 
lower completion rates. Data from one longitudinal study show that only 
11 percent of adults whose parents had been in the lowest-income 
quintile earned a college degree, compared with 53 percent of adults 
whose parents had been in the top-income quintile. Educational 
attainment also varies considerably based on other characteristics, 
including the State, region, and locality in which an individual 
resides. Closing these substantial gaps in higher education attainment 
is important to the economic competitiveness of our Nation, as well as 
for social justice reasons. Higher education produces countless 
benefits for individuals--including higher earnings, better working 
conditions, higher rates of employment, lower rates of unemployment and 
poverty, better health, and longer life expectancies, as well as 
numerous benefits for our society, including greater economic 
productivity, less reliance on social welfare programs, greater civic 
engagement and charitable giving, and higher rates of voting. Raising 
our Nation's educational attainment and closing gaps in attainment 
across groups is also needed to counteract the considerable and growing 
income inequality that exists in the United States.
    Many stakeholders, including the Federal and State governments, as 
well as students and their families, K-12 schools and higher education 
institutions, employers, and philanthropic organizations, have roles to 
play in closing gaps in higher education attainment.
    The Higher Education Act is a key mechanism for advancing this 
goal. As I and others have written elsewhere, the financial aid 
programs authorized under title IV--especially the Federal Pell grant--
are critical to reducing the financial barriers to college attendance 
for students from low-income families. The TRIO programs are important 
to promoting the successful transition into and through college for 
many low-income and first-generation college students and have expanded 
college opportunity for groups that had previously been excluded. I 
applaud the committee's attention to the ways that the benefits of 
these and other programs may be enhanced by making such changes as 
simplifying the financial aid application process, standardizing the 
financial aid award letter, and addressing some of the negative 
consequences of using loans to pay college costs.
    I also applaud the committee for its attention to the topic of 
today's hearing: The Role of States in Higher Education.
    In our Federalist system, States have the primary responsibility 
for improving the higher education attainment of their residents. In a 
new book entitled, The Attainment Agenda: State Policy Leadership for 
Higher Education, my Penn GSE colleague Joni Finney and I provide 
complete results of a comprehensive examination of the relationship 
between State policy and higher education. For this study, we conducted 
in-depth case studies of this relationship in five purposively selected 
States: Georgia, Illinois, Maryland, Texas, and Washington.
    Five conclusions are particularly relevant to today's hearing.
    First, the relationship between public policy and higher education 
attainment cannot be understood without considering the State context. 
We found different stories about the relationship between public policy 
and higher education attainment in each of the five States we examined. 
These different State stories are not surprising, given that these five 
States--and all 50 States--vary greatly in terms of many 
characteristics, including their need for improved educational 
attainment and the magnitude of gaps in educational attainment across 
groups, as well as the size and diversity of their higher education 
systems and their varied higher education governance structures. They 
also vary in terms of their demographic, economic, political, and 
historical characteristics. Any Federal policy intervention must 
recognize the tremendous diversity that exists across and within 
States. Given this diversity, there is no ``silver bullet'' policy that 
will ``solve'' the higher education attainment problem.
    Second, improving higher educational attainment requires State 
policy leadership. Higher education institutions have a range of goals 
and objectives--not all of which give priority to--or are consistent 
with--a State's goal of improving its overall higher education 
attainment and closing gaps in attainment across groups. State policy 
leadership is required to articulate statewide goals for improving a 
State's higher education attainment, and State policy leadership is 
required to steer institutions toward achieving these goals.
    Third, all States have policies in place that are somehow related 
to college preparation, participation, completion, and affordability. 
But, if States are to make meaningful progress in raising overall 
higher education attainment and closing gaps in attainment, they must 
have more than a collection of policies. To improve educational 
attainment for their populations, these policies must be oriented 
toward meeting three goals:

    (1) Ensuring that college is affordable,
    (2) Ensuring that students can move from K-12 schools into higher 
education institutions and can transfer among higher education 
institutions without loss of academic credit, and
    (3) Ensuring that high-quality higher education options are 
available to all State residents.

    To maximize the effectiveness of available resources, we must 
better understand how various public policies in these three categories 
come together to influence higher education attainment for individuals 
from different groups. For instance, college affordability is 
determined not just by the Federal Government's investment in financial 
aid, but also by State appropriations to public institutions, the 
amounts and types of financial aid that State governments and higher 
education institutions make available to their students, and the 
tuition and fees charged by higher education institutions. 
Affordability is also a relative term, as what is affordable depends on 
an individual's family income.
    A fourth conclusion from our study is that public policies must be 
oriented toward leveling the playing field for higher education 
attainment. Students from disadvantaged groups are disproportionately 
negatively impacted when public policies do not ensure that college is 
affordable, do not ensure that students can move seamlessly across 
education levels and sectors without loss of academic credit, and do 
not ensure the availability of high-quality higher education options.
    Finally, States must continually monitor the extent to which their 
collection of public policies is effectively promoting their State's 
overall higher education attainment and closing gaps in attainment 
across groups, and make necessary adjustments in these policies.
    Based on this and other research (including a volume in The ANNALS 
of the American Academy of Political and Social Science that I co-
edited with Michael McLendon from Southern Methodist University and 
that will be released in September), I recommend that the Higher 
Education Act be amended to include ``Federal-State partnerships'' for 
raising overall higher education attainment and reducing gaps in 
attainment across groups. Such partnerships would build on prior 
successful partnerships such as those stimulated by the Federal Morrill 
Land Grant Acts and the Leveraging Educational Assistance Partnership 
(LEAP) Program (formerly known as the State Student Incentive Grant 
(SSIG) program). Explicit Federal-State partnerships would recognize 
that a comprehensive approach with specified roles of multiple actors 
is required if we are to successfully raise overall rates of higher 
education attainment and close gaps in attainment across groups.
    One productive Federal-State partnership would focus on improving 
college affordability. This type of partnership would address one force 
that is driving up tuition and fees at public colleges and 
universities: the decline in State appropriations per student. Greater 
attention to State investment--through both appropriations and 
financial aid--is warranted, given the declining affordability of 
higher education and the many public benefits that result from higher 
education. This type of partnership could take the form of maintenance 
of effort provisions like those in the State Fiscal Stabilization Fund 
in the American Recovery and Reinvestment Act of 2009. An alternative 
approach would be to match State funding with Federal funding, along 
the lines of the State-Federal College Affordability Partnership 
proposed by American Association of State Colleges and Universities 
(AASCU) and included in Senator Harkin's draft reauthorization bill. 
Three characteristics of the proposed partnership are particularly 
important. First, the proposed partnership specifies the roles and 
responsibilities of the Federal Government, State governments, and 
public colleges and universities in ensuring the availability of high-
quality but affordable higher education. Second, it recognizes that 
affordability is influenced by both appropriations and tuition. Third, 
it sets as a clear goal the enrollment of students from low-income 
families.
    A second type of Federal-State partnership would encourage the 
development of more effective and innovative approaches to addressing 
the complex, systemic issues that limit college opportunity, especially 
for students from low-income families, racial/ethnic minority groups, 
and other groups that are underrepresented in higher education. This 
type of partnership could take the form of Senator Harkin's proposed 
``State Competitive Grant Program for Reforms to Improve Higher 
Education Persistence and Completion.'' Innovation is essential if we 
are to identify effective strategies for reducing the costs of 
delivering high-quality higher education, improving the transition of 
students from K-12 education into higher education (and reducing the 
need for developmental education), smoothing transfer among higher 
education institutions, improving degree completion rates, and better 
aligning the higher education options that are available within a State 
with the educational needs and other characteristics of a State's 
population.
    In a third type of Federal-State partnership, the Federal 
Government would incentivize States to promote college-related 
knowledge among prospective college applicants. Students are more 
likely to stay enrolled and have better graduation rates when they have 
more complete information about the different kinds of colleges and 
universities from which they can choose, the differences in costs of 
these institutions, and their financial-aid options. More and more 
information is available about these issues. But, the challenge is 
greater than simply making information available. The information must 
be relevant, useable, and applicable to students with different 
information needs. One of the primary mechanisms for converting 
information into knowledge is the high school counselor. But, in too 
many schools across the Nation, there are too few counselors to 
adequately address college-related information needs. More must be done 
to ensure the availability of college-related counseling, including 
providing funding to staff these positions and encouraging the 
development of innovative approaches for delivering this counseling.
    The challenges to closing gaps in attainment across groups are 
many. But continued gaps in higher education attainment leave the 
United States and individual States at a competitive disadvantage, 
diminish the middle class, and contribute to growing economic and 
social inequality. The time for greater action is now.

    The Chairman. Thank you very much, Dr. Perna.
    Thank you all for excellent written statements, which I 
read last night, and for your spoken statements this morning.
    Now we'll start a round of 5-minute questions.
    Dr. Perna, I'll start with you. You talked in your 
testimony about the five States that you had done a 
comprehensive examination of. Through this examination, did you 
identify any best practices among States for boosting college 
completion rates among their students, particularly low-income 
students?
    I would add here that the president of Arizona State 
University, Michael Crow, I think here once made a statement 
that really caught me. He said that if you are a C student from 
a high-income family, you have an 80 percent chance of 
completing college. If you are an A student from a low-income 
family, your chances are only 17 percent.
    So what are some of the best practices that we can do to 
close that gap? You mentioned the gaps.
    Ms. Perna. Right. Thank you for that question. Our States 
vary tremendously, and all of the States that we looked at--we 
looked at Maryland, Georgia, Texas, Washington and Illinois--
all States need to do more in order to improve the educational 
attainment to the levels required for economic competitiveness 
moving forward, and all have substantial gaps across groups.
    One area of promise we found was in Maryland. Maryland has 
developed a comprehensive approach to financing higher 
education that is really seeking to align the fiscal levers 
that are in place to address affordability. College 
affordability is still challenging in Maryland and in other 
States, but there are practices in place now to think about how 
those levers that we have--State appropriations, tuition, and 
financial aid--come together relative to family income to 
ensure that college is affordable.
    The Chairman. I'll be back to that in the second round.
    Ms. Perna. OK.
    The Chairman. I wanted to ask Attorney General Madigan 
about what's happening with students being ripped off by some 
of these scam artists that say that they're going to take care 
of your debts and all that, you just give us some money, and 
then that's the end of it. I do applaud the work that you've 
done, and what other attorneys general have done with respect 
to some of these instances, but it almost seems like we're 
playing that old game of whack-a-mole where you do one thing 
here and it pops up someplace else.
    I just wonder how you might respond to the Federal 
Government, have we done enough to rein in some of these 
economic incentives and market failures that allow these abuses 
at these institutions. And second to that, talking about the 
investigation of Sallie Mae. Do you believe there are enough 
statutory protections in place to protect student loan 
borrowers?
    Ms. Madigan. Mr. Chairman, first and foremost, let me 
actually applaud what the committee has done in terms of 
investigating for-profits. You, like some of the State 
attorneys general and other regulators, are probably the most 
aware in this country of the problems that have been, 
unfortunately, pervasive at some of the for-profit 
institutions. The very aggressive recruiting, the poor 
accreditation, the high cost, the low job placement, and 
therefore a heavy amount of debt when these students can't find 
a job in their field, or certainly a decent paying job to pay 
down that debt.
    So you, this committee has done a good job, but there is 
obviously much more that needs to be done at the Federal level 
to make sure that we aren't sending billions of dollars to sub-
standard, really predatory colleges. There's much more to be 
done in that regard.
    I'm not going to talk to you specifically about our 
investigation with Sallie Mae, but I will say in general, from 
the complaints that we've received in the Attorney General's 
Office, what we are seeing are problems that are very similar 
to what we saw when we were having problems with struggling 
homeowners making their mortgage payments. When they contacted 
their servicers, and when the students, former students are 
contacting the servicers, again they're not being given their 
repayment options.
    If you have a Federal student loan, there are actually some 
very good repayment options available. But instead of being 
informed of what those are and walked through what would be the 
best for their financial circumstance, they're instead being 
kind of pushed into just get up to date with their payments as 
opposed to get into a better payment plan.
    We're also seeing some of the typical problems that we saw 
previously where you never talk to the same person. When you do 
hand in paperwork, it's lost repeatedly. Problems with applying 
payments appropriately if there's an overpayment, and a real 
lack of counseling that's out there.
    Those are some of the problems that we've been seeing.
    The Chairman. I've had that experience.
    Ms. Madigan. Sorry.
    The Chairman. Yes, believe me.
    My time is up.
    Senator Alexander.
    Senator Alexander. Dr. Kaler, welcome. Someone once asked 
me what's more difficult, being Governor, a member of the 
Cabinet, or president of a university, and I said obviously 
you've never been president of a university.
    [Laughter.]
    I welcome you.
    You mentioned in your testimony some deregulation. You 
mentioned one grant, one loan, one work, working on this FAFSA 
thing. Senators Mikulski and Bennet, Burr and I, with Chairman 
Harkin's agreement, have set up a task force headed by 
Chancellor Zeppos of Vanderbilt and President Kirwan of the 
University of Maryland to try to address over-regulation of 
colleges and universities. Do you have any specific comments 
about that? And specifically, the finding that 42 percent of a 
principal investigator's time on Federal research is spent on 
administrative matters.
    Mr. Kaler. Thank you, Senator Alexander, and I appreciate 
your nuanced view of the various positions you've had in your 
career. I happen to agree with you.
    The regulation is just really quite remarkable. It's 
probably more apparent, more flagrant in the research space. We 
have a variety of research reports that we have to send back to 
the Federal Government, and our Office of the Vice President 
for Research has done an analysis, and about half of the 
information that we send back to the Federal Government in one 
of those reports is information the Federal Government already 
has. There's just this repetitive need to provide information 
that does not add value.
    I think the research community is deeply interested in 
accountability. We are interested in using our funds wisely. 
But the regulatory burden is just crushing elements of our 
scientific----
    Senator Alexander. The head of one of the academies visited 
with me this week, and a university president. I said, well, 
what would be a reasonable percentage of time? And they were 
reluctant to say that, but they said, well, 15 or 20 percent of 
a principal investigator's time might be spent on 
administrative matters. Does that sound more or less right?
    Mr. Kaler. Senator, in my experience as a long-time 
principal investigator, as a scientist, a 10 percent number I 
think is completely reasonable, and again recognize that in 
addition to the principal investigator's time, these reporting 
activities require the hiring of additional staff whose 
principal job is to fill out forms for the Federal Government. 
There's an added cost associated, as well as the researcher's 
time.
    Senator Alexander. We have, if I'm not mistaken, about $30 
billion of Federal research dollars out. So if we were able to 
find a way to reduce from 42 percent to 10 or 15 percent the 
amount of administrative time for the principal investigator, 
that would be a lot of extra money for research, it would seem 
to me.
    Let me ask Ms. Lubbers, you've been a State senator, and 
now you're a commissioner of education, so you've had a chance 
to look at the State of Indiana budget. I mentioned Peter 
Orszag and Thomas Kane of Brookings. Peter Orszag was President 
Obama's budget director who talked about a key factor in 
explaining the declining trend in State appropriations for 
higher education is the rise of State obligations under the 
Medicaid program. Orszag estimated that if higher education's 
share of State budgets had remained constant instead of being 
crowded out by rising Medicaid costs, it would be getting some 
$30 billion more than it receives today, or more than $2,000 
per student.
    Lieutenant Governor Ravitch, a Democratic lieutenant 
Governor of New York, I read his comments where he talked about 
in an article in the New York Times during the Great Recession 
how the maintenance of effort requirements that require more 
spending on Medicaid had the effect of less spending on higher 
education, and therefore higher tuition.
    What has been Indiana's experience with the relationship of 
Federal requirements on State Medicaid spending and funding for 
higher education?
    Ms. Lubbers. Senator, you're exactly right, and Indiana 
would be a poster child for this. We used to be about 12 
percent of the budget, 12 to 13 percent would be for higher 
education. Obviously, a greater portion would go to K-12. For 
the first time in the last budget cycle, we saw Medicaid bump 
higher education at a higher percent, Medicaid higher than 
higher education. That was the first time that had happened.
    Clearly, that is the case. And I recall from my 17 years in 
the senate how difficult it is to balance very important and 
competing interests, and never more so than after the recession 
that we just faced as universities have struggled with their 
budgets and families have struggled with their budgets. But it 
is a very real phenomenon that entitlements have caused 
pressure on budgets at the State level, including the higher 
education budgets.
    In Indiana, the last budget session we looked at our 
appropriations and we made a convincing argument that our 
appropriation for FTE had been going down and we asked for more 
money for higher education, which we received, but we did it 
predicated on two very important factors. One, that we would 
fund our higher education institutions based on our performance 
metrics. We were going to pay for what we value. And we were 
also going to ask our institutions, if we were successful in 
getting more money, to hold tuition to no more than the rate of 
inflation. In fact, they did that, and some froze tuition.
    This is a very delicate balance with other State interests, 
and it's a very delicate balance in terms of how we fund higher 
education. I think we're making some progress, but it's a 
complex issue.
    Senator Alexander. Thank you.
    Thank you, Mr. Chairman.
    The Chairman. Thank you.
    I see Senator Franken, Senator Isakson, Senator Warren, and 
Senator Murphy, in that order.
    Senator Franken.
    Senator Franken. Thank you, Mr. Chairman.
    Dr. Kaler, thank you for your testimony, your written 
testimony. We've attended a number of college affordability 
roundtables together. One of the things that we both heard is 
that very often students say they didn't really understand 
going in what the cost was. Just before the hearing today we 
talked about net price calculators. I have a bipartisan piece 
of legislation to make those very prominent and have a 
standardized thing, and that's in the process before you apply 
to college. When you can look online, you can see what it would 
cost with all the different financial aid possibilities that 
you can get.
    The College Board did a study and showed that a lot of 
students decided not to apply to schools that they could have 
gotten into, elite schools or better, because they didn't 
understand what actually was there for them, what the actual 
net price was.
    Now, after you get into a school--and Senator Alexander, 
the Ranking Member, was talking about complicated forms--there 
is no uniform form coming back from these schools on award 
letters. There will be different award letters that use 
different terminology for the same thing. It will be an award 
letter that says you're getting this Stafford subsidized loan, 
but it says SS-182 or something, and it's under ``Awards.'' 
Most people don't think of a loan as an award.
    I want to get your comment on what we can do to help 
transparency and simplicity in letting kids, letting students, 
letting parents, letting guidance counselors, letting everyone 
know what the cost of a college is before you apply, and then 
once you're accepted at different schools be able to have a 
uniform comparison.
    Mr. Kaler. Senator Franken, Senator Harkin, I couldn't 
agree with you more. I think the net price calculator is an 
important first step, but it is just a first step. I mentioned 
to you before the testimony that you can hardly avoid the net 
price calculator on our website. It is there, and it's heavily 
used, and it's critically important for families, particularly 
first-generation college families, to be able to see what it is 
really going to cost and to avoid, as you mentioned, under-
placement, a student accepting a lower-quality institution when 
in fact they could be quite competitive and they could 
economically afford to go to what I would call a better school. 
That's important.
    I think we as an industry need to do a better job of 
advising our students clearly where they are in their financial 
aid trajectory and tying that conversation very directly to 
academic progress.
    I was delighted to hear about the 15-credit banding. We've 
moved our tuition structure to enable that to occur at 
Minnesota as well. Students need to be on-time and graduate in 
4 years, if at all possible.
    If you look at the history of how debt has accumulated, a 
student may be doing some of this in years 2, 3, 4; but 5 and, 
heaven forbid, 6 are where you take a larger chunk because 
you've used all your other resources. So timeliness, clarity, 
and appropriate placement I think are three very important 
points, and I agree with you on them.
    Senator Franken. And another thing you wrote about in your 
testimony is what you've been doing at the U., and I think all 
of you will recognize this as part of this problem of 6-year 
graduations or students not graduating, and that's when you 
have debt and no degree. But what you've been doing to get non-
traditional students, students who are poor, students of color, 
get them through school, you have the President's Emerging 
Scholars Program and another program you talked about in your 
written testimony, Retaining All Our Students. Can you talk a 
little bit about that?
    Mr. Kaler. Thank you, Senator Franken, Chairman Harkin. 
Indeed, what goes on in the classroom is a pretty important 
part of a student's experience, but what goes on outside is at 
least as important. We are really focusing on getting students 
to graduate, and it's pretty clear that if you don't come back 
for your second year, you're probably not going to graduate in 
four.
    The President's Emerging Scholars Program is an enhanced 
program around advising, around integrating first-generation 
students, students of color, students who are challenged 
economically into the full breadth of the university so they 
become part of the community and have a connection that brings 
a student back.
    In addition to the academic progress, a connectivity with a 
club or a sport or an activity is really important for 
enhancing that. Right now, our first- and second-year retention 
rate for all of our students is 91 percent, and for students of 
color it's 90.5 percent. So it is working to enable those 
students to connect and come back.
    We spend about $30 million a year in the University Promise 
Scholarship Program, which is directed to provide financial 
aid, particularly for families with zero expected family 
contribution, and it's working to improve the success of those 
students.
    Senator Franken. I'm out of time, my time. I'd like to 
thank all the witnesses. I'll probably submit some written 
questions.
    Just to the Ranking Member's point about college 
presidents, I once heard a saying that a college president is 
someone who lives in a mansion and begs for money.
    [Laughter.]
    We just beg for money.
    [Laughter.]

                      Statement of Senator Isakson

    Senator Isakson. Mr. Chairman, thank you very much, and 
thanks to the witnesses for their good testimony and their 
great work.
    I'm going to deviate from what I'm supposed to do in terms 
of asking questions and instead try and address the Chair's 
question, which all of you have really referred to, and that is 
the likelihood of lower income families actually being able to 
get a college degree.
    In the United States today, if a young person goes to a 
university or a college when their family has a household 
income in the top quartile of America, they are 10 times more 
likely to graduate with a college degree than a student from a 
family in the lowest quartile, and there's an example in 
Georgia that I just want to use to submit for the record, if I 
can, Mr. Chairman.
    Georgia State University is a large urban university in 
downtown Atlanta with 32,000 full-time students. In the last 10 
years, they've gone from some of the poorest performing 
graduation rates among Latinos and African Americans to where 
today they grant more Bachelor's degrees to African Americans 
than any university or college, not-for-profit, in the United 
States of America. Latino students have gone in 10 years from a 
graduation rate of 22 percent to one of 66 percent. African 
Americans have gone from 29 percent to 57 percent, and African 
American males, which was one of the biggest problems we 
experienced, has gone from 18 percent to 59 percent.
    They did it with a program they call the GPS Advisor's 
System and Panther Grants. The GPS Advisor System is a system 
where when a student enrolls, they're given a password into the 
GPS Advisor System, which has 10 years of collective data, 2.5 
million grades and programs, and the likelihood predictability 
of students' ability based on their qualification to perform 
and achieve in each one of the courses that they are registered 
for, so they can actually do some comparative analysis of what 
they're trying to do using the computer. All the students have 
access to it, but it's most helpful to those students who are 
most at risk not to graduate. And what has happened has been 
pretty remarkable.
    The access to the GPS system has generated 34,000 
individual meetings in 1 year and saved students an average of 
3 credit hours and $4 million in savings for additional time 
they have to stay at the university in order to graduate.
    The second thing they've done is they've raised an 
endowment to create something called Panther Grants. One of the 
biggest difficulties for low-income students is they run just 
short of having enough money to register for a semester. So 
they don't register, they drop out and they get a part-time 
job, and they never come back. Georgia State raised the money 
to create a program called Panther Grants where you can qualify 
for grants in the $300 to $1,000 range to be just that little 
bit of money that can take you from your loans, from your 
family income and from your grants and give you enough money to 
stay in school.
    The results of that have been that 70 percent of seniors 
who received funding graduated within two semesters of 
receiving the grant. These are the students who almost make it 
and drop out because at the last minute they're a little bit 
short of income.
    I'd like to submit for the record the details of these 
programs because I think Georgia State University has done a 
remarkable job doing that. Their student population, by the 
way, that 32,000 students, is 61 percent non-white. They are a 
majority minority university that has done a great job of 
addressing the disparity in terms of income and giving their 
students access to a quality education, and I'm very proud to 
brag about them. And thank you for your testimony and your 
work.
    The Chairman. Without objection, we'll put that in the 
record.
    [The information referred to may be found in additional 
material.]
    The Chairman. But I want to visit with you more about this. 
I want to learn more about what they did and how they did that. 
That's fascinating.
    Senator Warren.

                      Statement of Senator Warren

    Senator Warren. Thank you, Mr. Chairman.
    And thank you all for being here today.
    Last month, Senator Durbin, Senator Harkin, Senator Franken 
and many others introduced a student loan refinancing bill to 
lower the interest rates on outstanding student loans. Even 
though every Democrat, every Independent, and three Republicans 
supported moving this bill forward, a majority of Republicans 
filibustered it and blocked the bill.
    I'm disappointed about what happened because student loan 
refinancing should not be a partisan issue. North Dakota, for 
example, recently began its own student loan refinancing 
program with strong bipartisan support. People in North Dakota 
can now lower the interest rate on their Federal loans by 
refinancing into a State loan. So far, the program has been 
pretty popular. The State has refinanced more than $40 million 
in student loans just since April.
    There's a downside, though, and that is borrowers who 
refinance have to give up the benefits of Federal student 
loans, like income-based repayment plans, loan forgiveness, and 
certain consumer protections. A Federal student loan 
refinancing program would let borrowers get lower interest 
rates without losing out on any of the Federal protections that 
they're currently guaranteed.
    Let me start by asking you, Attorney General Madigan, how 
would a Federal refinancing program affect people with student 
loans in Illinois?
    Ms. Madigan. Senator Warren, obviously I believe, like you 
do and many others, that allowing student lenders to refinance 
makes an enormous difference. Any attempt and any ability we 
have to reduce the overall amount of debt that they have is 
going to allow them to more quickly pay off their debt and 
therefore more quickly fully participate in our overall 
economy, because what we're seeing with the students who are 
struggling is that many of them are living in their parents' 
homes. They can't even qualify sometimes, because their credit 
is a mess, to rent an apartment. They're unable to make small 
purchases of furniture or make major purchases of a car, 
certainly of a home, and they can't save for retirement. They 
can't even startup a small business.
    So we are very concerned about having millions of people in 
this upcoming generation perpetually stuck and not able not 
only to fulfill their own life and dreams but also be a 
significant drag to our economy. Refinancing seems to be not 
only a good option but a fair one that we have in the past put 
people who are struggling to make their mortgage payments front 
and center.
    Senator Warren. Good. Thank you very much, Attorney 
General.
    North Dakota's refinancing plan had overwhelming support 
from both Democrats and Republicans in the State legislature. 
It was signed into law by a Republican Governor. I believe it's 
time to cut the interest rate on student loans, and I think 
this should be something that we should be able to support, 
both Democrats and Republicans.
    I want to ask another question, and that is the role the 
States can play to keep students from wasting their money at 
poor performing for-profit colleges like Corinthian College. 
Corinthian is a national for-profit college chain that has 
sucked down about $1.4 billion a year in Federal financial aid. 
It is now facing allegations that it falsified job placement 
data, altered grades, and fabricated attendance data. About 1 
in 5 of its students are in default on their loans within 3 
years.
    The Federal Government finally took action against 
Corinthian and as a result it will either shut down or sell off 
campuses over the next several months, and I think this is an 
important step in holding a for-profit college accountable if 
they're taking Federal loan money. So I support this.
    But even as Corinthian shuts down, the majority of its 
students have already taken on significant student loan debt. 
Some will get their money back, but many will have to finish 
out their programs either at Corinthian or at another 
institution. Students at campuses that are listed for sale are 
going to have to wait to see whether Corinthian can find a 
buyer and then decide whether to stay enrolled at the new 
institution or try their luck at transferring somewhere else. 
Despite all this, Corinthian continues to enroll new students.
    State Attorneys General are playing a significant role in 
investigating for-profit colleges. Corinthian is currently 
under investigation in more than a dozen States. But I'd like 
to know whether the States are doing everything they can to 
ensure that Corinthian College students are being protected.
    I want to start here with Dr. Lubbers. Has your office 
assessed whether students at the local Corinthian campus will 
be able to transfer to their local community colleges, and are 
you helping them research this option?
    Ms. Lubbers. Thank you. We do have some students at Everest 
College in North Indiana who would be coming under this new 
problem that's been created. It's a teach-out for those 
students there. But this goes far beyond I think just this 
particular situation, as egregious as that might be, and that 
is to really look at how Hoosier students understand these 
issues related to transparency and value.
    I suppose if there's an area in which the Federal 
Government and the States could be more engaged, it is an area 
like this where you have students who could live in one State 
and are going to school in another State. We have all the 
online programs that are offered as well. So I think we really 
need to work together on this.
    We do oversee the Board for Proprietary Education in 
Indiana, so we are taking a really good look at this. We have a 
return on investment report. For the first time we're really 
gathering data for not just our public institutions but our 
private and our proprietary schools, too. We'll be gathering 
information on graduation rates. This is especially true for 
our financial aid students where we have new State authority to 
get additional information about our proprietary schools.
    We're very committed to making sure that students get value 
from their dollar, and that includes getting a degree and 
having an opportunity so they will find another placement in 
Indiana, and we're working with them to do that.
    Senator Warren. Thank you very much.
    I'm out of time, so I may have more questions for the 
record on this, Mr. Chairman. But I do want to say, this 
problem did not occur overnight. We can push the Federal 
Government on its role in overseeing these for-profit colleges, 
but I very much encourage the States to step up their oversight 
as well.
    Thank you very much. Thank you, Mr. Chairman.
    The Chairman. Thank you very much, Senator.
    Senator Murphy.

                      Statement of Senator Murphy

    Senator Murphy. Thank you very much, Mr. Chairman.
    I want to stay on this exact topic because I'm as 
passionate as Senator Warren is about this issue. While I share 
all of her concerns about Corinthian College, let me just 
broaden out the problem because the statistics are fairly 
stunning on a national basis when we look at for-profit 
schools, understanding that there are a lot of good for-profit 
schools out there, but there must be a lot of pretty poor 
performing for-profit schools if for-profits in this country 
educate about 13 percent of students but comprise 47 percent of 
loan defaults. That is a stunning statistic, 13 percent of 
students, 47 percent of loan defaults.
    Many of these schools take in about 90 percent of their 
revenue in Federal Government aid, and the industry writ large 
turns a profit of about 19.7 percent every year, taking in 
about $3.32 billion in total profit, largely off of federally 
funded grants. So I'm thrilled that the Administration has 
taken on Corinthian College, but it's much bigger than that.
    Let me pose the question to you, Attorney General Madigan. 
You've talked about in your testimony the need for the Federal 
Government to start setting some real standards. I mean, we are 
the 3,000-pound gorilla here. We have $140 billion that we are 
spending with virtually no strings attached to it when it comes 
to quality. We have one standard that says if you have default 
rates of more than 30 percent, we'll start to look at perhaps 
restricting the money.
    What are the things that Attorneys General can do here? But 
what are also the limits of your authority, and what would you 
recommend to the Federal Government when it comes to 
accountability?
    Ms. Madigan. Let me liken this to the situation where you 
had State Attorneys General during the beginning of the 
mortgage crisis looking at the large subprime lenders. We were 
constantly doing our investigations, bringing our lawsuits, 
even settling our lawsuits, but we were still unable to really 
stop the problem because we kept getting push-back from the 
institutions, similar to as we are now with the for-profits 
saying, well, if there was a problem, the Federal Government 
would do something, they'd stop our payments.
    You have, as you're aware, on a bipartisan basis, Attorneys 
General across the country that are involved in investigations, 
that are involved in lawsuits, that are trying to either change 
these practices or stop students from enrolling in these 
schools by making them more aware. So certainly Federal 
oversight, whether it is through the rulemaking process, the 
90/10 Rule, the Gainful Employment Rule, as you mentioned, the 
Cohort Default Rate, you have to be not just looking at those 
things but truly putting teeth into them and enforcing them. 
You can't keep on giving money out to these predatory subprime 
colleges. It is a waste of taxpayer dollars and, worse than 
that, you are ruining people's lives by allowing it to happen.
    There is much more that can be done at the Federal level. I 
think the States and even some of the Federal regulators are 
doing a lot of work, but we really need the support at the 
Federal level.
    Senator Murphy. Dr. Kaler, you were nodding your head, so I 
want to ask you to comment on this but pose this specific 
question. When you're talking about accountability, we need to 
be able to assess how schools are performing, and that involves 
understanding how students do after they graduate. Do they make 
enough money in order to pay back their student loans?
    We have a fairly blunt instrument right now, which is just 
figuring out which students have defaulted on their loans. But 
because we have a Federal ban on something called a unitary 
student record, the ability to take the data that exists in the 
Federal Government today and just figure out how they did after 
they graduated and whether the schools' claims about what they 
were going to deliver actually matched up to reality, we're 
unable to really give a metric to students, never mind the 
Federal Government, that allows them to choose.
    My understanding has been that one of the barriers to 
enacting a unitary student record has been the resistance of 
colleges and universities, for-profit and non-profit, all 
across the country. So I'd like your general comment on this, 
but how can you help us get the information necessary to hold 
these schools accountable and give students information as 
they're applying that is relevant to the decisions that they 
make?
    Mr. Kaler. Senator Murphy, thank you for that question. I'm 
tempted to give you an academic answer which I suspect you will 
find unsatisfactory, so I'll avoid that.
    It is a nuanced situation, and you are looking at the 
outcomes that an individual makes after graduation as to the 
trajectory of their life, and there is a lot that goes into 
that beyond just the education that they obtained at a 
particular institution. In some sense those outcomes are out of 
the control of the place from which they graduated.
    What is in control and which I do believe you should look 
very carefully at is what happens in that institution, what are 
the 4- and 5- and 6-year graduation rates, what are the 
trajectories of not just full-time first-time students, as 
somebody mentioned in our comments, but all students. If you 
transfer, if you come to Minnesota for 2 years and transfer to 
Iowa and graduate from Iowa in 2 more years, that's a success 
for everybody, and we don't count that appropriately.
    What are the student default rates? What are job placement 
rates? These are elements that are more directly related to the 
performance of the institution and which I would be comfortable 
being judged on. The lifetime outcomes are more difficult and 
involve, as I mentioned before, many other inputs that are out 
of our control.
    Senator Murphy. I understand it's imperfect, and it speaks 
to the fact that you would have to have subtlety and nuance to 
the way in which you enforce the law. But the fact is that 
there are for-profit colleges out there that are bringing in 
droves of students for degrees in video game design, which is a 
wonderful thing to study for 4 years, but there are no jobs in 
that field commensurate to the number of students who are going 
to for-profit schools to study it, and right now we don't have 
the appropriate tools to determine whether those marketing 
claims about the job market are actually based in reality.
    Thank you, Mr. Chairman. I'm over time.
    The Chairman. Thank you, Senator Murphy.
    Dr. Kaler, I'm a graduate of Iowa State University, a land-
grant college in Iowa, and I just thought it was a very nice 
touch that you wore the university's colors on your tie today. 
I thought that was a nice touch.
    Mr. Kaler. The coincidences in life are sometimes 
overwhelming, Senator.
    [Laughter.]
    The Chairman. I couldn't resist.
    Mr. Kaler. But I'm glad you appreciate it.
    The Chairman. I couldn't resist.
    Dr. Kaler, you talked about the collection of Byzantine 
forms, applications, websites, et cetera, and you talked about 
going to a one-form, one-application type of thing. I know my 
friend, Senator Alexander, has talked about that, too. But 
here's a concern I have. If you do that, what do you do about 
Perkins loans? What do you do about SEOG? What do you do about 
subsidized loans? Do we just get rid of all those?
    Mr. Kaler. Senator, I think this is a very important 
conversation to have, and the details, which are important 
ones, and you just named three of them, I think need to be 
sorted out. But the current situation is almost a Rube Goldberg 
kind of machine. It's complicated to operate and it's non-
transparent.
    The Chairman. I agree with that. Every time Senator 
Alexander holds that up, I shake my head. It is Byzantine. But 
still, how do we work and make sure that we continue to have 
programs which I think have proven effective? I don't know. I 
could hear a counter-argument. But Perkins loans are an 
extension of the kinds of loans I took out, which when I went 
to school were called National Defense Education Act loans. Of 
course, SEOG, which I think is very important to a lot of 
colleges and a lot of our students, and the subsidized loans. I 
don't know how you work that in.
    Mr. Kaler. Let me give you another example that my folks 
have provided me. We have the Teacher Education Assistance for 
College in Higher Education, or TEACH, loans. Those have to be 
repaid with the loan plus interest. Many of these loan programs 
have different expected family contributions, different 
lifetimes, different interest rates. I don't have the solution 
for you today, but I would strongly encourage in this process 
to run a comb through this, make it user friendly, make sure 
that the families who need the help get the help, and that that 
help goes to institutions that deliver on their mission.
    The Chairman. Thank you.
    Attorney General Madigan, as you know and as you noted, we 
had a long series of investigations and hearings on the for-
profit college sector, which we published. I was challenged at 
one time saying that we were just being selective and that 
there are a lot of mistakes. At the time we put out the report, 
I challenged the for-profit school industry. I said if you find 
any mistakes in our report, just any mistakes, please let me 
know. I have yet to hear one. So I think our team, our 
investigative team, did a good job.
    I want to followup on that, and you had some discussions 
here with Senator Warren about that, and Senator Murphy. I have 
serious concerns that students are not being properly protected 
from a failing for-profit education model that rewards 
executives with high pay, rewards their shareholders, but 
leaves students holding the bag when the music stops. In this 
regard, you have concerns about the ability of these cash-
strapped for-profit colleges to compensate their victims if 
they're forced to pay for their illegal practices.
    In other words, it may not be coincidence. There are others 
out there, too. What happens when they start to go under? The 
students have paid their money, which they borrowed from the 
Federal Government, by the way. The taxpayers have put that 
money in, and yet they don't have a degree. These people have 
engaged in deceptive practices under State laws. How are they 
going to be compensated?
    Ms. Madigan. Mr. Chairman, that is the right concern to 
have, and it's one that we share. So to the extent that these 
institutions don't have the capital to repay these people to 
make them whole, then the Federal Government has to look at 
what, if anything, will you do in terms of discharging all or 
part of their loans, because I'm not sure what other relief is 
available to them at that point if there is no money to be had 
from these institutions.
    The Chairman. So these schools have taken taxpayer money, 
they have enriched their executives and their shareholders. 
They go under. The students have the debt. The students still 
have to pay the money. The students have to pay it back, but 
they didn't get their degree. They didn't get anything out of 
it. So will the Federal Government then have to come in again 
and pay, and pay for these students?
    Ms. Madigan. That is a possibility and one that, 
unfortunately, I think you are going to have to look at, 
particularly if one of these schools completely goes under.
    In the instance of Corinthian, if there is not a buyer, 
then what do you do in these circumstances? Certainly, as you 
know, if an institution does go out of business, then those 
loans are allowed to be discharged. So that is a possibility, 
unfortunately. The taxpayers get hit twice.
    The Chairman. They get hit twice, and the students get hit 
because they're the ones that are burdened with the debt.
    Thank you very much, and thank you for your leadership in 
this area, Attorney General Madigan.
    Ms. Madigan. Thank you.
    The Chairman. Senator Alexander.
    Senator Alexander. Attorney General Madigan, on loan 
repayments, with the President's new executive order I believe 
there may be nine different ways under the Federal law a 
student can repay a student loan. Senator Bennet and I have 
suggested that we change that to two. One would be a standard 
10-year repayment, and one would be a 20-year repayment based 
on a student's income.
    Based on your experience, would that eliminate confusion? 
And if you eliminated confusion, would that help?
    Ms. Madigan. Senator, I certainly think that we have seen 
from the complaints coming in to the Illinois Office of 
Attorney General a great deal of confusion. There's not 
awareness of the opportunities that are even available. To the 
extent that there is an ability to streamline the process, make 
it transparent and make it easy, yes, that would be a good 
thing, and it also eliminates the opportunity for these scam 
artists to prey on people who have to pay back their debt by 
telling them they can get them through the process and they can 
reduce your debt. I think anything that Congress can do to make 
the loan repayment process simpler is a good idea.
    Senator Alexander. Mr. Kaler, or any of you, several school 
directors in Tennessee have told me that if we were able to 
replace this FAFSA with something that came close to two 
questions or a few more that the effect would be that a lot 
more students would take advantage of the Pell grants and the 
loans that are available to them, and that would help with our 
effort to get more people into higher education and to 
graduate. Do you have any sense of whether that's likely to be 
true?
    Mr. Kaler. Senator Alexander, my sense, and it is only 
that, not backed by data, is that not only would that be true 
that we would get more students, but I think it would also 
address the placement issues that Senator Franken mentioned 
earlier, about students under-achieving in their educational 
objectives and the schools that they would consider.
    Senator Alexander. And would it help if a student, a 
traditional student, could find this information out in the 
junior year of high school rather than in the second semester 
of the senior year? Would that help?
    Mr. Kaler. Yes, sir. We have a very vigorous program at 
Minnesota to get information into high schools beginning the 
freshman year and start to acculturate families to the 
University of Minnesota as a potential destination. You simply 
cannot wait until the second semester of the senior year.
    Senator Alexander. I have one other question. I'd be 
interested in a response from any of the panelists. In dealing 
with student loans, we have a provision that really limits the 
ability of an institution to counsel students who are borrowing 
money. That seems nonsensical. And there have been several 
suggestions that the institutions themselves, both for-profit 
and non-profit, become more involved in the loan process.
    There have also been suggestions of risk sharing; in other 
words, that at least for some part of a loan, the institution 
itself would be responsible for some or all of the default. Any 
of you have any comment on that or any practical way of how to 
go about doing it?
    Ms. Madigan. I would very quickly say it's the ``skin in 
the game'' concept, similar to what we were looking at when we 
were forming the mortgage practices. So that makes some sense. 
It should hopefully prevent institutions from purposefully 
having their students take out enormous loans that they will 
never have to contend with the default. I think that's 
something that should be looked at.
    Ms. Lubbers. I would offer that many of the schools are, in 
fact, stepping up, and I mentioned in my testimony that Indiana 
University, in the course of 9 months, reduced borrowing by 11 
percent with their students by showing them what they owed and 
what they were going to owe going forward. There's a lot that 
can be done already in terms of what colleges and universities 
are doing.
    I have to use this as an opportunity to talk about the fact 
that all we've talked about today is really very, very 
important, but equally important is making sure that we get 
these students to graduate because then they have an 
opportunity to use their degree when they leave in a way that 
will benefit them. I think having smart consumers when they're 
there, making sure that they understand the value of going to 
college and graduating, is really the key to financial 
viability for families.
    Mr. Kaler. I would just add that this limitation on 
counseling and advice is critical. We graduated last year 7,420 
undergraduates from the University of Minnesota, and exactly 
eight of them had undergraduate debt of more than $100,000. I 
don't know how that can happen, and it turns out I can't 
actually find out, and I think that's a shame.
    Senator Alexander. I think many Senators really aren't 
aware that the law limits the ability of institutions to 
counsel students about over-borrowing, which is something we 
should change.
    The Chairman. Senator Murray.

                      Statement of Senator Murray

    Senator Murray. Thank you very much to Chairman Harkin and 
to Ranking Member Alexander.
    I think this is really an important hearing because, as we 
all know, for a lot of Americans, earning a college degree 
really is a ticket to the middle class, and we also know that a 
highly educated workforce is really good for our economy by 
building the middle class and strengthening the workforce we 
need for the jobs that are coming to our country. And because 
of those benefits, States around the country traditionally have 
played a very fundamental role in financing higher education to 
help make it more affordable.
    But when that economic downturn hit in 2007 and 2008, a lot 
of States made some very drastic cuts to investments in higher 
education, and we know now today they spend 23 percent less per 
student than before the recession, on average. In fact, in my 
home State, spending is down nearly 28 percent less per 
student.
    When States cut back funding for higher education, schools 
increase tuition, and that cost is obviously passed on to 
students who are working to advance their own education. And 
because of those rising tuition costs, of course, students take 
out more loans. Today, the average college graduate has to pay 
back about $30,000 in student loans, and we all know that debt 
can have a very lasting consequence for borrowers and for our 
economy.
    Mr. Chairman, I was really proud to co-sponsor the bill 
from Senator Warren to allow borrowers to refinance their 
student loans to today's lower interest rates to help ease that 
debt. But I am also very concerned that besides that crushing 
burden, there are a lot of complaints today about student loan 
servicers mistreating borrowers and failing to process payments 
correctly. I know, Mr. Chairman, you asked about that, but that 
is a concern that I have.
    With that, let me just ask a few questions of the panel.
    Dr. Kaler, you actually come from a similar State to mine 
when it comes to State support for student aid. Both Minnesota 
and Washington have some generous State need grants and their 
own State work study programs. In your testimony I noticed that 
you testified that your institution would support a one loan, 
one grant, one work proposal, and I wanted to ask you how that 
proposal would then interact with Federal, State, and 
institutional student aid funds.
    Mr. Kaler. Thank you, Senator Murray, for the chance to 
amplify my comments on that. Again, we view this one bill 
activity as a good step forward. There are a lot of details 
that have to be worked out. We want to ensure that we, in the 
course of this, do not take resources away from students who 
need them, obviously.
    But it is an opportunity--we talked about the Perkins loans 
a minute ago--to reassess where we are in those. Those are 
available, for example, to students at for-profit colleges, but 
they're not available to students at community colleges, and 
that strikes me as not right.
    I think if we were able to build a Federal system, then 
States could interface to that electronically--a shim, if you 
would--so that the Minnesota State Grant Program or the one in 
Washington could be seen in a holistic way by a student and 
their family as they evaluated the cost of going to various 
institutions. I think standing up websites is sometimes more 
complicated than you might want it to be, but having that data 
available to a family would be enormously useful.
    Senator Murray. Under that, would you support elimination 
of some of the campus-based programs that support, for example, 
low-income students, like the Supplemental Opportunity 
Education Grants, or the elimination of the Iraq and 
Afghanistan Service Grants?
    Mr. Kaler. The short answer is I want a system that 
provides the amount of aid that students need in a more 
seamless way, and we have a lot of programs. Let me take the 
Iraq and Afghanistan one. I will share with you, for the first 
14 years of my life, my father was a sergeant in the Air Force, 
so I understand what dependent families have to do. But in that 
program, we have two programs in the State of Minnesota that 
support the spouses or dependents of Iraq and Afghanistan vets. 
There are programs in the Veterans Administration, and when I 
queried our folks about the number of students who took 
advantage of the Iraq and Afghanistan program that you just 
mentioned, we don't think we have any because they're using 
these other sources.
    This is an area in which I think we should look carefully. 
Obviously, we want to align resources in support of those 
families. But what's the best and most efficient way between 
the Federal Government and the State to get that done? I think 
in Minnesota, we don't have the optimum way to provide that 
support.
    Senator Murray. OK. I know my time is up, but if I could 
just ask one other question, I just wanted to broadly ask 
because as Chair of the Budget Committee, I know we live in 
pretty tight fiscal environments, and a lot of States are 
moving toward performance metrics for institutions of higher 
education.
    What have you learned about performance metrics at the 
State level just generally? Anybody can respond to that.
    Ms. Lubbers. We have been doing performance funding for 
institutions for about a decade. We've learned that it's 
important to have the student at the center, so as to have your 
rewards built around the student. It's important to have them 
differentiated based on the mission of the institution. So 
different kinds of institutions can be allocated money through 
the metrics in different ways. It's important to pay for what 
you value, and in Indiana, like probably your State, Senator, 
we value more degrees, more students graduating on time, more 
at-risk students graduating, more high-impact degrees. So the 
metrics themselves are very important, and then the way that 
you look at those over a period of time. The period of time in 
which you recognize the metrics matters, too.
    We think that funding of higher education is always 
complicated. But if you say you're going to pay for what you 
value, then you need to pay for what you value in good times 
and bad. You need to continue to do performance funding even if 
you don't have new dollars.
    Senator Murray. Do those change--do metrics change 
institutional behavior? And, maybe even more importantly, is 
there a threshold level of funding required to change 
institutional behavior?
    Dr. Perna.
    Ms. Perna. Thank you, Senator. The research on this is 
pretty limited, and it suggests that, at least looking at the 
older, the first generation of performance funding, that there 
have not been substantial changes in institutional behavior 
associated with performance funding. There are some new 
approaches that are being implemented now in some States, so 
we'll see. But it's mixed.
    Senator Murray. OK. All right. Thank you.
    Thank you very much, Mr. Chairman.
    The Chairman. Thank you very much, Senator Murray.
    Dr. Kaler, I just want to make it clear, as a followup to 
my question earlier, in terms of simplification, you are not 
advocating that we do away with Perkins loans or SEOG or 
subsidized Stafford loans.
    Mr. Kaler. Senator, I would advocate for a simplification 
approach. If the purpose is that those programs serve now can 
be met in a more efficient way, I would be interested in seeing 
that happen. If that meant instead that we would abandon 
students who receive important aid under those programs, then I 
would not do that. I think there is a way to provide this kind 
of aid in a more simplified way.
    The Chairman. If you have some suggestions on it, I would 
be more than happy to receive that information from you later 
on. Tell us how you think these could be simplified yet 
continue the important role that they play, I think, in higher 
education.
    Mr. Kaler. We do have some ideas on that that we'll share 
with your office.
    The Chairman. Yes, please do so, please do so.
    I wanted to ask Dr. Perna just one last question on this. 
On Federal-State partnerships here, I know that my friend, 
Senator Alexander, has talked about the Medicaid problems. I 
don't think we need to debate that here. We've debated that a 
lot in the past, I think. But what I want to know from you is, 
tell me again in your own words and the research that you've 
done, why a State-Federal partnership is needed for college 
affordability in the context of State disinvestment.
    I don't want to get into this whole Medicaid thing, but the 
fact is--and we've had the data to show, that States have been 
disinvesting. Dr. Kaler talked about what happened in 
Minnesota. In the past, if a student brought a dollar, the 
State brought two dollars. Today, if a student brings a dollar, 
the State brings 50 cents.
    Mr. Kaler. Yes, sir.
    The Chairman. The State has been disinvesting. So why is it 
so important for the Federal Government and the State 
government to partner in college affordability?
    Ms. Perna. Thank you, Senator. College affordability we 
know is one of the primary forces that limits attainment for 
students. Certainly other things matter, including academic 
readiness and things like that, but we have to address the 
college affordability problem.
    We have competing uses for resources. What we saw in our 
States is that we really need more strategic use of the 
resources that we have available, and I think that really means 
bringing into alignment the different types of levers that we 
have at our disposal to try to achieve the purposes that we're 
trying to achieve.
    I think the first step is determining do we care about 
reducing the cost of going to college for students, so do we 
care about addressing the college affordability issue. If we 
have consensus that that's a shared goal, then figuring out how 
we can incentivize all the different stakeholders to use the 
resources that we have available. In our work, we have shied 
away from saying if you just implement this one very particular 
type of policy you'll solve the problem, because there's 
variation across States in the orientation of their systems, 
their governance, structures for higher education, other 
contextual forces.
    But thinking about how to incentivize States to allocate 
resources, appropriations to institutions to help reduce the 
cost of higher education, figuring out how to allocate 
financial aid to improving access for students from the lowest 
income families, and thinking about tuition policies. In three 
of our five States, there has been a movement toward tuition 
deregulation, so giving more and more power to institutions to 
set tuition, and institutions have priorities that are not 
necessarily aligned with the statewide goals for higher 
education.
    We tend to think about policy in isolation, but thinking 
about how policies come together to really achieve what we're 
trying to achieve here I think is key.
    The Chairman. Thank you.
    Ms. Lubbers, I wanted to cover one thing with you and what 
I think you're doing really great in Indiana. You say in your 
testimony you're telling students how much debt they've 
accumulated and what their monthly payment would be, that that 
tends to maybe get them to understand their financial 
obligations and maybe not even borrow so much.
    We have had testimony before from other panels on some 
colleges that when a student enrolls and is accepted to that 
college, they have to go through a--what am I trying to think 
of?
    Ms. Lubbers. Financial literacy course of some kind?
    The Chairman. That kind of thing when they first go, and 
telling them what they ought to be thinking about in terms of 
financial literacy and how much it's going to cost to go to 
school and that kind of thing. Not all schools do that. I 
assume you're doing that in Indiana. I don't know if you're 
doing that in Indiana. You're doing it, it sounds to me, after 
they're in school, but do you do it when they first enroll?
    Ms. Lubbers. We do it at most institutions when they first 
enroll. We are a coordinating board, so this would be done at 
the institutional level, not at the State level. But they're 
doing it because it pays for them to do it. Keeping their 
students there is in their best interest, and it's what they 
want to do. So if financial stress is one of the reasons why 
students don't persist, then making sure that they understand 
that before they begin is important.
    We've talked a lot about the cost calculator, for example. 
We have a comparative cost calculator in Indiana which goes far 
beyond the Federal requirements in terms of providing 
information to students. They would be using that in high 
school, not when they get to college, and it provides a lot of 
information to them about borrowing and the cost of college.
    The Chairman. I wish more high schools would do that. But 
the fact is we have a lot of kids--and these are kids with good 
grades who are eligible to go to college. They haven't the 
slightest idea of how to balance a checkbook, let alone figure 
out what their debt payment is.
    Do you do that in Minnesota when students first come in?
    Mr. Kaler. Yes, sir, Senator Harkin. We have a terrific 
program, actually, very robust, and the tag line is ``Learn to 
live like a student now so you don't have to later.''
    The Chairman. That's not bad. I like that.
    Any other views on that? I'm out of time, but I just wonder 
about getting students up front, when they first go to school, 
to get them to understand what debts mean to them.
    Yes, Dr. Perna.
    Ms. Perna. Just very quickly, Senator, I think it's 
important to recognize that one of the strengths of the U.S. 
higher education system is also one of the challenges. We have 
so many choices, so many different opportunities here, and we 
don't specifically track people to those different choices 
early on like they do in other nations.
    We also have so many different options and mechanisms 
available to finance higher education. I think we need to be 
embracing the choice that we have and recognizing the 
challenges that it does create. With all of that complexity, we 
have to figure out a way to make sure that people can make 
informed choices. We've done, I think, a good job of putting 
information out there, but it's not enough just to put 
information out there. Often it's not understandable, it's not 
accessible to folks, especially for those who are the first 
generation in their family to attend college.
    Part of the complication here is that we know that having 
people involved in counseling students one-on-one, that 
matters, it improves their knowledge. But in many ways, we've 
moved away from allocating resources in that way. In the 
average high school there are 450 students per counselor, and 
the students in the high schools that serve disproportionately 
low-income first-generation students, the numbers are often 
higher.
    We need to do multiple things. We need to simplify our 
system. We have to put in more mechanisms to help people 
understand and make the good choice, especially given our 
reliance on loans and the riskiness of loans, especially for 
this population. Thank you.
    Ms. Madigan. May I just very quickly say we're dealing with 
teenagers.
    The Chairman. Say that again.
    Ms. Madigan. We're dealing with teenagers for the most 
part. Some people are going back to school, but most of these 
people are teenagers when they are taking on a substantial 
amount of debt. They do not understand the long-term 
implications of that. So there absolutely have to be programs 
in high school and when people get to college to make sure they 
understand what they've taken on and what their ability is 
going to be to pay it back.
    The Chairman. Thank you all very much. I took a lot of 
time.
    Senator Alexander.
    Senator Alexander. We had testimony in one of these 
hearings about that simplification which struck all of us here 
about how much consensus there was about the importance of it. 
If you're presented with all this stuff, instead of this, and 
if you're presented with it after you've already decided where 
to go to school instead of your junior year in high school, if 
high school counselors are spending all their time reading 
through this instead of counseling, they would have more time 
to advise students about how much they can afford and where 
they ought to go to school, which leads to the point that if we 
do simplify, we have to simplify, which means we have fewer 
programs.
    The one grant, one loan proposal that was made to us by 
witnesses said that an undergraduate ought to have a single 
grant and a single loan. That would mean, for example, that we 
would not have the subsidized loan, which 80 percent of 
students who have an unsubsidized loan have a subsidized loan. 
That saves $41 billion over 10 years. That money could then be 
put for more Pell grants, and we expect there would be a lot 
more Pell grants if people filled out this instead of all this.
    It would also pay for year-round Pell grants, which is very 
expensive. We tried that a few years ago and then had to give 
up on it because of the cost of it.
    We have to simplify, which means getting rid of some 
options. If we get rid of options at the beginning, and if at 
the end instead of nine repayment options we have two, less 
confusion might mean more education.
    The only other thing--and Senator Harkin is correct, we 
don't need to get into a big debate about Medicaid, except I 
want to just restate my position in this way. During the Great 
Recession after 2008, because of the maintenance of effort 
requirement on States, Medicaid funding went up 15 percent in 
the State of Tennessee, higher education funding went down 15 
percent. The growth didn't go down 15 percent. The absolute 
amount went down 15 percent, and I'll bet it did in Minnesota, 
Illinois, Indiana, Pennsylvania, and every other State in the 
country, and it was because Washington was telling the State X 
is more important than Y, instead of letting the State spend 
its own dollars.
    President Obama's former budget director, Peter Orszag, 
said if higher education's share of State budgets had remained 
constant during this period instead of being crowded out by 
rising Medicaid costs, it would be getting some $30 billion 
more than it receives today or more than $2,000 per student. 
Now, $2,000 per student is a lot of money when the average 
tuition at a community college is $3,600.
    We have to be straightforward about this. If we want to 
require States from Washington to spend more for Medicaid, we 
need to understand that that means there's going to be not 
disinvestment by States--States don't want to spend less on 
higher education. They just don't have the money if they're 
required from here to spend it another way.
    That's something we're going to have to grapple with in the 
future, and obviously we have a difference of emphasis let's 
say.
    Thank you, Mr. Chairman.
    The Chairman. Well, since we did get into it----
    [Laughter.]
    The Chairman [continuing]. I will say that the 2012 report 
from the Kaiser Foundation found that a decline in States' 
revenues was a greater factor than increases in Medicaid on 
State budget shortfalls from 2008 through 2010. We were in a 
recession. What happens in a recession? People lose jobs. When 
they lose jobs and need health care, where do they go? 
Medicaid. It stands to reason.
    But at the same time, what States did is they started 
cutting taxes, cutting their revenues. I understand there was a 
big move there. The decline in State revenues, and that's what 
happened.
    If you want to talk about Medicaid, the Affordable Care Act 
proposed that States that go into the Federal Medicaid system, 
for the first 3 years 100 percent of that increase would be 
picked up by the Federal Government and after that 90 percent. 
That's better than the 50/50 that most States have. I think my 
State is about 50/50. Ninety percent of that would be picked up 
by the Federal Government.
    I say to my friend from Tennessee, maybe we have some kind 
of an agreement on this, that the Federal Government ought to 
do more in health care. I'm for a national health care system. 
I'm for a single payer system, the Federal Government. I'd like 
to get the States completely out of that. But I don't think 
that that's going to pass here in this--in any kind of 
Congress.
    I'm for a single payer. It would be streamlined. It would 
be cheaper. The Federal Government takes up--the States don't 
have to worry about a darned thing in Medicaid after that. But 
I don't know if that's what my friend is advocating on the 
single payer system.
    But States, they have to step up and do their part too on 
higher education, and I would just say this about the 
simplification. Again, studies have shown--I would be corrected 
if I'm wrong on this--that about 1 percent of students who fill 
out a FAFSA do it on paper. They do it online, and it takes 
about 25 minutes. About 25 minutes fills it out.
    And my friend says, well, we may just have to do away with 
subsidized loans or SEOG and Perkins loans, but those are 
targeted for different populations. Then we have other things 
we come up with, but we say we want to increase or decrease the 
interest rates for certain occupations that we want people to 
go into, and we made that decision. Rightly or wrongly, we made 
that decision. So all those, I think, would go by the wayside.
    I'm all for simplification, but not at the expense of the 
poorest students, not at the expense of students who need a 
Perkins loan because they're low interest rate, no interest 
rate while you're in college. I pointed out that I had the NDAA 
when I went to school. I went to school at a State land grant 
college. I didn't have any money, so I borrowed under that 
Eisenhower--they called it the Eisenhower Program at that time. 
All the time I was in school, there were no interest charges. I 
went into the military for 5 years, no interest charges. I then 
went to law school for 3 years under the GI bill, no interest 
charges. Then I had a 1-year grace period after I finished law 
school, no interest charges. And then, on my then Perkins loans 
or NDAA, then the interest clock started ticking.
    Think about that. I had 5, 8, 9, 10, 11 years where there 
were no interest charges on my student loans. Now, if that was 
good enough for my generation, why isn't it good enough for 
this generation? Why is it now when they take out a loan, that 
interest rate clock starts ticking right away?
    Again, if it provided a whole generation of young people of 
my generation a great college education at very low cost--but 
we don't do that anymore. So I say what the heck? If it was 
good enough for me, why isn't it good enough for students 
today?
    I didn't mean to have the last word. Do you want to say 
anything else?
    Senator Alexander. No. I want to say thank you for your 
comments.
    After you leave, if you have any specific thoughts about 
simplification, things that we could actually write into a 
Higher Education Act, I would welcome those. If you have any 
specific recommendations about risk sharing for institutions on 
loans, we're very actively considering that. Senator Jack Reed 
of Rhode Island is interested in that. I'm interested in it. 
Others are, too. But we want to make sure we do it in a correct 
way. I would welcome having those ideas. Thank you.
    The Chairman. Thank you. And I would join with Senator 
Alexander in requesting that, too.
    I think what this hearing has shown, and others, is that 
there is a Federal-State relationship here that we need to have 
for higher education. It extends from, obviously, loans and 
that type of thing to the States being involved in oversight 
and innovation. It involves consumer protections for students, 
both on the State level and the Federal level.
    What my draft tried to do is to see how do we reinvigorate 
that Federal-State relationship, and what are the proper roles 
for both in higher education, and that's what we're trying to 
seek to do in that regard. That's what I think the key is to 
the reauthorization. To figure out how we both get the States 
back in the game and delineate those unique responsibilities 
for both State, Federal Government, students and their 
families.
    I want to thank Senator Alexander for all of his 
participation in this. We've been great partners in this. 
Obviously, we have philosophical differences on things, but we 
don't have personal differences. And I say this publicly, 
Senator Alexander has been a great member of this committee, 
and of course he brings a lot of expertise being a former 
college president, and also Secretary of Education. So we rely 
upon him a great deal for his expertise in this area.
    I thank you all for being here, and I request the record 
remain open until August 7th for members to submit statements 
and additional questions for the record.
    The committee will stand adjourned. Thank you all very 
much.
    [Additional material follows.]

                          ADDITIONAL MATERIAL

                                ------                                


                        Georgia State University

                        Complete College Georgia

                           2013 Status Report

                                overview
    Ten years ago, Georgia State's institutional graduation rate stood 
at 32 percent, and underserved populations were foundering. Graduation 
rates were 22 percent for Latinos, 29 percent for African Americans, 
and 18 percent for African American males. Pell students were 
graduating at rates barely half those of non-Pell students.
    In 2013, as a result of a campus-wide commitment to student success 
and more than a dozen innovative programs implemented over the past 
several years, Georgia State's achievement gap is gone. The 
institutional graduation rate has improved 21 points since 2003. This 
past 2 years alone, it has climbed 5.1 points--reaching a new record of 
53.1 percent--and it is on pace to increase another 2 to 3 points next 
fall. (See Chart 1.) In the past decade, graduation rates are up 28 
points for African Americans (to 57 percent in 2013), 41 points for 
African-American males (to 59 percent), and 44 points for Latinos (to 
66 percent) (Chart 2). All of these numbers set all-time highs for 
Georgia State. Pell students now are as successful as non-Pell 
students. The total number of degrees conferred annually increased in 
the past year from 6,901 to 7,365 (up 7 percent), setting another 
institutional record. Just 4 years ago, the number of conferrals stood 
at 5,857, meaning that Georgia State is now graduating 1,500 more 
students per year than it was in 2008 (Chart 3).
    Significantly, Georgia State did not accomplish this dramatic 
turnaround through exclusion. Over the past decade, the student 
population has become larger (growing from 27,000 to 32,000), more 
diverse (moving from 46 percent to 61 percent non-white), and more 
economically disadvantaged (with the Pell population climbing from 31 
percent to a record 56 percent in 2013) (Chart 4). In fact, Georgia 
State also set records this past year for the number of students 
enrolled in each of the following categories: Pell (with the number now 
topping 14,000 students), African-Americans, Latinos, Asian-Americans, 
first generation, and military learners. Georgia State's success with 
diverse student populations is of growing national significance. In 
September 2012, the Education Trust released a report ranking Georgia 
State 1st in the Nation in success with Latino students and 5th in the 
Nation in success of African American students relative to other 
student populations. Over the past year, Georgia State was named one of 
the Top 100 Hispanic Serving Universities in the United States, ranked 
among the top 50 universities in the Nation for the number of 
bachelor's degrees conferred to Asian Americans, and, with a 17 percent 
once-year increase, ranked 1st in the Nation among all non-profit 
universities in bachelor's degrees conferred to African Americans 
(Chart 5).
             updates and progress with specific initiatives
    We believe that this impressive progress has come from a commitment 
to the systematic use of data in identifying problems that impact 
students across multiple racial, ethnic, and economic groups; the 
piloting of innovative, low-cost interventions; and the subsequent 
scaling up of the successful programs to maximize their impacts. This 
last point is of particular significance. It is by no means easy to 
develop effective programs, but it is also not enough. The institution 
must also be willing and able to scale the programs so that they impact 
large numbers of students.
    This year, Georgia State will welcome 300 at-risk freshmen into its 
Summer Success Academy; serve 2,500 students in Freshman Learning 
Communities; teach more than 7,500 pre-calculus students in a hybrid, 
adaptive learning format; tutor 9,600 students in peer-led Supplemental 
Instruction; reverse 2,600 students from being dropped for non-payment 
through its Panther Retention Grant program; and track the academic 
progress of 25,000 students daily through its web-based GPS advisement 
system. Not one of these programs existed 10 years ago; indeed, all but 
two were implemented over the past 3 years.
    What follows are updates on some of the major initiatives mapped 
out in our 2012 plan:

    Double the number and amount of need-and merit-based scholarships. 
Led by President Mark Becker and the GSU Foundation, the University has 
raised over $10 million in new scholarship moneys over the past 12 
months. In 2010, GSU opened a fully staffed Scholarship Resource Center 
and created a searchable data base of scholarship opportunities for 
students. Outcome: Disbursements to students from institutional 
scholarships and grants increased 63 percent over the past year. In its 
first year of operation, the new scholarship data base was used by more 
than 9,000 students.
    Reduce the negative impacts of unmet need. With a large increase in 
the number of GSU students dropped for non-payment in recent terms, we 
initiated the Panther Retention Grants program in 2011. Within hours of 
the fee drop, personnel in enrollment services proactively reach out to 
hundreds of students who have just been dropped, offering small grants. 
In some cases, the difference between a student staying enrolled or not 
hinges on as little as $300--a surprising claim until one realizes that 
40 percent of Georgia State students come from households with annual 
incomes of $30,000 or less. Outcome: Over the past year, 2,600 students 
were returned to classes after having been dropped as a result of this 
program. The grant recipients meet with financial aid counselors, and 
more than 90 percent have re-enrolled for subsequent semesters without 
requiring additional grants. Seventy percent of the students who were 
within two semesters of graduating when the grant was awarded have 
since graduated.
    Decrease the negative effects of the loss of the Hope scholarship. 
At Georgia State, 74 percent of freshmen come into the University 
supported by the Hope Scholarship. In 2008, 51 percent of Hope freshmen 
lost the scholarship by the end of their first year due to their GPA 
dropping below 3.0. Of these students, only 9 percent ever gained the 
scholarship back again. For the others, their likelihood of graduating 
dropped 40 points, from 61 percent to 21 percent. Sadly, the vast 
majority of students who dropped out after losing Hope left Georgia 
State in good academic standing; they were on the path to graduating, 
they just lacked a 3.0 GPA. In 2009 we piloted a program, Keep Hope 
Alive, offering students $500 a semester for the first two semesters 
after they had lost Hope. In return for the funds, they signed a 
contract agreeing to attend a series of academic skills and financial 
literacy workshops and to meet with their academic advisors regularly 
during the year. Outcome: Last year, 62 percent of the students in the 
program recovered Hope by their next check point. The program has 
helped to raise Hope retention rates on campus from 49 percent in 2008 
to 75 percent last year and has proven so effective that the Goizueta 
and the Coca-Cola Foundations both directed funds to the initiative as 
part of recent gifts to GSU (Chart 6).
    Overhaul academic advising. Georgia State had an academic advising 
system that had developed piece-meal over time. The University and its 
colleges maintained six different advising offices with little 
coordination between them, no common recordkeeping, and no common 
training. As prescribed by the 2011 Georgia State Strategic Plan, 
Georgia State has hired 42 additional academic advisors to bring our 
student-advisor ratio to the national standard of 300-to-91. We have 
established a common record system, common training, and a campus-wide 
University Advising Council. In 2013, we opened a central University 
Advisement Center, housing almost 70 advisors who serve every college 
and major, in a location in the heart of campus. In August 2012, we 
went live with a cutting-edge, web-based GPS Advising system based on 7 
years of RPG data and over 2 million GSU grades. The system, which 
monitors 25,000 students with nightly updates from Banner, uses 700 
markers to track when students go off path academically and offers 
predictive analytics for how each student will do for every major and 
every course in the curriculum. Outcome: In its first year of 
operation, the GPS system was used in 15,800 advisement sessions. 
Twenty-four hundred fifty-two students were converted from off path to 
on path for graduation, and 900 had their schedules corrected during 
registration when markers were triggered indicating that they had 
signed up for wrong or inappropriate courses. According to our 
analytics, the net impact of the first-year of our advising initiative 
will be a 1.1 point increase in the institutional graduation rate. In 
the coming academic year, with the help of an Incubator Grant from the 
USG, we will become the first school in the Nation to integrate a 
nuanced set of financial analytics into a web-based advising platform.
    Redesign courses with high DFW rates. Five years ago, the 
mathematics requirement constituted an insurmountable progression 
roadblock for many students and was the cause of thousands of students 
losing the Hope scholarship. The DFW rate in College Algebra, for 
instance, was 43 percent. In some sections, the number topped 60 
percent. The university piloted a hybrid model in which students attend 
a 1-hour lecture each week and spend 2 hours in a math lab with their 
class, working online with adaptive-learning exercises while the 
instructor monitors results and answers questions. Outcome: This past 
academic year, 7,500 students took their mathematics requirement in 
this hybrid format, including every student who enrolled in College 
Algebra. The DFW rate for the course has dropped from 43 percent to 21 
percent. This means that 1,650 more students are passing the course in 
their first attempt than was to case 5 years ago. Our newly founded 
Center for Instructional Innovation is helping to expand such 
pedagogical innovation across the curriculum with seed grants to 
departments and faculty to explore new approaches in the classroom.
    Expand Supplemental Instruction. With many other courses with high 
DFW rates and limited resources, we decided to tap into one of our 
competitive advantages: large numbers of Federal Work Study students. 
We scoured the rosters of courses with high failure rates for Work 
Study students who had done well. Rather than assign these students to 
work in the library or cafeteria, we hired them to go through training, 
attend the course again, and offer tutoring sessions to students 
currently in the course. Outcome: The average course grade for those 
students who attend at least five SI sessions is almost half a letter 
grade higher than for those who do not attend, and the program now 
supports 9,600 students every year. A side benefit of the program has 
been that the graduation rates of the tutors, now teaching rather than 
working in the cafeteria or shelving books in the library, have also 
climbed by 10 points.
    Institute a Summer Success Academy for at-risk freshmen. Our data 
show that there are identifiable characteristics of admitted students 
that correlate highly to academic struggles and attrition. Rather than 
defer admission for the weakest students until spring, Georgia State 
piloted a Summer Success Academy in 2012. Students were admitted for 
the fall on the condition that they attend the Academy--a 7-week long, 
7-credit-hour program in which all students are enrolled in Freshman 
Learning Communities (that extend into fall and spring) and are exposed 
to intensive academic support, including Supplemental Instruction, our 
early alert system, one-on-one advisement, and financial literacy 
workshops. Outcome: The 135 students in the 2012 Summer Academy 
(representing the 4 percent of the fall freshman class with the highest 
risk factors) not only all completed the Summer Academy; the group went 
on to achieve a 2.95 average GPA during the fall semester--a higher 
average GPA than that earned by the remaining 96 percent of the 
freshman class. For 2013, the Academy has more than doubled in size and 
the students completed the 7-credit-hour summer term with an impressive 
average GPA of 3.29.
    Increase Enrollments in Freshmen Learning Communities. By breaking 
down the freshmen class into groups of 25 students and having the 
students travel to all of their fall semester classes together, 
Freshmen Learning Communities allow study-partnerships and friendships 
to form naturally and provide a structure through which the University 
can direct advisement, Supplemental Instruction, and other academic 
support to the students. The average 1-year retention and 6-year 
graduation rates are both 4 points higher for students enrolled in FLCs 
than for those who are not. Outcome: The 2011 University Strategic Plan 
pledged to increase the percent of freshmen enrolled in FLCs to 70 
percent. We hit the target for the first time this fall, enrolling 
2,160 of the incoming 2013 freshmen in FLCs--and increase of almost 690 
students over FLC enrollments in 2012.
                              partnerships
    As a comprehensive research university with deep ties to metro-
Atlanta and the State, Georgia State University has dozens of 
partnerships that serve the college completion goals not merely of 
Georgia State but of the entire State of Georgia.
    The College of Education, for instance, maintains multiple 
successful service centers that provide important resources to K-12, 
including professional development for teachers and administrators, 
training and support for mental health providers, and literacy 
resources for children and families. There is a commitment to expanding 
these thriving centers and clinics, including the Alonzo A. Crim Center 
for Urban Educational Excellence, the Center for School Safety, the 
Principals Center, the Center for Reading Recovery, and the Urban 
Literacy Clinic, in order to more effectively serve the needs of the 
Georgia.
    The University continues to work closely with Atlanta Public 
Schools on multiple fronts and has recently increased the number of 
students in its Washington High Early College program, which has 
brought hundreds of at-risk high-school students to take courses at 
Georgia State. We also maintain our successful Early College 
partnership with Carver High. Leadership from the national Woodrow 
Wilson Foundation recently visited campus and indicated that they would 
like to partner with Georgia State on several innovative programs for 
the preparation of K-12 teachers, especially in STEM areas. We also 
entered a new agreement with the Woodrow Wilson Foundation to educate 
and to support teachers in STEM fields through a comprehensive program 
of curricular and financial support. The partnership with this highly 
prestigious foundation--one of only a handful of such agreements that 
the Woodrow Wilson Foundation has entered in nationally--seeks to 
increase both the number and the quality of STEM teachers in Georgia.
    Our leadership in partnering with the Education Advisory Board to 
develop GPS Advising has led to a host of new collaborations. As a 
result of the 2013 CCG summit, multiple USG campuses sent 
representatives to campus to visit GSU's new University Advisement 
Center, observe the advising protocols we have put in place, and see 
the web-based advising platform in action. More surprisingly, perhaps, 
is the fact that Georgia State has now worked with two other groups who 
saw the demonstration of GPS Advising at the Summit, the TCSG and the 
Georgia Association of Independent Colleges--with GSU providing 
webinars and hosting campus visits to the groups. In the past year, 
Georgia State has also been asked to present on its innovations in the 
area of advisement at meetings of Complete College America in Chicago, 
New Orleans, and Orlando; meetings of the American Association of State 
Colleges and Universities in Mobile and Baltimore; APLU meetings in 
Miami and Washington; the Aspen Institute's forum on The Future of 
Higher education in Colorado; and with dozens of individual 
universities. The Chancellor of SUNY has asked Georgia State to present 
on its advising programs and its use of ``big data'' in October at an 
annual meeting of the leadership of all SUNY schools, as has the Board 
of Regents of Ohio and the Indiana Higher Education Commission. We are 
partnering with the USG and the Education Advisory Board to develop the 
first-in-the-nation integration of financial analytics into a web-based 
advising platform.
    The coming year will also see a major partnership between Georgia 
State and the USG in developing principles and procedures for the 
support and credentialing of innovative means of learning, including 
MOOCS. Meanwhile, we continue to work with Georgia Perimeter College on 
a Lumina-funded project to improve transfer success between the two 
institutions using Lumina's experimental DQP (Degree Qualifications 
Profile) as the model.
                  key observations and lesson learned
    One of the most exciting aspects of the innovative programs that 
Georgia State has implemented is their potential to provide novel data 
that can be employed to accelerate rates of college completion, not 
merely at Georgia State but elsewhere.
    The Panther Retention Grant Program--simple in concept, but highly 
uncommon nationally--was recently featured in an article in the 
Chronicle of Higher Education and in Jeff Selingo's new book College 
(Un)bound precisely because it has revealed the strong positive impact 
that micro grants of as little as $300 can have on college persistence. 
As we track the data in the semesters ahead, we should be able to 
provide insights into the effect of such grants on college-completion 
rates--a study that will have national significance.
    Our tracking through the National Student Clearinghouse of all 
Georgia State students who leave the University has produced data now 
being cited nationally by Complete College America due to their 
startling implications. When one tracks Georgia State's cohorts by race 
and ethnicity not merely through Georgia State but through all 
institutions nationally, success rates increase by 20 points for 
African Americans, 25 points for whites, and an incredible 29 points 
for Latinos (Chart 2). This has led to an increased appreciation of the 
transient nature of low-income and at-risk students: they and their 
families, often due to economic pressures, move around more than do 
better resourced students. Even more importantly, the data has led to 
increased appreciation of the under-reporting that occurs when we track 
success rates by individual institutions. Georgia State's graduation 
rate of 51 percent climbs by more than 20 points when you include 
students who go on to enroll (and succeed) elsewhere.
    Perhaps most promisingly, the hundreds of thousands of datum being 
collected on a daily basis by Georgia State's new GPS Advising system 
have the potential to be a game changer (and the subject of an upcoming 
article in The Wall Street Journal.) Academic advisement has long been 
a hold-out when it comes to data; the details of advisement are often 
veiled behind the private conversations of students and advisors. Now, 
we not only have the ability to see what impact the careful tracking of 
every undergraduate and his or her academic choices will have on 
existing metrics--encouraging news, for instance, is the fact that 
after 1 year of GPS Advising, Georgia State's average number of credit 
hours at the time of completion is down for the first time in 5 years--
it also opens the door to a whole new set of metrics. If we can track 
whether each student is on path or off path for timely graduation, how 
do these numbers compare by various degree programs and how do they 
track over time? (See Chart 7.) If we can identify all of the pre-
Accounting students who failed to meet the minimum grade in their first 
course in the program and we intervene immediately, what percent of 
students can have their path righted and go on to succeed in the 
Accounting degree program? (See Chart 8.) If we can track the effects 
of different types of interventions, what potential do the resulting 
data hold for strengthening the nature and substance of the 
interventions that we offer?
    The search for such answers is exciting, and it will be a major 
focus of Georgia State's college completion efforts in the coming year.
    For more information: Timothy Renick, Vice Provost and Chief 
Enrollment Officer, [email protected].
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

    [Editor's Note: For further details on the GSU GPS Advising system 
and the Panther Retention Program see http://success.gsu.edu/
initiatives/gps-advising/.]
                                 ______
                                 
                              United States Senate,
                                      Washington, DC 20510,
                                                   August 12, 2014.
Hon. Tom Harkin, Chairman,
Committee on Health, Education, Labor, and Pensions,
428 Dirksen Senate Office Building,
Washington, DC 20510.

    Dear Chairman Harkin: Please accept for the record my 
submission of the following document on behalf of the Coalition 
of Higher Education Assistance Organizations (COHEAO).
    Should you have any questions or need additional 
information please contact Ashley Eden on my staff at 4-9243.
            Sincerely,
                                              Kay R. Hagan,
                                             United States Senator.
                                ------                                

          Coalition of Higher Education Assistance 
                            Organizations (COHEAO),
                                 Washington, DC 20005-3586,
                                                    August 4, 2014.
Hon. Tom Harkin, Chairman,
Committee on Health, Education, Labor, and Pensions,
428 Dirksen Senate Office Building,
Washington, DC 20510.

    Dear Chairman Harkin: The Coalition of Higher Education Assistance 
Organizations (COHEAO) is writing to submit comments to the 
Congressional Record related to the July 24, 2014, HELP Committee 
Hearing: The Role of States in Higher Education. COHEAO would like to 
thank you and the committee for your efforts to improve and simplify 
the Federal financial aid process so that students can readily access 
the financing they need for postsecondary education. Specifically, 
COHEAO would like to support the positive and accurate comments you 
made [during the hearing] regarding the benefits of the Federal Perkins 
Loan Program to students and how critically important the program is to 
reauthorize as part of the Higher Education Act.
    Since 1958, the Federal Perkins Loan Program has:

     Provided subsidized, low-interest loans to assist 
undergraduate and graduate students with economic need to finance the 
cost of higher education;
     Utilized campus-based revolving funds established from a 
combination of Federal and institutional contributions to make the 
loans; and,
     Filled a critical gap that exists for many students after 
Federal grant and Stafford loan funds are applied.

    The success of this loan program is a result of the central role 
played by higher education institutions that originate the loans, 
counsel their students, and work closely with students throughout their 
entire repayment process. The Perkins Loan Program is a risk-sharing 
program in which institutions contribute at least one-third of the 
funds that go toward their students' awards. This ``ownership 
interest'' greatly contributes to the successful management of this 
vital program.
    For example, New York has the largest Perkins portfolio in the 
country totaling $862 million, representing 10 percent of the overall 
dollars awarded to 16 percent of the students who benefit from Perkins 
each year. Last year, the State University of New York (SUNY) campuses 
combined to award $21.2 million in Perkins loans to more than 26,000 
students. The Perkins program is critical funding for NY students and 
helps significantly in their ability to access affordable student aid.
    Across the United States in 2012-13, close to 500,000 students with 
need were awarded nearly $1 billion in Perkins loans, with an average 
amount of about $2,000 awarded per student. This funding is critical to 
students who would otherwise be forced to borrow less beneficial 
private loans or leave school altogether. Perkins loan recipients are 
predominantly from lower income families as detailed below:

     67 percent of Perkins borrowers are dependent students--34 
percent of whom are from families with household incomes of less than 
$30,000.
     20 percent of Perkins borrowers are independent students, 
70 percent of whom have personal incomes of less than $20,000.
     13 percent are graduate students, for whom no other low-
cost subsidized loan program is available.

    This program provides critical support to students with economic 
need. It offers low-interest, fee-free funds to students, flexible 
repayment terms and generous forgiveness options that are public 
service oriented. It is administered at the school level to provide a 
highly efficient, self-sustaining program with accountability, 
transparency, and risk-sharing.
    This proven and longstanding loan program is in jeopardy. In order 
to keep the Perkins Loan Program alive, Congress needs to reauthorize 
the program or it will sunset on October 1, 2015. COHEAO encourages the 
Chairman to include language in the HEA that will ensure the Federal 
Perkins Loan Program will continue to be available to the hundreds of 
thousands of students who need and rely on it to assist in their 
ability to pursue a higher education.
    COHEAO thanks the Chairman and the committee for this opportunity 
to submit comments to the record and would be happy to answer any 
questions.
            Sincerely,
                          Maria Livolsi, President, COHEAO,
                            Director, State University of New York.

    Since 1981, the COHEAO has served as a partnership of colleges, 
universities, and organizations dedicated to promoting the Federal 
Campus-Based loan programs and other student financial services. 
Committed to the preservation and improvement of the Federal Perkins 
Loan and Health and Human Services Loan Programs, COHEAO also serves as 
an advocate and education resource on consumer finance issues affecting 
colleges and universities.
                                 ______
                                 
                                   Campus Partners,
                                   Winston-Salem, NC 27106,
                                                    August 4, 2014.
Hon. Tom Harkin, Chairman,
Committee on Health, Education, Labor, and Pensions,
428 Dirksen Senate Office Building,
Washington, DC 20510.

    Dear Chairman Harkin: Campus Partners is writing to submit comments 
to the Congressional Record related to the July 24, 2014, HELP 
Committee Hearing: The Role of States in Higher Education. Campus 
Partners would like to thank you and the committee for your efforts to 
improve and simplify the Federal financial aid process so that students 
can readily access the financing they need for postsecondary education.
    Specifically, we would like to support the positive and accurate 
comments you made [during the hearing] regarding the benefits of the 
Federal Perkins Loan Program to students and how critically important 
the program is to reauthorize as part of the Higher Education Act.
    Since 1958, the Federal Perkins Loan Program has:

     Provided subsidized, low-interest loans to assist 
undergraduate and graduate students with economic need to finance the 
cost of higher education;
     Utilized campus-based revolving funds established from a 
combination of Federal and institutional contributions to make the 
loans; and,
     Filled a critical gap that exists for many students after 
Federal grant and Stafford loan funds are applied.

    The success of this loan program is a result of the central role 
played by higher education institutions that originate the loans, 
counsel their students, and work closely with students throughout their 
entire repayment process. The Perkins Loan Program is a risk-sharing 
program in which institutions contribute at least one-third of the 
funds that go toward their students' awards. This ``ownership 
interest'' greatly contributes to the successful management of this 
vital program.
    Across the United States in 2012-13, close to 500,000 students with 
need were awarded nearly $1 billion in Perkins loans, with an average 
amount of about $2,000 awarded per student. This funding is critical to 
students who would otherwise be forced to borrow less beneficial 
private loans or leave school altogether. Perkins loan recipients are 
predominantly from lower income families as detailed below:

     67 percent of Perkins borrowers are dependent students--34 
percent of whom are from families with household incomes of less than 
$30,000.
     20 percent of Perkins borrowers are independent students, 
70 percent of whom have personal incomes of less than $20,000.
     13 percent are graduate students, for whom no other low-
cost subsidized loan program is available.

    This program provides critical support to students with economic 
need. It offers low-interest, fee-free funds to students, flexible 
repayment terms and generous forgiveness options that are public 
service oriented. It is administered at the school level to provide a 
highly efficient, self-sustaining program with accountability, 
transparency, and risk-sharing.
    This proven and longstanding loan program is in jeopardy. In order 
to keep the Perkins Loan Program alive, Congress needs to reauthorize 
the program or it will sunset on October 1, 2015. Campus Partners 
encourages the Chairman to include language in the HEA that will ensure 
the Federal Perkins Loan Program will continue to be available to the 
hundreds of thousands of students who need and rely on it to assist in 
their ability to pursue a higher education.
    Campus Partners thanks the Chairman and the committee for this 
opportunity to submit comments to the record and would be happy to 
answer any questions.
            Sincerely,
                                     Donna K. DeWispelaere,
                                                 President and CEO.

    [Whereupon, at 11:52 a.m., the hearing was adjourned.]

                                  [all]