[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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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
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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.]
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