[Senate Hearing 113-673]
[From the U.S. Government Publishing Office]
S. Hrg. 113-673
THE CHALLENGE OF COLLEGE AFFORDABILITY: THE STUDENT LENS
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HEARING
OF THE
COMMITTEE ON HEALTH, EDUCATION,
LABOR, AND PENSIONS
UNITED STATES SENATE
ONE HUNDRED THIRTEENTH CONGRESS
FIRST SESSION
ON
EXAMINING COLLEGE AFFORDABILITY
__________
APRIL 16, 2013
__________
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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
Pamela Smith, 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
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STATEMENTS
TUESDAY, APRIL 16, 2013
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
Murphy, Hon. Christopher, a U.S. Senator from the State of
Connecticut.................................................... 4
Baldwin, Hon. Tammy, a U.S. Senator from the State of Wisconsin.. 5
Murray, Hon. Patty, a U.S. Senator from the State of Washington.. 36
Whitehouse, Hon. Sheldon, a U.S. Senator from the State of Rhode
Island......................................................... 38
Franken, Hon. Al, a U.S. Senator from the State of Minnesota..... 39
Witnesses
Senack, Ethan, Higher Education Associate, U.S. Public Interest
Research Group, Washington, DC................................. 6
Prepared statement........................................... 7
Donelson Derrica, Student, Lipscomb University, Nashville, TN.... 12
Prepared statement........................................... 13
Goldrick-Rab, Sara, Ph.D., Associate Professor of Educational
Policy Studies and Sociology, University of Wisconsin-Madison,
Madison, WI.................................................... 15
Prepared statement........................................... 17
Brooks, Vivica, Student, Bowie State University, Bowie, MD....... 24
Prepared statement........................................... 26
ADDITIONAL MATERIAL
Statements, articles, publications, letters, etc.:
Response to questions of Senator Bennet by:
Sara Goldrick-Rab, Ph.D.................................. 48
Vivica Brooks............................................ 49
(iii)
THE CHALLENGE OF COLLEGE AFFORDABILITY: THE STUDENT LENS
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TUESDAY, APRIL 16, 2013
U.S. Senate,
Committee on Health, Education, Labor, and Pensions,
Washington, DC.
The committee met, pursuant to notice, at 10:02 a.m., in
room SD-430, Dirksen Senate Office Building, Hon. Tom Harkin,
chairman of the committee, presiding.
Present: Senators Harkin, Alexander, Baldwin, Murphy,
Franken, Murray, and Whitehouse.
Opening Statement of Senator Harkin
The Chairman. The Senate Committee on Health, Education,
Labor, and Pensions will come to order. A little over a year
ago, this committee launched a series of hearings to examine
the challenge of college affordability. So far we've held three
hearings. We've heard from the administration, from both
traditional and online universities and community colleges,
from State officials, higher education associations, think
tanks and researchers, among others.
Today, in our fourth and final hearing in this series,
we'll examine this issue through the lens of students. We'll
listen to their voices, their experiences, and their ideas.
Since our last hearing in September, we have continued to be
reminded of the enormous difficulties that students from lower
income families face in their efforts to get a college
education. In the fall, new data showed that two-thirds of
college seniors who graduated in 2011 had an average student
loan debt of $26,600, which was a 5 percent increase from the
previous graduating class.
This continuous upward trend has persisted despite the
tripling of Federal grant aid and constant dollars over the
past decade. Last month, a report by the State Higher Education
Executive Officers warned that public higher education, which
educates 70 percent of the students in this country, is about
to cross an historic threshold. For the first time ever,
students will pay a higher percentage of operating costs of
public universities than State governments.
In 2012, net tuition revenue made up 47 percent of public
colleges' educational costs. By comparison, in 2001, tuition
was 29 percent of the costs. We've learned that first student
spending from State and local sources fell to less than $5,900
in 2012, a 9 percent decrease just from the year before, and a
quarter century low for the third consecutive year.
The implications for affordability of this cost shifting is
obvious: As States continue retrenching from their historic
responsibility as primary supporters of public higher
education, students and their families are asked to shoulder an
ever-growing burden of cost. And where do they go for that?
They go to loans and Pell grants, of course.
Finally, I recently came across these shocking statistics:
Students from wealthy families are seven times as likely to
have earned a bachelor's degree by age 24 than those from poor
families. And this disparity has grown over the last 40 years.
Between 1970 and 2010, the proportion of 24-year-olds with a
bachelor's degree who came from the lowest quartile of family
income grew from 6 percent to 10 percent over 40 years, while
in the wealthiest quartile the proportion grew from 40 percent
to 71 percent.
In addition, when one takes academic preparation into
consideration, the disparity is even more striking: A high-
achieving student of limited means has the same chance of
attending college as a low-achieving student from a more
advantaged background. At the lowest achievement level, a
wealthy student is about twice as likely to attend college as
his low-income peer.
It is estimated that over the past decade, 4.4 million
college qualified low-income high school graduates did not
attend 4-year colleges, and an additional 2 million did not
attend colleges at all. What this tells me is that something
needs to change and urgently if we want America's higher
education system to be an engine of equal opportunity and not a
system that perpetuates and actually broadens inequality.
There is no bigger economic or educational failure than
having a committed and prepared student who has to forego a
postsecondary education because it's just too expensive. The
upcoming reauthorization of the Higher Education Act will be an
historic opportunity to get a handle on runaway costs, stop the
shifting of costs onto students, and get our higher education
back on track. And we'll continue to hold hearings on these
issues as we move forward.
I might just add, parenthetically, that one of the most
important priorities right now in the next couple of months is
to maintain the affordability of college loans. As you know,
they are set to double from 3.4 to 6.8 percent again in June,
as they were last year. We kept it low for a year, and we're
doing everything we can to try to keep it low, down at 3.4
percent. The President's budget prevents that from doubling,
and there are other proposals. But, again, this is something
that we cannot afford to do, to let that double at this point
in time.
I'm looking forward to hearing from our students. I read
your testimonies last night. They're all very good. And with
that, I invite Senator Alexander for any opening remarks.
Opening Statement of Senator Alexander
Senator Alexander. Thanks, Mr. Chairman, and welcome to the
witnesses today. I thank the chairman for his leadership on
this issue. This is, as he said, the fourth hearing.
Why is the cost of college going up? Insofar as public
colleges and universities, which is where three out of four
students attend, the first reason is the cost of Federal
Medicaid mandates. The mandates force States to spend money on
Medicaid that they would otherwise spend on public higher
education. As a result, tuitions go up to make up the
difference.
For example, in the 1980s in Tennessee when I was the
Governor, Medicaid took 8 percent of the State budget. Today,
it's 26 percent of the State budget, soaking up money that
could be used to reduce tuitions. Senator Harkin is correct.
There has been a dramatic change in State support for public
higher education.
In the 1980s in Tennessee, the State paid 70 percent of the
cost of your going to a public college or university. Today, it
pays 30 percent, and the student pays 70 percent. So the first
reason is because of Federal Medicaid mandates.
The second reason is because of the inefficient use of
campus facilities. The former president of George Washington
University said that simply requiring one mandatory summer
session for every student in 4 years, as Dartmouth does, would
improve his institution's bottom line by $10 million to $15
million a year. You could run two complete colleges, he said,
with two complete faculties in the facilities now used half the
year for one. Those savings could be used to reduce the cost of
going to a college and to improve the quality of the college.
To save money and reduce costs, some colleges are
experimenting with 3-year degrees for appropriate students, and
some States, like Tennessee, are allocating funds to colleges
that do a better job of helping students graduate in 4 years.
Obviously, you save money if you go and complete your work in 4
years instead of 5 or 6.
The third reason college costs are so much is because of an
absurd barrage of well-intentioned Federal regulations. The
Stanford University president said complying with them consumed
7 percent of his budget. I voted against the last Higher
Education Act because it authorized a new stack of regulations
as tall as I am, and the existing stack was already that tall.
Senators Mikulski, Burr, Bennet and I, with Chairman Harkin's
encouragement, are going to go to work on this.
The fourth reason college costs so much could be the huge
amount of Federal money which follows students to the college
of their choosing. The average Pell grant today, about $3,600,
exceeds the cost of tuition at the average community college,
$3,100. The average Federal undergraduate student loan is about
$2,000 less than tuition at the average 4-year public
university.
These loans have become easy money. An undergraduate
student who is still classified as a dependent on his or her
parents' tax returns can borrow up to $31,000 in Federal loans
at either the 6.8 percent interest rate on unsubsidized loans
or the 3.4 percent rate on subsidized loans. The President has
recommended--and I agree with his thinking--that we consider a
form of variable rates so students can take advantage of the
lower rates, for example, that exist today.
If a student is independent from their parents, he or she
can borrow up to $57,500 in Federal loans to pay for college.
Some private banks will offer loans to students at rates
between 5.75 and 13 percent. These loans may be easy to get,
but they are hard to pay back. Many Americans find themselves
unable to pay the loans back, and taxpayers find themselves
holding worthless notes.
Taxpayers as well as students have something at stake here.
These grants and loans cost taxpayers quite a bit of money or
add quite a bit to the Federal debt. Pell grants were $33
billion last year. There were $105 billion in new Federal loans
last year, all provided by the Federal taxpayer. The total of
Federal student loans is approaching $1 trillion. About half
our students at our 6,000 institutions have either a Federal
grant or a Federal loan to help pay for college.
I'd like to see Congress address all four of these
contributors to the rising cost of college as well as look at
ways we can help students make better decisions about how much
money to borrow when they feel the need to borrow.
Thank you, Mr. Chairman.
The Chairman. Thank you, Senator Alexander. Now, we'll turn
to our introductions, and, first, I'll invite Senator Murphy to
introduce our first witness.
Statement of Senator Murphy
Senator Murphy. Thank you very much, Mr. Chairman. I'm so
pleased to have with us today Ethan Senack. Ethan is a native
of Torrington, CT, and a graduate of the University of
Connecticut, where he studied political science and sociology.
He is currently an advocate for students as the Higher
Education Associate for U.S. PIRG.
But when he was at the University of Connecticut, he was a
true leader in bringing together student body presidents from
across the State as well as students from all of our private
and public universities to lobby at the State capitol on behalf
of student aid issues and support for public universities. He
was a real leader among students of all political persuasions
in Connecticut's legislature and in our higher education
system, and we are pleased to have him here this morning.
The Chairman. Thank you very much. I'll turn to Senator
Alexander for purposes of an introduction.
Senator Alexander. Thanks, Mr. Chairman. I'm pleased to
introduce Derrica Donelson, a student at Lipscomb College in
Nashville. She's 23. She was born in Nashville, raised by a
single working mother, and attended Martin Luther King Magnet
School. She is scheduled to graduate in August with both a
bachelor's and a master's degree in accounting. She is active
in her community.
We look forward to hearing from her about the informed
choices that she made as she selected among colleges. She
didn't go to the least expensive college she could have gone
to. She made a decision about where she wanted to go, and she's
been successful. I look forward to her testimony.
The Chairman. Thank you.
Senator Baldwin.
Statement of Senator Baldwin
Senator Baldwin. Thank you, Mr. Chairman. It's my honor to
introduce Dr. Sara Goldrick-Rab, an Associate Professor of
Educational Policy Studies and Sociology at the University of
Wisconsin-Madison. Dr. Goldrick-Rab traveled to Washington, DC,
today with her grandfather, Isaac Youcha. Mr. Youcha enlisted
to serve his country in June 1949. When the war ended, Mr.
Youcha attended New York University on the GI bill, graduating
in 1950 as the first person in his family to earn a college
degree.
As I think Dr. Goldrick-Rab will testify later this
morning, her grandfather's pursuit of the American dream,
access to a quality higher education, forever changed their
entire family. I can only imagine how proud Mr. Youcha is today
to be here and watch his granddaughter testify before our
Senate committee, and with good reason. We're incredibly lucky
to have her join us today.
Dr. Goldrick-Rab is an affiliate of the La Follette School
of Public Affairs, the Center on Financial Security, the
Institute for Research on Poverty, and she serves as a senior
scholar at the Wisconsin Center for the Advancement of Post-
Secondary Education. As a scholar, activist, and sociologist
with a deep commitment to bringing research into policy and
practice, Dr. Goldrick-Rab's research explores policy aimed at
reducing socioeconomic and racial inequalities.
She currently holds the William T. Grant Faculty Scholar
Award, a 5-year grant facilitating her work on a project titled
``Rethinking College Choice in America,'' and is co-author of
Putting Poor People to Work: How the Work First Idea Eroded
College Access for the Poor, which was a finalist for the C.
Wright Mills Award. Her research has been published in numerous
journals and has received support from several foundations. Dr.
Goldrick-Rab holds a Ph.D. in sociology from the University of
Pennsylvania, and we are delighted to have her on our panel
today.
The Chairman. Thank you very much, Senator Baldwin.
Senator Mikulski also chairs another committee, a very
important committee on appropriations, which she has to attend
to this morning. So in her place, I will introduce Vivica
Brooks, a Washington, DC, native, a senior at Bowie State
University in Maryland, majoring in business with a
concentration in marketing. Ms. Brooks has been a recipient of
the Federal Pell grant and loans as well as scholarships. She
is a mother and an active commuter student and student athlete.
She resides in Bowie, MD, with her mother and son.
Welcome, Ms. Brooks.
Your statements will all be made a part of the record in
their entirety. I would ask if you could sum up your statements
in 5 minutes or so, we would appreciate it. And we'll go from
left to right, and then when we finish, we'll open for
questions.
Mr. Senack, welcome and please proceed.
STATEMENT OF ETHAN SENACK, HIGHER EDUCATION ASSOCIATE, U.S.
PUBLIC INTEREST RESEARCH GROUP, WASHINGTON, DC
Mr. Senack. Thank you, Chairman Harkin, Ranking Member
Alexander, and Senator Murphy for the introduction, as well as
all the distinguished Senators here today. My name is Ethan
Senack. I'm the Higher Education Associate for the U.S. Public
Interest Research Group. U.S. PIRG is a federation of State-
based consumer groups, including 75 campus chapters in 20
States across the country. On behalf of those students, our
project works to promote affordable and accessible higher
education.
Less than a year ago, I was a student at the University of
Connecticut. I thought I was destined for Husky basketball, but
I ended up working with the student PIRG chapter on higher
education at UConn instead. Add in that I'm a recent graduate,
and college affordability is a very important and relevant
topic to me.
As Chairman Harkin said before, with two-thirds of my
colleagues graduating with an average of $26,000 in debt,
there's no question that the cost of higher education is a
major issue for my generation. On April 25th, we'll note the
first anniversary of our Nation hitting over $1 trillion in
collective student loan debt. At the same time, States are
spending an average of 28 percent less per student on higher
education. While State investments have plunged, tuition has
skyrocketed, causing students to rely more heavily on loans.
Congress has taken serious steps to improve college
affordability, raising the maximum Pell grant, maintaining low
interest rates on student loans, and instituting mandatory loan
counseling. But there is more work we can do to improve the
system.
Financial aid certainly played a major role in my decision
to go to the University of Connecticut. Never having had debt,
it was really hard to understand the repercussions of taking on
$28,000 or $40,000 or $60,000 in debt. And I'm not alone in
that. Over 76 percent of students express a desire for better
training in personal finance before college.
The financial aid shopping sheet, just one example of the
Department of Education's efforts to improve financial
literacy, is a great positive step forward. Right now, there is
no standardized system for communicating financial aid offers,
which can lead to issues for students. Some students feel they
are led into higher levels of debt than necessary. Whether the
package offers low costs but recommends large loans, or even
just that loans are often listed under the award section, the
fact remains that an already complicated process is made even
more difficult.
Senator Franken introduced the bipartisan Understanding the
True Cost of College Act last year, which required colleges to
conform their award letters to a standardized system. Just as
important was the consumer testing to improve the shopping
sheet's ability to present and communicate this data clearly.
Once a student has signed the dotted line, it's critical to
keep them aware of their options. Senator Harkin recently
introduced the Smarter Borrowing Act to improve loan counseling
requirements on Federal student loans, including annual
notification of cumulative debt and remaining eligibility for
loans and grants.
Steps like these help students make the right financial
decisions. Once students are at college and getting their
degree for the right price, the next concern is that their debt
stays low and is affordable in repayment.
First and foremost, Pell grants are the cornerstone of the
financial aid system, supporting over one-third of all college
students across the country. Unfortunately, the program's
impact is slowly eroding, covering the smallest portion of
tuition costs in history, and cuts over the past few years have
squeezed over 140,000 students out of the program.
Students need a strong investment in grant aid. It's far
better than loans and better targeted to those who need it. For
those who do need loans, low interest rates are key to
affordability. With the support of many of you, Congress passed
a 1-year extension of the low interest rate last year. But that
runs out in a few months, raising costs by over $1,000 for more
than 7 million students across the country.
I recognize the need for long-term reform, but it's just as
critical to make sure interest rates don't double on students
this July. With only 2 months before the deadline, I urge
Congress to extend the low rate and give us the time to work
out a comprehensive student-friendly policy.
Income-based repayment could also use improvement. As a
safety net to help struggling borrowers avoid default, far too
few distressed borrowers are participating. There are only 1.1
million students enrolled in IBR, but there are 5.4 million
students currently late on their payments. Congress should
simplify the process and ease transition into IBR, as well as
improving emphasis on such fall-back programs in loan
counseling.
All of these changes will require strong political will.
But I'm confident we can get there. I saw Congress and the
President rise above political gridlock last year to keep
student loan interest rates low. I'm seeing significant change
on the college level. Over 600 colleges have voluntarily joined
the movement to make their costs transparent. And students at
colleges across the country are gearing up to make their voices
heard on interest rates once more.
Thank you, all of you, for your time, and I look forward to
your questions.
[The prepared statement of Mr. Senack follows:]
Prepared Statement of Ethan Senack
Summary
background
College costs are rising. The national recession has led to weak
State economies, which in turn have squeezed college budgets. While
State investments in higher education have plunged, tuition costs have
skyrocketed. In line with that, student loan debt has grown enormously.
On April 25th, we'll note the first anniversary of when the country's
collective student loan debt hit $1 trillion.
recommendations
Improve Potential Students' Knowledge and Understanding: One of the
most complicated decisions for students and families to make is where
to go for college. Millions of Americans make the decision every year--
and a large portion say that financial cost weighs most heavily on
their choice.
Increase use of Financial Aid Shopping Sheet: Many
students and families have complained about the lack of
transparency in college pricing and financial aid packages,
which may lead them into higher debt levels than they
anticipate. The shopping sheet is a standardized method of
communicating award packages and allows comparing and
contrasting of college financial aid offers.
Improve Loan Counseling: Right now, loan counseling
does not effectively communicate critical borrowing and
repayment options. Efforts to increase the depth and
comprehension of loan counseling can only help improve
financial literacy among students.
Maintain Grant Aid: Pell grants are the cornerstone of the Federal
financial aid program, supporting more the 9 million students pursuing
their college degree. To meet workforce needs in years to come, we must
maintain strong funding for the Pell grant program.
Keep Debt Low and Repayment Manageable: Student debt levels are at
record highs, as is the default rate on student loans. High loan debt
has serious economic impacts on a graduate's ability to move forward in
life, whether purchasing a home, starting a family, or continuing their
education.
Maintain Low Interest Rates on Student Loans: Unless
Congress and the President act decisively, the interest rate on
new subsidized Stafford student loans will double from 3.4
percent to 6.8 percent on July 1, 2013. That will drive up loan
costs by $1,000 per student, per loan, for over 7 million
students.
Strengthen Income-Based Repayment: IBR is an
important safety net for borrowers struggling to make their
payments. Unfortunately, far too few distressed borrowers are
participating. Right now, there are only approximately 1.1
million students enrolled in IBR, while 5.4 million borrowers
are currently late on their payments.
______
Thank you Chairman Harkin, Ranking Member Alexander, and other
distinguished Senators for giving me this opportunity to speak about
the student perspective on college affordability. My name is Ethan
Senack, I am the Higher Education associate with the U.S. Public
Interest Research Group (U.S. PIRG). Thank you for inviting me to
speak. U.S. PIRG is a federation of State-based consumer protection
groups, which has 75 campus chapters in 20 States across the country.
On behalf of those student chapters, our project works to promote
affordable and manageable student loan policy, to increase grant aid,
and to protect student consumers on campus.
Less than a year ago, I was a student at the University of
Connecticut, so college affordability is a very important and relevant
topic to me.
As a member of our student PIRG chapter at UConn, I was part of the
successful effort to keep the interest rate low on the subsidized
Stafford student loan program. Thanks to the President and to Congress,
in particular the Senators sitting here now from both sides of the
chamber, a bipartisan agreement was reached to temporarily extend the
low rate. To help make the point, the student PIRGs hosted 27 student
watch parties, garnered over 800 press hits across the country and
gathered 600,000 petition signatures to Congress.
I care to organize around these issues because I just experienced
and interacted with a number of the programs that fall under the topic
of this hearing. I appreciate you giving me the opportunity to speak on
behalf of students across the country and share my thoughts on keeping
college within reach for all Americans.
background
College costs are rising. The national recession has led to weak
State economies, which in turn have squeezed college budgets. As a
student leader, I led other students to the capitol in Connecticut to
ask lawmakers to reprioritize higher education. The issue wasn't just
the amount of money going to higher education; it was that the
proportion of the budget going to higher education had shrunk.
The same scenario is playing out across the country. States are
spending 28 percent less per student on higher education; 11 States
have cut funding by more than one-third per student, and two States
have cut that spending per student in half.\1\ While State investments
in higher education have plunged, tuition costs have skyrocketed.
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\1\ Report, Recent Deep State Higher Education Cuts May Harm
Students and the Economy For Years To Come, Center for Budget and
Policy Priorities, March 19, 2013.
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On top of that, student loan debt has grown enormously. On April
25, we'll note the first anniversary of when the country's collective
student loan debt hit $1 trillion dollars.\2\
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\2\ News story, Student Loan Debt Exceeds One Trillion Dollars,
National Public Radio, April 24, 2012.
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Thankfully, I graduated with less debt than the national average
but considering that \2/3\ of my colleagues graduated with debt at an
average $26,600,\3\ that accomplishment seems hollow.
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\3\ Report, Student Loan Debt Climbs to $26,600 For Class of 2011,
Then Institute For College Access and Success, October 18, 2012.
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For the millions of students like me that graduate with debt, the
burden limits opportunity. Whether it's holding graduates back from
building a family, buying a home, starting a business, or even
continuing their education, high loan debt has serious impacts.
Beyond its impact on the individual, student loan debt is bad for
the country as a whole, contributing to the persistent economic
stagnation we currently face. The Federal Reserve Bank of New York
recently identified high student loan debt as a risk to economic
growth.\4\
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\4\ Minutes, Minutes of the Federal Open Market Committee, The
Federal Reserve, March 19-20, 2013.
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recent steps forward
To make college affordable, we need strong investment in higher
education. At the Federal level, we have seen real progress.
Specifically, the Pell grant program is the Nation's cornerstone
student aid program, providing need-based, scholarship aid to nearly 10
million students this year. In the big picture, the Pell grant program
should ensure that all students who are qualified to attend college can
do so without financial barriers. The Pell Grant supports nearly a
third of all students attending college each year.
It is absolutely critical that the Pell grant remain strong and
fully funded--the more students can rely on higher amounts of grant aid
to pay for college, the less they rely on student loans. In 2008,
Federal lawmakers invested more than $40 billion in Pell grants, and
put the maximum award on track to hit $5,975.\5\ The legislation also
stabilized the program, which faced a severe budget shortfall due to
the larger number of students and workers qualifying for the award. In
2011, the program was exempted from the automatic cuts that are being
imposed as of March of this year,\6\ enabling students to rely on their
grant for college during this time of economic uncertainty. I'm sure
the 3,500 students at UConn that rely on Pell grants appreciate your
efforts, as well as millions of students across the country.
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\5\ Issue brief, The Health Care and Reconciliation Act, The White
House, 2009.
\6\ News story, Sequestration Presents Uncertain Outlook for
Students, Researchers, Job-Seekers, The Chronicle of Higher Education,
March 1, 2013.
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And of course, last year's extension of the low rate on subsidized
Stafford loan demonstrated a real commitment from Congress and the
President to help students manage their high cost loans.
But even with all of these improvements, we still have a major
affordability problem. I will walk through a variety of suggestions on
both the front end, when students and families are shopping around for
a college and signing on the dotted line, and on the back end, when
student borrowers enter into repayment.
improving potential students' knowledge and understanding
One of the most complicated decisions for students and families to
make is where to go for college. Millions of Americans make the
decision every year--and a large portion say that financial cost weighs
most heavily on their decision.\7\
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\7\ Survey, The American Freshman: National Norms Fall 2010, Higher
Education Research Institute, January 2011.
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Financial aid certainly played a major role in my decision to
attend the University of Connecticut. Never having had debt or
initiated a major financial decision, I found it hard to entirely
understand the magnitude of choosing to attend a school with tuition in
the range of $40,000 or $50,000.
The unfortunate reality is that, like me, most students feel
unprepared to interpret the financial decisions they must make. Over 76
percent of students expressed desire for increased training in personal
finance before going to college.\8\ Because of this, we must continue
to improve access and ease of understanding of financial information.
Fortunately for students and families, there are some notable efforts
underway already.
---------------------------------------------------------------------------
\8\ Survey, New Survey by The Hartford Reveals Financial Education
Gap, The Hartford Financial Services Group, Inc., February 2007.
---------------------------------------------------------------------------
Financial Aid Shopping Sheet
Many students and families have complained about the lack of
transparency in college pricing and financial aid packages, which may
lead them into higher debt levels than they anticipate.
When I received my financial aid package, I was faced with the
choice between a private school offering enough financial aid to cover
the full cost of attendance--over $20,000 in grants and an additional
$20,000 in loans--and a public school offering enough grant aid and
subsidized loans to cover the majority of costs but leaving a small
amount unfilled. The private school letter showed a ``net cost'' of $0,
and while the public school letter showed a ``net cost'' of a few
thousand dollars. That alone is misleading, because the private school
would have left me with $80,000 in debt, while I ended up graduating
from the public school owing only $14,000.
Even more confusing is that schools calculate costs differently.
Some include tuition plus room and board. Other schools incorporate the
cost of textbooks. Beyond that, there are manifold costs that may or
may not be accounted for in the school's assessment: transportation or
parking, school supplies, etc. Without a detailed breakdown or
explanation, potential students and families may be slammed with higher
costs than expected down the road.
The U.S. Department of Education has developed and promoted a
financial aid shopping sheet. The Department campaign is a voluntary
effort through which colleges present their financing information in
consistent and easy to understand format.\9\ Over 600 institutions have
agreed to use the Department of Education's template in their letters
this year \10\--creating a standardized way for students and families
to compare and contrast different schools and aid awards. Last year,
Senator Franken introduced a bipartisan bill, the Understanding the
True Cost of College Act, which required all universities to conform
their financial-aid award letters to a standard shopping sheet format.
The bill also includes valuable consumer testing to improve the
shopping sheet's ability to present and communicate the data clearly
and effectively.\11\
---------------------------------------------------------------------------
\9\ Issue Brief, Financial Aid Shopping Sheet, The U.S. Department
of Education, 2012.
\10\ Ibid.
\11\ Press Release, Senator Franken Introduces Bipartisan Bill To
Help Families and Students Understand the True Cost of College, Senator
Al Franken, May 24, 2012.
---------------------------------------------------------------------------
Fortunately, I ended up making the right choice, but we need to
make sure there are strong systems in place to give guidance to all
students and families.
Improving Loan Counseling
Senator Harkin recently introduced the Smarter Borrowing Act to
improve student loan counseling.\12\ This is another positive step in
building financial literacy among students. The legislation strengthens
and reforms the current mandatory entrance and exit loan counseling
requirements for Federal student loans and notifies students annually
of their cumulative debt, including their remaining eligibility for
loans and grants. Efforts like this can only help students make the
right education finance decisions as they complete their education.
---------------------------------------------------------------------------
\12\ Mikulski, Harkin Introduce Bill to Improve Loan Counseling.
---------------------------------------------------------------------------
maintaining grant aid
An enormous factor in deciding to attend college and where to go is
how much scholarship aid a student receives. For as much progress that
we've made recently to keep the Pell grant effective, the program's
impact is eroding slowly, which is bad for college access. In 2011, as
part of the Budget Control Act, Congress reached a bipartisan
commitment to maintain a maximum Pell grant of $5,550 for low-income
students and provided $17 billion in additional funding over 2 years
for Pell grants.\13\ To maintain that maximum, Congress eliminated Pell
grants for summer learning, limited the length of time a student can
receive a Pell grant, made it more difficult for low-income students to
automatically qualify for the maximum Pell award and eliminated Pell
eligibility for students without a high school degree who demonstrate
the ``ability to benefit'' from post-secondary education.\14\ Over
140,000 students were squeezed out of the Pell grant program due to
these cuts.\15\
---------------------------------------------------------------------------
\13\ Blog, Understand Why Federal Budgets Matter to Students, US
News and World Report, 1/18/12; brief, Debt Ceiling Law Provides $17
Billion for Pell, National Association of Student Financial Aid
Administrators, 8/3/11
\14\ Issue Brief, Don't Double Our Rates, U.S. Public Interest
Research Group, April 9. 2013.
\15\ Release, 143,000 Students Lose Their Pell Grant Next Year,
U.S. Public Interest Research Group, December 19, 2011.
---------------------------------------------------------------------------
keeping debt low and repayment manageable
Once students are at the right college for the right price, the
next concern is that their student loans stay manageable and affordable
in repayment. Two thirds of college students graduate with debt.\16\
---------------------------------------------------------------------------
\16\ Issue Brief, Don't Double Our Rates, U.S. Public Interest
Research Group, April 9. 2013.
---------------------------------------------------------------------------
Maintain Low Interest Rates on Student Loans
Unless Congress and the President act decisively, the interest rate
on new subsidized Stafford student loans will double from 3.4 percent
to 6.8 percent on July 1, 2013.\17\ That will drive up loan costs by
$1,000 per student, per loan, for over 7 million students.
---------------------------------------------------------------------------
\17\ Ibid.
---------------------------------------------------------------------------
I worked with students in Connecticut and all over America who
couldn't afford to add to their debt burden. Students who stood up at
press events, students who visited their legislators--and we heard
stories from all of them about the crushing student debt our generation
faces. The wave of outcry from students and the general public that
built around the July 1st deadline shows that there is real consensus
about investment in higher education. In the end, Congress echoed that
call and passed a temporary extension of the 3.4 percent interest rate.
I recognize that we need comprehensive student loan reform, but
students and borrowers in repayment need more time to bring their case
to Members of Congress. Forums like this help us shed light on the
problems and concerns from our perspective--and allow us to work
together with lawmakers to develop good long-term policy. I hope you
will continue your efforts to reach out to students and young people on
comprehensive reform as we move toward reauthorization of the Higher
Education Act.
That said, it is just as critical to prevent the subsidized
Stafford interest rate from doubling on students this July. If we are
unable to develop a long-term solution that benefits all student
borrowers now, before July 1, then I urge Congress to extend the low-
interest rate for a short time, to give us the breathing room we need
to work out a student-friendly and comprehensive policy.
Strengthen Income-Based Repayment
Beyond interest rates, there are other methods of increasing
affordability on the back end.
Income Based Repayment (IBR) is another tool that could use
improvement. IBR is designed as a safety net to help borrowers in
financial distress avoid the dangers of student loan default. The
program driving down their payments to a small percentage of what they
earn.
The problem with IBR is that far too few distressed borrowers are
participating. Right now, there are only approximately 1.1 million
students enrolled in IBR, while 5.4 million borrowers are currently
late on their payments.\18\ Several of my former classmates and peers
have expressed their frustration with the enrollment process, citing a
complex process and lack of knowledge about the program details.
Congress should act to simplify the process and increase ease of
transition into IBR, as well as increasing the emphasis of such
fallback programs during loan counseling.
---------------------------------------------------------------------------
\18\ News story, Despite Student Debt Concern, Income-based
Repayment Lags, Inside Higher Ed, October 23, 2012.
---------------------------------------------------------------------------
in conclusion
All of these improvements will require a strong political will. But
I'm confident we can get there. I saw Congress and the President rise
above political gridlock last year to keep student loan rates
affordable. And I'm seeing significant change at the college level. Six
hundred colleges have joined the movement to make costs and aid
transparent. At colleges across the country, students are gearing up to
make their voices heard once more as July 1 approaches.
I am excited to work with all of you as we undertake the daunting
but achievable goal of keeping college within reach for millions of
American students and families.
The Chairman. Thank you very much, Mr. Senack.
Now we'll move to Ms. Donelson.
Please proceed.
STATEMENT OF DERRICA DONELSON, STUDENT, LIPSCOMB UNIVERSITY,
NASHVILLE, TN
Ms. Donelson. First, allow me to express my deepest
appreciation to Chairman and Hon. Senator Tom Harkin and the
Honorable Senator Lamar Alexander from the great State of
Tennessee for inviting me to testify in this meeting. There are
few events in life that are as important and as life-shaping as
graduating from college. Thank you for the Federal financial
aid that has been made available to me and for the opportunity
to achieve my dreams in life. While the path to graduation has
not been simple or easy, it has been worth all the efforts.
Like you said, my name is Derrica Donelson and I am 23
years old. I will graduate in August 2013 with a Bachelor of
Business Administration degree in accounting and a Master's
degree in accounting from Lipscomb University. I graduated from
Martin Luther King, Jr., Academic Magnet High School, and I am
the first of the past two generations to graduate with a
master's degree.
Upon graduating high school, I had numerous conversations
with my guidance counselor regarding future plans for college.
She advised me to complete applications as early as possible. I
submitted my application for Tennessee State University, Middle
Tennessee State University, Austin Peay State University, and
Trevecca Nazarene University. It was at a college fair held at
my high school where I first learned of Lipscomb University.
After talking with Lipscomb's representatives, I made the
decision to submit my application.
At that time, I had no knowledge of what it would cost to
attend, but I knew that Lipscomb University was high on my
list. Before graduating high school, I had an idea of what I
wanted my major to be. It was my exposure to the accounting
profession at the Tennessee Society of Certified Public
Accountants' Accounting Academy that I learned of my real
interest in accounting. Due to that interest, I researched the
colleges where I submitted my application and narrowed my
choices down to Middle Tennessee State University and Lipscomb
University.
When it came to making a decision on which school to
attend, I had to consider many factors. One factor I considered
was the tuition to attend each school. Lipscomb is a private
school, and it was significantly more expensive to attend. But
I did not want cost to be my deciding factor on which school to
choose. It was extremely important to me to consider things
such as my culture, and it was important to me to feel as if I
belonged there.
I visited both schools, and both schools had great
accounting programs. However, Lipscomb had a joint BBA and MAcc
program that allowed me to obtain my Master's degree in 5
years. It was also closer to home. Lipscomb became my first
choice, but finances could have created a problem.
The summer prior to attending Lipscomb, I filled out many
applications for scholarships and grants. I did not know how I
was going to pay for school. During my first week at Lipscomb,
one of the first faculty and staff members that I met was
Tiffany Summers. She is the director of financial aid. It was
that day when the concept of paying for college finally hit me.
Instantly, I broke out crying. My mother was a single parent,
working two jobs to support our family.
After my break down, Tiffany was kind enough to sit down
with me and my mother to help us determine how I was going to
pay for college. She helped me understand how loans worked and
the benefits of scholarships. I have received such aid as the
Tennessee State grant, the Federal Pell grant, Federal Stafford
subsidized loans, and Federal Stafford unsubsidized loans. I
also qualified for parent PLUS loans.
I would like to thank Senator Alexander for his support of
education in the State of Tennessee. State grants from
Tennessee have provided me more funding than the Federal
grants. After my freshman year, I kept a part-time job
throughout college, I was an officer of a student organization
for 3 years, and I managed to maintain a grade point average
above 3.0.
I do realize that I am going to have some debt after
obtaining my degree. However, I plan to use my education to
excel in a career of accounting. Although Lipscomb's tuition
was expensive, it was still obtainable. When negotiating my
salary for a job offer, I was sure to include at least $300 a
month for my loan payments. I feel as if my education would not
have been possible without the financial aid that I received.
Looking back, I would not have changed my decision to
attend Lipscomb University, even with the debt I obtained. I
would recommend to future college students to do their research
on what resources are available to them and make an informed
decision. Once that research is done, begin to utilize those
resources. It is also important that the student talks to the
financial aid office, file the FAFSA early, have a good ACT
score, and maintain a good grade point average.
The help is out there. It just depends on how determined
the student is about receiving an education. In order for the
committee to improve college access and success for all
students, I would suggest starting at the high school level.
Keeping the guidance counselors informed on the resources that
are out there will give the guidance counselors the opportunity
to pass that information on to the students. An increase in the
Pell grants would also help make college more affordable for
more students. Giving more opportunities to students for loan
forgiveness could help ease the burden of debt.
I would like to thank the committee for dedicating this
time to do their research and for including the student's
perspective in their work.
[The prepared statement of Ms. Donelson follows:]
Prepared Statement of Derrica Donelson
summary
My testimony will start off by first thanking the Senators for
allowing me the opportunity to take part in this hearing.
I am going to give a brief overview about who I am and about my
education. In my senior year of high school, I filled out many
applications to schools such as Tennessee State University and Middle
Tennessee State University. I also filled out an application to
Lipscomb University after attending a college fair. I had the idea that
I was going to major in accounting, but it wasn't until after I
attended the Tennessee Society of Certified Public Accountants'
Accounting Academy when I became absolutely sure that I wanted to major
in accounting. After doing my research, Lipscomb University became my
first choice for college.
Funding my college education was a problem for me, but I did not
let that stop me from attending the school of my choice. My mother and
I went to the financial aid's office to see what could be done. My
mother was always very supportive and very active in the process of
finding the funds to pay for college. The Director of Financial Aid at
Lipscomb University was very helpful in the whole process. She was very
informative and knowledgeable about what was available to the students.
She gave us information on State grants, Federal grants, Federal loans,
and parent plus loans.
I plan to make monthly payments to repay my loans. I have
calculated an amount in my budget to allocate to loans each month. I
would suggest that students do the research and talk to the Financial
Aid office of their desired school to see what is available to them.
______
First, allow me to express my deepest appreciation to Chairman and
Honorable Senator Tom Harkin and the Honorable Senator Lamar Alexander
from the great State of Tennessee for inviting me to testify in this
meeting. There are few events in life that are as important and as life
shaping as graduating from college. Thank you for the Federal financial
aid that has been made available to me and for the opportunity to
achieve my dreams in life. While the path to graduation has not been
simple or easy, it has been worth all the efforts.
My name is Derrica Donelson. I am 23 years old. I was born and
raised in Nashville, TN. I will graduate in August 2013 from Lipscomb
University with a Bachelor of Business Administration degree in
Accounting and a Master's degree in Accounting. I was raised in a
single parent home. I am the oldest of four children. I graduated from
Martin Luther King, Jr. Academic Magnet High School. I am the first of
the past two generations to graduate with a master's degree.
Upon graduating from high school, I had numerous conversations with
my guidance counselor regarding future plans for college. She advised
me to complete applications as early as possible. I submitted my
application to Tennessee State University, Middle Tennessee State
University, Austin Peay State University, and Trevecca Nazarene
University. It was at a college fair at my high school, when I first
learned of Lipscomb University. After talking with Lipscomb's
representatives, I made the decision to submit my application. At that
time, I had no knowledge of what it would cost to attend, but I knew
that Lipscomb University was high on my list.
Before graduating high school, I had an idea of what I wanted my
major to be. It was my exposure to the accounting profession at the
Tennessee Society of Certified Public Accountants' Accounting Academy
that I learned of my real interest in accounting. Due to that interest,
I researched the colleges where I submitted an application, and
narrowed my choices to Middle Tennessee State University and Lipscomb
University.
When it came to making a decision on which school to attend, I had
to consider many factors. One factor I considered was the tuition to
attend each school. Lipscomb is a private school, and it was
significantly more expensive to attend. I did not want cost to be the
deciding factor of choosing one school over the other; there were other
factors that were extremely important to me, such as the overall
culture of the campus. It was important for me to feel as if I belonged
there. I visited both schools, and both schools had great accounting
programs. However, Lipscomb had a joint BBA/MAcc program that allowed
me to obtain a Master's degree in 5 years. It was also closer to home.
Lipscomb became my first choice, but finances could create a problem.
The summer prior to attending Lipscomb, I filled out many applications
for scholarships and grants.
I did not know how I was going to pay for school. During my first
week at Lipscomb, one of the first faculty and staff members that I met
was Tiffany Summers. She is the director of financial aid at Lipscomb
University. It was that day when the concept of paying for college
finally hit me. Instantly, I started crying. My mother was a single
parent, working two jobs to support our family. After my break down,
Tiffany was kind enough to sit down with me and my mother to help us
determine how I was going to pay for college. She helped me understand
how loans worked and the benefits of scholarships. I have received aid
such as the Tennessee State grant, the Federal Pell grant, Federal
Stafford subsidized loans, and Federal Stafford unsubsidized loans. I
also received parent-plus loans in order to fund my college education.
I would like to thank Senator Alexander for his support of education in
the State of Tennessee. State grants from Tennessee have provided me
more funding than the Federal grants.
After my freshman year, I kept a part-time job throughout college.
I was an officer of a student organization for 3 years. I managed to
maintain a grade point average above 3.0. As a graduate student, I have
been interning at Regional Care Hospital Partners. That position has
allowed me to work full-time. Lipscomb's MAcc program gives me the
opportunity to work a full-time job and attend class at night.
I do realize that I am going to have some debt after obtaining my
degree. However, I plan to use the education that I have earned from
Lipscomb to excel in a career of accounting. Although Lipscomb's
tuition was expensive, it was still obtainable. I plan to make monthly
payments to pay off my loans. When negotiating my salary for a job
offer, I was sure to include at least $300 a month for loan payments. I
feel as if my Lipscomb education would not have been possible without
the financial aid that I received.
Looking back, I would not have changed my decision to attend
Lipscomb University even with the debt I obtained. I would recommend to
future college students to do their research on what resources are
available to them and make an informed decision. Once that research is
done, begin to utilize those resources. It is also important that the
student talks to the financial aid office. It doesn't hurt to ask them
questions. I would also suggest filing the FAFSA early. It was possible
for me to receive Federal and State grants, because I filed my FAFSA
early. Having a good ACT score and maintaining a good grade point
average also helps. The help is out there, it just depends on how
serious the student is about receiving an education.
In order for the committee to improve college access and success
for all students, I would suggest starting at the high school level.
Keeping the guidance counselors well-informed on the resources that are
out there, will give the guidance counselors the opportunity to pass
that information on to the students. An increase in the Pell grants
would help make college more affordable for more students. Also, giving
more opportunities to students for loan forgiveness could help ease the
burden of debt. I would like to thank the committee for dedicating this
time to do their research and for including the student's perspective
in their work.
The Chairman. Thank you very much, Ms. Donelson.
Congratulations on your success.
Dr. Goldrick-Rab. Welcome.
STATEMENT OF SARA GOLDRICK-RAB, Ph.D., ASSOCIATE PROFESSOR OF
EDUCATIONAL POLICY STUDIES AND SOCIOLOGY, UNIVERSITY OF
WISCONSIN-MADISON, MADISON, WI
Ms. Goldrick-Rab. Good morning, Chairman Harkin, Senator
Alexander, and members of the committee. Thank you all for this
opportunity.
There's never been a more important time to address the
issue of college affordability. College is now the main road to
a stable, secure life. And in this age of global knowledge
markets, it is college-educated workers who will be the main
driver of the U.S. prosperity. But the research evidence is
clear. Most families and students find the high cost of college
attendance unbearable, and it is affecting their choices about
whether to attend college, where to attend, and even whether or
not to finish the degrees and certificates they have started.
As access to college becomes more difficult, public
frustration is emerging and is spilling over toward other
societal institutions and, indeed, into the streets. Today's
Americans are experiencing annual declines in family income,
yet the net price of attending public colleges and universities
continues to rise by almost $500 per year. That's after taking
aid into account.
In the early 1970s, the maximum Pell grant covered almost
80 percent of the cost of attending a public 4-year
institution. Today, it covers barely 30 percent. With so little
help, even low-income families are left with a bill of about
$12,000 a year. For many, that is the equivalent of up to 70
percent of their annual income. And so it is not surprising
that only about one in 10 find their way to a college degree.
It has not always been this way. The idea that students
should bear most of the cost of college comes from a time when
college cost much less, and powerful people thought markets
were saviors. Students today are just as responsible as ever
and just as willing to work for their education, but the task
is plainly impossible. Covering $12,000 in unmet need requires
a student to work at least 35 hours a week 52 weeks a year at
Federal minimum wage. The arrangement is untenable and
compromises their chances of actually completing their degrees.
Congress got it right in 1972 when it affirmed the societal
goal of universal access to postsecondary education as a
citizen's right. Understanding that low tuition supplemented by
the Pell grant was the most effective means of supporting
access, it invested heavily in that key program. But within a
decade, before the start of the 1980s, the needs of students
and families fell by the wayside, and our financial aid system
has never recovered.
Acting on the theory that higher education would become
more equitable and efficient by operating on free market
principles, policymakers began to reduce the availability of
grant aid, increase the availability of loans, in de facto,
encouraging rising costs of attendance we see today. This was a
mistake. The decision to move away from a low tuition approach
to higher education, coupled with a refusal to regulate how
institutions set prices, has forced millions of students into
debt.
Loans are the new normal because of political choices, not
because there are no alternatives. College today is what high
school was a century ago, and yet students are being required
to both work and borrow for it. The consequences are evident.
I've spent the last 5 years with a team of researchers on the
ground in Wisconsin documenting the results.
I'd like to tell you about Chloe, who I met when she first
enrolled in a Wisconsin 2-year technical college after
finishing high school in a small rural Wisconsin town of just
1,800 people. She wanted to become a vet technician. Since she
was the first person in her family to even attempt college,
they had no savings. So she got the Pell, and she figured she
was set. Not quite.
As a last ditch effort to ensure that she had enough
resources for her books, she sold her family's horse, which she
had raised on the farm as a teenager. It broke her heart. She
did not know what else to do. But the horse was a short-term
fix. A month later, she was short of gas money, so she took a
job at a fast food restaurant. They couldn't offer her enough
hours, so she took a second job. She went from one job to
another, attending classes in between, getting home at
midnight, and getting up at 6 a.m.
Working left her too little time for studying, but she was
afraid of loans because she had seen credit card debt nearly
destroy her mother's finances. She was exhausted, she was
hungry, and she was stressed. Six months later, I went back to
check in on Chloe, and college was done. She had dropped out.
The two jobs plus school routine had left her falling asleep in
her classes, and she earned a 1.9 GPA, ending up on academic
probation and kicked out of her program.
She was furious, she was confused, she was unsure whom to
talk to, and she failed. Several weeks later, a bank began
calling. The student loan she had accepted during finals week
when she was trying to find another way to finish was now
coming due. Unemployed, in debt, and disillusioned, Chloe was
dodging their calls.
Making it this hard to pursue a college degree is weakening
our country. We have to return to a demonstrably effective
approach to putting college within reach of all Americans by
providing a meaningful Pell grant targeted to the neediest
families, distributed early enough so that they know about it
to get ready for college, and stripped of all unnecessary
requirements. It should be matched by a very difficult but very
necessary effort to drive down college cost by ending the
ineffective tax credits flowing to wealthy families, stemming
the tide of indebtedness by capping the interest rate on
student loans, and using incentives to push States and
institutions to return to a focus on providing high quality
postsecondary education, not glorified summer camps, that are
accessible to all Americans.
My written testimony contains recommendations aimed at
accomplishing these goals.
My grandfather is here today with me because he is a great
example of what happens when Congress acts on behalf of all
students. The GI bill made it possible for him to graduate from
NYU in 1950, the first person in his family to earn a college
degree. He went on to graduate and postgraduate education and
is still practicing as a psychoanalyst doing the work he loves,
alongside my grandmother, a writer. He is, for me, a constant
reminder of the wonderful lives that Congress has helped the
hardworking people of this Nation lead by supporting their
educational dreams.
I know we can do better right now for students like Chloe
and the millions like her. Help us find a way back to the
original goals and intentions of financial aid, and we will all
benefit.
Thank you.
[The prepared statement of Ms. Goldrick-Rab follows:]
Prepared Statement of Sara Goldrick-Rab, Ph.D.
summary
Federal financial aid aims to help Americans achieve their fullest
potential not only by opening the doors to college, but also by
providing them with the financial support necessary to complete their
studies. But students and families are resoundingly clear--as a nation
we are not meeting this goal.
Research indicates that a lack of affordability frequently affects
educational choices, and discourages the most talented students from
low-income families from even applying to great colleges and
universities that match their abilities. Much of Federal financial aid,
including the Pell grant and tax credits, arrives too late, comes with
requirements that reduce its effectiveness, and makes a commitment to
students that is too small and insufficiently matched by efforts from
States and higher education institutions. Just as troubling, consumer
confidence in the financial aid system is low. It is difficult to count
on these resources when they are constantly threatened and ever
changing; they give the appearance of a Congress unsure of what it is
trying to accomplish. Most disturbing, student debt has become the new
normal, and threatens to reshape our national future the way several
world wars changed the lives of prior generations.
The most effective public policies are sensible and dependable
workhorses aimed at doing one job and doing it well. Congress can turn
the Pell grant into that program by restoring its purchasing power and
focusing it on the most needy students. An early commitment to the Pell
grant, provided to the Nation's poorest eighth graders, could jump
start their academic and financial planning and produce significant
gains. Taking steps to ensure that States and institutions do their
part to match the Federal commitment to affordability will bring
additional resources to the table for the students who most need them.
Eliminating several unnecessary complexities in the eligibility and
awarding process will help students retain their aid, increasing their
chances of finishing what they start.
It is equally important that the student loan program not be used
as a piggy bank to finance other aid. We all reap the benefits of a
democratic nation full of talented, college-educated neighbors and
friends; we must all therefore bear the collective responsibility of
properly funding it. Congress and the States need to reverse the
unconscionable trend of pushing people to take on levels of debt they
are uncomfortable with, simply because they wish to become better
educated. Income-based repayment is a safety net. It should not be used
as an excuse for bigger, more expensive student loans.
Students are already doing all they can. The evidence is clear:
Americans are not afraid to work for what they need, and undergraduates
are no exception. But ensuring that financial aid succeeds in promoting
educational success means that Congress has to act to get low- and
middle-income students the grant aid they deserve, providing them with
a fair shot at reaching the college finish line.
______
Chairman Harkin, Senator Alexander, members of the committee, I am
honored to testify before you.
summary
The goal of Federal financial aid is to help Americans achieve
their fullest potential not only by opening the doors to college, but
also by providing them with the financial support necessary to complete
their studies. Students and families are resoundingly clear--as a
nation we are not meeting this goal. Research indicates that a lack of
college affordability is frequently affecting educational decisions,
and discouraging the most talented students from low-income families
from even applying to great colleges and universities that match their
abilities. Much of Federal financial aid, including the Pell grant and
tax credits, arrives too late, comes with requirements that reduce its
effectiveness, and makes a commitment to students that is too small and
insufficiently matched by efforts from States and higher education
institutions. Just as troubling, consumer confidence in the financial
aid system is low. It is difficult to count on these resources when
they are constantly threatened and ever changing; they give the
appearance of a Congress unsure of what it is trying to accomplish.
Your leadership is required to marshal and triage all available
resources, direct them to where they can be most effective, and build a
financial aid system that is worthy of our great Nation.
students and families agree: college is unaffordable
Many higher education analysts put the concept of affordability in
quotation marks. While they note that while the official definition is
the costs paid today relative to the lifetime benefits, and on average
benefits continue to outweigh the costs, perceptions of affordability
vary widely.\1\ Despite decades of investment in financial aid and
numerous efforts to provide tools such as net price calculators, all
indications are that now more than ever, families feel college is
essential and at the same time unaffordable. Their feelings are
understandable, given that nearly all Americans are experiencing annual
declines in family income (see Figure 1), while the net price of
attending public colleges and universities continues to rise by almost
$500 per year.\2\
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\1\ Baum, Sandy and Saul Schwartz, 2012. ``Is College Affordable?
In Search of a Meaningful Definition.'' Washington, DC: Institute for
Higher Education Policy.
\2\ Net price is the difference between the institutional cost of
attendance (the sticker prices) and all grant aid awarded; it is the
amount of money the student will actual pay to attend school. Author's
calculations based on The College Board, Trends in College Pricing:
2012 report. According to Table 7, annual growth in the net tuition,
fees, room and board at public 4-year institutions between 2009-10 and
2012-13 was $493.
The Power of the Pell Grant is Diminishing
In theory, our system of financial aid is supposed to ensure that
students whose decisions are most affected by tight family finances
receive the most aid. In the past several decades, we have moved
further and further away from this approach. The leading need-based aid
program, the Pell grant, has failed to withstand the tests of time and
changing demographics. In the early 1970s, the maximum Pell grant
covered almost 80 percent of the costs of attending a public 4-year
institution, and today that has eroded to barely 30 percent. The result
is that even after taking all grant aid and tax credits into account,
families have to find some way to pay more than $12,000 a year.\3\ For
a family in the bottom quintile of the income distribution, that
amounts to more than 70 percent of their annual income.\4\
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\3\ Ibid.
\4\ The median income in the bottom 20 percent is around $17,000.
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One reason we are in this situation is that when faced with some
hard choices, most States quietly opted to shift the costs of funding
their public colleges and universities onto the backs of students and
families. In doing so, they contributed to the erosion of the Pell by
withdrawing their efforts to keep costs down.\5\ Rather than openly
debating the tradeoffs between investing in colleges or prisons or
healthcare, legislators simply cut appropriations and then attacked
higher education institutions for responding with easily anticipated
tuition hikes. In many States, the constituency of college graduates
remains relatively small, and those most affected--children with great
ambitions and displaced workers returning to get the training they need
for economic stability--voice little resistance as the buck is passed
to them. It is Congress that must act on their behalf, bringing States
back to the table and ensuring that they do their part.
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\5\ Weerts, D., Sanford, T., Reinert, L. 2012. College Funding in
Context: Understanding the Difference in Higher Education
Appropriations Across the States. Demos.
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Students are already doing all they can. Americans are not afraid
to work for what they need, and undergraduates are no exception. The
problem is that today, it is no longer possible to cover all of the
costs of college while working part-time. Covering those remaining
costs at a public university would require a student to work at least
35 hours a week, 52 weeks a year at the Federal minimum wage. The work
penalty contained in the Federal needs analysis means that those
earnings would quickly diminish her access to aid, causing her to work
even more. Such extensive work hours would almost certainly compromise
her chances of completing college, particularly in a timely fashion,
rendering all of that effort far less meaningful.\6\ This makes the
relative size of grants like the Pell more important than ever. But
unfortunately, the trend has been away from grants and toward loans, a
subtle move that has shifted societal responsibilities onto the backs
of individuals.
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\6\ Perna, L.W.: Understanding the working college student: New
research and its implications for policy and practice. Stylus
Publishing. Stylus Publishing, LLC. 2010.
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Student Loans Are Too Often Required, Not Optional
When originally conceived, student loans were intended to
facilitate choices. That is no longer the case--most students are left
with no viable way to afford college without taking on debt. The result
is a forced choice that pits students against their schools, with
educators arguing that ``debt is good'' while students wish to at least
have a genuine choice in the matter. Now that unmet need at public
universities has reached $12,000 a year, current students are now faced
with prospective debt of upwards of $48,000, and that is if they finish
in 4 years. Or, they could both work and borrow, a scenario that was
quite uncommon when their parents went to college, but now seems
inevitable. Again, if they have to work too much, they are much less
likely to complete and in turn are left with substantial debt and no
degree.\7\
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\7\ Fry, Richard. 2012. ``A Record One-in-Five Households Now Owe
Student Loan Debt.'' Washington, DC: Pew Social & Demographic Trends;
Goldrick-Rab, Sara, Douglas N. Harris, and Philip A. Trostel. 2009.
``How and Why Financial Aid Does (or Doesn't) Matter for College
Success.'' In Higher Education: Handbook of Theory and Research (Vol.
24), ed. John C. Smart, 1-45.
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Under these constraints, the Pell grant has become a gateway to
student loans. Student debt is the new normal, and threatens to reshape
our national future the way several world wars changed the lives of
prior generations. Today, 40 percent of households headed by an adult
under the age of 35 hold educational debt.\8\ When considering whether
that is acceptable, it is important to note that it is far from the
``manageable'' rate of 8 percent of income--students with degrees owe
as much as 24 percent of their take-home pay to the Federal Government.
Many former students who left unable to complete their degrees owe even
more.\9\ Over the long haul, this points to a serious need to plan for
a new era in which debt is done away with, and we should take initial
steps to begin now.\10\
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\8\ Fry, Richard. 2012. ``A Record One-in-Five Households Now Owe
Student Loan Debt.'' Washington, DC: Pew Social & Demographic Trends.
\9\ Wei, Christina Chang and Laura Horn. 2013. ``Federal Student
Loan Debt Burden of Noncompleters.'' NCES Report 2013-155.
\10\ For one smart approach, see Dannenberg, Michael and Mamie
Voight. 2013. ``Doing Away with Debt: Using Existing Resources to
Ensure College Affordability for Low and Middle-Income Families.''
Education Trust, Washington, DC.
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affordability affects educational decisions
Both common sense and research evidence tell us that when students
feel that college is unaffordable it has real consequences for their
educational decisions.\11\ The students for whom the current financing
system is working--those at the top of the income distribution--have
increased their rates of bachelor's degree completion by 50 percent
over the last 40 years. That is the only group of students with a
greater than 1 in 2 chance of completing a bachelor's degree. The odds
range from 9 to 30 percent for everyone else.\12\ While this is partly
because of the tight relationship between family income and academic
preparation, the k-12 experience alone does not explain why origins
determine destinations so clearly. Recent randomized experiments
indicate that the current system needlessly leaves even the most
talented poor kids far, far behind in a multitude of ways. In addition
to failing to meet their need with aid and pushing them into debt,
government and educational institutions fail to engage in meaningful
outreach, impose fees for college applications that create additional
barriers, hinder access to aid by veiling it beneath masses of
requirements that even college-educated, financially literate adults
have difficulty navigating.\13\
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\11\ Detailed reviews of the research on the effectiveness of
different types of financial aid include: Bettinger, Eric. 2012.
``Financial Aid: A Blunt Instrument for Increasing Degree Attainment''
in Andrew Kelly & Mark Schneider (Eds), Getting to Graduation: The
Completion Agenda in Higher Education, John Hopkins Press; Castleman,
Benjamin and Bridget Terry Long. 2012. ``Looking Beyond Enrollment: The
Causal Effect of Need-Based Grants on College Access, Persistence, and
Graduation.''; Scott-Clayton, Judith. 2012. ``Information Constraints
and Financial Aid Policy.'' National Bureau of Economic Research.
Working Paper 17811. Deming, David and Susan Dynarski. 2009. ``Into
College, Out of Poverty? Policies to Increase the Post-Secondary
Attainment of the Poor.'' National Bureau of Economic Research. Working
Paper 15387; Goldrick-Rab, Sara, Douglas N. Harris, and Philip A.
Trostel. 2009. ``How and Why Financial Aid Does (or Doesn't) Matter for
College Success.'' In Higher Education: Handbook of Theory and Research
(Vol. 24), ed. John C. Smart, 1-45;
\12\ Bailey, Martha J. and Susan Dynarski. 2011. ``Inequality in
Post-Secondary Education.'' In Whither Opportunity?'', ed. Greg Duncan
and Richard Murnane, 117-32. New York, NY: Russell Sage Foundation.
\13\ Bettinger, Eric P., Bridget T. Long, Philip Oreopoulos, and
Lisa Sanbonmatsu. 2013. ``The Role of Application Assistance and
Information in College Decisions: Results from the H&R Block FAFSA
Experiment.'' The Quarterly Journal of Economics, 127(3), 1205-42.
Hoxby, Caroline M. and Christopher Avery. 2012. ``The Missing `One-
Offs': The Hidden Supply of High-Achieving, Low-Income Students.''
National Bureau of Economic Research. Working Paper 18586.
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Our unwillingness to confront this affordability challenge is
holding back students all over the Nation. In communities such as
Crockett County, TN, where the college-going rate dropped 20 percentage
points in recent years,\14\ the pain is real. To tell you more about
what it looks and feels like, I will turn next to students in the
heartland of Wisconsin, where like so many in the country, only a small
fraction of citizens who want to earn a college degree can afford to do
so.
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\14\ Tennessee Higher Education Commission. 2010. ``College-going
Rate of Tennessee Public High School Graduates.'' Nashville, TN: THEC.
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Since 2008, my research team has followed a group of 3,000 Pell
grant recipients as they pursue college degrees at Wisconsin's 42
public colleges and universities.\15\ Our efforts have included a
randomized experiment with a private financial aid scholarship, but
even more importantly, we have repeatedly interviewed 50 students every
6 months whether or not they remained enrolled. I would like to
introduce you to one of them, a woman I'll call Chloe, whom I first met
when she enrolled in a Wisconsin technical college soon after
completing high school in a small, rural Wisconsin town of just 1,800
people. Tall and blond with bright blue eyes, Chloe impressed me with
her rapid-fire talk about a passion for animals. At school to become a
veterinary technician, she was excited to be the first in her family to
attempt college, and eager to get started. Since neither she nor her
parents ever figured she'd make it to college, they had no savings. As
a result, she made a reasoned decision to attend a less expensive 2-
year school, and qualified for a Pell grant--and with that, she
thought, she was ready to go. Almost. During that first interview
together, in a near whisper, she confided that as a last-ditch effort
to ensure that she had enough resources for books, she'd sold her
family's horse, whom she'd raised on their farm as a teenager. It broke
her heart to do it, she said, but she didn't have other ideas. The
horse, it turned out, was a short-term fix: a month into school, Chloe
was enjoying her classes but was regularly short of the gas money
needed to commute to school. To cope, she took a job at a fast food
restaurant, but they couldn't offer her enough hours, and so she found
a second job at a fabric store, working at the first job in the morning
and the other at night. She attended class in-between, getting home at
midnight, and beginning her day again at 6 am. Working left little time
for studying, but she feared loans, since she had seen credit card debt
nearly destroy her mother's finances. Running from job to school to
job, she looked like many of the Nation's Pell recipients: exhausted,
hungry, and stressed--hardly the conditions that promote learning.
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\15\ See www.finaidstudy.org.
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Six months later, I went back to check in on Chloe, hoping to see
that she'd acclimated to the hectic schedule and gotten some advising.
But college was done--she'd dropped out. The two-job-plus-school
routine led her to fall asleep in her classes, and she'd earned a 1.9
GPA--putting her on academic probation. Her program of study didn't
allow for that, and kicked her out.
Furious, confused, and unsure whom to talk to, Chloe bailed.
Several weeks later, a bank began calling--the student loan she'd
accepted during finals week, when she was trying to find another way
forward, was now coming due. Unemployed, in debt, and disillusioned,
Chloe was dodging their calls.
It is not supposed to be this hard to pursue further education, and
it does not have to be. We do not need new resources--we need to put
the ones that already exist to work where they are needed most.
Ensuring that students from low-income families have more of their
financial need covered without having to lean so heavily on work and
loans is an effective strategy to increasing their chances of college
completion. In an experiment that took place during the recent
recession, my colleagues and I examined the privately funded Fund for
Wisconsin Scholars grant, which is distributed by lottery among
eligible first-year undergraduates attending Wisconsin's 13 public
universities. Our analysis of that program produced evidence that need-
based financial grants administered in the current system are effective
at inducing students to remain enrolled, earn slightly more credits,
and get somewhat better grades. Critically, these effects appear to be
stronger when students receive more grant aid. For every $1,000
reduction in unmet need, we estimated a 2.8 to 4.1 percentage point
increase in the likelihood that recipients of financial aid would
persist into their second year of study.\16\ Increased grant aid to
low-income and working class students is a strategy that pays off.
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\16\ Goldrick-Rab, Sara, Douglas N. Harris, Robert Kelchen, and
James Benson. 2012. ``Need-Based Financial Aid and College Persistence:
Experimental Evidence from Wisconsin.'' Madison, WI: Institute for
Research on Poverty Discussion Paper 1393-12.
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But instead of targeting our investments in the Pell grant to
ensure that it is sizable enough to make a real difference, Congress,
States, and institutions of higher education have been busily spreading
the wealth. Those efforts may be politically popular, but they greatly
diminish the effectiveness of the dollars spent.\17\ Financial
assistance provided based on merit without attention to need has been
shown to be ineffective at changing educational outcomes.\18\ Yet many
States and large numbers of colleges and universities focus their
resources on merit aid, and even pull back institutional aid from needy
students when they gain outside scholarships. In effect, they match the
Federal commitment to the Pell grant program by redirecting their own
spending elsewhere, including spending on country-club amenities that
further alienate working students from their campuses and diminish
their chances of success.\19\ This must stop.
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\17\ Schneider, M. and Sara Goldrick-Rab. 2011. ``College Aid, The
Right Way.'' Chattanooga Times Free Press. October 30.
\18\ Bowen, William G., Matthew M. Chingos, and Michael S.
McPherson. Crossing the Finish Line: Completing College at America's
Public Universities. Princeton: Princeton University Press, 2009;
Brookings Institution State Grant Aid Study Group. 2012. Beyond Need
and Merit: Strengthening State Grant Programs. Washington, DC;
Cornwell, Christopher M., Kyung Hee Lee, and David B. Mustard. 2005.
``Student Responses to Merit Scholarship Retention Rules.'' The Journal
of Human Resources 40, no. 4 : 895-917; Heller, Donald. 2001. The
Effects of Tuition Prices and Financial Aid on Enrollment in Higher
Education: California and the Nation. Ed Fund.; Heller, Donald. 1997,
``Student Price Response in Higher Education: An Update to Leslie and
Brinkman.'' Journal of Higher Education 68, no. 6 (1997): 624-59.
\19\ According to one estimate, about two-thirds of Pell dollars
distributed to private not-for-profit institutions are simply used to
displace institutional aid students would have otherwise received.
Public institutions do not appear to engage in this behavior, and spend
far less aid on non-needy students. Turner. Lesley J. 2013. ``The Road
to Pell is Paved with Good Intentions: The Economic Incidence of
Federal Student Grant Aid.'' On the use of institutional resources for
amenities see Jacbob, Brian, Brian McCall, and Kevin M. Stange. 2013.
``College as Country Club: Do Colleges Cater to Students' Preferences
for Consumption?'' National Bureau of Economic Research. Working Paper
18745.
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focus, trust, and commitment matter
The most effective public policies are sensible and dependable
workhorses aimed at doing one job and doing it well. Congress needs to
turn the Pell grant into that program. To that end, I recommend the
following:
1. Restore the power of the Pell grant by doubling its effective
amount and focusing it on the most needy students. Three actions should
be taken immediately to accomplish this:
a. Allow the expected family contribution (EFC) to go negative
when a student's family income falls below the subsistence level as
reflected by the income protection allowance. The current minimum EFC
of zero caps financial need and need-based student aid at the cost of
attendance, rendering college less affordable for students who need
grant aid for their college education in order to stand a chance of
succeeding and rising out of poverty.
b. Offer States incentives to agree to maintenance-of-effort
provisions that ensure the Pell grant is supplemented not supplanted by
State actions. More States should be encouraged to follow the lead of
New York, where tuition is guaranteed not to increase more than $300 a
year over the next 5 years, and regular investments in financial aid
also will occur.\20\
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\20\ Alexander, King F., Thomas Harnisch, Daniel Hurley, and Robert
Moran. April 2010. ``Maintenance of Effort: An Evolving Federal-State
Policy Approach to Ensuring College Affordability,'' American
Association of State Colleges and Universities, A Higher Education
Policy Brief. Also see Harnisch, Thomas L. July 2012. ``Update on the
Federal Maintenance of Effort Provision: Reinforcing the State Role in
Public Higher Education Financing.'' American Association of State
Colleges and Universities, A Higher Education Policy Brief.
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c. Experiment with giving higher education institutions with
demonstrable success in moving Pell recipients toward degrees some
incentives to devote more of their own resources to matching the
Federal investment in Pell. About $5 billion in funding for the Pell
program could be raised with the assistance of private not-for-profit
institutions that currently supplant rather than supplement the Pell
grant.\21\
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\21\ Turner, Lesley J. 2013. ``The Road to Pell is Paved with Good
Intentions: The Economic Incidence of Federal Student Grant Aid.''
2. Encourage more Pell recipients to become academically and
financially prepared for college by letting students and their families
know early and often that the Pell awaits them. Too many eighth graders
have no idea they are college-bound and therefore do not get ready.
Their families are not getting any wealthier as they wait, and an early
commitment of financial aid could make a big difference. Fund the
demonstration early commitment Pell program for eighth graders
receiving free and reduced price lunch that was authorized in the
Higher Education Act, and rigorously evaluate it.\22\ The President's
Budget includes a $67 million request for research innovative on
financial aid programs that should be used for this purpose.\23\
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\22\ Kelchen, Robert and Sara Goldrick-Rab. 2013. ``Accelerating
College Knowledge: Examining the Feasibility of a Targeted Early
Commitment Pell Grant Program.'' Madison, WI: Institute for Research on
Poverty Discussion Paper 1405-13.
\23\ For additional details on the research needed to better inform
future policymaking regarding financial aid, see Harris, D.N. & Sara
Goldrick-Rab (2012). ``Improving the Productivity of Education
Experiments: Lessons from a Randomized Study of Need-Based Financial
Aid.'' Educational Finance and Policy, 7(2); 143-169.
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3. Bring more resources to the most talented Pell recipients who
earn private scholarships by ending award displacement so that they can
gain the full monetary value of that philanthropic investment. Award
displacement occurs when receipt of an outside scholarship, leads to a
reduction in other forms of financial aid, especially grants. The
consequence is that a student who has worked hard to gain the
scholarship experiences no net financial gain, and therefore
improvement in his or her ability to pay for college. This problem
should be addressed with three actions:
a. Expand the definition of cost of attendance in section 472 of
the Higher Education Act to include other common living expenses, such
as the cost of a computer and student health insurance.
b. Increase the overaward tolerance from $300 to $2,500 in 34 CFR
673.5(d) and (e), 34 CFR 682.604(i), 34 CFR 685.303(e), and Section
443(b)(4) of the Higher Education Act of 1965 [42 U.S.C. 2753 (b)(4)].
Rather than help stretch Federal funds further, overaward regulations
simply let institutions off the hook for meeting the needs of their
students.
c. Strike references to scholarships and fellowships from the
definition of estimated financial assistance and the coordinating
restrictions in 34 CFR 673.5(c)(1)(vi) and (viii), 20 U.S.C.
1078(a)(2)(C)(ii)(II), 20 U.S.C. 1087vv(j)(1) and 26 U.S.C. 25A(g)(2)
and by adding exclusions for scholarships and fellowships in 34 CFR
673.5(c)(2).\24\
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\24\ The details of these proposals originate with the authors of a
forthcoming white paper from the National Scholarship Providers
Association, to be released in May 2013. Details can be obtained from
NSPA executive director Amy Weinstein, at
[email protected].
4. Support students who work hard and keep their student debt low
by expanding the income protection allowance and reducing the
assessment rate on student earnings. Students work while attending
school because they need the money; removing their financial aid based
on those earnings creates perverse incentives and encourages them to
take on more debt. This especially hurts single parents pursuing
college degrees.\25\ Raising the income protection allowance (IPA) by
$2,000 will help ensure that more of their earnings are used to prevent
additional debt, and lowering the assessment rate from 50 percent to 40
percent will further promote that goal.
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\25\ Goldrick-Rab, S. & Kia Sorensen (2010). ``Unmarried Parents in
College.'' Future of Children, v20(2): 179-203; Shaw, K., Goldrick-Rab,
S., Mazzeo, C., & Jacobs, J. (2006). Putting Poor People to Work: How
the Work-First Idea Eroded College Access for the Poor. New York:
Russell Sage Foundation.
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5. Further focus the Pell on college completion by reducing
complexities and requirements that prevent the students who receive it
from keeping it until they complete degrees. Eliminate the need to re-
file the FAFSA for recipients who are continuously enrolled at the same
institution. Require students to file only for a change in
circumstances that increases their need, nudging them to maintain their
financial aid and keeping their net price more stable from year to
year.
In addition, given that most students in the Nation mainly
experience financial aid in the form of student loans, it is important
that their costs be stabilized. We cannot expose American families who
are experiencing no growth in family income to the full brunt of the
market. Students deserve the same protections provided to home-buyers
and small business owners; a cap on interest rates is required to
ensure that interest rates do not skyrocket.
immediate action is required
To summarize, I hope you take away these three things from my
remarks today.
First, need-based grants matter for students' educational success.
Most students in this country, particularly working class and low-
income students, will not earn a college degree without them. If you
want to increase college access, affordability, and completion, the
Pell grant must be restored to its full capacity. It has been neglected
and reconstituted in ways that make it harder, not easier, for
America's working poor families to obtain. We should be doing the
opposite.
Second, the student loan program should not be used as a piggy bank
to finance other aid. We all reap the benefits of a democratic nation
full of talented, college-educated neighbors and friends; we must all
therefore bear the collective responsibility of properly funding it.
Third, Congress and the States must reverse the unconscionable
trend of pushing people to take on levels of debt they are
uncomfortable with, simply because they wish to become better educated.
Income-based repayment is a safety net. It should not be used as an
excuse for bigger, more expensive student loans.
Debt aversion is real for real students. The prospect and reality
of high levels of student loan debt have multiple negative consequences
for students like Chloe.
We can do better by her and millions like her.
The Chairman. Thank you very much. Where is your
grandfather? Where is he? Oh, right there. Thank you very much.
I always said the GI bill after World War II--out of the
ashes of World War II and the debacle of the Great Depression,
the GI bill built the middle class in America. Thank you for
being here. I also had the GI bill, too. Thank you very much.
Ms. Brooks, welcome and please proceed.
STATEMENT OF VIVICA BROOKS, STUDENT, BOWIE STATE UNIVERSITY,
BOWIE, MD
Ms. Brooks. Thank you. Good morning, Chairman Harkin,
Ranking Member Alexander, and distinguished members of the
committee. Thank you for the opportunity to speak today about
the issue of college affordability and my personal experience.
Again, my name is Vivica Brooks, and I am a senior at Bowie
State University in Bowie, MD, majoring in business with a
concentration in marketing. I chose Bowie State for its
convenient location, its exceptional college of business, and,
most importantly, its affordable tuition. The cost of tuition
was so important to me because I accepted the full burden of
paying for my education.
As I applied for financial aid, I found the FAFSA process
moderately simple to complete. In my first year, I chose to
receive a Federal direct subsidized loan. I chose the
subsidized loan over the unsubsidized loan because the interest
rate is lower and would be less of a financial burden to me
when I graduate from college.
Throughout my matriculation of college, I worked part-time
to cover the remaining tuition balances and costs of living. At
times, I struggled with juggling class and work, but I managed
to pay for school and maintain my grades throughout my freshman
year. I took a year off from school when I gave birth to a
bouncing baby boy in December 2009. I returned to school in the
fall of 2010 and accepted both the Federal Pell grant and
Federal direct sub loan. I was now a successful student and
mother, juggling academics, work, and family life.
Federal funding attributed greatly to my ability to engage
in the full college experience. Without it, I would be in a
predicament where I spent more hours working to pay my tuition
than focusing on my education itself. Currently, I am a senior
at Bowie State, working 40 hours per week. I take courses both
online and in class in the evenings.
I am still a recipient of the Federal Pell grant and the
Federal direct sub loan. In addition, I now receive a Maryland
Educational Assistance Scholarship and a Bowie State Mission-
based scholarship. I recently learned that I have reached my
maximum limit for subsidized loans, and I am in the process of
planning how I will pay for my last semester this coming fall.
Looking back on my college career and how I secured my
financial aid, there are a few things that I would have done
differently or wish I had more information. First, I would have
conducted more research on other possible aid opportunities.
And, second, I would have saved more throughout the year so I
would not have accumulated the amount of debt that I will have
to repay following graduation.
With respect to my peers and friends, I feel that many
navigate through the financial aid process timidly,
undereducated, and otherwise unconsciously. Some of my peers
fear the debt that loans will bind them in, and others are ill-
educated and believe that they may not qualify for loans for
various reasons, such as grades from high school or other
background information.
Every opportunity to further educate the student population
and prospective student population should be taken. Overall,
Federal programs, private programs, and scholarships have
played a tremendous role in my ability to afford college, and
for that, I am truly grateful. I encourage Congress to continue
to recognize and reassess the needs of students in order to
create and modify existing programs for qualifying individuals
that help lessen the debt students face after graduating.
In closing, success can be accomplished not only by
responsible stewardship, but also by obtaining a plethora of
knowledge through higher education. Therefore, I believe it is
your duty as lawmakers to continue to lay the foundation and
provide our citizens with programs designed to ensure
affordable higher education for all.
Thank you for this opportunity to speak with you, and I am
happy to answer any questions that you may have.
[The prepared statement of Ms. Brooks follows:]
Prepared Statement of Vivica Brooks
summary
Chairman Harkin, Ranking Member Alexander, and distinguished
members of the committee, thank you for the opportunity to speak today
about the issue of college affordability and my personal experience. My
name is Vivica Brooks, and I am a senior at Bowie State University in
Bowie, MD majoring in Business with a concentration in Marketing.
I chose Bowie State for its convenient location, its exceptional
College of Business and most importantly, its affordable tuition. The
cost of tuition was so important to me because I accepted the full
burden of paying for my education. As I applied for financial aid I
found the FAFSA process moderately simple to complete. I chose to
receive a Federal Direct Subsidized Loan. I chose the subsidized loan
over the unsubsidized loan because the interest is lower and would be
less of a financial burden to me when I graduate from college.
Throughout my matriculation of college I worked part-time to cover
the remaining tuition balances and costs of living. At times I
struggled with juggling class and work but I managed to pay for school
and maintain my grades throughout my freshman year. I took a year off
from school for the fall of 2009 and spring 2010 semesters when I gave
birth to a bouncing baby boy in December 2009. I returned to school in
the fall of 2010 and accepted the Federal Pell grant and Federal Direct
Sub Loan. I was now a successful student and mother juggling academics,
work, and family life all thanks to having Federal funding.
I am currently a senior at BSU working 40 hours per week. I take
courses both online and in class in the evenings. I am still a
recipient of the Federal Pell grant and Federal Direct Sub Loan. In
addition, I now receive Maryland Educational Assistance scholarship,
and a BSU Mission-based scholarship. I recently learned that I have
reached my maximum limit for subsidized loans and am in the process of
planning how I will pay for my last semester this coming fall.
Looking back on my years at Bowie State and how I secured my
financial aid, there are a few things that I would have done
differently or wished I had more information. I would have done more
research about other possible aid opportunities. I also would have
saved more throughout the years so I would not have accumulated the
amount of debt that I will have to repay following graduation. With
respect to my peers and friends, I feel that many navigate through the
financial aid process timidly, under-educated, and otherwise
unconsciously. Some of my peers fear the debt that loans will bind
them. Others are ill-educated and believe that they may not qualify for
loans for various reasons, such as grades, or other background
information.
Overall, Federal programs, private programs, and scholarships have
played a tremendous role in my ability to afford college, and for that
I'm truly grateful. I encourage Congress to continue to recognize and
reassess the needs of students in order to create and modify existing
programs for qualifying individuals that help lessen the debt students
face after graduating. In closing, success can be accomplished not only
by responsible stewardship but also by obtaining a plethora of
knowledge though higher education. Therefore, I believe it is your duty
as law makers to continue to lay the foundation and provide our
citizens with programs designed to ensure affordable higher education
for all.
Thank you for this opportunity to speak with you and I am happy to
answer any questions you may have.
______
Chairman Harkin, Ranking Member Alexander, and distinguished
members of the committee, thank you for the opportunity to speak today
about the issue of college affordability and my personal experience. My
name is Vivica Brooks, and I am a senior at Bowie State University in
Bowie, MD majoring in Business with a concentration in Marketing. My
brother, who is also a student at Bowie State, and I were raised in a
modest two-parent middle-class family in Maryland.
At an early age I knew I wanted to go to college and with the
support of my family, teachers, and friends I was confident in my
decision. In my senior year of high school I began to research
potential colleges and universities. I narrowed my search to five
universities: the University of Maryland, College Park, University of
Maryland, Baltimore County, Howard University, Delaware State
University, and Bowie State University. Each of these institutions
offered me the convenience of being close to home; however,
affordability played a huge role in my ultimate decision. I chose Bowie
State for its convenient location, its exceptional College of Business
and most importantly, its affordable tuition. The cost of tuition was
so important to me because I accepted the full burden of paying for my
education. In my senior year of high school, my counselor and I had
several discussions about financial aid scholarship opportunities. She
directed me to utilize the Internet and research FAFSA, State, and
private opportunities. My teachers were also instrumental in aiding me
with navigating through various scholarship applications. I also found
and applied for several private scholarships as well as completing a
FAFSA.
I found the FAFSA process moderately simple to complete. Upon my
admittance into Bowie State I was given the opportunity to select from
a list of offered loans. However, because of my dependent status my
household income was not considered low-income and I was only offered
enough funding to cover a portion of my tuition. Since my parents were
not financially responsible for my education; I chose to receive a
Federal Direct Subsidized Loan. I chose the subsidized loan over the
unsubsidized loan because the interest is lower and would be less of a
financial burden to me when I graduate from college.
During my freshman year I worked part-time to cover the remaining
balance of my tuition through a payment plan. The benefit of the
payment plan was that it allowed me to make more affordable monthly
payments instead of paying the term in-full upon registration. At times
I struggled with juggling class and work but I managed to pay for
school and maintain my grades throughout my freshman year. I took a
year off from school for the fall of 2009 and spring 2010 semesters
when I gave birth to a bouncing baby boy in December 2009. With the new
addition to my family, my finances changed drastically. As I planned to
return to school in the fall of 2010, I completed my FAFSA and learned
that I was eligible for the Federal Pell grant. I returned to school in
the fall of 2010 and accepted the Federal Pell grant and Federal Direct
Sub Loan. These funds covered my tuition in full and were a great help.
Without these funds, I would not have been financially stable enough to
return to school. In my junior year I was offered and accepted similar
loans, grants, and scholarships of the year prior. The flexibility of
no longer having such a grand financial burden allowed me the time to
work less hours and participate in school organizations and activities.
In the fall of 2011, I became a member of BSU's Golden Girls
Cheerleading Squad. I was now a successful student-athlete-and mother
juggling academics, work, and family life all thanks to having Federal
funding.
I am currently a senior at BSU working 40 hours per week. I take
courses on-line and in class in the evenings. I enjoy this hybrid
schedule. It is extremely convenient and practical for my lifestyle. I
am still a recipient of the Federal Pell grant and Federal Direct Sub
Loan. In addition, I now receive Maryland Educational Assistance
scholarship, and a BSU Mission-based scholarship. I recently learned
that I have reached my maximum limit for subsidized loans and am in the
process of planning how I will pay for my last semester this coming
fall. With regards to my future after graduation I have a few concerns.
Looking back on my years at Bowie State and how I secured my financial
aid, there are a few things that I would have done differently or
wished I had more information. First, I would have done more research
about other possible aid opportunities. I also would have saved more
throughout the years so I would not have accumulated the amount of debt
that I will have to repay following graduation. Additionally, I would
have familiarized myself more with the terms of my loan agreement. I
was not previously aware that there was a limit to the total amount one
could receive in subsidized loan funding; I regret not knowing because
I could have saved more and utilized the funds from my previous years
at BSU more efficiently.
With respect to my peers and friends, I feel that many navigate
through the financial aid process timidly, under-educated, and
otherwise unconsciously. Some of my peers fear the debt that loans will
bind them. Others are ill-educated and believe that they may not
qualify for loans for various reasons, such as grades, or other
background information. There are others who would rather just pay for
it all themselves and rather take on the burden of working full-time
and going to school part-time.
Overall, Federal programs, private programs, and scholarships have
played a tremendous role in my ability to afford college, and for that
I'm truly grateful. The Federal Government's role in financing
student's education, especially lower-income students like myself where
affordability is critical, has been a job well-done. I also appreciate
that Congress reduced interest rates on Federal student loans, which is
critical to making higher education more affordable. I encourage
Congress to continue to recognize and reassess the needs of students in
order to create and modify existing programs for qualifying individuals
that help lessen the debt students face after graduating. I will
continue to be optimistic about the future of Federal funding and the
affordability of tuition for students.
In closing I would like to state that the economic future of the
United States relies heavily on the success of its citizens. Success
can be accomplished not only by responsible stewardship but also by
obtaining a plethora of knowledge through higher education. Therefore,
I believe it is your duty as lawmakers to continue to lay the
foundation and provide our citizens with programs designed to ensure
affordable higher education for all.
Thank you for this opportunity to speak with you and I am happy to
answer any questions you may have.
The Chairman. Thank you very much, Ms. Brooks.
Thank you all very much for your great statements.
We'll begin now a round of 5-minute questions. I want to
start with Mr. Senack.
You mentioned about simplifying the income-based repayment
process. And, basically, you pointed out only one in five
eligible are taking advantage of this. Why? Why is that?
Mr. Senack. Sure. That's a great question. Thank you,
Senator. I think it's a combination of different things. This
was underscored by the fact that I was actually in a meeting on
the Hill a few weeks ago, and a couple of the staffers here
were talking about how they were struggling to enroll in the
IBR program.
I think it's just a combination of two things, one, just
making sure the information is available and they're well-
educated about their options. I think improving loan
counseling, particularly exit counseling, is critical in
communicating that information. I don't remember the specific
number, but a majority of students don't even recall having
gone through loan counseling a year after leaving school, and
that seems like a red flag. We should definitely improve exit
counseling.
Also just simplify the process. It seems like there are
some issues in terms of getting the application approved or
just administration of the actual paperwork.
The Chairman. Enlighten me on this. When a student
graduates and they have this debt, do they get some kind of
proactive information about income-based repayment, or do they
have to apply and ask about it? Does the government, the
Federal student loan program, notify them and give them
information about it? Do you know the answer to that question?
Mr. Senack. I actually don't remember too well my exit
counseling. I mean, I imagine it's included in exit counseling.
I think it would be good to make it more of a priority, and
that includes following up in years after. But it can be
difficult to track down the information.
The Chairman. Let me ask all of you about loan counseling.
You all noted in your testimonies that institutions of higher
education are required to provide mandatory entrance and exit
loan counseling for student borrowers. Yet a recent poll showed
that 40 percent of the students don't even remember having
received that counseling. So you wonder how transitory that
counseling really was.
Since you're all borrowers, I was wondering whether you
could share with us what you thought of your loan counseling.
Do you feel like it provided you with all the information you
needed to understand what you were getting into?
Ms. Donelson, obviously, you had a financial counselor that
really did, from your testimony.
But how about the others? Did it give you the information
you needed? Were there ways in which it could have been more
helpful?
Ms. Brooks, I see you're ready to answer that.
Ms. Brooks. Thank you. Great question. Actually, in my
freshman year in 2008, they do an introductory course at Bowie
State University that prepares you for financial aid and gives
you a lot of information. However, they did not include
information--or that I can recall--information about there
being a maximum limit on the loans, subsidized or unsubsidized.
Had I known that, I would have taken the loans and spread
them out more throughout my matriculation through college.
Because I used them at such various times to pay for needs, I
am at a situation now where I need to find more money to pay
for just my last semester in order to graduate in December.
The Chairman. Anybody else?
Dr. Goldrick-Rab.
Ms. Goldrick-Rab. I've been giving a lot of thought to this
issue of the loan counseling. I can tell you that this
experience is very common. It is very unusual for a college to
offer what is apparently being offered at her university. A
college course to help students understand financial aid is a
great idea in theory. It's very difficult to get the
institutions to do it. Some of them are trying it. At the
University of Wisconsin-Milwaukee, for a subset of grant
recipients, they are attempting a one-credit course in this
regard.
The Federal student aid folks are working hard on the issue
of loan counseling, and I have been in touch with them. I have
reviewed the proposed revisions to loan counseling, and some of
them have begun to roll out. This is what I will say, and we're
trying to do research on this right now. This is something that
I've been actively trying to understand, what students really
get from it.
A lot of information is now being provided. It is text
heavy, it is difficult to navigate, and it contains a lot of
terms that, frankly, are above the levels of financial literacy
of not only our undergraduates but, frankly, most Americans. It
also takes an attitude toward many of our students that I have
to say would be off-putting.
For example, it tells students, ``Well, are you running out
of money? Here's some strategies. Don't go out to eat.''
Research does not suggest or support the idea that most
hardworking students are wasting their money on luxurious
restaurant meals. It suggests that they are already taking
these strategies. So, in other words, it doesn't offer them
real alternatives when they are already understanding these
sorts of things. It simply gives them an array of terms and
program options. IBR is not well-explained in the current
system. It is given with a set of acronyms and complex terms.
The Chairman. Any other thoughts?
Ms. Donelson.
Ms. Donelson. Well, I did have a lot of counseling. My
financial aid advisor--well, Tiffany, the director--sat down
and explained to me, ``Now, you can only borrow this much for
this year, so let's see what we can do and stretch this out.''
And if she said something to me like, ``Oh, you have to pay
$300 to finish your books,'' I'm like, ``Cool. I'll take $300.
I'm OK with that.''
So she was able--I'm very thankful for Tiffany. She
actually got with me a couple of days ago. We need to sit down
so we can look at this. And the financial aid puts on a lot of
events, so it was like, ``Financial aid will be in the student
center. Come talk to us. We want to speak to you. Always come
see us.'' And it's required the first week of your freshman
year at Lipscomb that you see financial aid. You have a day
assigned to financial aid, so you have to talk to them.
If you go in and be oblivious to what's going on, it's
actually, I feel, on the student. I was just determined that
this is what I have to do, and this is what I'm going to take
care of to get what I need. So I guess it's just different.
The Chairman. Thank you all very much.
Senator Alexander.
Senator Alexander. Thanks, Mr. Chairman. This is very
helpful, and I want to stay on topic, although I can't resist
making a comment that would provoke a big discussion here,
particularly from my Democratic friends.
The primary reason for less State aid for public colleges
and universities, which are attended by three out of four
students, is Federal Medicaid mandates soaking up money that
would otherwise go to public higher education. It's gone from 8
percent in the 1980s to 26 percent today. It's never discussed
at hearings like this in a serious way.
I'm not talking about President Obama. I'm talking about
what's happened over the last 30 years, as the Medicaid program
was growing and States shoulder 40 percent of the bill. That's
where the moneys come from, and that's why your tuition has
gone up if you're at a public college or university. So that's
our responsibility.
The other part that's our responsibility are Federal grants
and loans--I mean, regulations. Senator Harkin and Senator
Franken have legislation, and I had some legislation when I
first got here to try to simplify things. Maybe as we think
about this, we could get rid of some of the rules which we now
have about helping you understand what your loan would be and
replace them with better rules so that we don't add to that.
For example, as Senator Harkin was indicating, we already
have required by law a college navigator, a student shopping
sheet, a net price calculator, disclosure. All this was in the
Higher Education Act. Each school is supposed to say what the
loans and the responsibilities are of a student who is a
borrower with a long list of what that entails. We require each
school to provide counseling with a long list of what that
entails.
Schools are audited annually on these efforts. I wonder how
that could be, with 6,000 colleges and universities and 12.5
million students who have grants or loans. We have spent $68
million on 15 different financial literacy programs. So,
obviously, part of the big stack of regulations we have are
things we've already, in a well intentioned way, tried to
require.
So let me go to you, Ms. Donelson, and ask you this. Of the
things that made the most difference to you, it sounds like it
started with your high school advisor and then your financial
aid advisor at Lipscomb. Is that where you got the best
information? Because you made a decision to go to a more
expensive school. I mean, you could have gone to Middle
Tennessee State University. The tuition there is $8,000 a year
or so. At Lipscomb, it's twice that. Right?
Ms. Donelson. Yes, sir.
Senator Alexander. Or you could have started out with 2
years at a community college and then gone to Lipscomb, and the
Pell grant is about equal to the community college tuition. But
you made a decision that the best way for you to get an
accounting master's degree was to take a more expensive route.
Of all these things that we hear about, what was the most
helpful thing to you in making that decision?
Ms. Donelson. As far as choosing Lipscomb instead of the--
--
Senator Alexander. In deciding to run up--you've run up a
debt----
Ms. Donelson. Yes, sir.
Senator Alexander [continuing]. That you didn't have to run
up. You could have gone to some other school at a lower cost.
But you're comfortable with that decision. Right?
Ms. Donelson. Yes, sir. Actually, Tiffany Summers was--the
whole financial aid family--they were very, very helpful. It's
sad to say I stayed in the financial aid office more than a
usual student would. They would see me and say, ``Hey, Derrica,
what's going on today?'' So that's the sad thing about it. But
she was very helpful with the decision. And my mom was very,
very involved. Me and my mom worked together on how we were
going to support the family and how we were going to make it.
We asked ourselves, ``Can we do this? Can we work this
out?'' And then Tiffany sits down and says, ``Well, this is
what it is, and this is what it requires for you to do once you
take this step.'' And so by working with my mother and Tiffany,
I have been able to make a plan for myself that I think is
obtainable, that is what I can do. I'm not trying to get ahead
of myself, but I feel like I can do this.
Senator Alexander. So you're comfortable with the higher
debt you received because--even though it wouldn't have had to
be that high if you had gone to a less expensive college.
Ms. Donelson. Yes. I am comfortable with that, even though
that sounds bad. But I am comfortable with that.
Senator Alexander. No, no, it doesn't sound bad. It sounds
like you spent a lot of time making an informed decision. And
if you're that comfortable with it, you'll probably be a great
success.
Mr. Senack, you heard that list of all the things that the
law requires colleges and universities to do. From the
perspective of a student, what would be the one or two things--
if you were me or Senator Harkin or Senator Franken working on
a new piece of legislation to try to improve this, is there
anything you'd get rid of or improve or replace? The words were
used, text heavy. That sounds like a lot of things around here.
What advice would you have for us?
Mr. Senack. Absolutely. I think the Department of Education
has been seriously working to build financial literacy, and I
think that's why they have such a variety of tools. What's out
there right now is targeted at different constituencies. So
things like the college navigator or the college score card are
directed at students who are searching for a school and
deciding where to go.
Senator Alexander. In your experience, have those been
helpful to students?
Mr. Senack. Well, they weren't around when I was looking
for a school. But I think in our constituencies across the
country, it's definitely been beneficial to have the
information out there. I definitely think that there are steps
that can be taken to simplify and communicate the most
important things in that information. In particular, I think
the shopping sheet scores better than most other types of
financial aid letter in terms of comprehension, so I think
that's an important step. But I do think that communicating the
information is absolutely critical to keeping debt down.
Senator Alexander. Ms. Brooks, obviously, one piece of
information that either wasn't taught or didn't get through was
the loan limit. Have you thought about any suggestions you'd
have for us as we think about what we already require, which is
quite a bit, of colleges and universities and what actually
might work as you're gathering information about grants and
loans?
Ms. Brooks. Thank you. I definitely think that you all have
done an extremely great job so far. But for the future, I can't
say that I have any definite suggestions. However, if it's on
the lines of institutions making sure that they give the right
information to the students--like they've said, text heavy
information, things that I would not understand when I'm
filling out financial aid questions, and if I had questions,
who could I go to.
If I'm researching online, and there's something that is
unclear--not all institutions have these great financial aid
offices or counselors that we can go to, unfortunately. So when
researching these things online, make it clear what is to be
expected of the student after graduating in terms of repayment
and the maximum limits on these loans.
Senator Alexander. Thank you, Ms. Brooks.
Thank you, Mr. Chairman.
The Chairman. Thank you, Senator Alexander. On my list, I
have Senators Baldwin, Murphy, Franken, Murray, and Whitehouse
in that order. So I'll recognize Senator Baldwin.
Senator Baldwin. Thank you, Mr. Chairman and Ranking Member
Alexander, for holding this important hearing.
I want to particularly thank Dr. Goldrick-Rab for your
testimony, your familial story and bringing your grandfather
here with us, and putting a lot of this debate in a historical
context. I think sometimes that we've forgotten the role that
access to higher education plays in giving meaning to the
American dream, making it real, not just a dream, and building
our middle class.
I repeat often our President's words from the State of the
Union--not this past one, but the one before--that to win the
future, we must out-educate, out-innovate, and out-build the
rest of the world. And we're losing ground on that. I've spent
a lot of time in the last couple of years interacting with
students at various settings across the State of Wisconsin,
students in private universities and colleges, students at our
public universities, at our technical and community colleges,
and they're struggling mightily, as your story of Chloe
reveals.
I have just a couple of specific questions. I'll start with
Dr. Goldrick-Rab, but anyone who has further insights, I would
certainly appreciate hearing from you.
I've been visiting a lot of technical colleges recently,
and at some of them, they've seen a real change in the
demographic of their student population with our recent deep
recession. Many have been displaced in the recession from their
manufacturing jobs. Others are looking for an opportunity to
perhaps move ahead in a setting in which they're currently
working. They're finding that our financial aid system, in many
cases, is just unavailable to them if they are seeking a couple
of semesters, a certificate rather than a full degree, and
finding it so challenging to move out of, say, ``minimum wage
employment'' to something that would be readily available in
their immediate communities that could pay $15, $20, $25 an
hour because of that gap.
So I wonder if you can comment on those nontraditional
students caught in between and how we can better serve them.
I'll start with Dr. Goldrick-Rab, but anyone else who has
comments, I would appreciate.
Ms. Goldrick-Rab. Thank you for the question. I guess the
first thing I want to say is that those so-called
nontraditional students are actually the traditional students
now.
Senator Baldwin. Yes.
Ms. Goldrick-Rab. It's a terrible term. They're the
majority. Most students in this country don't look like these
folks. These are extraordinary people, and I wish that the
Nation was full of such extraordinary people making such
extraordinary choices with extraordinarily supportive families
and extraordinarily supportive college settings. But that isn't
the case. That is not the common experience at all.
The folks that you're talking about really are struggling.
They're the ones who need a little bit more, just a few courses
perhaps. They already have families. They've already been in
the labor market, and they're coming back in to get a bit more.
That is really the story of so many of them, and the aid system
is not really well supportive of them.
If they want to do this in a fashion that is online, for
example, the UW flex degree that people are working toward
creating right now in Wisconsin--it is not very well-aligned
and supported by our current financial aid system. Asking these
folks to take on the student loans--they look at this
calculation a little bit differently. They already have debt in
their families. They've been out of work.
So asking them to take on more--and they don't have their
whole lives in front of them to pay it off. This feels highly
unrealistic to them. Many of them are really at the bottom, and
the need calculation doesn't leave them with very much. So I
think this is something to take a really close look at in the
upcoming reauthorization and make sure that it is built for
them.
Senator Baldwin. With just a few seconds left, the other
question I wanted to ask was about where the financial aid
literacy should begin. We were talking about having a
conversation earlier about courses as undergraduates. But it
strikes me when we try to have young people see college as a
path, we often don't have that financial aid conversation
early.
When should it begin? What programs should be funded that
aren't right now? I think some are authorized and not fully
supported.
Ms. Goldrick-Rab. I would not make this a higher education
project. This needs to be a project that begins, frankly--we're
talking about early childhood a lot. They're perfectly capable.
They're learning numbers. These lessons need to begin then. And
the reason for that is that the college choices of many
students are determined by the time that they're in eighth
grade. If they don't understand that college is affordable by
that point, then they do not take the courses that they need to
get ready.
That is the main reason that low-income students are not
finishing their degrees. They were never ready in the first
place with their courses. So, please, make that a part of the
reforms that you are taking around K-12 education and those
sorts of things rather than placing them at the other end of
the educational pipeline.
The Chairman. Thank you, Senator Baldwin.
Senator Murphy.
Senator Murphy. Thank you very much, Mr. Chairman.
Last week, I was at an afterschool center in Danbury, CT,
and I was talking with an amazing group of volunteers that were
kids that were teaching boxing lessons and dance lessons. They
were all high school graduates invested in their community. But
none of them are going to college. There were about four or
five of these kids.
I said, ``Well, for how many of you is the reason that
you're not going to college, money?'' They looked at me like I
had horns on my head. They said, ``Well, of course, the only
reason why we're not going to college is money. Of course, we
would be there if we could afford it.'' Some of them couldn't
afford it under any conditions. Several of them had to be
working to support their families.
I just thought, what an absolute tragedy that these kids,
who are already committed to this community, who have shown
that they're willing to go above and beyond the call to make
our State a better place, aren't able to get a degree. Part of
it was that they were scared off because they had heard stories
of their friends and older brothers and sisters who had tried
and come out with just these enormous amounts of debt and no
way to repay them.
I want to start with you, Mr. Senack, because one of the
things we're going to be talking about--and you mentioned it in
your testimony--is the rate at which students are going to be
paying. It might not sound like a lot of money to some Senators
and Members of Congress, that the difference between 3.4
percent and 6.8 percent is going to be $1,000, or maybe on the
high end $4,000, over the course of the loan.
But the reality is for most kids graduating college these
days is that they're not making enough money to pay the bills,
never mind to pay back these loans. So can you just paint a
little bit of a picture for us about the stakes of this debate
over the rate that is being paid and what the reality is?
You've recently graduated. All your friends are out in the
workforce today. What's the picture today of the ability of a
recent college graduate to be able to pick up an extra thousand
dollars or an extra couple of thousand dollars in loan
repayments just based on the difference in interest rates?
Mr. Senack. Sure. Thank you for the question. I think it's
important to recognize, first off, that subsidized loans, which
the rate is set to double on, are targeted at the most needy
students. We're not just talking about the people who are able
to make their 10-year repayment plans. We're talking about the
students who needed more money to go to school than what's out
there in grant aid.
You know, $1,000 is a significant amount of money. If you
were taking out four loans, one for every year of school, that
puts your debt over $30,000 if you're already at the average.
There's 7 million students across the country who have
subsidized loans. There are 10 million who have unsubsidized
loans. Beyond that, there are millions and millions more who
have PLUS loans or Perkins loans.
So there's a significant amount of the college population
that's relying on these direct loans to stay in school. When
the students are looking at going back to school next year,
$1,000 is a significant amount of money. And it's unfortunate
that that will turn heads and will change minds about being
able to afford to continue to stay at a school of higher
education.
Senator Murphy. Clearly, one of the things here is what we
can do to try to make the package that we give students more
generous. But part of our discussion is how we can make college
cheaper. How do we get you through 4 years at lower costs?
Ms. Brooks, I wanted to ask you about online courses,
because you said you've been taking online courses during the
day and doing classes in person at night.
And, Dr. Goldrick-Rab, you referenced that your university
is moving more toward some online education.
Ms. Brooks, can you talk about your experience in taking
online courses? You're taking both, so you're a perfect person
to talk about the kind of education you think you're getting
online, which, ultimately, we think, can be cheaper than what
you get in person. How does it compare to your classes that you
take at the university?
Ms. Brooks. Thank you. And, first, I'd like to say that I
appreciate taking hybrid courses, both online and evening
classes. It offers me the flexibility to be able to work and,
on breaks, enter my classroom setting online and be able to
catch up on work that I may have missed if I had to miss a
class because of a doctor's appointment for my son or a day at
work that I couldn't miss for a class. And evening courses, as
well, I appreciate for offering the accommodation I need to
both be able to work and attend school at the same time.
Above all, though, I appreciate online courses. I think
that they are great. I receive the same amount of information I
would as an in-person class. If it is cheaper for me to take
online courses, I would much rather do that. And if I had a
schedule where I could take all online courses, I definitely
would. I appreciate them much. Thank you.
Senator Murphy. Well, thank you very much. I think a big
part of our discussion has got to be how we deliver a skill set
for less money and perhaps less time.
Thank you, Mr. Chairman.
The Chairman. Thank you, Senator Murphy.
Senator Murray.
Statement of Senator Murray
Senator Murray. Thank you very much, Mr. Chairman. I really
appreciate you having this hearing. I think it's one of the
most compelling issues that we need to address for the future
of our country. If we are hearing, as Senator Murphy said, from
young kids who have already decided they are not going to
college because of costs, that's the future of our country. So
this is just such an important issue, and I really appreciate
this.
You've talked about a number of the issues I was going to
ask about. I was very happy to hear you, Dr. Goldrick-Rab, talk
about what we call traditional students becoming no longer
traditional students, because if you go on campuses--and Ms.
Brooks is a perfect example of who you might look at and say is
traditional, but very nontraditional, trying to raise a family
and do all the work and everything at the same time.
Most people think a traditional student goes to school in
the morning, goes home at night, does their studies, and goes
back the next day. And, in fact, most of our students today
have jobs, they are raising families, and some of them are in
the workforce.
I wanted to ask what programs or initiatives are most
helpful to you, Ms. Brooks, in balancing your family and your
work and your classes.
Ms. Brooks. I would definitely say, again, the online
courses and offering evening courses are definitely a big help.
I am flexible in maintaining the schedule that I do have,
working 40 hours per week. Every morning, I work, and being
able to have these classes at night and online is a big help.
If I did not have that, I would not be able to take as many
courses and graduate on time. And would that affect how much
money that I would have to put out to go to school? Those are
questions that I ask myself if those weren't offered to me. So
I appreciate those programs.
Senator Murray. Does anybody else have any ideas about how
we address that?
Ms. Donelson.
Ms. Donelson. I actually intern at Regional Care Hospital
Partners. That allows me to work up to 40 hours a week. But the
MAcc program is set up for you to be able to work a full-time
job and go to class at night. So I usually have a class for 4
hours, even though that sounds very nerve wracking. But it
actually is very helpful that I can get this.
They have them in terms. I have an 8-week class, and every
8 weeks, I'm switching to a different set of classes, and that
has helped me to be able to go through this MAcc program in an
accelerated form and to get my degree in 5 years.
Senator Murray. So the college is being more flexible in
terms of this isn't a 4-year program, where you start and 4
years later you finish. But rather, looking at you as a student
and getting you out with skills.
Ms. Donelson. Yes, ma'am.
Senator Murray. Dr. Goldrick-Rab.
Ms. Goldrick-Rab. I'd like to add to this discussion,
however, that research is very clear, and there's some new
research out of the Community College Research Center that
indicates that while the blended version, which you are
receiving at the moment, where you have some online and some
in-person, does well by students. The achievement gap grows
when we push students to only have online courses.
In addition, I want to note that when students work full-
time--again, I think these are exceptional folks who are
managing to work long, long hours and do well in school. What
typically happens is that the lowest income students work those
long hours, but these are the same folks who have the least
academic preparation, and this time working competes with their
time for studying and academic advising.
This is why we find so many of them end up with debt and no
degree, and those are the folks----
Senator Murray. So how do we address that? What is the best
way to address that?
Ms. Goldrick-Rab. I think, first of all, the best way to
address that is to reduce the cost of going to college so that
it doesn't require one to work such long hours and to borrow.
If one works 40 hours a week during college and has grant aid,
there's a question about why there should still be cost left
over for loans. So in the meantime----
Senator Murray. So what is the best way to address the
affordability issue? Because what we're doing here is trying to
create all kinds of ways to pay more or put more money into the
system so that students can succeed. Let's ask the question:
How do we decrease the cost of college itself?
Ms. Goldrick-Rab. How do we decrease the cost of college
itself? There are many ways in which to do that. It's actually
very interesting to me--Senator Alexander, you're very
concerned about the regulations, and I agree with you. There
are a lot of regulations, and, in fact, I do think that they
are contributing somewhat to college cost. And they are also
interfering with the autonomy of colleges and universities,
something that they're very concerned about.
It seems to me that we have so many regulations precisely
because we have created such a complicated system, and we have
so many score sheets and all of these sorts of things and so
much high need for financial literacy because we've created so
much of a complicated system. So there's an incredible need to
simplify this for the schools. And to simplify this means to go
back to revisit where we were when these programs started out.
We didn't have this plethora of things involved.
If you remove the number of Federal programs, if you reduce
the number of those things, and you take out of the equation
the availability of these student loans to these institutions,
they will have to adjust. They will adjust. If families do
not----
Senator Murray. What regulations and programs, or whatever
you want to call them, would you take away or consolidate?
Ms. Goldrick-Rab. Right. I would reduce the availability of
student loans. I would insist that the States maintain their
effort and put their money into appropriations. I would
redirect----
Senator Murray. Because you think if they didn't have all
these students on student loans, they would have to look at
their own institutions?
Ms. Goldrick-Rab. Yes, they would have to look at their own
bottom lines. The fact is that they do adjust accordingly when
they know that these students come with additional dollars.
There is growing empirical evidence of this, particularly in
the for-profit sector and in the private colleges and
universities.
And the fact is that one of the reasons that public
colleges and universities continue to increase their cost is
because they're in a race, an arms race, with those private
institutions who have defined quality as expensive. And the
American public has bought an argument that equates price with
quality. It isn't true. We do not need to be building the
luxurious settings which these colleges and universities,
including now on public campuses, are building only to keep up
with their peers. We need to have teaching and learning
environments that are focused on education and, frankly,
nothing more.
Senator Murray. My time is up.
The Chairman. Senator Whitehouse.
Statement of Senator Whitehouse
Senator Whitehouse. Thank you, Chairman.
Clearly, one factor in all of this is the Pell grant. I'm
from Rhode Island, and we're very proud of Senator Pell and his
contribution to the creation of the Pell grants, i.e., they
were his idea. Shortly after they were launched, they were
contributing, on average, about 72 percent of the cost of
college then. Now, that's down to 32 percent, even after the
increases that we added in recent years. So it used to be more
than two-thirds. Now it's less than one-third.
I'd like to ask, particularly, the students on the panel,
do you receive Pell grants? Do they make a big difference? And
what percentage of your financial obligation do you think they
meet, roughly? You don't have to give me 31.7 percent. But how
important is it, and how big a piece is it?
Ms. Brooks. Thank you. I do receive the Federal Pell grant,
and I would say that it covers 90 to 95 percent of my tuition.
And I need that, of course, but without that coverage, I would
be left with approximately $6,000 worth of tuition at Bowie
State University. So with the coverage of the 95 percent, I'm
only required to work the 40 hours to pay the difference.
However, if I didn't have the Pell grant, then I would be
left with this hefty bill, and then left with how can I afford
to pay for all these classes, and then I would reduce the
number of classes that I take. I'm now taking five classes per
semester. To go from a full-time student to a part-time
student, I then wouldn't be eligible to receive some financial
aid because I'm a part-time student. So that plays a big role
as well.
Senator Whitehouse. Thank you.
Ms. Donelson.
Ms. Donelson. I do receive the Pell grant, and I'm looking
at the layout of my financial aid now. The way that my
financial aid advisor has helped me--she has broken down for me
each semester that I have used it, and it shows that it has put
a significant dent in the--basically a dent in taking care of
the cost for that semester.
I really can't give you a percentage, but I'm just looking
at the numbers.
Senator Whitehouse. But it helps.
Ms. Donelson. Yes, sir.
Senator Whitehouse. The other issue that I think we need to
address is the combined problem of the for-profit sector in
certain areas moving out into selling what one might even
consider to be bogus education. We've got wonderful for-profits
in Rhode Island. Clearly, there are some terrific examples of
for-profit education.
But when there's all this money floating around, there are
people who come in, and we've heard these tales of some tiny
little college someplace getting bought by a hedge fund. It's
got the right kind of license. Suddenly, it explodes. You've
got 20,000. The degrees don't actually connect to the real
world in any way that gets you your license or your
certificate.
And the tough thing about it is that you're only young
once, and, worse than that, whatever you borrow isn't
dischargeable in bankruptcy. It's one of the very, very few
kinds of loans that you can't reboot on if things haven't
worked out for you. So you end up with people who have lost the
learning years of their lives, and they've got a debt they
can't shed. So it's hard to go back and make it right.
And where the education you got was essentially bogus and
isn't useful, and you got conned by an outfit that had 300 or
400 recruiters and one person doing job placement, because that
was where their interest was--bring you in, get your money, and
see you later--the damage that happens in people's lives, I
think, is very, very severe. To this day, I don't think anybody
knows who snuck the non-dischargeable provision into the so-
called Bankruptcy Reform Act, but it sure slipped in. Some
lobbyist, some wheeler-dealer got it in there, and I think we
do what we can to get it out.
I don't know if anybody has any experience with people who
have had that situation where the degree wasn't what it was
cracked up to be and they lost both the time and the money and
were unable to start over and carried that burden for the rest
of their lives.
Mr. Senack, do you want to speak to that?
Mr. Senack. Sure. I think the reality is that budgets
everywhere are shrinking. So it's critical that where we're
investing our dollars are places that will actually be granting
degrees and generating real results for students.
I appreciate all the efforts that the government has taken
to make sure financial aid dollars aren't used for recruiting
or advertising or things like that, because it is just so
critical with the pie being so small right now that we're
getting the best bang for our buck. And that means targeting
this aid to schools that will actually grant degrees and get
students out into the workforce.
Senator Whitehouse. Thank you very much.
The Chairman. Thank you, Senator Whitehouse.
Senator Franken.
Statement of Senator Franken
Senator Franken. Thank you, Mr. Chairman and Senator
Alexander, for this hearing.
You three students here today are extraordinary young
people. I've done lots and lots of roundtables around
Minnesota, and it seems like when we get students in, they are
all extraordinary. Sometimes, I think that it fools us, that
you guys figure out how to do it. You've worked incredibly
hard.
When I talk to student leaders from the MNSCU system in
Minnesota, the Minnesota State Colleges and Universities, they
come in, and I say, ``How many of you work 20 hours a week?''
They all do. ``How many work 30 hours a week?'' Most of them.
``How many work 40 hours?'' A lot of them. It's pretty
extraordinary stuff, the ones that are successful, like you
are. It's just that I worry about some kids who aren't so
extraordinary as you are.
Mr. Senack, thank you for bringing up the understanding of
the true cost of college. I agree with Senator Alexander, the
Ranking Member, that making things simpler is a good idea.
And, Dr. Goldrick-Rab, you talked about these financial
letters, these aid letters, these award letters. I think you
pointed out that sometimes an award letter will have a loan in
it and it won't say it's a loan.
Mr. Senack, you mentioned that in your testimony. So the
whole idea of this is just to require everybody to use the same
form, the same letters, the same terms. And when I introduced
this--I'm going to reintroduce it, and it's bipartisan. When I
introduced this, I had college counselors get in touch with me,
saying, ``Thank you. I can't figure these things out, let alone
the parents and the students.''
So can you talk to me, Mr. Senack, or anybody, about the
value of that type of legislation, the uniform form, that
everyone uses the same terms, et cetera?
Mr. Senack. Sure. Thank you. One of the big issues with
financial aid packages is that there is no consistent system.
In some cases, schools will calculate their total cost
differently. Some just use tuition plus room and board. Others
include transportation, parking, textbooks. And it really makes
it difficult to actually look at a side-by-side comparison of
two different schools.
Beyond that, I mentioned that students often feel misled in
terms of the awards that they're given. PLUS loans are used
often to just cover the remainder of the cost, to give students
a low net cost, but actually end up saddling them with tens of
thousands of dollars in debt down the road.
I made the choice to go to the University of Connecticut
because it was a more affordable option. I was able to tell
that because I was able to make a side-by-side comparison
between that and other schools. But the majority of students
aren't able to do that. So it's critical that we make a system
that is easily understandable. More than 600 colleges and
institutions have signed on to use the shopping sheet. But we
do need to take more steps to increase its use.
Senator Franken. So you can compare apples to apples,
oranges to oranges.
Mr. Senack. Absolutely.
Senator Franken. I know, Ms. Donelson, you took either AP
or IB in high school?
Ms. Donelson. Thank you. Yes, sir. I did. I took AP
psychology, anatomy, government, and economics.
Senator Franken. Great. Of course, you would have.
[Laughter.]
I, again, have done just recently some roundtables at the
St. Paul College in Minnesota, Winona State University. And one
of the things that students talked about was how you can get
college credits, and that saves you a lot. There are actually
some students who have gotten 2 years of college credits in
high school. Now, boy, that cuts down the cost of college.
And you took AP, and also there are International
Baccalaureates. We also, in Minnesota, have something called
PSEO, which is postsecondary enrollment options or
postsecondary education in the school. These do allow you to
get credits.
One of the things I want to do is just be able to help kids
who can't afford the tests, the IB test and the AP test. Some
States do it. Some States don't. But tell me about that in
terms of what the risk is, because you take an AP course, and
you're essentially and hopefully buying and getting a credit
that will offset some of your college costs. Right? But if you
don't get the 3 on the AP test, then--how much do these cost?
Do they cost about $85----
Ms. Donelson. Per test, yes.
Senator Franken [continuing]. For the IB and about $100 and
some for the AP in high school?
Ms. Donelson. Yes, sir. I don't quite recall what the exact
cost was when I was in high school. But the risk for me was----
Senator Franken. Years ago when you were in high school.
[Laughter.]
Ms. Donelson. But the risk for me was, like you said, I
could take the test, but it isn't guaranteed that I make the
score for it to go for college credit. I actually got my
psychology class for college credit, and I missed the
government and the economics by one point. So I spent all this
time going through school and taking the tests.
But, actually, it did take a lot of--but the Advanced
Placement was required at MLK. But Advanced Placement was a
hard class for me. I guess I was just more interested in
psychology at the time, and that made me be able to excel
better in that test. But the risk for me was actually taking
tests and not getting the score.
Senator Franken. One student I talked to who was from the
University of Minnesota and a third year senior--he had gotten
enough credits to be a third year senior. He got enough credits
in high school. But he said that if it hadn't been for the
State program, he would not have taken the IB and the AP
courses because he couldn't afford them. So there are some kids
that can and some kids that can't, and I'd like to make sure
that they're able to do that.
I'm way over my time. I want to thank both the Ranking
Member and the Chairman for this hearing. This is such an
important topic. I admire you tremendously. It was a lot easier
for us when we were going to school.
The Chairman. Thank you. We'll begin a second round.
Whenever I can, I always like to point out that no State
has to accept Federal Medicaid money, no State. You always hear
that it's like the Federal Government is coming down on the
States and saying, ``You've got to do this. It's a mandate.''
It's not a mandate. If a State wants to accept Federal Medicaid
money, then, yes, they have to meet certain requirements.
That's it.
But if you don't want to accept that money, you don't have
to. So any State legislature could tomorrow, if they want to,
vote and say, ``Hey, we don't want to accept any of that
Federal Medicaid money,'' and they can take all their State
Medicaid money and put it into education or something else. So
there's no Federal mandate.
Now, if there's been an increase--and there has been a
terrible, huge increase in Medicaid costs, it's because we've
got more poor people. You can't get Medicaid unless you're
poor. You reduce unemployment from--actually, it's really
around 13 percent now rather than 7 percent. If you reduce
unemployment down to 4 percent or 5 percent, guess what? You
save a lot of money on Medicaid. So it's because we have more
poor people.
Some States have no income taxes. Well, that's their right.
They don't have to if they don't want to. But then they can't
come crying to the Federal Government and say, ``Put more money
into education by getting more students into debt.''
State budgets have been cut. States are now in a race to
the bottom to see who can have the least amount of taxes to
attract a business or something. So they have this race to the
bottom--we'll cut taxes more than that State will cut taxes--
and as a consequence, education suffers. So these are just my
thoughts on that.
Dr. Goldrick-Rab, you just skewered a very sacred cow. I
call it edifices. So many colleges now get in this race to
build a new building and name it after somebody, don't you
know? And it's fancy, and when you look at the brochures from
some of these colleges, it's all about all these fancy new
buildings, the swimming pools, and all these sports arenas, and
all that kind of stuff.
You look in vain, Mr. Senack. You look in vain in those
brochures to discover what kind of student support services
they have for poor kids. What do they do to make sure students
get through in 4 years?
I might just mention on the bankruptcy situation that was
brought up here that we had a bill in 2005. It was called the
bankruptcy bill, revised bankruptcy laws and stuff. That was
put in there, in that bill, that student loans were not
dischargeable in bankruptcy except under very dire
circumstances. That was one of the reasons I never supported
it. There were other reasons, but that was one that was put in
there. I don't know why, but it just was. You can discharge
everything else in bankruptcy, but you can't discharge that. I
thought that was very interesting.
Now, last, I want to get this--and I'm going to talk to Dr.
Goldrick-Rab about this, but you can also chime in, any of you.
We've seen a big move away from need-based aid to merit-based
aid. Now, that sounds very nice. We're all for merit. But what
it means is a lot of those people that have the merit also come
from that upper quartile of income. So now the aid has shifted
to that rather than students who are smart, who can go to
college, but who come from poor families, but who have the
need.
So I wonder if you could comment on what you see about
that, Dr. Goldrick-Rab. We've heard repeatedly how important
need-based aid is for low-income students, that merit-based aid
does not promote college attendance. What are the obstacles we
face in restoring need-based aid as a priority?
Ms. Goldrick-Rab. Thank you for the question, Senator,
because it's a really important issue. In fact, you're correct.
We are now over-awarding, essentially, students who have no
financial need. We are supplying them with what I would call
financial incentives--that's what I would call merit-based
aid--to choose a particular institution. And we've provided the
ability to do this to these institutions by covering some of
the cost for the needy students with our own aid.
Often, what we see happening, particularly at private
colleges, is that they will essentially use the need-based aid
for the needy students and then reserve their own institutional
aid, their own endowments, to put toward these merit awards.
Now, what we see is that these merit awards, while they do
relieve those families of having to spend on college, do not
alter the choices that those families or students make in
whether they go to college, whether they finish college, et
cetera.
In Georgia, for example--this is a well-researched State
where they have a big HOPE program. That's a famous merit-based
program. The introduction of that program to the State did not
cause increases in college attainment in the State as much as
it benefited the car industry, because the families who had
saved for college and already were able to afford it kept that
merit scholarship money and spent it to buy cars for their
children. That is not a good use of policy dollars.
The other thing it does is it creates a constituency of
students on campus who are disproportionately wealthy. And as
you were saying earlier about the edifices at the campuses, it
is not the case that buildings or amenities are driving up
college costs. That's not the main driver.
But what is going on is that the colleges are orienting
their experiences toward these wealthier students. They are
catering to their needs, and they are responding to their
requests for an experience that essentially prices out the
working class student. It makes it very uncomfortable for them
to be on the campus because they cannot fully participate in
college life.
This is the essential effect of the merit-based
scholarships, where the students who are already wealthy now
have even more resources to spend on things that they would
like to have during college, while the other students are left
with additional needs. You put these students together on a
college campus, and you create a culture of haves and have-nots
that eventually will drive those have-nots to think this isn't
tenable anymore, and those are the ones who drop out.
The Chairman. I'm over my time, but I want to followup on
that. But, first, I'll recognize Senator Alexander.
Senator Alexander. Go ahead, Mr. Chairman.
The Chairman. Thank you.
I have a problem with that. When I went to college, I was a
have-not. My dad had a sixth grade education. He was already
over 65 and on a meager $65 or $70 a month social security. We
had no money. We had nothing.
Fortunately, I had a scholarship. I had a Navy ROTC
scholarship that paid my tuition and books. I got a $50 check
every month to cover expenses. But I didn't have any other
money. We had to go on cruises every summer, but I had to work.
I'm not saying that I did all this--but I worked on Christmas
break, and I worked on Easter break, and all that kind of
stuff.
But we always knew that even at Iowa State University,
there were haves and have-nots. There were a lot of kids who
had a lot more money than I did. They came from wealthier
families. They had nice cars, sports cars, and went on spring
break to Florida and all that kind of stuff. We couldn't do
that.
That didn't bother me. It didn't bother me, because I just
recognized where I came from, and I didn't have that much. OK,
fine. But I was going to go to college and maybe I'd be there
sometime. Maybe I would make that.
So I don't know that I buy it that kids that are have-nots
see this and it discourages them. I'm not certain about that. I
think at the most would be to make sure that kids who are from
have-not families have the wherewithal to go to college without
having huge debts piled on their head, that have the support
services. Many students who come from disadvantaged families
who don't have a lot of family support--to make sure they get
that kind of support when they go through college.
But I'm not certain about that idea that they get
discouraged.
Ms. Goldrick-Rab. Let me tell you what the difference is.
I've heard a lot about folks like yourself who attended college
at that time. And the experience that you had was partly
because, at the time, the colleges and universities were not so
much catering or gearing the way in which they offered
opportunities to those other students. It was more accessible
to all.
What research indicates--and there's a new book out that
you could look at that's based at one State university. It's
called Paying for the Party. It's a brand new book out of
Harvard University Press. And what they document is that
colleges have oriented the way in which they provide services
to those other students so that less is available to you.
You raised earlier this question, for example, of student
services. We can't even look at the budget for student services
and know what fraction of those services are essentially
provided to facilitate the social life of students, right,
versus the needs of students, for example, through emergency
counseling, those sorts of things. The budget is not
sufficiently transparent for us to be able to see that.
So what we're finding is that it's not just the case that
students are individually in these situations running into
conflict with each other, but that it is, in fact, partially
the response of the institutions and the failure of those
institutions to make it possible for everyone to have access to
the things that people want to participate in. So the culture
on these campuses has changed, and this has changed even at big
State universities.
Let me give you just one example: the range of housing
options on a given campus. If you go to the University of
Wisconsin at Madison where I teach, the range of on-campus
housing options, the range, is a $7,000 difference. At one
residence hall, it is $7,000 a year more expensive than at
another. This causes the segregation of students by family
income on a given campus.
At other institutions that take more responsibility for
this, for example, the University of Wisconsin at Green Bay,
the difference is only a couple of hundred dollars, which means
that students from different backgrounds can live together.
The Chairman. Well, that's the way it was----
Ms. Goldrick-Rab. That is wonderful and diverse, and that
is exactly what you want to have for an educational
environment. You don't want family income to determine the type
of college experience that one can have, because then it is
also determining the chances of graduating. These are major
changes from the time when you went to college.
The Chairman. I guess you're right. When I went to Iowa
State--you're right. Friley Hall, the girls' dorms--that was
the day when girls lived one place and guys lived in another.
It was a mixture of everyone. That's true. I never thought
about that. There wasn't very much of a range at all. The
married students, mostly GIs, lived in Quonset huts. But that's
interesting. I never thought about that.
Senator Alexander.
Senator Alexander. Thanks, Mr. Chairman.
Ms. Donelson, did you have a HOPE scholarship?
Ms. Donelson. Thank you. Yes, sir. I did.
Senator Alexander. How much was that per year?
Ms. Donelson. Per year, it's $5,500.
Senator Alexander. Did you know about that when you were in
high school?
Ms. Donelson. Yes, sir.
Senator Alexander. Was that a contributor to your working
hard so that you might be able to maintain a grade average to
earn it?
Ms. Donelson. Yes, sir.
Senator Alexander. If you didn't have the HOPE scholarship,
could you have gone to David Lipscomb?
Ms. Donelson. Honestly, I probably would not have been able
to go to Lipscomb. But I did--like I said, I was very close to
my guidance counselor, and she aimed at--``Derrica, you need to
make sure you have a high score. You need to make sure you keep
these grades so you can qualify for it.''
Senator Alexander. What grades did you have to have in
order to earn the HOPE scholarship?
Ms. Donelson. They based mine off of my ACT score, which at
that time was 21 and above. I don't remember if they--I don't
know if they changed it or not. And I maintained a grade point
average over a 3.0. I would really say I maintained at least a
3.2 or above at Lipscomb.
Senator Alexander. I have a little different view than the
chairman. Most of our Federal aid is based upon need. I mean, I
like our system of Federal higher education support. Half our
students have a grant or loan to help pay for college. The
amount of the Pell grant, as Ms. Brooks pointed out--not quite
in her case, but the amount of the Pell grant average, $3,600,
is $500 more than the average cost of attending a community
college.
So you can take a Pell grant and you can go to college if
those averages are about right, because, typically, you would--
of course, you have your living expenses. But in community
colleges, typically, you don't have dormitories. Do you have
dormitories at Bowie State?
Ms. Brooks. Yes.
Senator Alexander. You do. Most of ours in Tennessee do
not. And so I like the system, and I think infusing incentives
and rewards and merit within a system of higher education is
just fine. If we have 6,000 institutions of higher education of
all types in America, they're going to have many different
types of programs.
I mean, I had merit scholarships all the way through,
although I came from a family without much money, even into law
school. And the idea of going--I went to NYU as well, which is
the graduate--the law school, and what they were trying to do
was achieve a diversity at NYU law school. They wanted some
hillbillies at the law school instead of people from the Bronx.
They had all these bright kids from New York City, and they
were trying to achieve some diversity in the law school at the
time. So that was their independent autonomous goal, and they
had a merit scholarship, and I took advantage of it.
Mr. Chairman, there's one thing that has come up here that
has come up at other hearings--Dr. Goldrick-Rab mentioned it--
and that's simplicity. I love the phrase, text-heavy. I'm going
to remember that, because so much of what we read is text-heavy
around here. And having been the Secretary of Education, what
really tends to happen is that well-meaning regulations just
pile up. That happens in every department. But that's something
that we may be able to agree on here.
We might not agree on Medicaid. My view of that is that
every State participates in the Medicaid program, and once you
participate in it, you're stuck if you're a Governor. But we'll
debate that some other time.
Something we might be able to work on--and you and I have
talked about it. We've got this informal alliance of Mikulski
and Bennet, Democrats, and Burr and me, who are interested in
this--as we move into the Higher Education reauthorization,
maybe we could think about, for example, in this area of
simplifying student forms, financial regulations, really
finding out what the existing regulations are.
Now, sometimes our colleagues come up with ideas that say,
``Well, if you add one, you've got to get rid of one.'' I don't
really like that so much because that's too wooden in its
approach. But I do think it's useful if we're going to approach
the whole area of financial aid for higher education, and it
might be a good idea to ask the staff to just bring us all the
regulations that exist and let's get some advice from students
and faculty members and say, ``Does this make any sense?''
We might have broad agreement on that here. I mean, Senator
Warren and I have used this example before. This is a committee
where we go from the right to the left probably in more of a
spectrum than any other committee in the Senate. But when she
was in the Consumer Bureau, she had a competition for a 1-page
mortgage application. I think that's a really smart idea.
Anybody who has refinanced their home over the last year or two
knows how much nonsense is in several pages. You can't tell
anything about it. You just sign the bottom line as the lender
loans it to you, and you're not really protected.
So what I'm suggesting is maybe we can find a way over a
period of time to focus on regulations that cost money, that
take time, that don't really protect the students they're
intended to protect. And if they save money, that money could
be put toward keeping tuition from going up quite so rapidly or
raising faculty salaries or whatever it needed to do. And I'm
certainly willing to spend time on that so that when we
reauthorize the next higher education bill, we don't add to the
stack of regulations. Perhaps we could reduce the stack of
regulations and do so by writing what we mean to say in
language that isn't text heavy.
That's just a suggestion I make to the chairman, and I
appreciate the conversations we've had on that before. I thank
the witnesses for their very helpful testimony today.
The Chairman. I also want to join in thanking you all.
One last thing I just wanted to say, Senator Alexander, is
that we talked about financial literacy. We're working on an
Elementary and Secondary Education Act. For what it's worth, I
just think that if you wait until you get to college to imbue
kids with financial literacy, it's too late.
So we're working on changing from the No Child Left Behind
constrictions to more of what we call college- and career-ready
regime. So what do you need to be college- and career-ready
when you get out of secondary schools and back that down to
what do you need to know in 12th, 11th, 10th, middle school,
and elementary school.
It seems to me that one of the things you need to have to
be ready for college or career is financial literacy. So,
hopefully, somehow we've got to put that in an ESEA bill--so
that's part of a regime that kids will be expected to know if
they're going to be college- and career-ready, they have to
know how to balance the checkbook, what compound interest is,
how debt accumulates, and how interest rates also accumulate,
and what it means when you pay the minimum amount on your
credit card bill and what that means in terms of debt
accumulation--just simple kinds of things like that. It seems
to me that needs to be a part of our Elementary and Secondary
Education Act bill.
Any of you who are listening to us up here--do you have any
further thoughts or suggestions or comments before I gavel it
to a close?
If not, again, I thank you all very much. I thought it was
a very good discussion. And, believe me, this is something that
Senator Alexander and I think all members of this committee
take very seriously, which is how we're going to do a higher
education bill next year--simplification, looking at need-based
programs, debt loads of students. This is all something we have
to address in that Higher Education Act bill next year. You've
been very helpful in prodding our thinking on it. So thank you
very much.
The committee will stand adjourned. We'll leave the record
open for 10 days, until April 30th, for any other statements or
comments or questions. The hearing will be adjourned. Thank you
all very much.
[Additional material follows.]
ADDITIONAL MATERIAL
Response to Question of Senator Bennet by Sara Goldrick-Rab
and Vivica Brooks
sara goldrick-rab
Question. What kind of information is most useful to students when
making decisions about whether to attend a particular school? I have
received letters from students that feel they did not have the
information they needed when they made the decision to attend certain
programs. Do you have examples of States, institutions or particular
programs that have successfully given students the range of information
they need to make informed decisions about their education?
Answer. Unfortunately, there is little research evidence on
effective practices in this area--whether to attend a particular
school. Most efforts are aimed at helping students decide to apply to
college at all, how to finance it, and sometimes where to apply. Fewer
programs focus on the choice to attend a given school, after applying
and being accepted. In addition, while there are many programs that
provide information to prospective college students, very few have been
evaluated for evidence of ``success.'' Given those caveats, here is
some evidence that might be useful:
1. Concern about the match between a student's academic
qualifications and his/her college choice is rising due to recent
evidence from several studies indicating that sizable fractions of
high-achieving low-income students aren't applying to or attending
selective colleges and universities.\1\ The most promising evidence for
a program aimed at improving college match comes from the Expanding
College Opportunities Comprehensive Intervention developed by Caroline
Hoxby and Sarah Turner as part of an IES-funded experimental study.\2\
The ECO is low-cost and administered through mailing a packet of
information including application strategies, fee waivers, information
about net costs and graduation rates, and a personalized letter of
introduction. The results indicate that this causes students to apply
to and enroll in colleges and universities with higher graduation
rates, greater instructional resources, and curriculum that is more
geared toward students with very strong preparation like their own. The
College Board is currently working to implement this approach
nationwide.
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\1\ See in particular: Bowen, William G., Matthew M. Chingos, and
Michael S. McPherson. 2009. Crossing the Finish Line: Completing
College at America's Public Universities. Princeton, NJ: Princeton
University Press; Hoxby, Caroline and Avery, Christopher. 2013. ``The
Missing `One-Offs': The Hidden Supply of High-Achieving, Low Income
Students.'' Brookings Institution, Washington, DC; Roderick, Melissa,
Jenny Nagaoka, Vanessa Coca, and Eliza Moeller. 2008. From High School
to the Future: Potholes on the Road to College. Chicago: Consortium on
Chicago School Research.
\2\ Hoxby, Caroline and Sarah Turner. 2013. Expanding College
Opportunities for High-Achieving, Low Income Students. Stanford
University. http://siepr.stanford.edu/?q=/system/files/shared/pubs/
papers/12-014paper.pdf.
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2. Another approach to providing information to high-achieving,
low-income students involves college coaching. In a study in Boston,
Christopher Avery and his colleagues provided 10 hours of
individualized college advising from an experienced counselor normally
employed in full-time college counseling at a high school with a
critical mass of high achievers. The estimated impacts on college
application and enrollment behaviors were quite small and the costs
were substantial.\3\ However, there are many other studies of college
coaching underway, and some, especially those focused on coaching that
occurs the summer prior to college, are promising.\4\
---------------------------------------------------------------------------
\3\ Avery, Christopher. 2010. ``The Effects of College Counseling
on High-achieving, Low-income Students,'' NBER Working Paper 16359.
\4\ Castleman, Benjamin and Lindsay Page. 2012. ``The Forgotten
Summer: Does the Offer of College Counseling the Summer After High
School Mitigate Attrition Among College-Intending Low-Income High
School Graduates?'' Harvard Graduate School of Education manuscript.
http://scholar.harvard.edu/files/bencastleman/files/
castleman_page_schooley_-_tfs_-_
011713.pdf.
---------------------------------------------------------------------------
3. Providing students and families with information about
institutional graduation rates has not yet been shown to affect college
decisions. One experimental study in this area estimated impacts on
families' hypothetical choices but the authors did not observe actual
decisionmaking.\5\
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\5\ Schneider, Mark, and Eric Bettinger. 2011. Filling in the
Blanks. American Enterprise Institute. http://www.aei.org/papers/
education/k-12/filling-in-the-blanks/.
---------------------------------------------------------------------------
4. Sharing information about the financial aid application (FAFSA)
was shown to be far less useful for decisionmaking when compared to
filling out and filing the form on behalf of families.\6\
---------------------------------------------------------------------------
\6\ Bettinger, Eric, Bridget Long, Phillip Oreopoulos, and Lisa
Sanbonmatsu. 2009. ``The Role of Information and Simplification in
College Decisions: Results from the FAFSA Experiment.'' Unpublished
manuscript.
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5. Finally, I also recommend this What Works Clearinghouse practice
guide on what high schools can do to help students make better college
choices. \7\
---------------------------------------------------------------------------
\7\ http://ies.ed.gov/ncee/wwc/PracticeGuide.aspx?sid=11.
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vivica brooks
Question. What kind of information is most useful to students when
making decisions about whether to attend a particular school? I have
received letters from students that feel they did not have the
information they needed when they made the decision to attend certain
programs. Do you have examples of States, institutions or particular
programs that have successfully given students the range of information
they need to make informed decisions about their education?
Answer. Greetings Senator Bennet, thank you for the question. From
my personal experience (prior to selecting Bowie State University as my
school of choice) I conducted an extensive amount of research of
several different institutions and programs such as, the University of
MD, College Park and Federal Student Aid opportunities. When narrowing
my choices I found that first, the accessibility of the information
(meaning it was simplest to find) was the most useful information; the
tuition costs and financial aid options such as payment plans and
school-based funding (i.e. work study, residential assistant programs).
This information helped me to analyze my finances and make solid
decisions based on what I could afford.
If there was more information made available about programming that
assists with the acquisition of books and/or room and board I would
have made further considerations about the school's affordability. I'd
also like to note that while there are several programs offered to
students, the fine print associated with the program is not always
easiest to understand. For example, in my personal experience with
subsidized loans, it provided me with financial assistance for 3
consecutive school years, however, I've reached my loan limit; a limit
that I wasn't even aware existed. Had the information been made clearer
to me prior to acceptance of the loans, I would have made some
alternative decisions as to how many loans I'd accept. While this may
be a negative, the positive is that I have now researched additional
programming and understand both the benefits and the terms/conditions.
For instance, I am a recipient of MD State Financial Aid; the program
has made accessing information and understanding my responsibilities as
a recipient very clear. Also, the program contacts me directly with
updates on the status of my aid, and also offers assistance for any
question(s) I may have. This program is an example of a successful
means of helping a student who needs to make informed decisions about
selecting aid and when selecting schools for consideration.
Thank you for the opportunity to answer your question. If you have
any more questions, I'd be happy to answer them.
Best Regards,
Vivica Brooks,
Bowie State University, Senior.
[Whereupon, at 11:48 a.m., the hearing was adjourned.]