[Senate Hearing 114-530]
[From the U.S. Government Publishing Office]
S. Hrg. 114-530
A REVIEW OF THE DEPARTMENT OF EDUCATION AND STUDENT ACHIEVEMENT
=======================================================================
HEARING
before the
COMMITTEE ON
HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS
UNITED STATES SENATE
ONE HUNDRED FOURTEENTH CONGRESS
FIRST SESSION
__________
SEPTEMBER 30, 2015
__________
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Washington, DC 20402-0001
COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS
RON JOHNSON, Wisconsin Chairman
JOHN McCAIN, Arizona THOMAS R. CARPER, Delaware
ROB PORTMAN, Ohio CLAIRE McCASKILL, Missouri
RAND PAUL, Kentucky JON TESTER, Montana
JAMES LANKFORD, Oklahoma TAMMY BALDWIN, Wisconsin
MICHAEL B. ENZI, Wyoming HEIDI HEITKAMP, North Dakota
KELLY AYOTTE, New Hampshire CORY A. BOOKER, New Jersey
JONI ERNST, Iowa GARY C. PETERS, Michigan
BEN SASSE, Nebraska
Keith B. Ashdown, Staff Director
Satya P. Thallam, Chief Economist
Gabrielle A. Batkin, Minority Staff Director
John P. Kilvington, Minority Deputy Staff Director
Deirdre G. Armstrong, Minority Professional Staff Member
Michael Santora, Legislative Assistant, Office of Senator Carper
Laura W. Kilbride, Chief Clerk
Lauren M. Corcoran, Hearing Clerk
C O N T E N T S
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Opening statements:
Page
Senator Johnson.............................................. 1
Senator Carper............................................... 3
Senator Ernst................................................ 17
Senator McCaskill............................................ 19
Senator Lankford............................................. 23
Senator Ayotte............................................... 26
Prepared statements:
Senator Johnson.............................................. 49
Senator Carper............................................... 51
WITNESS
Wednesday, September 30, 2015
Richard K. Vedder, Ph.D., Director, Center for College
Affordability and Productivity................................. 6
Kevin Carey, Director, Education Policy Program, New America..... 8
Hon. Theodore R. Mitchell, Under Secretary, U.S. Department of
Education...................................................... 31
Alphabetical List of Witnesses
Carey, Kevin:
Testimony.................................................... 8
Prepared statement........................................... 65
Mitchell, Hon. Theodore R.:
Testimony.................................................... 31
Prepared statement........................................... 70
Vedder, Richard K.:
Testimony.................................................... 6
Prepared statement........................................... 53
APPENDIX
Responses to post-hearing questions submitted for the Record:
Dr. Vedder................................................... 79
Mr. Carey.................................................... 80
Hon. Mitchell................................................ 81
A REVIEW OF THE DEPARTMENT OF EDUCATION AND STUDENT ACHIEVEMENT
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WEDNESDAY, SEPTEMBER 30, 2015
U.S. Senate,
Committee on Homeland Security
and Governmental Affairs,
Washington, DC.
The Committee met, pursuant to notice, at 9:35 a.m., in
room SD-342, Dirksen Senate Office Building, Hon. Ron Johnson,
Chairman of the Committee, presiding.
Present: Senators Johnson, Lankford, Ayotte, Ernst, Sasse,
Carper, McCaskill, and Peters.
OPENING STATEMENT OF CHAIRMAN JOHNSON
Chairman Johnson. Good morning. This hearing is called to
order. I want to thank the witnesses for appearing today and
taking the time to come here as well as for taking the time to
prepare some very thoughtful testimony.
The concept of this hearing really is the first in a series
of what I would like this Committee to do, which is basically
take a look at all the departments of the government, very
similar to the way a business looks at the different divisions
or departments, and kind of basically do a budget review
process, laying out this is how much this department has spent
since its inception, or we will figure out a particular
timeframe; what are the stated goals of the department or
agency; what are the metrics that prove whether those goals
have been met; and then, finally, what are some of the intended
or unintended consequences of department actions. So we are
going to try and attempt to do that today for the Department of
Education (ED).
I will say that over the last couple of weeks, as we
prepared for this hearing, it was frustrating trying to get the
information. For example, I kept asking my staff, because I saw
a graph that showed student loan debt at about $95 billion
about 20 years ago, growing to about $1.3 trillion, but the
only graph we could come up with reliable information only had
about 10 years' worth of data from about some $300 billion up
to about 1.15. And we did find out from the Federal Reserve
Bank (FRB) of New York that they get the data, but they get it
from the Department of Education. They do not view it as
reliable information. It is frustrating to actually get uniform
information on some of the questions I was asking.
Just to kind of run through the basic facts, since 1980,
when the Department was established, it spent about $1.5
trillion of taxpayer money. Divided by 35 years, that is an
average of about $43 billion per year. In fiscal year (FY)
2015, the appropriated amount of money was about $87 billion. I
think the question that this Committee is asking and that I
think taxpayers need to ask, the American taxpayers, is: Are we
getting our money's worth out of it?
The metrics we ought to be looking at is what has happened
since 1980 in terms of test scores. Have we improved the
performance in K-12 and postsecondary education? We will take a
look at those. If there has been improvements, it has been
pretty negligible.
The other important metric is how good are we at through
our education system matching educational outcomes to the
requirements of employers and really to societal needs. Are we
doing a good job preparing our children for the job market and
for other societal functions? Evidence proves that there is an
awful lot of problems in terms of that.
I was really involved in Oshkosh, before I became a U.S.
Senator, not only as a manufacturer but volunteering in the
education system in Oshkosh. One of the things we did within
the Catholic school system was initiate a program we called the
``Academic Excellence Initiative.'' And the tag line of it was:
``How do you teach more? How do you teach better? How do you
teach easier?'' So more, better, easier. Basically educational
productivity.
I remember at the time--quite a few years ago--I typed into
my Yahoo! search ``educational productivity,'' and I got zero
results. I do not think I misspelled it. But it is a concept
that is--certainly productivity--it is table stakes in terms of
the private sector and business. You have to improve
productivity if you are going to succeed in education. It is
really not something that people think about a whole lot,
unfortunately, and that is part of the problem.
I was part of the focus group for the Oshkosh area school
district, and they were going through their budget, and I was,
kind of the skunk in the room as they were talking about how it
costs about $10,000 per student, and they were just coming
under all kinds of pressure, which I understand. It is not an
easy task. But I just asked the question, ``Well, if you give
me $10,000 and give me 20 students, that is $200,000. I think
as a business guy I could do a pretty good job of educating 20
kids for two hundred grand.''
Now, that is only $10,000. I think the national average for
K-12 is higher than that. We see some jurisdictions--Baltimore,
Washington, D.C., I think it is closer to $25,000. So $25,000
times 20 students, that is half a million dollars. Are we
getting our money's worth?
Now, that is not all, Federal money. Most of that is State
and local. I think those are the kind of questions we have to
ask, those common-sense--this is what we are spending. What
kind of output are we getting?
College, by the way--and, again, it depends on what you are
looking at. For ease of math, let us take $20,000 per year,
cost of college, times 20 students. That is $400,000. Again,
give me 20 kids, $400,000, I think I can give them a first-
class education.
So that is a key question we have to ask: Are we getting
the bang for the buck? We are spending an enormous amount on
education, and I am not convinced that we are getting the
proper results.
One question I have, as I started looking into this, is,
the cost of college has exploded. Depending on what numbers you
look at, somewhere since the mid-1960s to 1970s, the cost of
college has increased somewhere between 2.5 and 2.8 times the
rate of inflation. Now, think of that. What is different about
what colleges and universities spend their money on that their
costs--tuition, room, board--would increase 2.5 to 2.8 times
the rate of inflation? That is a legitimate question to ask.
Then my final question is: Student debt has exploded in
this country. Again, I started out, about $95 billion, $100
billion 20 years ago, now about $1.3 trillion in total. About 7
percent of our national debt. Now, is that a good thing, $1.3
trillion? And why is that? How is that related to the explosion
in the cost of college.
We have some pretty good witnesses here that will address
that, and the second panel with the representative from the
Department of Education. Hopefully we can get some answers to
those questions, or at least point us in the direction for
where we need to ask additional questions and get some
additional data.
With that, I will turn it over to our Ranking Member,
Senator Carper.
OPENING STATEMENT OF SENATOR CARPER
Senator Carper. Thanks, Mr. Chairman.
To our witnesses, welcome. For those of you who came all
the way from Athens, Ohio, a special warm welcome. That comes
from a Buckeye, an Ohio State guy. Happy to see you, Dr.
Vedder. George Voinovich, one of our former colleagues, former
Governor of Ohio, spends a fair amount of his time there. I
think he was an undergraduate and went to law school at Ohio
State. But he is one of our favorites here. We miss him every
day. But it is great to see you. We welcome you warmly.
Mr. Carey, I do not think we have met before, but we are
happy you are here and very much look forward to your
testimony, as well as that on our second panel of Ted Mitchell,
Under Secretary of the U.S. Department of Education.
As it turns out, these are issues that I am hugely
interested in. I said to our Chairman, we have a working group
working on international tax reform in the Finance Committee
that I am a part of, and we are meeting literally at the same
time. And I want to be here, and I want to be there. We have
not figured out how to do cloning yet, and when we do, I will
be able to be in two places at once. But I will be in and out,
and it is not because I am not interested, but it is trying to
do--and we are all busy, so it is trying to do that.
Let me just say that the role of government is diverse. We
are responsible for any number of things--homeland security,
defense around the world--any number of things--the environment
and so forth.
One of the things that we are responsible for is creating a
nurturing environment for job creation and job preservation. A
nurturing environment for job creation and job preservation.
I was born in West Virginia. My grandfathers made their
living off the strength of their backs. My sister and I and our
siblings make a living more out of the strengths of our minds.
We do manual labor sometimes, but not like my grandfather, my
grandparents did. And it is important that we have strong minds
and that we start early on.
I like to focus on what works and do more of that. I was
privileged to be Governor of Delaware for 8 years and Chairman
of the National Governors Association (NGA). I also chaired
something in the NGA called the ``Center for Best Practices,''
and what we focused on was find out what works and do more of
that. And among the things we found out what works in raising
student achievement is making sure that parents understand and
are prepared to be parents and to be a partner with their sons'
and daughters' teachers and educators. We focused on early
childhood development, very early childhood, 2, 3, 4, 5 years
of age, fully funded Head Start. George Voinovich and I were
the first Governors to fully fund Head Start in our States
using State money to supplement the Federal money, which was
inadequate.
Another key is having teachers who are good at what they
do, know their subjects, love kids, love to teach, and that is
critically important, and the way we train them and prepare
them to work in any wide range of classrooms and schools and
different kind of demographics.
Another key is enlightened, capable school leadership. You
show me a school that has a lousy principal, and I will show
you a school that is not going to do too well. Show me a school
that has a great principal, and I will show you a school that
is on the way up. And the same is true of other school leaders
within school districts.
I think another key is having rigorous academic standards,
what we expect kids to know and be able to do. And we are not
smart enough--as smart as my colleagues and I are, we are not
smart enough to figure out what kids ought to know and be able
to do. But in our State, we just reached out to the private
sector and we reached out to colleges and universities and
said, ``What should kids know and be able to do in math and
science and English and social studies? '' And we urged and
encouraged our schools to align the curriculum with the
academic subjects and then measure progress from time to time.
I believe extra learning time is critically important.
Senator Lankford over here, from Oklahoma, Senator Lankford may
be able to learn faster than I am. I can still learn. I just
might need more time. So what we do is in my State we try to
provide extra learning time for those of us who need that extra
time.
There is any number of ways to raise student achievement,
and those are some of them.
I just want to say on the postsecondary side there is a lot
we could talk about there. It has changed a lot. When I was a
naval flight officer (NFO), my squadron's home station was near
Menlo Park, California, Moffett Field Naval Air Station, when
we were not overseas. And I think the tuition at the University
of California colleges was free. It was essentially free in the
late 1960s, early 1970s. That has changed enormously. Our
youngest boy grew up in public schools in Delaware, but he went
to William and Mary, a public school in Virginia, and we paid--
I do not know--$45,000 a year to help send him there. The State
support dried up in Virginia and States across the country. And
one of the reasons why the Feds have stepped in to help a
little bit is because the States have really drawn back.
The other thing, I think we are starting to witness a sea
change in the way we teach postsecondary, and a lot of that
involves the Internet and distance learning. Some of it is done
very well; some of it is not done well at all. And what we have
to do is we go through this period of time to figure out what
works and do more of that.
The last thing I will say is this: I spent 23 years of my
life, 5 on active duty in a hot war in Southeast Asia, another
18 right up to the end of the cold war as a naval flight
officer. And my dad, my parents, my grandparents, they were
like World War II vets and Korean War veterans and so forth. In
1952, we found that the GI bill was being squandered in some
cases with money that went to enroll people in for-profit
colleges or postsecondary training. We created a law that was
called ``85-15,'' and the law that at least 15 percent of those
enrolled under the GI bill at for-profit schools had to be non-
veterans. If the school could not attract at least 15 percent
of their students from non-veteran sources, they were not going
to get the GI bill students.
We changed that in 1992, and we changed it from enrollees
to the standard of revenue, so that at least 15 percent of a
school's revenues had to be from non-Federal sources. But it
was only Title IV stuff. Only Title IV stuff. And now what
happens is we have
for-profit colleges and universities where 100 percent of the
revenues--100 percent of the revenues--are coming from the
Federal Government. That is not a good situation. It is
something that we need to change, and my hope is that we will.
I could go a lot longer, but my time has expired, and I
thank you for your patience. Thanks and welcome again.
Chairman Johnson. Thank you, Senator Carper.
It is the tradition of this Committee to swear in
witnesses, so if you would both rise and raise your right hand?
Do you swear the testimony you will give before this Committee
will be the truth, the whole truth, and nothing but the truth,
so help you, God?
Dr. Vedder. Yes.
Mr. Carey. Yes.
Chairman Johnson. Please be seated.
Our first witness is Dr. Richard Vedder. Dr. Vedder is the
Edwin and Ruth Kennedy Distinguished Professor of Economics at
Ohio University, an adjunct scholar at the American Enterprise
Institute, and Director of the Center for College Affordability
and Productivity. I like that word. He has written several
books and over 200 articles on economics and public policy. Dr.
Vedder.
TESTIMONY OF RICHARD K. VEDDER, PH.D.,\1\ DIRECTOR, CENTER FOR
COLLEGE AFFORDABILITY AND PRODUCTIVITY
Dr. Vedder. Thank you, Chairman Johnson and Members of the
Committee. My oral remarks, by the way, today are extended in a
statement that I submitted for the record.
---------------------------------------------------------------------------
\1\ The prepared statement of Dr. Vedder appears in the Appendix on
page 53.
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In assessing the impact of the Department of Education on
universities, I think some historical perspective is in order.
Looking at higher education from 1950 to 1980, before we had a
higher education department, enrollment quintupled, going from
2.4 million to 12 million. Whereas, in 1950, barely 6 percent
of Americans over 25 had at least 4 years of college, by 1980
that proportion had nearly tripled to 17 percent.
College ceased to be mainly for the elite well before we
had a Department of Education or massive Federal student loan
and grant programs. Indeed, the rise in the proportion of adult
college graduates is by some measures even less today in the
era of the Department of Education than in the preceding
period.
Or look at research. From 1972 to 1979, right before the
Education Department was created, 40 percent of the Nobel
Prizes awarded were to Americans or persons associated with
American universities. Americans dominated the world of
research long before the Department of Education existed.
So what are the unique strengths of American higher
education? The 50 States have pursued different approaches to
educational excellence, and the diversity of choices has made
American universities I think more creative and competitive.
California, for example, pioneered an extraordinarily
comprehensive three-tiered system, the elite research-oriented
University of California that Senator Carper talked about just
a minute ago, an affordable State university system and many
junior colleges.
By contrast, New Hampshire, with lower taxes and a rich
tradition of private education, also has a high proportion of
college graduates, but with an altogether different but still
effective approach.
I think this contrasts somewhat with the blandness of much
of European higher education where centralized ministries of
education stifle diversity and intercollegiate competition. Our
Department of Education's quest for uniformity inevitably, I
think, dilutes somewhat the diversity our Federal system
provides.
While America still maintains its research dominance and
the abundance of foreign students suggests we still have a
superb international reputation, there are many disturbing
signs. Let me mention six.
First, in the 40 years prior to the Department's creation,
American tuition fees, adjusting for inflation, rose roughly
one percent a year. In the last 35 years, the rate of tuition
increase has more than doubled, to about 3 percent a year. I
think this is largely a function of a dysfunctional Federal
student financial assistance program.
Second, a smaller proportion of recent college graduates
are coming from the bottom quartile of the income distribution
now than at the time of the creation of the Department of
Education.
Third, studies by Arum and Roksa and others suggest
graduating seniors today have only slightly better critical
reading and writing skills than freshmen, but get far higher
grades than in the era before the Department of Education. I am
in my 51st year of teaching, by the way, at a university.
Literacy of college graduates is declining by some measures.
Students spend less than 30 hours a week on their studies
compared with 40 hours around 1950.
Fourth, the accreditation system overseen by the Department
is a disaster. It provides almost no useful information to
consumers, does little to eliminate poor-quality schools.
Accreditation promotes anticompetitive behavior, increases
barriers to useful innovation, and is rife with conflicts of
interest.
Fifth, some regulatory efforts of the Department are
intrusive and sometimes even violate basic American principles
of due process. The Department's Office for Civil Rights
Regulation on the college handling of sexual harassment cases,
for example, has almost certainly led to unjust Kafka-esque
treatment of some of the accused, resulting in condemnation
from persons from all over the political spectrum, from, the
Harvard law faculty, for example. The Free Application for
Federal Student Aid (FAFSA) form required for student aid is
byzantine in its complexity, keeping many low-income persons
from even seeking financial assistance.
Sixth, not only do over 40 percent of those entering
college not graduate within 6 years, nearly half of the
graduates become underemployed, taking jobs historically filled
by high school graduates, the point that Senator Johnson
alluded to in his opening remarks.
Thus, I doubt on the whole that the Department of Education
has improved the American higher education environment. In
1979, the bill creating the Department cleared the House
Education Committee on a 20-19 vote and was opposed not only by
most Republicans and seven Democrats on that Committee, but
also by the New York Times, the Washington Post, the AFL-CIO,
and leading Democratic intellectuals like Senator Daniel
Patrick Moynihan. The modern history of higher education
suggests to me that this opposition was probably largely
justified.
In conclusion, the data has been mentioned informally and
formally as a problem. One service the Department should
provide is good information to students and policymakers. Even
here it has often floundered, only recently finally issuing its
College Scorecard--which I like very much, by the way--but
which left out, some colleges--even left out colleges like
Hillsdale, Grove City, Patrick Henry, and Christendom. And we
have several other problems associated. Pell grant data, I have
challenged the Department for years to tell us what percentage
of college graduates on Pell grants graduate in 6 years, and
they have had data problems. But, in short, the overall record
in my mind is somewhat mediocre.
Thank you very much.
Chairman Johnson. Thank you, Dr. Vedder.
Our next witness is Kevin Carey. Mr. Carey directs the
Education Policy Program at the New America Foundation here in
Washington, D.C. He is a contributing writer for The Chronicle
of Higher Education and edits the annual Washington Monthly
College Guide. Mr. Carey.
TESTIMONY OF KEVIN CAREY,\1\ DIRECTOR, EDUCATION POLICY
PROGRAM, NEW AMERICA
Mr. Carey. Thank you, Chairman Johnson, Ranking Member
Carper, and Members of the Committee, on behalf of New America.
---------------------------------------------------------------------------
\1\ The prepared statement of Mr. Carey appears in the Appendix on
page 65.
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Why has college become so expensive? Unlike Dr. Vedder, I
would not put primary blame on the existence or actions of the
U.S. Department of Education. Certainly over the last 8 to 10
years, much of the expense of higher education has been driven
by disinvestment at the State level. States have reacted to the
2008 recession. They have disproportionately cut funding for
public universities, and many public universities have
increased tuition as a result.
I do acknowledge, however, that is an incomplete answer to
this question. It does not take into account increasing prices
among private colleges, and it is the case that over the long
term, colleges have increased tuition in good times, in bad
times, and more or less all times in between. And in the end, I
think they did that mostly because they wanted to and because
they were able to.
It is not a mystery why colleges would want to raise
tuition. All institutions like to have more money. The real
question is why were they able to. Why were colleges able to
increase tuition at the rate that Dr. Vedder described? And I
think we could just start with some basic math.
If we go back to 1972, which was really the founding of the
modern system of Federal financial aid, there were roughly
1,400 public 2- and 4-year colleges in the United States, and
there were about 9 million college students.
Since then, we have increased the number of public colleges
by about 11 percent and increased the number of students by 111
percent. So we have many more students competing for spots in
the same number of institutions, at the same time that we have
experienced seismic changes in the nature of the American labor
market. The blue-collar economy collapsed in many regions. So
even as population increased, more students were driven into
higher education, but we had only the same number of
institutions in order to educate them. So supply and demand,
much more demand for a service that became much more valuable,
and the same number of institutions giving them much more
pricing power in the higher education market.
A good question is: Why didn't new institutions spring up
to meet that demand? I agree with Dr. Vedder that accreditation
has a lot to do with that. To legally offer college degrees and
receive Federal financial aid, colleges must have
accreditation. The accreditation process is managed by
associations of existing colleges. Standards for accreditation
are based on how existing colleges operate--the kinds of people
they hire, the degrees they offer, the way they manage their
libraries, departments, and programs.
Accreditation defines away the possibility of radical
innovation and productivity increases in higher education.
Imagine if, back in 2007, the Apple corporation had to get
permission from a trade association of existing mobile phone
manufacturers in order to sell the iPhone. That is how higher
education works today.
Colleges are also subject to little or no market discipline
when it comes to their core mission of teaching undergraduates.
There is very little information about how much students learn
at individual colleges, and as a result, the market for higher
education is not driven by the basic value proposition of
benefits weighed against costs.
Instead, colleges compete with one another for status,
based on expensive things that have little to do with student
learning, such as intercollegiate athletics, research prowess,
Olympic-caliber gymnasiums, and luxury dormitories.
College administrators do not sit down every year and
determine how much it costs to provide students with a high-
quality education and set tuition accordingly. Instead, they
sit down every year and determine the largest tuition increase
that the private market and the political economy can bear and
then charge that much and spend the money on the things they
care about. And, increasingly, it seems the things that they
care about are themselves. The ranks of college administration
have grown over time. The ratio of administrators to students
has increased, at the same time that the percentage of classes
taught by tenured professors has declined. Many more classes
are taught by adjunct professors now, not tenured professors.
Higher education has also, uniquely among major
information-centered industries, avoided almost entirely the
disruptive pressures of information technology (IT). Today,
most colleges offer some form of hybrid or fully online
classes, and millions of students are enrolled. Yet colleges
charge the same tuition for these classes as for in-person
classes, even though online classes are much less expensive to
provide at scale.
What, if anything, can the U.S. Congress do about this?
I think many Federal lawmakers are appropriately cautious
about interfering with an industry that has long been seen as a
global leader and which has traditionally been the
responsibility of State governments and private markets.
However, I would argue there are some important things that
only the Federal Government can do. And now that the U.S.
Department of Education is the single biggest financier of
higher education, providing $165 billion a year in grants and
Federal loans, the question is really not whether there will be
a strong Federal role in higher education. There is one. The
question is whether that role will continue to be limited to
providing blank checks to organizations that are steadily
pricing the middle class out of higher education, and thus the
American dream.
The Federal Government should not tell colleges how to
teach. It can, however, expand the definition of who gets to be
a college and help consumers make better choices about which
colleges to attend.
Yet during the last reauthorization of the Higher Education
Act, in 2008, language was included at the behest of industry
lobbyists that actually prevents the U.S. Department of
Education from modernizing its information system and providing
information to students who are most likely to move among
different colleges during their careers. This shields colleges
from accountability, and I believe that provision should be
repealed.
The Federal Government should also expand its longstanding
commitment to university-based research to include more
research about universities. We spend billions of dollars to
develop cutting-edge technologies and virtually nothing to
evaluate the effectiveness of a hugely subsidized industry that
is crucial to our Nation's future economic and civic
prosperity.
Finally, we should create more room for higher education
innovation by allowing entrepreneurs to compete on a level
financial playing field with established colleges. In the long
run, the higher education cost problem cannot be solved with
price controls and public subsidies alone. We also need greater
productivity--I also like that word--through the creation of
new organizations built from the ground up with the growing
capacities of information technology in mind.
That does not mean ignoring consumer protection. Many
students have been defrauded by organizations in recent years.
But this is really not a matter of too much regulation or too
little regulation but the wrong kind of regulation. All of the
worst colleges were operating inside of the accreditation
system and taking advantage of that system's inattention to
student learning.
Instead, the Federal Government should experiment with
giving public, nonprofit, and for-profit organizations that may
look nothing like traditional colleges equal access to Federal
funds, in exchange for being held rigorously accountable for
outcomes defined not by government bureaucrats but by employers
and members of the academy.
Without such changes, colleges will continue to increase
tuition, because they want to, and because they can.
Chairman Johnson. Thank you, Mr. Carey. Let me go right to
you. You opened up talking about the reduction in State support
of public institutions, which, no doubt about it, that
contributes. Do you have a dollar figure on that in terms of
how much has been withdrawn? Because that does not affect--and
I think your testimony stated this, too. It does not affect the
tuition rise in private institutions, correct?
Mr. Carey. So there was a substantial disinvestment--I
would like to go back and give you the exact numbers. There was
an absolute decline in funding in the years after the
recession. Some States have begun to fill that gap in, but many
States have not.
Chairman Johnson. That does not explain the rise in cost of
tuition and the cost of college in private institutions.
Mr. Carey. It does not, no.
Chairman Johnson. Do you have a relative increase in
tuition and the cost of college between private and public?
Mr. Carey. They have been roughly comparable. They are
starting from different baselines, so a percentage basis and an
absolute basis, not the same. Public institutions have probably
increased their tuition more since the recession, but private
institutions were charging more to begin with.
Chairman Johnson. OK. It certainly describes the price
pressure on public institutions, but it does not at all--
something else is at play with private institutions, and,
again, you are talking about the supply and demand ratio.
Mr. Carey. Yes.
Chairman Johnson. So I think it is pretty stark. The supply
has gone up about 14 percent, and the demand has gone up 111
percent. That is going to put pricing pressure on any system.
Then your conclusion was because of the accreditation process
you have certainly limited--you have barriers to entry to
increase the supply.
Mr. Carey. Yes,
Senator Carper. Before you answer, could I just ask--we
started a vote, I believe, and we are about 11 minutes into the
vote. Do you want me to run and vote and----
Chairman Johnson. Sure.
Senator Carper. Then we will play tag team. This is how we
do it here.
Chairman Johnson. Are you familiar with the study from the
Federal Reserve Bank of New York that is really kind of
studying the increase in colleges, college costs?
Mr. Carey. Yes.
Chairman Johnson. So their conclusion, as best as I can
interpret it, is that for every dollar that the Federal
Government has poured into higher education, tuition has
increased 65 cents. You are familiar with that conclusion?
Mr. Carey. There is an active debate among academic
economists about the relationship between public--Federal
subsidies and prices. I think broadly speaking there probably
is one, but it varies quite a bit, depending on which part of
the industry and the sector we are talking about, public versus
private, for-profit versus nonprofit, elite versus non-elite.
Chairman Johnson. I will acknowledge it is complex. Let me
just throw out some numbers here for you, because I was
intrigued by that result, again, looking for why is college so
much more unaffordable. We all want access to higher education,
but if you make it unaffordable, you actually decrease access.
So I took a look at since 1970 how much money the Federal
Government has poured into higher education, and it totals
about $2.1 trillion in total. That is in grants and student
loans. If you take 65 percent of that, that is about $1.37
trillion. Now, is it a mere coincidence that the outstanding
student loan debt is about $1.3 trillion? I am asking--and,
again, I am an accountant. I am taking a look at these things.
It seems like possibly the Federal Government poured $2.1
trillion into higher education. Those institutions obviously
sucked that money up, again, felt pretty unrestrained in terms
of tuition increases and who is left holding the bag is our
young people with $1.3 trillion of student loans.
Mr. Carey. During that time there has been a substantial
increase in the number of people going to and graduating from
college, and so part of that money I think was spent providing
that access and giving primarily lower-income people access to
higher education who would not have had it otherwise----
Chairman Johnson. Which, of course, we all agree with that
goal. But, Dr. Vedder, you were talking about since the
Department of Education the percentage of lower-income
individuals actually going into college or getting degrees has
actually leveled off or declined slightly.
Dr. Vedder. That is correct, as I read the evidence. And
that goes back, by the way, to about 1970 or 1972 when Mr.
Carey was talking about. And the numbers that come to mind is,
I think, roughly 12 percent of recent graduates in 1970 or even
1980 were from the bottom quartile of the income distribution.
Now it is about 10 percent.
So my take on that, since you are interested in this,
Senator, is that the rise in tuition fees and everything that
has accompanied the student loan phenomenon and Pell grants, et
cetera, has pushed sticker prices up so much, it has caused
low-income people disproportionately to just say, ``College is
too expensive for me.'' Now, that may be wrong. It may be
incorrect.
And then we also say, ``Oh, by the way, you want to go? You
got to fill out this 120-question questionnaire that is worse
than the income tax form to fill out.'' That scares away low-
income people disproportionately to upper-income people who can
figure out a way to get around that or have their accountant
fill out the form.
So I think the great goal of these programs from day one--
Senator Pell and all of them--let us provide greater access.
And, there are many other--Kevin will point out there are many
other things going on at the same time. The income
distributions are changing, everything else is going on. But I
cannot see how these programs can be viewed as a success in
providing access. I just simply do not see it.
Chairman Johnson. Let me state we all share the same goal.
Education has value, and we all want every American to have the
opportunity to access education so they have the tools to lead
a successful and productive life. That is a goal. We have to
really take a look at how much money the Federal Government has
expended, what type of mandates, what type of control do they
put over the system, when prior to the Department of Education,
according to Dr. Vedder's testimony, things certainly were not
worse; if anything, potentially a little bit better; and we had
a State-run system that was actually working pretty well.
I would kind of like you to address just that basic premise
from Dr. Vedder's testimony, Mr. Carey.
Mr. Carey. Well, the----
Chairman Johnson. In other words, do you think there has
been a marked improvement in terms of higher education based
on--since the Department was stood up?
Mr. Carey. Dr. Vedder cited some, I think, correct and very
worrisome statistics about the amount that students are
learning in higher education. There are international
comparisons that are, frankly, just as grim. I think that we
have succeeded as a Nation both at the State--because of a
combination of both State and Federal programs providing more
access to higher education for people who could not afford to
have it otherwise. It is why we have one of the highest
percentages of people with a bachelor's degree in the world,
although other countries have been catching up with us. So in
that sense, I think the programs have been a success.
What we have not done is design programs that provide
incentives for institutions to restrain their tuition and to
focus on student learning at the same time.
Chairman Johnson. The marketplace provides those types of
restraints. I am not sure government control has ever proved
successful at restraining prices.
I do want to talk about what I think is quite troubling.
There was a Northeastern University study a couple of years ago
that came out and said that of recent college graduates, close
to 50 percent are either unemployed or underemployed--in other
words, with a job that required little or no college education
whatsoever. The Federal Reserve Bank of New York just came out
with a similar study saying about 44 percent. Dr. Vedder, you
were talking about that in your testimony.
Dr. Vedder. I have done one of those studies too. If you
want one, I will give you another one.
Chairman Johnson. So your conclusion is, and why?
Dr. Vedder. Well, there are different sources of data, and
there are different--what is the skill requirements for a given
job? There are honest differences of opinion, and I think
legitimate in some cases, about what is required. But there is
no question we have credential inflation in the United States.
We now have baristas who have college degrees; 15 to 20 percent
of taxi drivers now have college degrees; in 1970, less than 1
percent. We have 115,000 janitors with bachelor's degrees in
2010, according to the census data. So we have huge increases
in people. You can make a decent case that we are overinvested
in higher education, that we are putting too many resources
into getting people to get formalized 4-year degrees. Now, that
is not necessarily to say they should not be getting something,
some sort of training. Maybe more of them should go to welding
school. Welders make more money than anthropologists. And
maybe, you could make a case that we are misinvesting our money
or even overinvesting our money, because guidance counselors
tell everyone, ``You have to go to college.'' President Obama
tells us we want to increase the proportion with degrees. The
Lumina Foundation--that is what they are all telling us. But
what is happening to the graduates? How is it helping society?
And now a bar owner can advertise, ``I will only accept
applications from college graduates for a bar tender's job.''
You do not need a bachelor's degree to mix drinks. One in
chemistry might help for some of the more exotic drinks, I
suppose. But you do not really need a degree. So we have added
this on.
And, of course, there is another dimension to college, and
there is a socialization dimension to college. There is also a
notion that college is more than about vocational things. It is
about developing virtue and so forth. But I do not even see the
evidence there that there has been an enormous improvement,
say, in civic virtue, civility, these other things that
allegedly college graduates have.
I am in my 51st year of teaching. I am leaving here early,
and I demanded you move the hearing up to 9:30 so I can get
back to students. I am on the firing line still at age 74--and
not getting paid for it, by the way--because I think it is a
calling. It is an important calling. But I do think we have
been terribly inefficient. I agree with everything Kevin said,
virtually everything he said. All these barriers we put up to
new forms of innovation are there, all the failure to use the
Internet. Teaching is the only profession, with the possible
exception of prostitution, in which there has been absolutely
no productivity advance in the 2,400 years since Aristotle
taught Socrates, and Aristotle, too, taught the youth of
Athens. So we have not taken advantage of technology. We have
conflicts of interest--Kevin talked about this; I talked about
this--in the way we decide who can enter the field. The supply
constraints that he mentioned and that you picked up on are
partly predicated on that. That is something that although they
are technically done by a private accrediting association, the
Department has a very strong role to play in, and I think I
would agree with Mr. Carey that that is an area we ought to----
Chairman Johnson. I can certainly attest to the fact,
because I have gone all around the State of Wisconsin for the
last 4\1/2\ years and visited manufacturing sites, and I come
from a manufacturing background myself, somebody who has had a
very difficult time for the last 20, 25 years hiring people for
manufacturing. There is not one manufacturing plant I visited
in Wisconsin that can hire enough people. Not one. So there is
demand. Those are good-paying jobs as well as oftentimes those
manufacturers will pay for education so our kids do not have to
put themselves into what is on average--and, by the way, is
this a correct figure, about $29,000 on average is what
students are leaving college with?
Mr. Carey. Among those who borrow, yes.
Dr. Vedder. Yes, among those borrowing.
Chairman Johnson. I really want to hone in on this: 40 to
50 percent of recent college graduates that are either
unemployed or employed in positions that require no college
education whatsoever. How much of that is due to the fact that
the degree programs are not matching what employers are looking
for? On the one hand, if you need welders, you need
manufacturers, You are already potentially overeducating people
and causing them to go into debt. The way I always refer to it,
the fill-in-the-blank studies degrees, again, have value,
higher thinking, liberal arts, I am not denigrating that, but
in terms of the evaluation or the metric of matching outcomes
with employer and societal needs, how are we doing along those
lines? I would like to hear your thoughts on that, Mr. Carey.
Mr. Carey. Well, the skills requirements for job categories
have changed a lot over time, so, manufacturing used to be a
semi-skilled job, but now it requires a lot of advanced
training. You have to understand----
Chairman Johnson. Just hang on here.
Mr. Carey. Yes.
[Pause.]
Chairman Johnson. I am getting close to the end of the
vote. I was hoping somebody would come back to keep this thing
going, but I may have to put this in recess for a while, or a
pause. What is the proper term?
[Pause.]
A pause? OK. Let me go vote. When somebody else comes in,
they can start asking the questions. Thanks.
Mr. Carey. Thank you, Mr. Chairman.
[Recess.]
Senator Carper [Presiding.] Well, thanks for waiting. We do
this all the time, trying to keep things moving, and we
appreciate your bearing with us.
Thank you both for being here. Fifty-one years, that is
extraordinary. Extraordinary. We thank you for all of those. If
you ever see George Voinovich, give him my best.
Dr. Vedder. I see him frequently, and he is a great public
servant, and he is a great graduate of my university.
Senator Carper. There you go. But I want to start and, Dr.
Vedder, I am going to ask you a question. One of the questions
I like to ask of witnesses, I am always looking for common
ground. Always looking for common ground. And I thought you
both said a lot of things that were important, correct, and I
want to ask you, Dr. Vedder, to sort of like--not spell check
but some of the things that Mr. Carey said, especially toward
the end of his testimony, that I just want to ask you to react
to some of what he said. He said basically we write out a blank
check, and we do not ask for much in terms of results. Would
you just kind of react to that for us, please?
Dr. Vedder. Yes. I very much agreed with almost everything
that Mr. Carey said. We were not carbon copies of one another
because he picked up on other things that I did not.
Senator Carper. One of the things that I do not think you
agreed on is the role of the Federal Government funding, Pell
grants and so forth, you all do not agree that is----
Dr. Vedder. Well, I think we might have some differences
of----
Senator Carper. But where do you agree, especially with the
things----
Dr. Vedder. First of all, on the information side, that is
one area where we agree. There is a lot of things that go on in
education. We know appallingly little about what kids actually
learn during the course of their college years, and if we do
know any more, we have some generalized national information.
We do not know the difference between the learning at the
University of Delaware vis-a-vis the Iowa State University,
since Senator Ernst just walked in the room. And we do not
know. Do the kids at Iowa State learn more during the course of
their years in college than the students at the University of
Delaware? We have no--that is a fairly fundamental question. We
do not know the answer to that. And getting the answer is
difficult. It is not easy, and there is some disagreement, how
do you measure learning and so forth.
But we are in the business of grading students all the
time. We are evaluating students all the time. Why can't we get
better assessments of what the colleges are doing? And I think
Kevin and I in general are in agreement with that.
The area of accreditation, both of us hit pretty hard on
this, that we do not think--I should not speak for Mr. Carey,
but I think we would both very strongly agree that the
accreditation system, while it has a legitimate purpose for
certain, is not working as well as it should. Does it really
weed out the bad schools? No. Is there a conflict of interest
inherent in it? When the colleges themselves more or less
regulate themselves, and to get accredited, you have to do what
the other colleges do more or less, with some modification.
Senator Carper. I am going to ask you to wrap up because I
do not have a lot of time. Just finish your sentence and then I
am going to come back to Mr. Carey. Go ahead.
Dr. Vedder. Yes, the last thing I would say, along with
him, the incentive systems within the academy to be efficient
and to be productive are very, very limited.
Senator Carper. OK. Thanks for that.
Mr. Carey, if we take nothing away from your testimony
today, take nothing away but maybe two or three points,
including some of the stuff you said at the end, just hammer it
home, please.
Mr. Carey. Sure. The Federal Government I think has an
appropriate role in providing information about higher
education to consumers. It is a national market, and so really
it is the only body that can provide consistent data. In fact,
just a couple of weeks ago, the Department of Education
released earnings and loan repayment data for the very first
time about every college and university in America. Very
interesting information, some of it quite disturbing. Actually,
a number of institutions where many graduates earn no more than
high school graduates do; many institutions where very few
students are able to repay their loans on time. I think that is
an appropriate role.
Senator Carper. And when you look at it, is there an
inordinate--for those students who are unable to pay their--
graduate with a degree, or maybe without a degree, if they are
unable to pay their loans on time, in terms of like public
schools, private schools, for-profits, is there any
differentiation there that you are aware of?
Mr. Carey. Certainly the loan repayment rates are worse in
the for-profit industry.
Senator Carper. Why do you suppose that is? And it is not
just by a little bit.
Mr. Carey. Sure. There are, I think, a significant number
of for-profit colleges that, first of all, they enroll--
because, as you had said earlier, many are almost entirely
dependent on the Federal financial aid system for revenue, they
enroll students who are eligible for financial aid who are, by
definition, lower-income students. So they enroll students who
have very little money. They charge prices that are much more
expensive, often, than public institutions or even private
nonprofit institutions. And some of them--not all, but I think
a significant number--are offering degrees that
do not have a lot of value in the job market. So students just
cannot--they do not get paid enough to pay their loans back.
Senator Carper. OK. We have this law on the books that I
mentioned before--it used to be 85-15; it goes back like sixty-
some years--where scam artists, for-profit schools were taking
advantage of the GIs and the GI bill, and we established the
85-15 rule that said 15 percent of enrollees in a for-profit
school have to be not paid for by the Federal Government. And
then we upgraded that, I think 85 percent of the--15 percent of
the revenue of these for-profits had to come from non-Federal
sources. And then we made that 90-10 so that 10 percent of a
for-profit school's revenues had to come from, non-Federal
sources. But then we find out that there is a loophole that
allows the schools to take students on the GI bill, take
students that are on active duty, and that does not count
against the 90 percent. So some schools have 100 percent of
their moneys coming from Federal sources. What should we do
about that?
Mr. Carey. I believe it is a loophole. I believe some
colleges actively recruit members of the military because every
dollar of the GI bill counts in the 10 percent. So if you get
$1 in military--in GI bill money, you can go and get $9 more
from the regular Title IV system. I think it has led to abuses.
I think it contravenes the spirit of the 90-10 and previously
85-15 rule, which says that colleges ought to be able to
convince someone to pay their own money for college, and if
they do not, it says something, I think, that we ought to take
a look at. So I think it is a loophole. I think it should be
closed.
Senator Carper. Thanks so much.
I think, Senator Ernst, you are next. He asked for you to
defend Iowa State.
Mr. Carey. I am also an Ohio State graduate.
OPENING STATEMENT OF SENATOR ERNST
Senator Ernst. Well, fantastic. We could go around and
around all day, couldn't we?
Thank you, Senator Carper, very much. Gentlemen, thank you
for being here today.
First, I want to just talk a little bit about financial
literacy of those students that are going into higher
education. When I was back at Iowa State University, I had a
great friend who was receiving a Federal student loan. He had
gotten his loan check in the mail, and in our conversation, he
stated, ``Oh, I am so glad I got my check today. Now I can pay
my girlfriend's rent.'' I was confused. I did not think that is
what the Federal student loan program was for.
So, anyway, I think there are a lot of--and I do not want
to call them abuses. I just do not know that students are
adequately prepared when they get those Federal student loan
dollars. Maybe they should know that this is for books and
tuition and your own use toward higher education.
But just for both of you gentlemen, in your opinion, how
can we improve the ways that we are educating those that are
receiving these loans or those that are potential borrowers
about the risks of overborrowing, which is oftentimes what
happens, or using borrowed funds inappropriately? How can we do
better in that area? Any thoughts?
Dr. Vedder. Well, it is an information problem, and the
College Scoreboard which was recently put out is a step in the
right direction. It tells for each college the amount of
borrowing that students are doing. It says what percent have
even failed to make a single dollar payment on their loan. Some
of that provides information to students in general,
particularly in terms of selecting a college. I have often
thought--my wife is a high school guidance counselor in a low-
income area and pushed very hard for years to get more and more
kids to go to college. I think that is an admirable thing to
do. But I think sometimes we give unrealistic information to
students. We do not tell students that 40 percent of the people
that enter college do not graduate in 5, 6 years. We do not
tell them the risks. We tell them the benefits. You will earn
an extra $1 million over a lifetime, which is what it says on
the Department of Education website today, if you go on and
look at it right now. I can show it.
Senator Ernst. Wow.
Dr. Vedder. You earn $1 million more if you go to college.
``Oh, gosh, I want to earn $1 million more.'' It does not say
there is a 40-percent probability based on national evidence
you will not get through college in 6 years, not 4. It does not
even--the colleges do not tell you, ``You are not going to
graduate in four. There is a 40-percent chance you will
graduate in four, but a third of the kids who graduate take
five or six. It does not tell you that. They do not tell you
that stuff.
The colleges provide a rosy scenario, and it is the duty of
others, I think, to provide information, including the magazine
rankings. I do the rankings for Forbes magazine for colleges
and universities. I think we provide a little bit of a service
in that way.
But I think the risks associated with going to college are
understated. The benefits are overstated. And as a consequence,
we get people whose expectations are dashed at the end. They go
to school for a few years. Either they do not graduate, or they
do graduate, or they graduate and then get a job working at
Starbucks or Walmart, and they are having a heck of a time
paying back, and they are living in---Arum and Roksa in their
second book said 24 percent of recent graduates, 2 years, live
in the base--well, I am not sure they live in the basement of
their parents. They live in their parents' house. Sixty percent
are still receiving financial aid from their parents 2 years
after graduation. And that is not the way it is supposed to be.
When you go to college, you do not expect to be relying on your
parents after you graduate.
Senator Ernst. Right, and I do think that we see a lot of
that.
Mr. Carey, do you have any thoughts?
Mr. Carey. Yes, Senator Ernst. There is kind of a push and
pull between making the Federal aid system kind of bureaucratic
and rule-bound in a way that would constrain how students spend
their money and making it open enough and giving students
choices, and they might not all make the right choices. So I
think that is kind of a tradeoff we have to wrestle with.
One thing we could do, right now colleges bear none of the
risk of students defaulting on their loans, because they get
the money up front. As we found out recently, there are
hundreds of institutions where 5 or 7 years after graduation
the majority of students have, as Dr. Vedder said, paid none of
their loans back, they have either defaulted or they are only
paying interest or they are sitting out there, the colleges
have almost no risk at all. And so some people have proposed--
and I think this is a good idea--to have colleges share in some
of the downside risk of the loan program where, if their
graduates default on the loans, they would be responsible for
some percentage of that money. That might give colleges
incentives to provide better counseling to students and make
sure that they spend their money wisely, borrow enough money
but not too much money.
Senator Ernst. Certainly something to think about. I think
financial literacy, whether it is part of the orientation
process or even in high school, whether it is guidance
counselors, some way we just have to instruct those young
people that, proper use of those funds and this is for your
education. But I think we can also--whoever that ``we'' might
be, but a better understanding of also the programs that are
offered through colleges or universities and what their outcome
is with employment, hey, philosophy sounds great, but, what
kind of job are you going to get in philosophy or world history
or, civilization? I do not know.
So there needs to be a realistic expectation on the part of
those students what degree program they go into and then what
the outcome of that degree will be. Maybe even a scale of this
is what on average people in your field will make once they
have secured employment, I think that is maybe perhaps helpful
as well.
Any closing thoughts?
Mr. Carey. Well, I would just note that, only 2\1/2\ weeks
ago, the Department of Education for the very first time
published information about what the average earnings are of
students who graduated from an individual college and the 10th
percentile, 25th, 90th percentile, earnings for men, earnings
for women. So we do now have the ability by matching
information from the Federal student financial aid system with
information from the Internal Revenue Service (IRS) to provide
that kind of information to students. So we will have to see
and train guidance counselors to use that, to provide that as
students make choices.
Senator Ernst. Very good. Thank you, gentlemen. I
appreciate it.
Thank you, Mr. Chairman.
Chairman Johnson [Presiding.] Thank you, Senator Ernst.
On a side note, and this is a very unscientific study, but
my own focus group, every time I have asked a student who is in
debt, I ask them, ``Did anybody ever--high school counselor,
college counselor, financial counselor--talk about paying this
loan back? '' And it will change now, and I am saying this
publicly. To date, the answer has always been, ``No, nobody
ever talked to me about it,'' which-- again, that is the kind
of counseling we have to give.
But, anyway, Senator McCaskill?
OPENING STATEMENT OF SENATOR MCCASKILL
Senator McCaskill. Do either of you believe we should
eliminate the Department of Education?
Dr. Vedder. I think a case could be made to do that. I
think higher education in America is no better today, maybe
marginally worse than it was 34 years ago.
Senator McCaskill. OK.
Mr. Carey. I do not believe.
Senator McCaskill. OK. The vast majority of the funding in
the Department of Education goes to three programs: the Pell
grants, funding for special education needs in K-12, and grants
to local State school systems. Of those programs, should all
three of them be eliminated, Dr. Vedder, if we eliminate the
Department of----
Dr. Vedder. I did not talk about program elimination. First
of all, the hearing is on higher education. I do not favor the
elimination of Pell grants. The other two programs are not
higher----
Senator McCaskill. And where should they be administrated
if the Department of Education is gone?
Dr. Vedder. First of all, I do want to eliminate some of
the student loan programs.
Senator McCaskill. OK.
Dr. Vedder. I do. I want to be on record on that.
Senator McCaskill. All right. Less than 10 percent of the
education funding in this country comes from the Federal
Government, and a huge amount of the money that is going into
higher education, of course, or student loans, which even
though many of them are not paid back, the majority of them are
paid back. And in the process, these kids are getting a college
education. Even less of the management decisions are being made
at the Federal level. I would guess that the management
decisions in higher education are being made, what would you
estimate, 95 percent at the local level?
Dr. Vedder. Well, I do not know how you define management
decisions.
Senator McCaskill. Well, we are not deciding to raise
tuition, Dr. Vedder. The Federal Government is not.
Dr. Vedder. What do you suppose, Senator, why do you
suppose tuitions have gone up 3 percent faster than the rate of
inflation? Why do you suppose----
Senator McCaskill. Well, we have not even talked about
tenure.
Dr. Vedder [continuing]. Textbook prices are going up more
than the prices of other books?
Senator McCaskill. We have not even----
Dr. Vedder. It is the financial aid system, Senator.
Senator McCaskill. OK. So I understand that there is an
argument and there is a huge debate about whether or not, as
Mr. Carey indicated, a huge debate among accomplished
economists about what is the driving cost. I guess the point I
am trying to make is the Federal Government has such a small
role in the policies and the financing of higher education, and
if higher education is doing such a bad job, isn't that an
indictment on the State and local and for-profit institutions
as opposed to the Federal Government?
Dr. Vedder. It is an indictment on the entire system. The
Federal Government is only part of it. But I would not agree--
--
Senator McCaskill. A small part of it.
Dr. Vedder. I would not agree with your characterization.
$180 billion, $160 billion is sloshing around in student loans
every year, and Pell grants, et cetera. That is not a minor
part of a $400, $500 billion industry. Admittedly, it is loans.
And you say, well, we do not count that because those are going
to be paid back someday. But it has a disproportionate impact
on what goes on.
When the Department of Education tells colleges and
universities what standards they will use on Judiciary hearings
on sexual assault, for example, that is an interference by the
Federal Government on local decisions.
Perhaps you understated the role that the Federal
Government plays----
Senator McCaskill. Let us talk about sexual assault. My
office did the first----
Dr. Vedder. I am against it, by the way.
Senator McCaskill. We all are. And it probably is not
humorous. For the first time in decades, we did a statistically
valid survey of colleges and universities in this country last
year. If you have not had a chance to read it, I would
recommend it to you. I would certainly recommend that you look
at the underlying methodology because I think you will be
impressed that the underlying methodology was--I made sure it
was bulletproof, as a former auditor. Understand now that any
complaint of sexual assault on a college campus is supposed to
be investigated. Forty percent of the higher education
institutions in this country said on that survey that they had
not done a single investigation in sexual assault in 5 years.
Do you believe, Dr. Vedder, that that is an accurate
reflection of whether or not there was any sexual assault going
on on those campuses?
Dr. Vedder. I suspect there is a shameful lack of
reporting. I suspect you are absolutely----
Senator McCaskill. Or a shameful lack of acknowledgment by
the universities that they have a problem.
Dr. Vedder. Universities like to hide problems. They like
to hide bad publicity, and this is an area which is
particularly true. I am sure you are correct.
Senator McCaskill. And one in five admitted that their
athletic departments had a role in adjudicating these cases
against their athletes.
Dr. Vedder. I believe that, and I think there is a scandal
in intercollegiate athletics, too.
Senator McCaskill. So my question is: Do you believe that
Title IX was good in terms of equality for women in terms of
sporting opportunities? That Federal law, do you believe that--
--
Dr. Vedder. I think it is probably a good thing. I have no
problem with it.
Senator McCaskill. That that was a good Federal role?
Dr. Vedder. Yes, sure.
Senator McCaskill. OK. But you do not believe that there
should be a Federal role in giving young women an opportunity
or young men an opportunity to tell the university when there
is an environment on their campus that is unsafe?
Dr. Vedder. I raised in my testimony, which you were
probably voting at the time, or whatever----
Senator McCaskill. I read your testimony.
Dr. Vedder. We use standards in sexual assault cases--and
this is not my area--I am an economist. This is not my area of
expertise. But we use preponderance of evidence standards,
which 28 members of the Harvard Law School, who are not
particularly known as being hidebound conservatives, said it
was inappropriate to be used, and----
Senator McCaskill. By the way, I am a conservative on this
topic because I believe that preponderance of the evidence is
completely appropriate when the only punishment they can
possibly get is leaving the campus. We are not talking about
depriving somebody of their liberty. We are not talking about
incarcerating them. We are not talking about them having to
register as a sex offender. We are not talking about them
having something hang over their head for the rest of their
lives in terms of being charged with a crime. We are talking
about most of the time they are getting book reports or being
suspended for 3 weeks. The worst that could happen under Title
IX is that they have to leave the campus. Now, do you not
believe that under those circumstances the safety of the
campus, if it is a preponderance of the evidence, that is
not--I think this is a conservative position, not a liberal
position. I think the liberal position is let us make sure that
we give every benefit of the doubt to people who have been
accused of raping women on campus?
Dr. Vedder. I think that cases of this kind should be
referred to the courts in the judiciary, to the prosecutor's
office, and that crimes of sexual assault are crimes, and
crimes should be handled by police. And I do think that often
campuses hide this. I think it is shameful. I agree with you,
Senator, on that.
Senator McCaskill. Well, perhaps----
Dr. Vedder. There are a lot of things going on in campuses
that are shameful. The interesting issue, though, is how should
these things--should they be settled from D.C. or should they
be settled at the State level? And I think that there are
honest differences of opinion.
Senator McCaskill. I think there are honest differences of
opinion, and I know I am out of time, but I will close. Mr.
Carey, one of the things our legislation will do that some of
us are cosponsors of the legislation--Senator Ayotte is one of
the cosponsors--is it would provide a climate survey that would
allow an apples-to-apples comparison of how students feel about
how safe they are on these campuses, which goes to your point
about consumer education. Right now, the Clery statistics,
nobody has any idea what they are. They do not know how to get
to them. They are not being done in a way that even allows a
comparison campus to campus. And I think unfortunately right
now too many parents are looking and seeing schools that do not
have any investigations, thinking, oh, that must be a safe
place, when in reality it is just the opposite.
So I am assuming the climate surveys that would allow
something like the Scorecard in terms of earning capability and
graduation rates would be something that you think would be an
appropriate Federal role?
Mr. Carey. I do, yes.
Senator McCaskill. Thank you.
Thank you, Mr. Chairman.
Chairman Johnson. Thank you, Senator McCaskill. I think
that information gathering and publication process is something
we can all agree on. I really do. Senator Lankford.
OPENING STATEMENT OF SENATOR LANKFORD
Senator Lankford. Thank you for the conversation. Let me
switch over to the accreditation conversation that had started
earlier as well, and I want to give you a chance to spend some
additional time on that.
Accreditation is one of those key areas where basically
other campuses that--or other schools limit the innovation of
other campuses, and my concern is: How do we actually encourage
more innovation rather than limit innovation? What are
recommendations and ideas that you have? And what role can we
have in the accreditation process?
I am one of those folks that believes we have the greatest
educational system for higher education in the world. The envy
of the world still is here, and one of the worst things that we
can do is to get increased Federal involvement to something
that is going well. But when there are clear areas that are not
going well, like limiting innovation, we need to find a way to
be able to engage in that.
So, Mr. Carey, you started this conversation. Dr. Vedder,
you also engaged in this as well. What are ways that we can
actually improve the accreditation process to make sure that we
encourage innovation rather than stifle it?
Mr. Carey. I would recommend experimenting in a controlled
fashion with alternatives to traditional accreditation that
would allow either for-profit or nonprofit organizations that
want to take an innovative approach to higher education, that
may not be whole colleges and whole degree programs, and give
them a shot, as long as they are willing to be held accountable
for outcomes, which, frankly, the current accreditation system
does not have.
For example, like right now, Massachusetts Institute of
Technology (MIT) and Harvard have created a nonprofit
organization called ``edX'' that offers free online classes
that are taught by MIT and Harvard professors. You can
basically take the entire MIT freshman curriculum, extremely
high quality classes online, same classes, same exams--I have
taken one of these classes---take the tests, get a certificate
from them. But what you cannot do is then use that for college
credit because the nonprofit consortium is not an accredited
college. I think that is crazy. You can get college credit and
pay a lot of money and give your Pell grant to the sketchiest,
worst college, for-profit or nonprofit--and there are both in
this country--but you cannot go and get credit for a Harvard or
an MIT class that is taught by the greatest professors in the
world. That is an accreditation problem, and it is because the
accreditation system does not know what to do with the
nonprofit----
Senator Lankford. Right. So I am back to the same issue. We
see rising costs in higher education. We see these innovative
models that are out there that can dramatically drop the cost
line. And one of the biggest issues we have is an increased
number of individuals wanting to get into college, which is
good, but then increasing costs for every one of those, and
they can get away with it because everyone is pushing these
students toward college. Good to do that, but we cannot get the
innovation. Typically when you have rising costs, you have--
competition floods into the market, and you have innovation
that occurs, and there are other models. To say if you want to
spend $100,000 to go to college, there is a place to do that.
But if you do not want to do that, there is also a way to be
able to get it done for $10,000. Right now I believe that the
accreditation models are stifling that.
So my question is: How do we fix it? I know it is there.
What are the ideas on how to actually fix that?
Mr. Carey. Because accreditation matters most in the way
that it grants eligibility to the Federal financial aid
system--that is far and away the most important thing about
it--I think we should experiment with other ways to access the
Federal financial aid system that are, again, rooted in
evidence of student learning and not rooted in you are like all
the colleges that came before you.
Senator Lankford. Dr. Vedder.
Dr. Vedder. I would agree 100 percent with Mr. Carey on
that. Colleges, you have to remember, are packaging devices.
You get a piece of paper at the end after you have taken 45
courses, or whatever the number is for a bachelor's degree, and
in a sense colleges have a monopoly on providing education
while the person is at the university, pretty much. They can
transfer in and out a little bit of credit. Even there, there
are some obstacles.
So coming up with allowing an individual provider of
courses as opposed to degrees, to get those courses in effect
accredited in some fashion, given--be anointed as being OK to
get Federal aid for would be a huge step forward. The massive
open online courses (MOOCs), the so-called massively open
online courses, what everyone said would be a great success,
have been sort of in some people's minds a bit of a
disappointment, not because they are a bad idea or the quality
is bad, but because the obstacles of turning learning, real
learning into something that can be certificated and proven as
learning is very difficult.
In that area in particular, I think there is, room for--why
don't we accredit courses rather than universities? Why doesn't
a person that has 45 courses from 20 different universities be
able to get a degree if there are a few other minor issues
associated with it, but why not in principle can't that happen?
Senator Lankford. Right.
Dr. Vedder. And so I am in complete agreement with Mr.
Carey.
Senator Lankford. So the question obviously on that is the
who. Who does that accreditation? Who actually examines that
course? Who signs off on it, sets the standards? We have
accrediting agencies now for universities. Universities are not
going to accept every other course that is out there. They will
not accept other things that are accredited, and even then they
will evaluate whether it is going to work on their degree. Who
does that type of accreditation? How would that work?
Mr. Carey. My recommendation would be that it either come
from business and industry, because many higher education
classes are explicit--programs are explicitly designed to lead
to skills and outcomes in the professions and in industry, or
the academy. So we should not ask the U.S. Department of
Education to decide what a good calculus class is.
Senator Lankford. Right.
Mr. Carey. We should ask mathematicians in our universities
who very much know what a good calculus class is. We can tell,
as Dr. Vedder said earlier, who is learning math and who is
not. They should decide what the standards are. And we should
allow anyone who can prove that they can through maybe very
different methods bring people up to those skills to compete on
a level financial playing field in the context of Federal aid.
Senator Lankford. OK. Dr. Vedder, any comments on the who?
Dr. Vedder. No. I completely agree with Dr. Carey.
I would say this: I have been yelling at the U.S. Chamber
of Commerce and other business groups, ``Why don't you get into
the business of accreditation? Just declare yourself an
accreditor.'' Businesses will listen to what other businesses
say perhaps. I do not know if it is the U.S. Chamber or the
National Association of Manufacturers or National Federation of
Independent Business (NFIB). Why aren't they getting in the
business of saying what is acceptable to them in terms of
placing people? And I think perhaps we ought to encourage more
militant--greater discussions with the business community about
doing this and picking up on Mr. Carey's point.
Senator Lankford. I would tell you, the State of Oklahoma
years ago invested at a very high level in our career and
vocational education, and the business community is very, very
engaged in making sure that that actually lines up with the
skills that they need to be able to hire. And the Oklahoma
model for career tech has been extremely successful and is a
very unique model around the country. So that is actually
possible on it. My challenge would be if we are fighting with
the inevitable cost, we cannot have the Federal Government say
we are just going to continue to pay the same amount for these
courses that are online that may cost a fraction of the amount.
If the goal is to be able to provide that student the
opportunity to be able to get a degree, maybe $5,000, $6,000
for a college degree they can do mostly online with high-level
classes, when Federal dollars start rushing into that, the
costs of the online courses are going to skyrocket, and it
should not be that way. So we have to be able to find a way
that the Federal Government is not the engagement on that, but
we have true competition in the process with the accreditation.
So I would appreciate the ongoing conversation on this in the
days ahead.
Thank you. I yield back.
Chairman Johnson. Thank you, Senator Lankford.
Before we move off this point, if I could interrupt on
Senator Ayotte's time here, isn't it true that the Federal
Government decides who the accreditation agencies are for any
university that is going to get Federal Pell grants and student
loans?
Mr. Carey. Yes.
Dr. Vedder. That is correct.
Chairman Johnson. It is not like somebody can just--they
have to get federally approved to be an accreditor of that. So
the Federal Government controls that process, right?
Dr. Vedder. Yes.
Mr. Carey. Yes.
Chairman Johnson. And in terms of innovation, the
marketplace is the greatest innovator, so, Mr. Carey, you
talked about the accreditation process limiting additional
supply. We have a 14-percent increase in supply, 111-percent
increase in demand in this thing. What else is limiting the
supply? Do you really view that as the primary factor limiting
the increase in supply of colleges and universities and
courses?
Mr. Carey. I do think that a consequence of our investments
in Federal aid, which I very much support and think were
important, they unleveled the financial playing field. So if
you are a competitor, students can bring a $5,500 voucher to
pay for their classes, and you are not in that system and you
are $5,500 behind, that is such a disadvantage that I think
nobody even wants to try to come in and compete.
There are a few places now, we see in like coding
academies, for example, very high demand, very high skill areas
where actually there are new organizations that are existing
outside the aid system. But that is for jobs that pay $90,000 a
year, and they cannot get enough people.
Chairman Johnson. Limiting the supply is really tied to the
Federal Government control over the accreditation process and
the financing, the student loans and the grants, is your
conclusion.
Mr. Carey. Yes.
Dr. Vedder. Yes.
Chairman Johnson. OK. Senator Ayotte.
OPENING STATEMENT OF SENATOR AYOTTE
Senator Ayotte. Thank you. I wanted to ask about a related
topic to what Senator Lankford just asked about. And as we look
at our education system, one of the experiences that I have is
when I travel around New Hampshire, I hear from employers
directly, many of them in the manufacturing field, that they
have many unfilled positions, and they are very good paying
positions, frankly, much better paying positions than many of
our 4-year graduates are able to get when they get out of
college. And we have a disconnect right now between our
employment needs and our opportunities that we are seeing with
some resurgence in manufacturing, and it is advanced
manufacturing. People sort of have this outdated view of
manufacturing that is in this dirty factory. These are very
technical jobs. They require obviously an understanding of how
to use computers. They require some basic mathematics and
engineering understanding. But they do not necessarily require
a 4-year degree.
So I wanted to get your thoughts on, Senator Kaine and I
actually have a bill, both of you, that would allow you the
flexibility, if you need your Pell grant, to take a short-term
skills program, a Career and Technical Education (CTE) program,
a training program, say you are going to go to a community
college or let us say you want to go to a welding program or
whatever it is, because there are a lot of opportunities for
good-paying jobs, and it goes back to this issue of
transparency. We need to tell our young people, too, that here
is where there are jobs and here is what the average pay is
here so that they know when they are taking out a college loan,
what the implications of that are, but also what are the
opportunities for me to earn in the long term, and where are
the jobs available?
So I wanted to get your thought on this idea of--I know we
are talking about higher education today, and one of the big
gaps we have in higher education is Science, Technology,
Engineering and Math (STEM) overall, but it is also beyond just
the traditional 4-year degree. I want to get both of your
thoughts on how do we provide people bigger opportunities here
in looking at higher education in a broader, more flexible
sense.
Dr. Vedder. I completely agree with everything you said,
Senator. Indeed, while you were out of the room, I spoke some
to the very issue you mention. First of all, colleges and
universities are organized in medieval ways. They are in
departments, the history department and this department and
that department. They are not quick, nimble, and fast. They are
bureaucratic. They are not able to see the changes going on.
They do not have the market incentives to see that changes are
coming.
Apple brought this out last week. This is the 6S. They sold
3 million last Friday. You can be sure Samsung and others are
working day and night to come up. That does not exist in higher
ed, so we have to facilitate what you are talking about in
different ways.
One way is to extend Federal aid, where Federal aid goes--
--
Senator Ayotte. Give you flexibility in how you use----
Dr. Vedder. Yes, exactly. Maybe we ought to use the word
``postsecondary'' instead of ``higher ed.'' And if you want to
go to welding school with that money, my view is go to welding
school, if that is what is best for you. Welders make more
money, for every education dollar spent on welding. It is a
heck of a lot better----
Senator Ayotte. If you want to talk value, if you have a
good welder, I mean, you could write your ticket.
Dr. Vedder. Yes, I mean, welders or plumbers are golden.
Senator Ayotte. Yes, I know. They are golden.
Dr. Vedder. Yes, absolutely.
Mr. Carey. Thank you, Senator. I also agree with what you
said. I think in many ways our higher education system
discriminates against programs that are designed to provide
people with skills that lead to good jobs. We tend to relegate
those to the less resourced part----
Senator Ayotte. And, also, I think we have kind of
developed a bad attitude that is not right in terms of those
jobs, that these are very important, productive jobs for our
country.
Mr. Carey. One of the problem we have is it is very
difficult if you say you went to a community college and got a
2-year degree that leads to employment, it is very difficult to
transfer those credits and get a bachelor's degree if, say, you
want to move up into management, and often management jobs you
need a bachelor's degree or even a master's degree. Those
things we can change. And, also, to pick up a little bit----
Senator Ayotte. We should change that, absolutely.
Mr. Carey. Absolutely.
Senator Ayotte. You should be able to use that and have
transferability to go on to that next step in your career.
Mr. Carey. I agree with that, and to respond a little bit
to something related to what Senator Lankford said earlier, we
do not have to make a full Pell grant available for every
program. We do, but we do not have to.
Senator Ayotte. Right.
Mr. Carey. You could imagine saying, what we really want
are lower-cost programs, and so in exchange for the flexibility
to try something new and not be like a regular accredited
college, you only get half a Pell grant, and see what happens,
see who responds to that.
Senator Ayotte. I also like this idea--you mentioned it--of
skin in the game for the colleges and universities and higher
education, because that I think would focus them more on
informing people, letting the students know what all of their
options are, and, for example, that they do not have to take
out the full amount of the loan if they have other sources. The
fact that if they had some skin in the game on repayment
themselves, they would also, I think, be giving people stronger
counseling and advice on what is available, and obviously that
is going to go back into the high schools.
So how do you see us doing that, the skin in the game? I
know there is a bill here, which I am supportive of, that has
been introduced in the Senate, but what thoughts do you have on
the policy end that we could make sure that we get the higher
education institutions in this, too?
Mr. Carey. I think it is relatively straightforward from a
policy standpoint. I think it is mostly a political issue. I
imagine you will get a lot of phone calls from college
presidents here and elsewhere----
Senator Ayotte. I probably will after this hearing, right?
Mr. Carey [continuing]. Who for obvious reasons would
rather keep the system they have now.
Dr. Vedder. Yes, the problem is overcoming the higher
education lobby. It is a political issue. I mean, there is no
question it should happen. There is no question that if
colleges are giving advice that is distorted or wrong, they
should pay a price for that if there are negative consequences.
It is simple.
But you try to get by Terry Hartle of the American--I will
name names--the American Council on Education or other
lobbyists. He is a fine man, by the way, but he will kill you
on this issue, or try to. And so it is a political issue.
Senator Ayotte. It would not be the first time that we have
all faced those kinds of issues, right? But I think what you
are hearing from all of us is a real desire to understand how
we can give our students an opportunity to pursue with
knowledge what they want to pursue and have the nimbleness
within our system to give those opportunities, because the
system now, with the way that prices are rising, you can get to
a point where it is just how do we sustain this, and that is
going to be a real issue for all of us. So I appreciate your
both being here.
Chairman Johnson. Senator Ayotte, I appreciate your line of
questioning here. Coming from a manufacturing background
myself, also volunteering in education, right before I ran for
the U.S. Senate, the initiative of our Partners Education
Council was really next step after high school. How do we
provide students and their parents all the information on all
their options after high school? One of the main points I kept
talking about, is we have to stop denigrating the trades. All
work has value. There is no first-or second-class way of
realizing your full human potential. Here is the good news in
manufacturing, I had the same comment in Wisconsin. There is
not one manufacturing company that I have visited that can hire
enough people, and for a number of reasons----
Senator Ayotte. I agree.
Chairman Johnson [continuing]. Partly because we tell all
of our kids, ``You have to get a 4-year degree,'' and thereby
imply that manufacturing is a lesser way of realizing your full
human potential.
The good news is with apprenticeship programs through
unions, and manufacturers are paying for education. Happy to
work with you on a Pell grant initiative, but we need to let
our kids know that there is such a shortage of welders and
manufacturing jobs available. Most manufacturers, my own
company as well, we paid for technical college. We paid for
full degrees for those individuals working for us.
There is no option here: going into manufacturing, having
manufacturing companies pay for education. You end up with a
degree and zero debt. We just do not tell our kids that those
options are really available.
Senator Ayotte. And this goes to the guidance counselor
issue in high school, too.
Chairman Johnson. Yes. We were trying to get this ingrained
in our comprehensive counseling model, starting in eighth grade
into tenth, getting that information out there. The good news
is that requires no Federal Government involvement whatsoever
providing that information. Individuals at the local school
level can provide that information and start opening up
students' and parents' minds to all their option. I appreciate
the line of questioning.
We do like to give our witnesses a chance to make some
closing comments before we seat the next panel, I will start
with you, Dr. Vedder.
Dr. Vedder. Yes, well, thank you. Higher ed is an unusual
industry. It does not have the incentives, it does not have the
market discipline, it does not have the forces of innovation.
Institutions like tenure can stifle initiative as well.
Resources, too many resources are going into non-academic
pursuits in recent years. Mr. Carey mentioned the explosion of
administrative staff as a good example of this. So there is
serious need of reform.
The issue partly is where does the reform start from. Does
it start here in Washington at the State level? Maybe it takes
a little at both levels. I would concede that. We need to
change incentive systems. Skin in the game is a great idea. Why
don't you do something, a little something on skin in the game?
Why don't you do a little experimentation on new approaches to
learning, such as Mr. Carey suggested? I think this would be a
good start. It is not the end of the story, but it is a good
start.
And if you do not mind, Senator, in a minute I am going to
have to go teach a class, which I am doing in Ohio, so I am
still in the trenches on the other end of this, so if you do
not mind, I will----
Chairman Johnson. We appreciate your chosen vocation. I
also appreciated your discussion of certification versus
degrees. I think that is another thing that we ought to be
exploring. You are excused.
Dr. Vedder. Thank you.
Chairman Johnson. Mr. Carey, I want to give you a chance
for a closing comment, but because Dr. Vedder mentioned it, you
talked about the explosion of the ratio of administration
staff. You can maybe just answer that question in terms of what
stat you have on that and then make your closing comment.
Mr. Carey. Thank you, Mr. Chairman. I believe that strong
public support for higher education is crucial for the Nation's
future civic and economic prosperity, and I do believe the
Federal Government has a role to play. I think if we look in
history, from the 1865 Morrill Land-Grant Act to the GI bill,
our measure to support for research funding, Federal investment
in higher education that respects the diversity of the market
and the autonomy of States, these have been wise choices.
I do think, however, that we are at a point where we lack
innovation, we lack productivity. Our institutions have become
somewhat decadent, frankly, and not focused enough on providing
value to students, providing value to taxpayers, and focusing
on student learning. I think there are some very
straightforward actually Federal statistics that the Department
of Education has gathered that show growing ranks of higher
education administration and, as I said, fewer tenured
professors, less money spent on instruction. I think that is a
symptom of this larger problem. I think it is a symptom of the
lack of innovation. And so my recommendation is that the
Federal Government has an opportunity to, again, not run our
colleges and universities, but serve as a catalyst for
innovation by linking the aid that it provides to new markets
and new providers of higher learning.
Chairman Johnson. Well, again, thank you, Mr. Carey, for
your time, your testimony, and your answers to our questions.
With that, we will excuse you.
Mr. Carey. Thank you, Mr. Chairman.
Chairman Johnson. We will ask Secretary Mitchell to come up
for the second panel.
[Pause.]
That was a quick changeover. I appreciate it.
Welcome, Secretary Mitchell. Again, we have a tradition of
swearing in witnesses, so if you will please rise and raise
your right hand. Do you swear the testimony you will give
before this Committee will be the truth, the whole truth, and
nothing but the truth, so help you, God?
Mr. Mitchell. I do, sir.
Chairman Johnson. Please be seated.
Mr. Mitchell. Thank you.
Chairman Johnson. The witness on our second panel is Mr.
Ted Mitchell. He is the Under Secretary of Education, a
position he has held since May 2014. He oversees policies,
programs, and activities related to postsecondary education,
adult career and technical education, Federal student aid, and
other initiatives. He has previously been Chief Executive
Officer (CEO) of the NewSchools Venture Fund, president of the
California State Board of Education, president of Occidental
College, and professor and department chair at Dartmouth
College. Under Secretary Theodore Mitchell.
TESTIMONY OF THE HONORABLE THEODORE R. MITCHELL,\1\ UNDER
SECRETARY, U.S. DEPARTMENT OF EDUCATION
Mr. Mitchell. Thank you, Mr. Chairman and Members of the
Committee, for inviting me here this morning. And before I
begin, Mr. Chairman, I would like to make two apologies.
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\1\ The prepared statement of Hon. Mitchell appears in the Appendix
on page 00.
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The first apology is that if we have been less than
responsive in your requests for information, that is not
something that I want.
Chairman Johnson. No. Not at all. No need to apologize
whatsoever. It is just like anything in the Federal Government,
it is hard to get information that I do not have questions on.
Mr. Mitchell. We like to be user friendly.
Chairman Johnson. Yes, OK. No apology necessary.
Mr. Mitchell. The second apology is for the confusion about
the two panels this morning. I apologize. But I am also
grateful for the opportunity to engage with the panel directly,
so thank you for your understanding.
I appreciate the opportunity to testify today on the
Department's goals for higher education. As I think you all
know, we have been working diligently to achieve a stronger,
more prosperous America, as you have, with the goal of
reclaiming our place as the Nation with the highest proportion
of college graduates in the world.
As an agency, we have established a goal of increasing
college completion by improving access, affordability, and
student outcomes.
A generation ago, America led the world in the proportion
of adults 25 to 34 who are college graduates; today, we are
12th. But by 2020, George Washington University estimates that
65 percent of job openings will require some postsecondary
education or training. Today, therefore, a great education is
not just what every parent wants for his or her child. It is a
necessity for individual financial security and national
financial security in a globally competitive economy. And,
moreover, it is important, critical, for the health of our
democracy.
Whether it is a 2-year or a 4-year degree, a certificate,
or a career and technical training program, some form of
quality postsecondary education is the gateway to opportunity
and the middle class, and our objective is in administration.
We cannot have substantial economic mobility in this
country without equal opportunity to get a high-quality
education. Since 2009, the administration has worked with
Congress to increase Pell grants by more than $1,000 a year. We
have also worked with Congress to create the American
Opportunity Tax Credit. By increasing direct support to low-
income students, we are making it easier for students to
achieve their college dreams and our national interest.
We have significantly simplified the Free Application for
Federal Student Aid. Today, students and families on average
fill out the FAFSA in about 20 minutes. And starting in October
2016, students and families will be able to apply for financial
aid just as the college application gets under way rather than
have to wait until January.
Students filling out the FAFSA will be able to
electronically retrieve tax information filed for an earlier
(prior) year. This will mean a reduction in the number of
applicants who need to estimate their income or taxes paid,
only to have to correct their application later. This will also
result in a significant burden reduction for institutions.
As you have heard, the Department released a new College
Scorecard, which focuses on a few key critical measures of
institutional performance to provide students and their
families with critical information about cost and student
outcomes. While no single measure is perfect, we believe the
Scorecard will help drive the conversation forward on access,
affordability, and student outcomes and create a kind of public
accountability for institutions that has been lacking.
At the back end of the college-going process is a part of
the administration's call for the student borrower bill of
rights. The Departments of Education and Treasury are working
together to determine the feasibility of developing, for
example, improvements in the recertification process for
borrowers and income-driven repayment plans and, more
generally, improvements in loan servicing.
Our Federal Student Aid Office has initiated targeted email
campaigns, for example, to borrowers regarding available
repayment options and has moved to an incentive-based pricing
structure for Federal loan servicers to ensure accountability,
to provide more effective borrower counseling, and outreach to
the borrower community.
We have proposed to address the affordability issue through
America's College Promise, sponsored by two members of this
Committee, a proposed grant program for States to make
community college, both technical training and transfer
programs, free for responsible students, enabling them to earn
a certificate or an associate's degree without paying tuition
and fees. In return, States must continue their investment and
community colleges must adopt innovative practices and improve
student outcomes. But as you have heard, between 2009 and 2014,
47 States cut their higher education per student spending by an
average of 13 percent. Over the past 25 years, State per
student spending is down 25 percent after adjusting for
inflation. And this matters most, Mr. Chairman, because 72
percent of undergraduate students enroll in public institutions
across the country. That is an example of what we believe as an
administration that everybody has their part to play. The
Federal Government has their part to play, States have their
part to play, and certainly, as the previous witnesses
discussed, institutions have a role to play in cutting costs
and increasing quality.
Our Department is using Federal dollars to seed new
approaches at the institutional level to help with this
innovation problem and to build a stronger body of evidence
about what works and to help to scale those innovations.
The good news is that our efforts have begun to move the
needle. As you know, our high school graduation rate is at its
highest point in history. Enrollments in college are growing
among minority and first-generation college students. And so we
are pleased to say that our quarterly Administration Priority
Goal report to you confirms that we are on track to meet our
goal for increasing the proportion of adults obtaining a
postsecondary degree.
At the Federal level, we view all of our efforts to improve
college access, affordability, quality, and completion through
the lens of transparency, accountability, and innovation.
Thank you again for the opportunity to speak with you today
about the administration's goals for higher education. I would
be happy to engage in a conversation, answer questions, and
hear comments, Mr. Chairman.
Chairman Johnson. Thank you, Mr. Secretary.
Let us start right with affordability because I think that
is a huge----
Mr. Mitchell. Yes.
Chairman Johnson. That is the problem. I have seen
different numbers, pointing to the fact that the cost of one
year of college has increased somewhere 2.5 to 2.8 times the
rate of inflation from the 1960s to the 1970s to the present
day. Is that in line with what you see as well? Are those
pretty accurate figures?
Mr. Mitchell. So we think that--yes is the short answer. We
believe that college price and college cost have risen. We know
that they have risen greater than the inflation rate. We are
quite concerned about that. We are concerned that it is
stifling access to students and families who look at a sticker
price and say, ``I cannot afford that,'' even if perhaps they
can. We hope the College Scorecard will help them with that.
And we are quite concerned that the incentives continue to be
misaligned, which is why I think the Secretary was so clear in
his speech in July that we need to refocus the system on
outcome.
Chairman Johnson. I am looking at what has caused that. Mr.
Carey certainly talked about--and you reference that as
well--there has been a reduction in State aid to the public
institutions, so that explains part of that. But it does not
explain why private institutions, and I do not think it
explains all of the increase in the cost of college at public
institutions as well. I thought Mr. Carey's testimony was
pretty stark when he talked about the mismatch between supply
and demand, how the demand for college has increased at 111
percent but the supply has only increased about 14 percent. His
theory, his explanation, was the fact that the accreditation
agencies really are a barrier to entry for additional
entrants--in other words, increasing the supply, increasing
innovation, when you have a competitive marketplace--I
participated in it for 30-some years. I would have loved to
have been a monopoly, but because of competition, my prices
were definitely constrained, as well as my quality was higher
and so was customer service. So competition really works.
What is your theory as to why the supply has only increased
at 14 percent but the demand has increased 111 percent?
Generally in a marketplace, supply would definitely catch up,
particularly after decades, with the demand.
Mr. Mitchell. So I think that there has been historically a
mismatch between supply and demand. I think that in a classic
economic sense, the barriers to entry to new providers have
been high. Accreditation is a part of that. So has been our
model of what a college is, and I think the good news is that
we are moving--Senator, at your point, we are moving away from
a place where we believe that every college has to be made of
brick, have a lot of ivy, have a football stadium. And so there
are diverse models that are emerging.
Chairman Johnson. With the Federal Government controlling
the accreditation process and also the financing process--and
those are completely related--we are not going to have to kind
of break that monopoly and figure out a different model in
terms of accreditation, possibly certification? Our previous
witnesses were talking about certifying courses versus
necessarily accrediting a degree. Just kind of speak to those
innovations.
Mr. Mitchell. Sure. So, again, we have, Senator, as the
Secretary said in his July speech--and I have often spoken
about the need to reform accreditation. The irony in the
accreditation process is that it is both too rigid, standing in
the way of innovation, and too flexible, accrediting
institutions whose student outcomes are deplorable. And so we
need to find a new balance there, and we are eager to take up
that challenge and working on a set of proposals for Congress
that will help us do that.
In many ways, the accreditation approval process is
controlled by a governing statute and governing legislation, so
we will need your help. We will need your help to be able to
focus more rigorously on student outcomes. We will need your
help to be able to take Pell grants and make the delivery of
Pell more flexible, to Senator Ayotte's point. And in between
now and then, working with Congress, we have developed a series
of experimental programs about new ways of delivering Pell, new
ways of thinking about program delivery. But I want to agree
with you straight down the line that the accreditation process
needs to be changed. It needs to be both more rigorous around
student outcome and more flexible around innovation.
Chairman Johnson. OK. When you look at the history, about
20 years ago the outstanding level of student loan debt was
about $100 billion. Now it is around $1.3 trillion, depending
on which figures you are looking at. That is really concerning
to me. Do you view that as a metric of success? Obviously,
those student loans have certainly made college accessible, but
as the Federal Reserve Bank of New York States, for every
dollar that goes in, about 65 cents--it has increased tuition
about 65 cents, so a 65-percent increase. Aren't we just
ballooning--with the limited supply, the price of college and
as a result our students, our young people are left with this
debt burden as they enter their productive life? It is an
enormous challenge for them.
Mr. Mitchell. It is an enormous challenge for them. The
good news is that the data shows that a college education--
whether it is a certificate or a 2-year degree or a 4-year
degree--is the best investment an individual can make, and we
feel strongly it is the best investment that a nation can make.
So that $1.3 trillion investment we have made is an investment
in individual students' livelihoods, and it is an investment in
our economic future. We need those young people to get the
skills that will put them into the right manufacturing jobs or
put them into the right computer science environment or the
right business entrepreneurship program. So we see that as an
investment that is going to pay dividends to individuals and
will be responsible for continued economic growth in America.
In terms of the debt burden to students, I think that this
is why we have been so tightly focused on creating new
repayment options for students so that perhaps in those early
years, when they are not settled in a career, they are able to
be in an income-based repayment program that will allow them to
make payments against their student loan, but not the kind of
payments that will cripple their participation in the----
Chairman Johnson. That is kind of putting a Band-aid over
the problem. I just want your comment on these studies that
show that 40 to 50 percent of recent college graduates are
either unemployed or really employed in a position that really
requires no college education at all. How concerned are you
about that? What is your explanation for that?
Mr. Mitchell. So I think that we need to put some
periodicity to that, that those recent college graduates have
entered the labor market in one of the most challenging periods
of the last 100 years. We see that beginning to even out in
positive ways, but we also believe--and you made this point in
your opening remarks, Mr. Chairman. We also believe that there
has been a mismatch between a general one-size-fits-all higher
education program and an economy that demands very
differentiated skills and knowledge. So that is why we are very
pleased to be supporting and looking at programs that are
shorter in duration, programs that are competency-based, that
directly link what students are learning to the needs of
employers, and most powerfully, in community colleges, where
those community colleges can see the needs of the local labor
market and develop programs that reach out and are able to
touch--make the bridge between what a student is learning and
what an employer needs.
Chairman Johnson. OK. Well, thank you, Mr. Secretary.
Senator McCaskill.
Senator McCaskill. Yes, thank you, Mr. Secretary, for being
here.
Mr. Mitchell. Thank you, Senator.
Senator McCaskill. I am going to start with student loan
servicer allotments. We now have metrics that show that the
not-for-profits are doing a better job of collecting on their
loans than the for-profits. For example, Nelnet received 13
percent of the new loans and has a repayment rate of 64
percent, while MOHELA, one of the not-for-profits, has a 92-
percent repayment rate, but they only have 6 percent of the
loan allotment.
I am trying to figure out where this 25-percent cap on the
allocation of loans for not-for-profits came from. You all did
that on your own. What in the world would have been the
motivation to arbitrarily decide that the not-for-profits were
only going to get one-fourth of the loan servicing agreements?
Mr. Mitchell. So as we moved from the previous system to
direct student loans and a multiple-servicer platform, we
wanted to make sure that the various different servicers had an
opportunity to integrate with our system to be able to show
what they could do and then for us to be able to move and
recompete with everybody on a level playing field. And we
believe that the not-for-profit servicers have fully integrated
into our system or systems. We believe that they are connected
with their borrowers in important ways. And we look forward to
seeing them compete on a level playing field when we----
Senator McCaskill. So we are going to make news today? We
are dropping the 75-percent cap?
Mr. Mitchell. No. When we recompete the contract at the end
of 2016.
Senator McCaskill. So we have to go for another year and a
half arbitrarily? Why don't you just drop the cap now and open
it up for new loans? I mean, they are better at it.
Mr. Mitchell. We think that the system that we have is
going to work through the end of the year, and I misspoke.
January 2016 is when we----
Senator McCaskill. Oh, OK. Just the end of the year. So
what you are saying is there will no longer be an arbitrary cap
between nonprofits and profits as of next year?
Mr. Mitchell. I cannot say that definitively, but I can say
that we are looking at the process of recompeting the contract
in----
Senator McCaskill. OK. Well, I am anxious to know when you
can say it definitively, because I do not get it. I do not get
why there would be--this should all be on metrics. You have a
track record now. We should be giving the loans to the ones who
are doing the best job of collecting the loans, period.
Mr. Mitchell. And that is why we have moved the
compensation structure for the servicers to one that absolutely
rewards that kind of success.
Senator McCaskill. OK. Where does one go when they have
been abused or mistreated by their servicer?
Mr. Mitchell. One goes to the student loan ombudsman, and
that is a short-term solution for us because, as the
President's memorandum that announced the student borrower bill
of rights indicated, we will be working on a brand-new
complaint--are working on a brand-new complaint system that
will be better integrated than the ombudsman program is,
modeled on the Consumer Financial Protection Bureau (CFPBs)
system, and we anticipate having that up and running next July.
Senator McCaskill. OK. Could I get data on how many
complaints you all are getting through the ombudsman?
Mr. Mitchell. Sure.
Senator McCaskill. I am hearing horror stories, I mean just
unbelievable horror stories.
Mr. Mitchell. Sure.
Senator McCaskill. The payment changes, and then the
servicer takes out the new payment but continues to take out
the old payment, after being continually recontacted. And
imagine how that wreaks havoc on someone's life, that all of a
sudden they have X amount of income a month, and the loan
servicer is taking double the payment out, and they cannot get
them to stop.
Mr. Mitchell. Right. So we hope that those are aberrations.
We would like to know each and every instance of that if we do
not already.
Senator McCaskill. Well, I am asking people to submit their
horror stories to my office, so I am thinking we will have a
nice list for you.
Mr. Mitchell. Well, great. If you could send those to us,
we----
Senator McCaskill. Because I just think it is really
frustrating, when someone is trying to do the right thing and
pay, to have incompetence greet them.
Mr. Mitchell. May I add to that? Just yesterday, we issued
a statement with CFPB and the Department of the Treasury on
student loan servicing standards, and we by that want to both
signal and say----
Senator McCaskill. Does CFPB have jurisdiction over these
servicers?
Mr. Mitchell. No, they do not.
Senator McCaskill. Who does?
Mr. Mitchell. We do.
Senator McCaskill. Just you?
Mr. Mitchell. Yes.
Senator McCaskill. OK. So you are asking them for help on
how to do it?
Mr. Mitchell. CFPB has jurisdiction if they violate the
regulations of the Consumer Financial Protection Bureau or
consumer law.
Senator McCaskill. Well, the horror stories I am hearing, I
can guarantee you they are violating the laws of consumer
protection.
Mr. Mitchell. Then we need to hear this.
Senator McCaskill. Yes, because, a credit card could never
get away with doing what these servicers are doing to these
young people. These are mostly kids in their 20s that have
gotten out of school and are trying to manage their loan
payment along with all the other budget needs in their lives,
and it is hard when they cannot get anybody to help them.
Mr. Mitchell. We want that to not be the case. We want to
be able to help them.
Senator McCaskill. OK. On campus sexual assault, one of the
things we have looked at, when the Department of Education
determines that a school has grossly mismanaged their safety
responsibility on their campus, under the current law the only
penalty available to the Department of Education is to take
away their Title IV funding; in other words, require that that
university no longer participate in any student loans. I know
the answer to this question, but I am going to ask it
rhetorically anyway. Has that ever happened?
Mr. Mitchell. It has not.
Senator McCaskill. And, of course, it has not. This is like
me saying to my kids, ``If you do that again, I am never going
to speak to you.'' I mean, my kids know better. They know I can
love them unconditionally, and as mad as I might be, I am going
to speak to them again. No college or university in the world
believes you are going to penalize all the innocent students on
that campus by removing their ability to get student loans. So
isn't that a meaningless penalty?
Mr. Mitchell. Our experience has been different, Senator,
and we would not measure our success by the number of
institutions we have eliminated from the Title IV program, but
instead by the real creativity, real bravery, and real honesty
that has come about in the settlements that we have secured
with institutions.
Senator McCaskill. But, ultimately, these settlements take
years, Secretary. I mean, I am very familiar with the
settlements you have been in. I am very familiar with the long
list of institutions you are investigating. I am very familiar
with the inefficiencies that are embedded in your current
system, and I know you guys are worried about not holding on to
that system. But in my experience, a deterrent only works if it
is a realistic penalty. And they may be entering into
negotiations because of the press associated with the problems
on their campuses, as nothing is more difficult for a
university than publicly being chastised for not protecting
young people from sexual assault. But I do not think it is
because of a threat of a penalty, because none of them take it
seriously in terms of it actually being imposed. Don't you
understand that it might be even more efficient and these
negotiations might even go more quickly if there was some kind
of interim penalty in the form of a fine that might be imposed?
Mr. Mitchell. And as you know, have been in discussion
about interim penalties. That is something that we are quite--
we are open to discussing. We do feel very strongly, as you do,
that we as a Federal Government need to protect the civil
rights of people on campus by insisting that institutions
protect young men and women from assault. We feel very strongly
that this has been an underreported problem, an underprosecuted
issue, and we are very, very proud of our enforcement efforts
to be able to bring these issues to light and to use the tools
that we do have at our disposal to create real change on
college campuses.
Senator McCaskill. Well, I appreciate that, and I
appreciate how hard your agency has worked with us in crafting
the legislation. Thank you, Secretary.
Mr. Mitchell. Thank you, Senator.
Chairman Johnson. Thank you, Senator McCaskill. Senator
Lankford.
Senator Lankford. Thank you. Mr. Secretary, thank you as
well for being here.
Let me follow-up on what Senator McCaskill was talking
about as well on the not-for-profit loan servicers. It is my
understanding that in September, just a few weeks ago, there
was a one percent increase from 25 percent for not-for-profits
to 26 percent for not-for-profits. Is that correct?
Mr. Mitchell. I do not know that specifically.
Senator Lankford. Well, it was announced on September 1st
that there was a one percent increase. What I wanted was
clarity. Does that start next year? Is that this increase or
this possibility for 2016 that it will go from 25 to 26
percent? Or is that current right now?
Mr. Mitchell. That starts right away.
Senator Lankford. So that is right away. So then there will
be another reevaluation for 2016, starting in January 2016, for
these not-for-profit loan servicers.
Mr. Mitchell. And to be clear, 2016 will be a recompete for
the broad arc of our servicing contracts, yes.
Senator Lankford. OK. And that would begin in 2017? Or when
would that begin then?
Mr. Mitchell. It would begin before 2017. We will do it as
quickly as we can. We will open the contracting process, and
the vicissitudes of the Federal contracting process.
Senator Lankford. I do.
Mr. Mitchell. We will move as quickly as we can.
Senator Lankford. Which makes it important that this
decision is made as fast as possible on this percentage,
because, again, I go back to the metrics. The metrics are
clearly in favor of the not-for-profit loan servicers, and we
are still trying to figure out how the decision was made, even,
that 25 percent, and then the decision was remade to say, no,
it will be 26 percent. Is there any evidence that we can get of
the process of making the decision to go
from--to set it at 25 percent in the first place, and then to
say, no, 26 is a better number, 26 percent. How was that
decision made?
Mr. Mitchell. So I am not familiar with the move from 25 to
26. I will find out. But, overall, I need to say that we are
content with the rough allocation that we have now, and we will
continue that allocation through to the recompete process.
Senator Lankford. I would say there are a lot of folks that
are not content with that allocation. That makes it very
difficult for not-for-profits to have such a small portion. It
is not sustainable in their business model to be able to
actually do that, and the concern is that in long term those
folks will just be driven out. And those folks have very good
metrics.
Let me move on to another process-type question, and that
is, guidance. What is your process in making a decision when
you are discussing whether you are going to do a guidance
document or regulation? Is there a written-out process that you
have in place to say if all of these things or even if one of
these things is true, then that needs to be a regulation?
Mr. Mitchell. So we are guided by the Office of Management
and Budget (OMB) bulletins and by our own Office of General
Counsel (OGC), and the bright line, as I believe my colleague
Amy McIntosh told you last week, is that for us if there is a
statement that we want to make, a statement, or an area we
believe needs to be investigated and where we need consultation
with the field that will result in having the force of law, we
believe that at that point we are bound to enter into
rulemaking.
Senator Lankford. All right. Clearly, the bright line is if
it is binding, then that is a regulation.
Mr. Mitchell. That is right.
Senator Lankford. The challenge that I hear over and over
again from institutions of higher education is they have a
tremendous number of guidance documents that are coming to
them, and they do not feel the freedom to be able to come back
to Education, the Department of Ed., and say this smells a lot
like a regulation to me because this is also where a stream of
funding comes from, and so they feel like they have to take it,
where other entities, obviously private businesses, they get a
guidance document come down, they file lawsuits, and they
challenge and they push back on it. Institutions of higher
education are actually leaning back and saying, ``I do not feel
the freedom to be able to challenge this for fear that we will
also have other things.''
Now, I am sure your answer is, ``They should not be afraid
of us. We are their friends.'' But I would tell you they are
very concerned not only the way the regulations are coming out
but the frequency of those regulations, and the pure cumulative
result of that is they are drowning in guidance documents--and
``Dear Colleague'' letters is actually how they are coming from
you--and the sheer number of ``Dear Colleague'' letters, they
feel like they cannot challenge.
Mr. Mitchell. So let me say that I hear the same things
when I talk to my colleagues in higher education, and in each
of those conversations, I do try to reiterate what Amy said
last week and I will say again. Our guidance does not hold the
force of law, and our recommendations and illustrations of the
ways in which we are interpreting the statute and the
regulations, so we are happy, in fact, to continue in
conversations with institutions of higher education----
Senator Lankford. The hope is that this can be an ongoing
dialog, because they feel like the ``Dear Colleague'' letter
shows up, and they did not have input, unlike a regulation
where they have the opportunity to be able to write in and say
when you do this, make sure you consider this. The ``Dear
Colleague'' letter shows up, and they assume someone had input,
but they were not in the clique group that got to have the
input on it. So that is a bigger issue that we need to deal
with.
You mentioned about accreditation earlier, and the Chairman
has brought this up in his line of questioning about
accreditation, which is incredibly important to us. We want to
have greater innovation in accreditation. You had said that
there are some recommendations and proposals that you all are
in the process of putting together to bring to us. When should
we expect those proposals?
Mr. Mitchell. By the end of the year.
Senator Lankford. By the end of this year?
Mr. Mitchell. Yes, sir.
Senator Lankford. OK, great. Will that come to this
Committee, to the HELP Committee? Where will that come?
Mr. Mitchell. We are still figuring out exactly how--the
shape of those recommendations, and so the recommendations will
determine the----
Senator Lankford. OK. Well, please include us in that, at
least with a carbon copy. How about that?
Mr. Mitchell. Of course.
Senator Lankford. Because we are obviously very interested
in this as well, and this is a long-term issue for us.
You also mentioned about student outcomes and trying to
measure that. Can you give me an idea of some of the metrics
that you are able to put together to be able to measure student
outcomes?
Mr. Mitchell. Well, I think--I want to go back to the
basics. The Federal Government is not and should not be in the
position of determining for 7,000 institutions of higher
education what their outcomes are.
Senator Lankford. Right.
Mr. Mitchell. The diversity of American higher education,
the varied missions of our institutions are all critical to the
health of higher education in the country. So rather than
stipulating either specific outcomes or levels against those
outcome measures, we would like accreditors to be much more
serious than they are about asking institutions how they are
measuring their outcomes and hold them accountable to----
Senator Lankford. To their own metrics.
Mr. Mitchell. To those metrics. But I would suggest, as we
have looked at the use patterns of the College Scorecard,
graduation rates, employment rates, repayment of student debt
rates are things that are very interesting to students and
families.
Senator Lankford. Right. It seems to be the repayment of
loans ends up being the biggest issue because obviously there
is the Federal exposure there with the tremendous number of
student loans that are federally backed student loans. So that
seems to be the primary issue, which drives me back to the
conversation that we have: Is the focus about trying to get
greater student loans and greater student repayment? Or is it
about getting greater innovations so college does not cost so
much? And it feels like on this side--and you can tell me how I
am wrong on this--has been how do we get more loans, more Pell
grants, more emphasis out there, and then make sure that we are
holding these schools accountable so they land jobs so they can
repay the loans that we did, rather than saying how do we back
up and create more innovation so college does not cost so
stinking much and many of our middle-class families back up
immediately and say, ``There is no chance I can ever get there,
no matter how many loans,'' or, ``I do not want to have a
$100,000 loan at the end of it.''
Mr. Mitchell. Yes.
Senator Lankford. So it looks like we are pushing in the
wrong area. We are pushing on banks, calling banks predatory
and putting all kinds of new regulations on banks on campus. We
are pushing on loan servicers. We are pushing on all these
other areas rather than pushing the accreditation side. And how
do we create more innovation so we have less expensive options
for people?
Mr. Mitchell. Got it.
Senator Lankford. So tell me where I am wrong.
Mr. Mitchell. I do not think that those are mutually
exclusive. I think that we have to protect against the downside
risk on the loan side, and I think that that is why we need to
continue to do all we can on financial literacy, that issue
that has come up, to help people understand how best to manage
their own loan portfolio.
We need to be sure that we are holding institutions
accountable to giving people the education that they need to
make a living and pay back those loans. That is why our gainful
employment regulation is so important.
We need to make sure that there are a variety of repayment
plans and that our servicers are doing a great job of helping
borrowers pick the right plan for them. That is all at the back
end.
On the front end, we are and must continue to support
innovation. The good news--and I think it differs a little bit
from what you--my view differs a little bit from what you have
heard this morning--is that there is tremendous innovation
afoot, even in the existing infrastructure. Arizona State just
announced a partnership with edX that Kevin mentioned to
provide a complete freshman year online. Southern New Hampshire
University has created a subsidiary called ``College for
America'' that offers one year of college for $2,500, part
online, part in-person. Georgia Tech has a $7,000 master's
program in engineering. These are examples of intense
innovation under way to create opportunities, pathways for
students.
While I am on that point, each of those institutions is not
only looking at creating pathways for traditional 18-to 24-
year-old students. These programs--the partial online programs,
the
competency-based degree programs, the cafeteria approach
programs--they are particularly designed to meet the needs of
working moms, returning veterans, fully employed workers, or
workers who have been displaced. Those turn out to be the new
majority students in American higher education.
So we are doing all we can to support those innovation
efforts. One of our great programs is the First in the World
Program where we provide grant support: innovation grant
support to institutions that want to create better access and
opportunity, better completion rates for first-generation and
underrepresented students. And so we are able to seed that
innovation through funds that you provide.
Unfortunately, Congress has suggested zeroing out that
program. We think that that would be a tragedy. It would cutoff
innovation at its very bud.
Senator Lankford. Well, we look forward to getting a chance
to see the recommendations. Will all these issues come up in
this January report that is coming to us?
Mr. Mitchell. We are likely to engage with you in the
budget process, we are likely to engage with you in the
reauthorization process, and we are likely to engage with you
in specific pieces as well.
Senator Lankford. OK. I yield back.
Chairman Johnson. Senator Peters.
Senator Peters. Thank you, Mr. Chairman, and thank you,
Secretary Mitchell, for being here.
Mr. Mitchell. Senator, thank you.
Senator Peters. I actually want to continue on some of the
themes from Senator Lankford in innovation, making sure that
folks have the opportunity to afford education, to get into
education, and particularly for some of the students who I
think have not been the focus of many in the educational
community when it comes to having access to higher ed.
Earlier this week, I visited Cody High School in Detroit,
and the Cody Rouge community there in Detroit is really working
very hard to reinvent how we think about high school and what
school offers. In fact, as I was there, I learned that many of
the Cody students, when they graduate from high school, have
the certifications necessary to be an Emergency Medical
Technician (EMT), to get into firefighter training or be
firefighter certified, to really have a first step up on their
postsecondary careers.
And, similarly, as you are well aware, dual and concurrent
enrollment in early college programs has been proven to
increase access to higher education and dramatically help the
affordability of education as well. So if we are able to
shorten the time that it takes for someone to get a degree by
being in a concurrent enrollment in high school, that is a good
thing. It will also help with the transition for someone,
particularly first-generation folks where they get an
introduction into that transition out of high school and into a
postsecondary situation. Although it seems like we have focused
a great deal on advanced placement, and we have international
baccalaureate programs to help students, which are all
wonderful things to do, I think you need to have a fairer
playing field for other folks who may not--that may not fit an
advanced placement (AP) program and an international
baccalaureate, and yet they need postsecondary education
training and concurrent enrollments to do that.
So if you could expand a little bit on what the Department
of Education is doing for concurrent enrollment, how can we
expand that? Are there ways that Congress can help you in this
mission? Because I see it firsthand every day in my State and
how they can transform young lives who might otherwise be left
behind.
Mr. Mitchell. Sure. Thank you, Senator. We completely agree
with you about the efficacy of dual enrollment and early
college programs. We think in both of the ways you suggest--
one, accumulating college credit and, two, accumulating
cultural knowledge about college and just being able to see
yourself in a college environment--is critically important to
low-income and first-generation students. So we have been big
supporters of dual enrollment, concurrent enrollment, and early
college high school--in fact, to the point that in 2013 we
launched and had in our budget the High School Redesign
Initiative to encourage high schools to develop, if they had
not, or expand, if they had, dual enrollment in early college
programs.
Similarly, in our Race to the Top program, a number of
States came forward with very aggressive plans that we
supported to move forward dual enrollment in early college
programs.
In the last several years, we have paid attention to early
college and dual enrollment through our College Opportunity
Summits where we have called together colleges and, in the last
year, colleges and high schools and community colleges within a
region to talk about how they are going to commit to developing
pathways through their system. And so the good news is that we
have dozens of commitments on the books from high schools,
community colleges, and 4-year colleges to build on and expand
their dual enrollment programs.
The tools that we have are limited at the moment, but I
think that Senator Ayotte mentioned using Pell in different
ways or in short-term training programs. And in a similar vein,
I think that your help in making early Pell available to
students enrolled in dual enrollment or early college high
school programs would be an example of a way that Congress
could act to put dollars behind what is, again, a very
efficacious program for students.
Senator Peters. Would the use of grants, as well, help some
of these high schools and colleges be able to develop these
programs? I assume there are some resources necessary. Federal
grants would be helpful, I assume.
Mr. Mitchell. If we could put together a grant program to
support that, that would be great. The other thing that you
know well from your State is that even in advance of America's
College Promise, when communities are coming together to build
their own Promise programs, Kalamazoo being the oldest and
grandest of all of them and the best evaluated, oftentimes
those programs lash up private support to provide funding for
dual enrollment and early college high school, too. So I think
that this is a case of all of the above.
Senator Peters. And when you mention Kalamazoo and others,
the strength of public-private partnerships, particularly when
it comes to this issue, I think is clearly demonstrated work
and are necessary if we are going to address this issue.
Mr. Mitchell. Exactly.
Senator Peters. Thank you so much for your testimony.
Mr. Mitchell. Thanks for your support.
Chairman Johnson. Senator Carper.
Senator Carper. Thank you.
Mr. Mitchell. Ranking Member, may I say thank you? Before
you begin, thank you for inviting me today.
Senator Carper. We are happy you are here. Thanks so much
for coming, Ted.
First of all, let me just say, you were here--I know you
were here for the first panel, and I thank you for sitting in
and listening. One of our witnesses--in fact, our second
witness--spoke near the end of his testimony, and he went
through--it was Mr. Carey. At the end of his testimony, he went
through, I thought, a really interesting, almost like a
checklist of things that we could do to get better results.
Would you react to anything that he said that you thought was
especially sound advice?
Mr. Mitchell. I think that what----
Senator Carper. A lot of what he said rang true to me, and
I think to my colleagues.
Mr. Mitchell. It did to me as well, and it rang true to me
not only in this role but in my previous roles as a campus
administrator.
I think most salient, though, is his injunction for us to
experiment within boundaries.
Senator Carper. Experiment?
Mr. Mitchell. Experiment within boundaries.
Senator Carper. OK.
Mr. Mitchell. I think that it is very important that we do
embrace the world of change in higher education around us, the
radically different delivery modes that are now available, the
short-term/long-term blended learning, online learning. I think
it is time for us to do some strategic innovation, to measure
what works, to then create policy that supports what works, to
scale that around the country. I think that that is an
obligation that we have as a government, and it is one of the
things that I think really only we as the Federal Government
can do because we are the gate holders to Federal financial
aid, which is how this market gets built.
Senator Carper. OK.
Mr. Mitchell. I will--if I can?
Senator Carper. Yes.
Mr. Mitchell. I think that the one place where I would urge
some caution on Kevin's checklist is regarding an overreliance
on the growth of the number of administrators as an example of
bloat in higher education. When I go around the country and
when I look at the most successful programs in terms of
providing opportunity to first-generation college students,
minority students, and low-income students, there are programs
that invest rather heavily in student support, and so I would
not want us to mix that up with what I do agree is an
overgrowth of other administrative categories.
Senator Carper. Good. Sometimes in this hearing room I
quote Albert Einstein, who said famously, ``In adversity lies
opportunity.'' And there is a lot of adversity here. We talked
about some of the heartache and challenges that we face. But
there is also opportunity here. And one of the things that my
wife and I do whenever close friends or relatives have a baby,
we send them a baby cup for the baby which is inscribed and a
handwritten note to the baby, and I am going to start changing
the note and urge the baby to open up a 529 at birth and urge
the parents to solicit, whenever somebody is looking to make a
donation or buy a gift for their child, birthday, Christmas,
whatever it might be, think about just--forget about--make it
easy, just make a donation to the 529. I know some folks who do
this. You probably do, too. It is a very, very smart thing to
do.
In our State and I am sure in other States as well, we have
schools that try to think about ways to save money and offset
the costs of higher ed, but schools offer advanced placement
courses, and we are trying very hard to get more kids in
advanced placement courses. Not every college or university
with take APs, or will do well in the advanced placement test,
but a bunch will, and that is a way to help reduce the cost of
going to college. One of our students, one of our children was
able to pretty well knock out the first year of funding because
of doing well on advanced placement tests.
Delaware State University, a historically black college and
university in Dover, Delaware, started up a new high school
last year, grades 9 and 10--eventually it will be 10, 11, grade
12--and the great thing about the--they call it their ``early
college high school'' at Delaware State University--is students
can earn credit and be able--up to 2 years of college credit
while they are in high school, from Delaware State University
and from other universities as well.
We have in our State something called the Student
Excellence Equals Degree program (SEED), whereby the folks can
go literally, if they do reasonably well academically in high
school, they can go to Delaware Technical Community College, a
2-year community college, pretty much free. And the
administration has called for doing that as part of their
national initiative.
We have a really good vo-tech high school in southern
Delaware called Sussex Tech, and they have partnered with
Widener University so that as students go through Sussex Tech,
do well, they can transfer earned credit to go to Widener
should they choose to do that.
Senator Johnson and I and our colleagues have the
opportunity to nominate kids to go to all the military
academies, the service academies. We do that every year. I was
a Reserve Officers Training Corps (ROTC) guy at Ohio State, and
we have all kinds of ROTCs where people can get help.
When I was Governor of Delaware, we really strengthened the
ability of the National Guard to pay tuition for folks that
volunteered to serve in the National Guard. One of my sons did
a pretty good job on his own, going out and finding scholarship
money. Somehow if we can encourage people to do that and make
it easy, not harder, that is helpful.
I worked a couple jobs. My guess is Senator Johnson worked
jobs, and probably a lot of us worked--or you worked jobs in
college, certainly in high school and in college as well. The
best job I ever had was in college. I was a pots and pans man.
I ran the Hobart dishwashing machine in the Delta Gamma
sorority house. The best job I ever had.
There are all kinds of things that we can do. We can apply
for Pell grants. We can serve in the military. And the great
thing about the GI bill, the post-9/11 GI bill--we just sent
off 300 men and women in the Delaware National Guard to
Afghanistan a month ago, and I told them all when they were
leaving at the departure ceremony, I said, ``When you come
back, most of you will be eligible for the GI bill. It pays
your full tuition to go to college to any public school pretty
much in the country. If you do not use it, your spouse can. If
your spouse does not use it, your dependent children can.'' And
that is a great--a lot of families are just leaving that money
on the table because they are not aware of the benefit or they
are not taking advantage of it. So there is a lot we can do.
As my time runs out, I want to come back to a concern, a
longstanding concern--it goes back 60-some years--about for-
profit colleges and universities. Some of them do a great job,
and some of them do not. It goes back to 1952 when the 85-15
rule was first established that I talked about. And today we
have created under the 90-10 rule a loophole which allows a
private college or university really to realize all the
revenues from the Federal Government, which I do not think is
healthy. It does not harness market forces. The reason why we
had the 90-10 rules was to try to harness market forces so we
did not have to have all this accreditation and rules and so
forth, and regulations. Markets, market forces, would actually
help make sure that if schools, private colleges and
universities were not doing a good job, then, we would learn
from that, and the kids would not go to those schools.
What should we do about the 90-10 rule? What should we do
out it?
Mr. Mitchell. Thanks, Senator, and I want to come back to
one of the themes in your remarks a moment ago, but first on
90-10, we think 90-10 is wrong. We think the loophole is wrong.
We want to fix it. We are grateful for your work with your
colleagues to move us in that direction.
We believe that it is appropriate to have a threshold for
Federal dollars, but that that should include all Federal
dollars.
We think that one of the ways that the market distortion
that you talk about has acted is by putting a bull's eye on the
back of veterans' backpacks, and we think that there have been
different kinds of bull's eyes on their backs for too long and
they need to get great information about which programs are
going to serve them well, and they need not to be targeted by
unscrupulous for-profit institutions who simply want the GI
bill money. We think that that is wrong for the country. We
think it is a tragedy for our veterans. We need to do better.
Senator Carper. Amen. Thank you.
Mr. Mitchell. Thank you.
Chairman Johnson. Thank you, Senator Carper.
By the way, that is an experience we share. I started my
taxpaying working career as a dishwasher in Walgreen's grill.
Learned to tolerate heat on your hands, right?
We will give you an opportunity to just make a closing
comment here. I did want to pick up on a point that Senator
Carper was alluding to with AP classes. I have certainly seen
that with my own kids and a lot of their friends. A lot of
these kids are starting college, sometimes with a year's worth
of college credit, and yet I have seen reports--this is what I
really want to get to in terms of metrics--where on average it
is taking students right now 5\1/2\, almost 6 years to complete
a 4-year degree. Is that, similar to the metrics you are
seeing? Can you provide any kind of explanation for that? Then
you can go right into any kind of closing comment you would
like to make.
Mr. Mitchell. Sure. Fair enough. So I think that this goes
back to the comments that I was making about the new normal
college student. The new normal college student is balancing
work, perhaps family, other obligations, and so it is generally
taking them longer. The pure 18- to 22-year-olds who are
starting college continue to finish in the 4-to 5-year range at
about the same rate. The growth at the other tail is largely
working adults.
That does not mean we should not worry about it. I think it
is why we need to invest more and innovate more in programs
that reach students where they are and take them to where they
need to be. And that is where the University of Wisconsin's
flex program, for example, is such a shining light for us.
Let me wrap up by saying a couple of things.
First of all, as I said at the outset, we continue to
believe that a college education, whether it is a 4-year
degree, a 2-year degree, or a certificate in a technical field,
is the best investment an individual can make and the best
investment that we can make as a Nation.
There is a lot that we can improve about higher education,
and there is a lot we can improve about the delivery and the
oversight of higher education. In America, we are always
looking to improve. We are always looking for what is that
thing that we can fix. And today's conversation has been a
great opportunity to engage in just that prototypically
American dialog.
For me, I have never been more excited about the future of
American higher education. I am excited by the diversity of the
students who are coming to the doors of colleges and
universities looking to improve their lives, looking to live
out the American dream. I am excited by the institutions that
are responding to the challenges of innovation and that are
providing opportunities for those students. And I am excited by
the opportunity to work together with this Congress in the time
that we have left to take the next steps to building an
innovative, creative, accountable, and high-quality education
so that access, affordability, and quality come to life every
day in the lives of students in our colleges.
Senator, thank you for the opportunity.
Chairman Johnson. Well, thank you, Secretary Mitchell, for
your testimony and answers to our questions.
With that, the hearing record will remain open for 15 days
until October 15th at 5 p.m. for the submission of statements
and questions for the record.
This hearing is adjourned.
[Whereupon, at 11:58 a.m., the Committee was adjourned.]
A P P E N D I X
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