[Senate Hearing 114-565]
[From the U.S. Government Publishing Office]
S. Hrg. 114-565
RECALIBRATING REGULATION OF COLLEGES AND UNIVERSITIES: A REPORT FROM
THE TASK FORCE ON GOVERNMENT REGULATION OF HIGHER EDUCATION
=======================================================================
HEARING
OF THE
COMMITTEE ON HEALTH, EDUCATION,
LABOR, AND PENSIONS
UNITED STATES SENATE
ONE HUNDRED FOURTEENTH CONGRESS
FIRST SESSION
ON
EXAMINING RECALIBRATING REGULATION OF COLLEGES AND UNIVERSITIES,
FOCUSING ON A REPORT FROM THE TASK FORCE ON GOVERNMENT REGULATION OF
HIGHER EDUCATION
__________
FEBRUARY 24, 2015
__________
Printed for the use of the Committee on Health, Education, Labor, and
Pensions
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COMMITTEE ON HEALTH, EDUCATION, LABOR, AND PENSIONS
LAMAR ALEXANDER, Tennessee, Chairman
MICHAEL B. ENZI, Wyoming PATTY MURRAY, Washington
RICHARD BURR, North Carolina BARBARA A. MIKULSKI, Maryland
JOHNNY ISAKSON, Georgia BERNARD SANDERS (I), Vermont
RAND PAUL, Kentucky ROBERT P. CASEY, JR., Pennsylvania
SUSAN COLLINS, Maine AL FRANKEN, Minnesota
LISA MURKOWSKI, Alaska MICHAEL F. BENNET, Colorado
MARK KIRK, Illinois SHELDON WHITEHOUSE, Rhode Island
TIM SCOTT, South Carolina TAMMY BALDWIN, Wisconsin
ORRIN G. HATCH, Utah CHRISTOPHER S. MURPHY, Connecticut
PAT ROBERTS, Kansas ELIZABETH WARREN, Massachusetts
BILL CASSIDY, M.D., Louisiana
David P. Cleary, Republican Staff Director
Evan Schatz, Minority Staff Director
John Righter, Minority Deputy Staff Director
(ii)
C O N T E N T S
__________
STATEMENTS
TUESDAY, FEBRUARY 24, 2015
Page
Committee Members
Alexander, Hon. Lamar, Chairman, Committee on Health, Education,
Labor, and Pensions, opening statement......................... 1
Murray, Hon. Patty, a U.S. Senator from the State of Washington,
opening statement.............................................. 4
Mikulski, Hon. Barbara A., a U.S. Senator from the State of
Maryland....................................................... 6
Burr, Hon. Richard, a U.S. Senator from the State of North
Carolina....................................................... 24
Bennet, Hon. Michael F., a U.S. Senator from the State of
Colorado....................................................... 26
Warren, Hon. Elizabeth, a U.S. Senator from the State of
Massachusetts.................................................. 28
Witnesses
Kirwan, William E. ``Brit'', Chancellor, University System of
Maryland, Adelphi, MD.......................................... 8
Prepared statement........................................... 11
Zeppos, Nicholas S., Chancellor, Vanderbilt University,
Nashville, TN.................................................. 13
Prepared statement........................................... 16
ADDITIONAL MATERIAL
Statements, articles, publications, letters, etc.:
National Task Force on Violence Against Women................ 36
Response by William E. Kirwan to questions of Senators:
Senator Enzi............................................. 37
Senator Franken.......................................... 37
Response to Questions of Senator Enzi by Nichloas S. Zeppos.. 38
(iii)
RECALIBRATING REGULATION OF COLLEGES AND UNIVERSITIES: A REPORT FROM
THE TASK FORCE ON GOVERNMENT REGULATION OF HIGHER EDUCATION
----------
TUESDAY, FEBRUARY 24, 2015
U.S. Senate,
Committee on Health, Education, Labor, and Pensions,
Washington, DC.
The committee met, pursuant to notice, at 10:02 a.m., in
room 430, Dirksen Senate Office Building, Hon. Lamar Alexander,
chairman of the committee, presiding.
Present: Senators Alexander, Burr, Murray, Mikulski,
Bennet, and Warren.
Opening Statement of Senator Alexander
The Chairman. The Senate Committee on Health, Education,
Labor, and Pensions will please come to order.
This morning we're having our first hearing in this
Congress of the reauthorization of the Higher Education Act
which will focus on the final report of the Task Force on
Government Regulation of Higher Education.
Senator Murray and I will each have an opening statement,
then we'll introduce our panel of witnesses. Senator Mikulski
will introduce one of the witnesses and at that time make
whatever comments she would like to make because she has to
leave at about 10:30 for another hearing. After our witness
testimony, Senators will have 5 minutes of questions.
Sometimes it's best to approach a subject with examples, so
let me use three. More than a year ago, Vanderbilt University
had the Boston Consulting Group determine how much it cost the
University to comply with Federal rules and regulations on
higher education. The answer: $150 million, or 11 percent of
the University's total non-hospital expenditures last year. Let
me repeat that. In 1 year, $150 million, or 11 percent of the
University's total non-
hospital expenditures.
Vanderbilt Chancellor Nick Zeppos, who will testify today,
says that this adds about $11,000 in additional tuition per
year for each of the University's 12,757 students. I met a
parent this morning, Chancellor Zeppos, who said he's sending
his $11,000 already.
The second example. Each year, 20 million American families
fill out a complicated, 108-question form called the FAFSA,
Free Application for Federal Student Aid, to obtain a grant or
loan to help pay for college. Experts who testified before this
committee last year, a hearing Senator Harkin presided over,
said that answering just two questions would tell the
Department of Education 95 percent of what it needs to know to
determine a student's eligibility for a grant or a loan: one,
what is your family size; and two, what is your family income.
In January, a bipartisan group of six Senators introduced
legislation to simplify the student aid application and
process, including reducing the 108-question FAFSA form to just
two questions. If our legislation becomes law, then families,
guidance counselors and admissions officers would save millions
of hours. Most importantly, according to financial aid expert
Mark Kantrowitz, the complicated 108-question form discourages
up to 2 million Americans each year from applying for aid. Last
fall, the president of Southwest Tennessee Community College in
Memphis told me that the complex form turns away from his
campus 1,500 students a semester.
Tennessee has become the first State to make community
college tuition free for qualifying students, but first each
student must fill out the FAFSA. Now that tuition is free, the
principal obstacle for qualified Tennessee students to obtain 2
years of education after high school is not money. It's this
unnecessarily complicated Federal form.
And finally, 10 years ago--the third example--then 3 years
ago, surveys by the National Academy of Sciences found that
principal investigators spend 42 percent of their time
associated with Federal research projects on administrative
tasks instead of research. I then asked the head of the
National Academy what a reasonable percent of time would be for
a researcher to spend on administrative tasks. He replied
perhaps 10 percent, or even less.
How many billions could we save if we reduced that
administrative burden? Taxpayers spend more than $30 billion a
year on research and development at colleges and universities.
This year the average annual cost of a National Institutes of
Health research project is $480,000. If we reduce spending on
unnecessary red tape by just $1 billion, the NIH could
potentially fund more than a thousand new multi-year grants.
These examples should not be excused as normal, run-of-the-
mill problems of government. These examples and others like
them represent sloppy, inefficient governing that wastes money,
hurts students, discourages productivity, and impedes research.
Such waste should be an embarrassment to all of us in the
Federal Government, and let me make it clear, let's just not
blame President Obama or Secretary Duncan. They have
contributed to the problem, but so has every president and
every education secretary, and that includes me, since 1965
when the first Higher Education Act was enacted; and the list
of those embarrassed should also include the Congress of the
United States for year after year adding to and tolerating a
pile of conflicting, confusing regulations.
The Higher Education Act totals nearly 1,000 pages. There
are over 1,000 pages in the official Code of Federal
Regulations devoted to higher education and, on average, every
work day the Department of Education issues one new sub-
regulatory guidance, directive or clarification. No one is
taking time to weed the garden.
The result of this piling up of regulations is that one of
the greatest obstacles to innovation and cost-consciousness in
higher education has become us, the Federal Government. Since
all of us created the mess, then it's up to all of us to fix
it. That's why more than a year ago four members of this
committee, two Democrats, two Republicans, asked a group of
distinguished educators to examine the current state of Federal
rules and regulations on colleges and universities. We asked
them not just to tell us the problem but to give us specific
solutions.
They have done so in a remarkable document entitled
``Recalibrating Regulation of Colleges and Universities'' in
which they outline 59 specific regulations, requirements and
areas for Congress and the Department of Education to consider,
listing 10 especially problematic regulations. I thank
Vanderbilt Chancellor Nick Zeppos and Maryland Chancellor Brit
Kirwan for leading the effort.
It's a remarkably good report. You did exactly what we
asked. Instead of sermons, it was very specific. It was written
in plain English. Perhaps we should get whomever wrote your
report to write the regulations of the Federal Government. It
reminds me of the ``Rising Above the Gathering Storm'' report
of 10 years ago that gave us 10, really 20 things we should do
to increase American competitiveness, and because they were
specific--and both Senator Murray and Senator Mikulski were
involved in this--they eventually got adopted.
This is a blueprint for the future. The report makes clear
that colleges and taxpayers expect appropriate regulation, but
neither taxpayers nor colleges are well served by the jungle
that exists today. Consumer information that is too complicated
to understand is worthless. Colleges must report, for example,
the amount of foreign gifts they receive, disclose the number
of fire drills that occurred. Gainful employment disclosures
require 30 different pieces of information for each academic
program subject to the regulation. When a student withdraws
from college before a certain time, a student's Federal money
must be returned by the government. That's a simple concept.
Yet the regulation governing this is 200 paragraphs of
regulatory text accompanied by 200 pages in the Federal Student
Aid Handbook.
The University of Colorado reports they have two full-time
staff devoted to this issue, one to do the calculation, the
other to re-check the other one's work. Institutions offering
distance education are subject to an additional set of
bureaucracy that can result in additional cost of a half-
million to a million dollars for compliance.
All of these are examples of colleges and universities
spending time and money on compliance with Federal rules and
not on students. Senator Murray and I will discuss how to
develop a bipartisan process to take full advantage of the
recommendations in this report and to include many of them in
the reauthorization of the Higher Education Act, which we plan
to do this year. We'll schedule additional hearings to gather
comment on the report from institutions who are not directly
involved with the report, and we'll hear from consumers of
higher education, including parents, students, and taxpayers.
Some of the recommendations require change in the law. Many
can be fixed by the Department itself. I've talked with
Secretary Duncan several times about this, most recently on
Friday. He's eager to do his part. I look forward to working
with him and President Obama on eliminating unnecessary red
tape, saving students money, and removing unnecessary
regulatory obstacles to innovation in the best system of higher
education in the world.
This is not a new subject for me. One of the first things I
did as a U.S. Senator in 2003 was to try to simplify student
aid, and I'm told the net result of my efforts was the
reduction of approximately seven questions on the Federal
Student Aid form. Those have been replaced by many more now.
I authored a provision in the bill of the Higher Education
Act of 2008 that required the Secretary of Education to publish
a compliance calendar so schools could see all of their
deadlines month-by- month, day-by-day. Unfortunately, 7 years
later, the Department of Education has been unable to produce
such a calendar. With bipartisan support and this
groundbreaking report, the one we have today, I'm counting on
this effort to get a lot farther than the one 10 years ago.
Now we'll go to Senator Murray for her comments, and then
to Senator Mikulski to introduce a witness and to make
comments.
Senator Murray.
Opening Statement of Senator Murray
Senator Murray. Well, thank you very much, Mr. Chairman.
This is, of course, our first hearing on higher education, and
I'm really glad that we're beginning our conversations on this
topic.
Higher education and job training is really critical to
making sure we have the economic strength of our middle class,
and I personally know this is true because I saw it with my own
family growing up. My dad was diagnosed with multiple sclerosis
when I was a teenager. It wasn't long before he couldn't work,
and without warning my own family had fallen on hard times. But
because of strong Federal investments, my brothers and sisters
and I got a good public education and we were able to afford to
go to college with the help of Pell Grants and other Federal
aid programs.
Higher education and training was critical for my family to
succeed and ensure we had a foothold into the middle class. I
continue to believe it is a crucial part of building an economy
that works for all families, not just the wealthiest few.
In my new role here on this committee as Ranking Member,
I'm going to continue to focus on making sure that students
have access to a college education and safe learning
environments. I'll be looking for ways to make college more
affordable. I'll be working to reduce the crushing burden of
student debt that limits so many families across the country
today.
Today, we are going to be talking about the recent report
from the Task Force on Federal Regulation of Higher Education.
I, too, want to really thank Senators Alexander and Burr,
Mikulski and Bennet for spearheading the creation of this Task
Force. I'm also glad the two co-chairs of the Task Force could
join us today to discuss their findings and recommendations.
I'm also looking forward to our next hearing that will
bring in the voices of students and more diverse types of
institutions that provide postsecondary opportunities.
At colleges and universities, we need to make sure that
students and families have accurate consumer information, that
students have a safe learning environment, and that the $150
billion in Federal taxpayer dollars we invest in these
institutions each year are well spent.
Of course, it is important to make sure colleges and
universities can work efficiently and effectively, and I am
open to ways to improve our rulemaking process. At the same
time, it would be a mistake to roll back important protections
for faculty, students, and families.
We should also be improving our current protections. Right
now, families and students aren't able to access basic, but
essential, consumer information on their college or university,
like useful graduation and transfer rates, average student
debt, or expected earnings.
When students are deciding where to attend, they should
have the tools to find out if their college or university will
give them a good return on their investment and hard work. They
have a right to know before they go. I was glad to see the
report shine a light on the need to improve the Federal data
systems that we have.
Today, more and more students and families are dealing with
the crushing burden of student debt. Colleges and universities
should be accountable for high-quality outcomes that don't
leave students with debt they struggle to repay.
The report highlights the need to focus our rules of the
road on risky institutions, and I welcome our witnesses'
suggestions in this area.
And finally, as I mentioned, I'm very focused on making
sure students have a safe learning environment, especially when
it comes to preventing violence and sexual assault on campus.
Both the Clery Act and title 9 work to build safer campuses and
protect students. Last year, important strides were made
through the Violence Against Women Act that will help prevent
crimes like stalking and domestic violence and dating violence
on campus. We shouldn't move in the wrong direction by
unraveling these core protections that provide our students
with a safe learning environment. In fact, we need to build on
our work because all students have the right to further their
education without the fear of sexual assault.
Here on this committee, I'm looking forward to working with
Chairman Alexander and our committee members over the next
several months to reauthorize the Higher Education Act in a
bipartisan way so we can make sure that hard-working Americans,
regardless of where they live or where they went to school, or
where and if their parents went to college, or how much money
they make, can continue to have access to the opportunities
that my family did.
I look forward to hearing from our witnesses today. Again,
I thank all of you for your tremendous work on this important
issue.
Thank you, Mr. Chairman.
The Chairman. Thank you, Senator Murray.
During the last Congress, we had a number of very good
hearings on higher education, and this is our first one in this
Congress, as Senator Murray said and as I said. It will
probably be April before we can get to another one, and between
now and then Senator Murray and I will talk about how to
develop the bipartisan process that we both hope to create.
I will introduce Chancellor Zeppos and then turn to Senator
Mikulski to introduce her witness and to make whatever comments
she would like to make at that time since she may have to leave
a little early.
Nick Zeppos was born in Milwaukee, WI. He's Chancellor of
Vanderbilt University in Nashville, TN. He's held that position
since 2008. He was well prepared for it, having been at
Vanderbilt for 28 years prior to that, starting as an assistant
professor in the law school. He later was provost, and now he
is the chancellor.
I want to express my appreciation to Chancellor Zeppos, as
well as Chancellor Kirwan, for giving so much of their valuable
time to leading this report.
Senator Mikulski.
Statement of Senator Mikulski
Senator Mikulski. Thank you very much, Mr. Chairman, for
your leadership on this, and also the leadership of Senator
Murray.
This morning, the Judiciary Committee is also holding a
hearing on human trafficking, and all the women of the Senate
on a bipartisan basis have joined together to work with our
colleagues on really very important legislative steps. I'll be
joining Senator Collins to testify and might have to leave
here.
This is going to be a great hearing and a wonderful report.
When you, Senator Alexander, and I were working on the
reauthorization of Higher Education in 2009, we looked at the
issue of two things: how can we make sure young people got a
very good education when they went to college, to make college
more available and make it more affordable; we have focused
also on student aid, reforming student aid, improving student
aid for the students.
What we also looked at was how can colleges and
universities, public and private, control their costs. What
emerged in our discussion, and I know in subsequent meetings I
had in my own State, the issue of regulation and the regulatory
aspects of some regulations that are either outdated or get in
the way of each other increased the cost but did not improve
either outcome in terms of graduation rates, didn't necessarily
improve outcome in terms of quality or innovation, or make sure
that our schools were opportunity-driven like title 9, and also
the safety concerns that many of us have.
This is where this task force came from, how could we take
a look at the regulations and identify the 10 most serious ones
that impact the administration of these. These recommendations,
just reading them very briefly, really offer a road map on how
we can improve quality, improve innovation, what you get when
you come to the classroom, make sure that the whole student aid
process really works on behalf of the student and that it does
lead to jobs, but not necessarily more jobs at the Department
of Education to write more regulations requiring job training
so that you can get a better job and come to work at the
Department of Education so you too can write more regs.
This is no laughing matter. We look forward to hearing this
testimony, and I would like to thank both Drs. Kirwan and
Zeppos, all the members of the task force, for their hard work
on this. They have done this on their own time. They have put
considerable effort, thought, and expertise into this, and I
mean to value it.
I'd like to bring to the committee's attention my
Chancellor from the University of Maryland, Dr. Kirwan. Dr.
Kirwan has been a member of the University of Maryland faculty
and administration for 24 years. He's been a distinguished
chancellor for 13 years. Before that, Ohio State also was able
to claim him.
When you look at all of the wonderful work that the
University of Maryland does in educating students here and
around the world, because we have something called University
College which has served our military since the end of World
War II and is now the largest online university run by a land-
grant college, it is stunning what has been done.
I would say this to the committee: We would not have Google
in the United States of America without Dr. Kirwan. Now,
Barbara, where does this come from?
[Laughter.]
Dr. Kirwan, in addition to being such an able chancellor,
really is a gifted mathematician. In his work as a
mathematician, he went to global conferences or international
conferences. There, there was a man named Dr. Brin. Though he
could not leave the Soviet Union, he was allowed to attend
international mathematical conferences. During the Jimmy Carter
era and while we were working on legislation called Jackson-
Vanik and the window opened and some people could get out, Dr.
Brin knew Dr. Kirwan and said do you think you can help me?
Dr. Kirwan responded. The Board of Regents responded. Not
only could Dr. Brin get out of Russia, but he could come to the
University of Maryland.
He had a little boy named Sergey. Sergey was really
brilliant, a little difficult. He had a unique ability to get
out of college by the time he was 17. Then finally, he went
through our public schools, goes to the University of Maryland,
graduates, goes off to Stanford to work in one of those garages
we all hear about.
Well, the rest is history. Sergey Brin, of course, is
Google. Had it not been for Chancellor Kirwan meeting Dr. Brin,
us doing Jackson-Vanik, the University of Maryland providing a
home for Dr. Brin, we would not have Google. That's a fabulous
story which shows what good immigration policy can do----
[Laughter.]
Senator Mikulski [continuing]. Also, what a gifted,
talented, dedicated humanitarian can do. That's Dr. Kirwan.
The Chairman. Well, that was--thank you, Senator Mikulski.
[Laughter.]
I'll have to give Chancellor Zeppos an even better
introduction a little later.
[Laughter.]
We have several Senators who are here who also joined in
commissioning the report--Senator Burr and Senator Bennet. If
you're going to be able to stay, you'll have a chance. Would
you like to make comments just before we start?
Senator Bennet. No. I'd like to hear the witnesses. I want
to thank you, Mr. Chairman, and Senators Murray and Mikulski,
for your leadership, putting the commission together. For once,
we have a committee that actually works in order. We put the
commission together, we're having hearings, and then hopefully
we're going to pass a bipartisan bill. Thank you very much for
that work.
The Chairman. Senator Burr, do you want to make any
comments?
Senator Burr. Mr. Chairman, only that I felt that Senator
Mikulski was going to highlight the entrepreneurial spirit of
Google being created with Dr. Kirwan. I welcome our witnesses.
I thank the Chair.
The Chairman. Thank you.
Usually we ask our witnesses to summarize their remarks in
5 minutes, but since there are just two of you, and since you
led the report and we're anxious to hear from you, why don't
you take up to 10, if you would, please, and then that will
give us a chance to ask questions.
Let's start with Dr. Kirwan.
STATEMENT OF WILLIAM E. ``BRIT'' KIRWAN, CHANCELLOR, UNIVERSITY
SYSTEM OF MARYLAND, ADELPHI, MD
Mr. Kirwan. Thank you very much, Chairman Alexander. And
thank you, Senator Mikulski, for that very nice introduction.
Unfortunately, I didn't get any stock in the Google
Corporation as part of that recruitment effort.
In any case, we want to thank Chairman Alexander and
Ranking Member Patty Murray for the opportunity to come and
make some comments on the report today, and thank the four of
you for your vision and leadership in creating this task force.
As Chairman Alexander noted, the task force was charged
with studying and recommending ways to reduce Federal
regulatory burden on higher education, but--and this is a very
critical point which Senator Murray just emphasized--to do so
in a way that ensures students, families, and taxpayers all
have relevant protections, and ensures Congress that funds are
being spent for their intended purpose.
In sum, we were asked to determine smarter regulations and
a streamlined process while maintaining a high level of
transparency and accountability.
In just a moment my co-chair, Nick Zeppos, will, of course,
make some comments, but we agreed that I would lead off.
The task force consisted of 16 presidents and chancellors
representing all sectors of higher education. In addition, as
part of our work, we visited and interviewed campus officials
at 60 different institutions. I also want to acknowledge at the
outset the excellent staff support that we received from the
American Council for Education. Molly Broad is here, who is
president of that task force; and Terry Hartle, who was a key
member of the staff that worked with us on this report.
Through the task force's efforts, we've learned that many
regulations are well-conceived, address critically important
issues for parents, students, and the general public, and
provide appropriate means of timely and transparent
accountability.
On the other hand, we also discovered that too many
regulations are overly complex, confusing to both students and
institutions, and result in costly compliance efforts that are
really not helpful to the public or to Congress.
What has happened over the years, in effect, is that
measures, regulations, and interpretations have been layered on
existing measures and rules, creating a maze of sometimes
confusing if not conflicting reporting requirements.
One way to illustrate this fact is that the Higher
Education Act is now 1,000 pages long. The regulations
supporting this act are another 1,000 pages, and on average the
U.S. Department of Education sends one ``dear colleague'' or
other guidance document to higher education institutions, on
average, every working day throughout the year.
The substance of our report is really contained in sections
2, 3, and 4. Section 2 addresses the challenges that higher
education faces in the current regulatory environment. Section
3 is the list of 10 most problematic regulations, with
recommendations for how they could be improved. The final
section is recommendations for improvement to the overall
process, although it doesn't do much if we correct 10
regulations but leave a process that could regenerate more
problematic regulations in the future. That's what the final
section is about.
I offer just brief comments on Section 3. That's the list
of 10 most problematic regulations, and mention two or three of
them, and then Nick Zeppos will comment on the other two
sections.
The first regulation I want to speak to is the FAFSA, the
form that Chairman Alexander held up just a few moments ago
that parents and students must fill out. There's been, of
course, considerable discussion about simplifying this form,
which, if possible, would be a great benefit to students and
their families, not to mention our higher education
institutions. There is a particular requirement with the FAFSA
that causes families and institutions enormous problems. Let me
explain.
A student currently seeking aid, let's say for next fall,
must provide tax data for calendar year 2014. They're going to
school in the fall of 2015; they have to supply the tax data
for calendar year 2014. This creates a significant timing
problem because the IRS due date for receiving tax information
is not until April 15, a date after the financial aid deadline
has passed.
This leads to enormous frustration on the part of students
and their parents, and to errors by institutions in rushing to
verify tax data. The task force offers what we think is a
simple fix to this problem: allow the student in this example
to submit 2013 tax information. In other words, not the prior
year tax information but the prior-prior year tax information.
The second of the 10 most problematic regulations I'll
mention is one that stifles innovation in higher education
delivery, and this is particularly relevant for my institutions
in the University of Maryland System because, as Senator
Mikulski noted, it includes University of Maryland University
College, which is the largest not-for-profit online education
institution in the United States.
Now historically, the State requirements for State
authorization of distance education were limited to the State
where the institution was physically located. In our case, the
University of Maryland University College needed State
authorization in Maryland.
However, a few years ago the Department of Education
fundamentally altered the authorization rules. It now requires
that institutions get authorization in every State where a
student lives, even if it's only one student in that State. You
can imagine the cost and time required for an institution to
send lawyers and other staff to each State where one of its
online programs enrolls students and go through the timely
process of getting authorized in that State.
The task force recommends that Congress re-codify the long-
term practice of requiring authorization by the State where the
institution exists, not where students reside.
One final recommendation in our top 10 list that I'll just
briefly cite, and this is the issue, again one that Chairman
Alexander mentioned, and this is the return of title 4 funds,
and there is a very sound regulation requirement that says if a
student who is getting title 4 funds leaves the institution
before the semester is over in which they got the support, they
are only entitled to funds for the portion of the semester in
which they were enrolled, a very sensible requirement and
regulation.
The difficulty arises if a student leaves the institution
and there is no record of that student leaving the institution.
If the student on departure from the institution actually goes
through the process of de-enrolling, withdrawing, then there is
a clear record of when the student left and a precise formula
about what proportion of the funds that student is entitled to.
For many students who leave an institution, they don't formally
withdraw. As a result, it becomes very difficult to determine
how the funds should be recaptured.
It's a complicated issue and, as Senator Alexander
mentioned, there are hundreds of paragraphs describing the
process to make this determination, and we think that we need
to take out a clean sheet of paper and go back and revisit this
regulation, and we have some suggestions and thoughts about how
that might occur.
Before turning to my colleague, Chancellor Zeppos, let me
return to a very important point. Higher education recognizes,
with deep appreciation, the enormous investment the Federal
Government makes in higher education through Federal financial
aid programs and to our universities' research enterprise. I
want to offer special words of appreciation to Senator Mikulski
and all of you who have worked so hard to ensure ample research
and financial aid funding during these fiscally challenging
times.
Federal funds are public funds, and the task force strongly
and unanimously supports a rigorous, efficient, and transparent
system of accountability to ensure Congress, parents, students,
and the general public that these funds are being spent
appropriately and to accomplish their intended purpose. Our
Nation deserves nothing less.
The task force has endeavored, in effect, to separate the
wheat from the chaff through recommendations and processes that
can both strengthen and streamline higher education's
accountability obligation. Thank you very much for letting me
make these comments.
Before I turn to Nick, I just want to recognize Michael
Locke from Rasmussen College who is here, and he is a member of
our task force, and we appreciate your being here, Michael.
Mr. Chairman, this completes my initial comments.
[The prepared statement of Dr. Kirwan follows:]
Prepared Statement of William E. ``Brit'' Kirwan
summary
Chairman Alexander, Senator Murray and committee members, this Task
Force was charged to recommend ways to streamline and refocus the
Federal regulations impacting higher education. We were asked to
identify smarter regulations and improved processes. The task force was
comprised of leaders from all sectors of higher education, and
conducted visits and interviews with campus officials from more than 60
different institutions.
We in higher education fully understand--and support--the important
role that Federal regulations play. Students, colleges, and
universities across this country benefit from the strong Federal
investment in higher education, including significant funding for
student aid programs such as Federal loans, Pell Grants for low-income
students, the Federal Work-Study program, TRIO programs, funding
targeted to historically black colleges, not to mention Federal funding
and grants for university-based research and development.
Many regulations are well-intentioned to address critically
important issues. Many regulations are poorly framed, confusing, overly
complex, ill-conceived, or poorly executed. Some are even wholly
unrelated to the mission of higher education. Requirements have been
layered upon requirements resulting in a tangle of regulations that too
often has a harmful effect on higher education's ability to serve
students. And, the costs associated with compliance are one of the
factors driving rising tuitions and harming affordability. For the past
several years, our Nation has been engaged in a conversation on college
affordability. All universities and colleges--public and private--need
to tighten their belts, reduce costs wherever possible, and emphasize
efficiency in their operations.
This report contains broad process reforms ideas as well as
recommendations to address 10 specific regulatory areas that have
proved particularly challenging. The much-maligned Free Application for
Federal Student Aid, or FAFSA. Many students and parents have
repeatedly pointed out, their complete tax information isn't available
until after the financial aid application deadline has passed. We
recommend that FAFSA be revised to allow applicants to submit tax
information from 2 years prior rather than the previous year.
The impact of inappropriate regulations often stifle innovations in
distance education. The Department altered that landscape by requiring
institutions to meet the State authorization laws of every State in
which a student--even just a single student--was physically located. As
the ability of online education to cast aside geographical boundaries
increases, it is counterproductive to erect walls of regulation.
Congress should clarify a return to the long-standing interpretation of
State authorization so that the resources that now go to attorneys,
compliance officers, and tuition surety bonds to get authorization in
State after State can be redirected to target access, affordability,
and educational innovations.
The next is the inordinate amount of information and data that
colleges and universities are required to collect and disseminate. Some
of this information is, of course, very useful for students and
families to consider; but some of it is not. For example, higher ed
institutions must report on the number of supervised fire drills they
hold in a given year. They have to produce more than 30 ``gainful
employment disclosures'' for each covered program offered. They are
required to counsel departing student borrowers on every one of the
seven different Federal loan repayment programs applicable even though
the vast majority use either the standard 10-year or the extended 30-
year program. We recommend that Congress and the Department of
Education work together to winnow this list down to require only the
information most useful to students.
Many requirements are placed upon higher education that have
nothing to do with our mission. These include enforcing Selective
Service registration, combating peer-to-peer file sharing, distributing
voter registration forms in a federally specified timeframe and format,
and other actions that divert time and resources.
The pending reauthorization of the Higher Education Act (HEA)
provides a propitious opportunity to not only identify the most costly,
burdensome, and confusing Federal regulations, but also develop clear
recommendations on how Congress and the Department of Education can
streamline and simplify regulatory policies and practices while
maintaining--even strengthening--accountability. I want to thank the
committee for this opportunity to testify and for the significant time
and attention you have given to this important matter.
______
Good morning. I am Brit Kirwan, Chancellor of the University System
of Maryland (USM). I want to thank Chairman Lamar Alexander and Ranking
Member Patty Murray for the opportunity to speak to this committee
about the need to streamline and refocus the Federal regulations
impacting higher education in America today.
As you know, just over a year ago a bipartisan group of U.S.
Senators--including Chairman Alexander and HELP Committee members
Senator Michael Bennet, Senator Richard Burr, and Senator Barbara
Mikulski--charged a task force with studying and recommending ways to
reduce the Federal regulatory burden, while still maintaining important
protections for students, families, and taxpayers. In short, we were
asked to identify smarter regulations and improved processes. The task
force was comprised of presidents and chancellors from across all
sectors of higher education, and conducted visits and interviews with
campus officials from more than 60 different institutions.
I am joined today by my task force co-chair, Vanderbilt University
Chancellor Nicholas Zeppos. I would also like to acknowledge the
excellent support that the American Council on Education (ACE) provided
to our efforts.
My co-chair has asked me to lead off our joint testimony.
By way of background, the University System of Maryland comprises
12 institutions, including research I institutions, comprehensives,
historically black institutions, one totally on-line university, and a
specialized research institute. We are, in many ways, a microcosm of
public higher education and--as such--have first-hand experience with
the ramifications of the extensive variety and volume of Federal
regulations.
Let me begin my testimony by making a very important point: We in
higher education fully understand--and support--the important role that
Federal regulations play. Students, colleges, and universities across
this country benefit from the strong Federal investment in higher
education, including significant funding for student aid programs such
as Federal loans, Pell Grants for low-income students, the Federal
Work-Study program, TRIO programs, funding targeted to historically
black colleges, not to mention Federal funding and grants for
university-based research and development. I can't let this point pass
without thanking my senior Senator from Maryland, Senator Mikulski, for
her exceptional efforts with regard to these funding issues. We in
higher education recognize with gratitude the extraordinary fiscal
commitment the Federal Government makes to our enterprise. Therefore,
we recognize and embrace our obligation to be transparent, responsible,
and accountable stewards of taxpayer money.
Through the task force's work, we have learned that many
regulations are well developed, address critically important issues,
and provide appropriate means of institutional accountability. On the
other hand, we have also discovered that too many regulations are
poorly framed, confusing, overly complex, ill-conceived, or poorly
executed. Some are even wholly unrelated to the mission of higher
education. In addition, over time, requirements have been layered upon
requirements resulting in a tangle of regulations that too often has a
harmful effect on higher education's ability to serve students. Some
regulations even restrict rather than contribute to student access to
higher education, limit our ability to focus resources on student
success, impede organizational efficiencies, and constrain innovation.
And, quite frankly, the costs associated with compliance are one of the
factors driving rising tuitions and harming affordability efforts.
This last point is very important. For the past several years, our
Nation has been engaged in a conversation on college affordability.
Clearly, all universities and colleges--public and private--need to
tighten their belts, reduce costs wherever possible, and emphasize
efficiency in their operations. And this is precisely what has been
happening at institutions across the country.
But, when it comes to costs associated with Federal regulations, we
are largely powerless. The increasing volume and velocity of Federal
regulation are captured by one simple metric: The U.S. Department of
Education issues more than one document per workday providing official
guidance to amend or clarify existing rules.
This is why this task force is so important and why I, once again,
want to thank the Senators for creating it and supporting it. The
pending reauthorization of the Higher Education Act (HEA) provides a
propitious opportunity to not only identify the most costly,
burdensome, and confusing Federal regulations, but also develop clear
recommendations on how Congress and the Department of Education can
streamline and simplify regulatory policies and practices while
maintaining--even strengthening--accountability.
The task force report contains broad process reforms ideas as well
as recommendations to address 10 specific regulations that have proved
particularly challenging. I will outline some of those specific
recommendations and Nick will followup with others.
The first I want to speak to is the much-maligned Free Application
for Federal Student Aid, or FAFSA. Under existing FAFSA regulations,
students are required to enter tax data from the previous year. But as
many students and parents have repeatedly pointed out, their complete
tax information isn't available until after the financial aid
application deadline has passed. To address this problem, we recommend
that FAFSA be revised to allow applicants to submit tax information
from 2 years prior rather than the previous year. Moving to a so-called
``prior-prior year'' system would drastically simplify the current
Federal rules regarding verification of information, which happens to
be one of the common compliance mistakes made by institutions. Prior-
prior year would also help students and families, who can be frustrated
and confused by the additional requests for information that come with
the verification process.
The second recommendation I will highlight looks at the impact of
inappropriate regulations that stifle innovations in distance
education. Historically, Federal requirements for State authorization
of distance education programs were limited to the State where the
institution was physically located. However, a few years ago, the
Department of Education fundamentally altered that landscape by
requiring institutions to meet the State authorization laws of every
State in which a student--even just a single student--was physically
located. As the ability of online education to cast aside geographical
boundaries increases, it is counterproductive to erect walls of
regulation. Congress should clarify a return to the long-standing
interpretation of State authorization so that the resources that now go
to attorneys, compliance officers, and tuition surety bonds to get
authorization in State after State can be redirected to target access,
affordability, and educational innovations. Institutions can and should
be responsible for complying with State laws, certainly. But there is
no need for the Federal Government to be involved with these matters.
The next item I want to highlight is the inordinate amount of
information and data that colleges and universities are required to
collect and disseminate. Some of this information is, of course, very
useful for students and families to consider; but some of it is not.
For example, higher ed institutions must report on the number of
supervised fire drills they hold in a given year. They have to produce
more than 30 ``gainful employment disclosures'' for each covered
program offered. They are required to counsel departing student
borrowers on every one of the seven different Federal loan repayment
programs applicable even though the vast majority use either the
standard 10-year or the extended 30-year program. Providing all this
data makes it difficult to separate the wheat from the chaff. To
prevent an overload of information, we recommend that Congress and the
Department of Education work together to winnow this list down to
require only the information most useful to students and their
families.
The final issue I will highlight before turning things over to Nick
is the number of requirements placed upon higher education that have
nothing to do with our mission. These include enforcing Selective
Service registration, combating peer-to-peer file sharing, distributing
voter registration forms in a federally specified timeframe and format,
and other actions that divert time and resources. These may all be
worthy goals, but using colleges and universities as the mechanism to
achieve them is costly and inefficient. It is our task force's hope
that Congress will use the upcoming HEA reauthorization as an
opportunity to review all of the Act's provisions, identify the Federal
purpose behind their inclusion, and strike requirements that are not
clearly related to the core mission and responsibilities of higher
education.
Chancellor Zeppos will now share with the committee his experiences
and perspectives and provide additional information on the Task Force
Report. So, let me close by once again thanking the committee for this
opportunity to testify and for the significant time and attention you
have given to this important matter.
The Chairman. Thanks, Dr. Kirwan.
Chancellor Zeppos, if you could summarize your comments in
about 10 minutes, we'll then go to the Senators for questions
and comments.
STATEMENT OF NICHOLAS S. ZEPPOS, CHANCELLOR, VANDERBILT
UNIVERSITY, NASHVILLE, TN
Mr. Zeppos. Thank you, Chairman Alexander, Ranking Member
Murray, and members of the committee. Thank you for inviting me
to testify before you today in my capacity as co-chair of the
Task Force on Federal Regulation of Higher Education.
It's been my privilege to serve in this capacity, and I'm
honored to be here with my co-chair and esteemed colleague,
Brit Kirwan, to discuss ways that we might improve the
regulatory structure for colleges and universities.
The underlying premise of our work is the belief that
smart, better regulations protect students and families, keep
them safe, and hold colleges and universities accountable for
the considerable public dollars we receive. Taxpayers and the
government, I want to stress, have the right to know that these
funds are being spent wisely. Thus, we embrace the need for
Federal regulations.
We are not here in any way to ask for any deregulation of
higher education. Rather, at your invitation, we wanted to
bring to you and bring to your attention the fact that over
time, we believe oversight of higher education has expanded in
many ways that undermines the ability of our institutions to
best serve students, accomplish our missions, and innovate in
this dynamic economy.
Many of the Department's regulations are well-intended but
unnecessarily voluminous, too often ambiguous, and the cost of
compliance has become unreasonable. It is having a real impact
on costs of college and tuition. Even more troublesome, we are
very concerned that these regulations stand as a barrier for
students' access to college education.
For years, I'm sure you know, colleges and universities
have complained to policymakers about the burdensome nature of
Federal regulations. We've gotten quite good at it, and I would
put myself in that category, which is why I accepted this
assignment. We have often found sympathetic ears on Capitol
Hill, but the higher education community has not, I believe,
been as transparent as we are in presenting the data in support
of this position and to really work closely with you for
proposed solutions.
This report, as Brit discussed, offers concrete suggestions
for reform. I will say as a cautionary comment, Senator
Alexander did not mention it but I was a lawyer in Washington,
DC, practicing administrative law, representing probably every
government agency before I joined the Vanderbilt Law School
faculty. I know that simply revising regulations is really not
the way to address some of the underlying problems with the
process by which the Department promulgates these regulations.
We believe changes are needed in how the Department develops,
implements, and enforces regulations, working closely with
colleges and universities. Our report offers recommendations to
improve each phase of the regulatory process.
For example, the negotiated rulemaking process is very well
intended, but we believe it has to be reformed to make sure it
achieves its purpose. Unrelated issues are often bundled
together in a complex process. Facilitators are really not
permitted to serve as arbiters in reaching a consensus on good,
smart regulations from a group of informed citizens.
The Department should provide clear regulatory safe harbors
to help institutions that abide by their standards meet their
compliance obligations. Such safe harbors exist in other areas
of the law that pertain to universities. As Chairman Alexander
mentioned, Congress required the Department in 2008 to produce
an annual compliance calendar. We believe that that would be a
great step forward if they were to do so.
The Department should also recognize when institutions are
acting in good faith according to the guidelines set forth by
the Department that are clearly stated. There should be some
sort of statute of limitations for enforcement of Department
regulations. We've given examples where it's taken more than 10
years to complete a program review and issue fines. If we are
going to have an effective system where universities are held
accountable through a return of funds, through a system of
fines, we simply have to have a better timeline to make sure
that the message is heard.
Finally, we suggest Congress consider developing and
implementing, as Senator Murray mentioned, risk-informed
regulatory approaches, where appropriate.
Let me discuss the issue of cost that was brought up by
Chairman Alexander. We've heard many numbers knocked around
over the decades, literally. What is the real number?
Over the course of the last 6 months, we at Vanderbilt
conducted an in-depth analysis to look at the cost of Federal
regulatory compliance, excluding those related to our very
large clinical health care mission. To give you a sense of
size, that left about $1.36 billion in the university's budget
by excluding the clinical enterprise.
We wanted to know not only the total cost but we actually
tried to identify what are the areas that we could look at to
reduce our own cost of spending. We found regulatory compliance
and costs, interestingly, that are centralized in many parts of
the university but, not surprisingly, particularly for the
larger universities, are spread across all lines of activities
in the university.
We found that Vanderbilt spends approximately $146 million
annually on Federal compliance. As Chairman Alexander noted,
that represents about 11 percent of our non-clinical expenses.
Put another way, this equals $11,000 in additional tuition per
year for our 12,757 students.
As a major research institution with nearly $500 million in
federally supported research, I want to emphasize that a
significant share of this cost is in complying with research
regulations, and I commend the committee for looking at that
area as well.
We also calculated that we spent approximately $14 million
annually in compliance with higher education-related
regulations such as accreditation and Federal financial aid.
One of the things we believe is happening is we're not asking
for all the costs, but as a large institution we're able to
spread a number of the costs over a pretty large base of
activities. We hear a lot from some of our smaller institutions
and colleagues that they just don't have that chance.
Again, I want to thank you for this opportunity to co-chair
this task force and to present what I believe is the first step
in moving forward with our collective recommendations.
Regulatory reform represents an area where we can remove
red tape, hopefully reduce some costs while we continue our
prudent stewardship of tax dollars and provide a safe and
welcoming environment for all of our students, faculty and
staff. We also believe it's incredibly important for students
and faculty to receive the information they need to make the
informed choices before they enroll in a school and accept the
financial obligations associated with that.
I think you will agree that the recommendations report
includes some fairly clearly written, commonsense proposals
that will hopefully benefit the greater society at large.
Historically, universities and colleges have served as drivers
of the general national interest. They promote education, they
promote discovery, and they provide solutions to face the
challenges that we all face.
We talk about the American Dream on our campus, and we
believe it happens every day as we see young people coming to
attend our university.
We all benefit from Federal funding, and it is spent for
the national interest. We want to be good stewards, but we'd
also like to see that money reinvested more in core missions of
aiding and advancing society.
I look forward to your questions, and I look forward to
further participation in advancing our recommendations. Thank
you very much.
[The prepared statement of Dr. Zeppos follows:]
Prepared Statement of Nicholas S. Zeppos
summary
Key Points in Chancellor Zeppos' testimony:
Our underlying premise is the belief that smart
regulations protect students and families and hold colleges and
universities accountable for the considerable public dollars they
receive. Tax payers and the government have the right to know that
these funds are being spent wisely. We are not here to ask you to de-
regulate higher education.
Over time, oversight of higher education has expanded in
ways that undermine the ability of our institutions to serve students
and accomplish our missions. Many of the Department's regulations are
unnecessarily voluminous and too often ambiguous, and the cost of
compliance has become so unreasonable that it is having a real impact
on college costs. Even more troublesome, some regulations are a barrier
for students' access to a college education.
Change is needed to address how the Department develops,
implements and enforces regulations. Our report offers recommendations
to improve each phase of the regulatory process. For example:
The negotiated rulemaking process should be reformed
to ensure it achieves its purpose. Unrelated issues should not
be bundled together. Facilitators should be permitted to serve
as arbiters in reaching consensus.
The Department should provide clear regulatory safe
harbors to help institutions that abide by certain standards to
meet their compliance obligations. Such safe harbors exist in
other areas of law that pertain to universities.
Congress required the Department in 2008 to produce
an annual compliance calendar. They have yet to do so.
The Department should recognize when institutions are
acting in good faith.
There should be a statute of limitations for
enforcement of Department regulations. Taking over 10 years to
complete a program review and issue fines should be
unacceptable.
Congress should consider developing and implementing
``risk-informed'' regulatory approaches where appropriate.
Following an in-depth look at the cost of Federal
regulatory compliance, excluding those related to our healthcare
mission, we determined that we spend approximately $146 million
annually on Federal compliance, representing about 11 percent of our
non-clinical expenses. While a significant share of this is in
complying with research-related regulations, we spend approximately $14
million annually in compliance with higher education-related
regulations such as accreditation and Federal financial aid.
We are now working with a number of other institutions
across the country to measure and compare our findings. We will have
conclusive data from these studies this spring.
Regulatory reform represents an area where we can remove
red tape and reduce costs while we continue our prudent stewardship of
tax dollars and provide students and families the information they need
to make informed choices. The recommendations in our report are common
sense proposals that will benefit the greater good and society at-
large.
______
Chairman Alexander, Ranking Member Murray, members of the
committee, thank you for inviting me to testify before you today in my
capacity as the co-chair of the Task Force on Federal Regulation of
Higher Education. It has been my privilege to serve in this capacity,
and I am honored to be here with my co-chair and esteemed colleague,
Chancellor Kirwan, to discuss ways we might improve the regulatory
structure for colleges and universities.
Let me echo what Chancellor Kirwan stated in his remarks. The
underlying premise of our work is the belief that smart regulations
protect students and families and hold colleges and universities
accountable for the considerable public dollars they receive. Tax
payers and the government have the right to know these funds are being
spent appropriately, thus we embrace the need for Federal regulations.
We are not here to ask you to de-regulate higher ed. Rather, we want to
bring attention to the fact that, over time, oversight of higher
education has expanded in ways that undermine the ability of our
institutions to serve students and accomplish our missions. As we
conclude in our report, many of the Department's regulations are
unnecessarily voluminous and too often ambiguous, and the cost of
compliance has become so unreasonable that it is having a real impact
on college costs and tuition. Even more troublesome, some regulations
are a barrier for students' access to a college education.
For years, colleges and universities have complained to
policymakers about the burdensome nature of Federal regulations--we've
gotten quite good at it. And we have often found sympathetic ears on
Capitol Hill. But the higher education community has not been as
transparent--until now--in presenting data in support of our position
and proposed solutions. This report provides concrete suggestions for
reform.
recommended improvements in the regulatory process
As an administrative lawyer, I know that simply revising existing
regulations is not sufficient to address the underlying problems with
the process by which the Department promulgates regulations. Change is
needed to address how the Department develops, implements and enforces
regulations. Our report offers recommendations to improve each phase of
the regulatory process; some of those recommendations follow.
The negotiated rulemaking process should be reformed to
ensure it achieves its purpose. Unrelated issues should not be bundled
together. Facilitators should be permitted to serve as arbiters in
reaching consensus.
The ``bundling'' of unrelated issues for consideration during a
single negotiated rulemaking has become a serious problem. More
specifically, the Department has too often grouped a host of unrelated
issues into a single panel, choosing negotiators on a disparate set of
issues and thus creating situations in which only a small number of
negotiators are knowledgeable enough to engage on any given issue. In
such cases, a very small number of negotiators may determine the
outcome of rules with broad public policy implications.
The February-May 2014 negotiated rulemaking on ``Program
Integrity'' illustrates this point. A single negotiating committee was
tasked with reaching consensus on, among other issues, ``cash
management'' of title IV funds; State authorization of distance
education programs; State authorization of institutions with foreign
locations; ``clock-to-credit-hour'' conversion; the definition of
``adverse credit'' for borrowers in the PLUS Loan Program; and the
retaking of courses. Given the range of individuals needed for such a
panel, it was not surprising that most negotiators were knowledgeable
about a limited number of these issues. It was even less surprising
that no consensus was reached on the regulatory package.
Another serious obstacle to successful negotiated rulemaking panels
in recent years has to do with the panels' facilitators. As the
individuals charged with running the negotiating sessions, facilitators
should serve as guardians of the process. Unfortunately, that is not
the case. In recent years, the Department has given facilitators a
limited role, with little authority to resolve differences that arise.
This part of negotiated rulemaking should also return to its original
purpose, which involved facilitators who served as arbiters of fairness
and who use their skills to help achieve consensus not by encouraging a
particular substantive outcome, but by being more active in exploring
areas of agreement.
The result of these practices is that the Department exercises an
extremely high degree of control over the entire process, not only
selecting all the committee members and limiting the role of the
facilitators, but also doing all the drafting and taking a very strict
view of what constitutes a consensus. These and additional concerns
about the Department's process for negotiated rulemaking and other ways
to improve the process are explored further in the report, including in
an appended white paper.
The Department should provide clear regulatory safe
harbors to help institutions that abide by certain standards to meet
their compliance obligations. Such safe harbors exist in other areas of
law that pertain to universities.
The Department's requirements are so complicated in many areas that
it is impossible for colleges and universities to be certain they are
in compliance, even when they take carefully considered steps they
believe are necessary. Clear safe harbors--provisions in the law that
will protect institutions from liability as long as certain conditions
have been met--should be established to help institutions meet their
compliance obligations.\1\
---------------------------------------------------------------------------
\1\ Definition adapted from Black's Law Dictionary Free Online
Legal Dictionary, 2d ed., available at: http://thelawdictionary.org/
safe-harbor/.
---------------------------------------------------------------------------
Safe harbors currently exist in other areas of law that apply to
institutions of higher education. For example, colleges and
universities hiring foreign nationals through the H-1B visa program
must pay those individuals wages that are equal to or higher than the
prevailing wage in the occupations for which they were hired. If an
institution uses Department of Labor-determined prevailing wage levels,
it has a safe harbor against challenges to its prevailing wages. The
Federal ``deemed export'' rules prohibit certain individuals from
receiving controlled information and/or controlled technologies without
the required license(s), exception, or exemption, even if those
individuals are otherwise authorized to work within the United States.
However, the ``fundamental research exclusion'' creates a safe harbor
from such requirements.\2\ In addition, under the terms of a
governmentwide policy, entities that receive Federal funds above a
certain amount must undertake an independent audit annually. This
process, commonly referred to as an A-133 audit, was designed as a safe
harbor against excessive audits by Federal agencies.
---------------------------------------------------------------------------
\2\ Fundamental research means basic and applied research in
science and engineering, the results of which ordinarily are published
and shared broadly within the scientific community, as distinguished
from proprietary research and from industrial development, design,
production, and product utilization, the results of which ordinarily
are restricted for proprietary or national security reasons. See:
http://www.ucop.edu/ethics-compliance-audit-services/compliance/
international-compliance/on-campus-research-with-foreign-
nationals.html.
---------------------------------------------------------------------------
Congress should instruct the Department to make use of safe harbors
whenever possible.
The Department should not make significant changes in
policy without following the Administrative Procedure Act's (APA)
notice and comment procedures.
The APA's notice and comment procedures are a valuable, time-tested
tool for developing good regulations.\3\ Soliciting public comments and
incorporating this feedback ensures that the agency has considered a
wide range of viewpoints and allows for the opportunity to address
unanticipated consequences before the regulation is finalized. When
developing formal regulations, the Department is usually careful to
follow the APA's requirements. However, as it increasingly turns to
sub-regulatory guidance to pursue its policy goals, the agency often
imposes significant new requirements without the benefits afforded by
the notice and comment process. The Department should always use the
notice and comment process. If, in rare circumstances, it determines it
cannot, it should articulate a reasonable basis for dispensing with it.
---------------------------------------------------------------------------
\3\ The ``notice and comment'' process has been adopted by a number
of other countries, including China. Jeffrey S. Lubbers, ``Notice-and-
Comment Rulemaking Comes to China,'' Administrative and Regulatory Law
News 32(1): 5-6, fall 2006, available at: http://www.law.yale.edu/
documents/pdf/Intellectual_Life/ch_Lubbers-Administrative_comment.pdf.
---------------------------------------------------------------------------
The Department's policies would be better informed and more
effective with the benefit of formal comments from all interested
parties. In addition, when there is a full and public vetting of policy
choices, the chances of good policy being upheld in any future
litigation will be greatly increased. Therefore, it is critical that
Congress ensure that agencies follow the procedures set forth in the
APA so that the public is given a meaningful opportunity to comment
before new mandates are imposed.
Congress required the Department in 2008 to produce an
annual compliance calendar. They have yet to do so.
Institutions of higher education have an obligation to comply with
regulations that the Department of Education is obligated to enforce.
Compliance is enhanced and the need for audits and fines is greatly
reduced if institutions are made clearly aware of the requirements they
face. That was the rationale behind the compliance calendar created by
Congress in the 2008 HEA reauthorization legislation.
Under that legislation, Congress mandated that the Department of
Education publish an annual ``compliance calendar'' that lists all
compliance requirements and their corresponding deadlines. The goal is
straightforward: Institutions should receive a clear checklist of
regulatory and information collection deadlines that documents their
regulatory obligations. Armed with this information, institutions--
especially small, thinly staffed ones--will be in a much better
position to comply than they are at present. Given that regulations and
requirements continue to grow, the compliance calendar should be
updated annually and made easily available to institutions. This will
allow institutions to know what is expected of them instead of playing
catch up and defense.
The Department should recognize when institutions are
acting in good faith.
Very few violations of Federal regulations are deliberate or
reflect negligence by institutions. Nor are all violations equally
serious. At present, minor and technical violations are not
acknowledged as such by the Department. We believe that the Department
ought to recognize when institutions have clearly acted in good faith.
In the summer of 2014, for example, the University of Nebraska at
Kearney was fined $10,000 for mistakenly misclassifying a 2009 incident
involving the theft of $45 worth of goods from an unlocked custodian's
closet as a larceny rather than a burglary.\4\ Because the Clery Act
does not require the reporting of larceny,\5\ the university did not
report the incident on its Annual Security Report. In an audit, the
Department ruled that the incident was a burglary and fined the
institution for failing to report it. We believe that this is an
example of an institution being overly penalized for a relatively minor
technical violation. In such cases, the size of the sanctions imposed
by the Department does not appropriately reflect the weight of the
infraction involved. Fines that fail to distinguish the important from
the trivial undermine the Department's credibility.
---------------------------------------------------------------------------
\4\ According to one article, the stolen items were a bag of potato
chips, Little Debbie Nutty Bars, and a set of walkie-talkies. Ben
Miller, Roll Call, August 25, 2014, available at: http://
www.rollcall.com/news/
how_unnecessary_data_reporting_requirements_turned_a_44_
theft_into_a_10000-235831-1.html?pg=1&dczone=emailalert.
\5\ To be precise, larceny is only reported under Clery when it
occurs in connection with a hate crime.
---------------------------------------------------------------------------
Some agencies, including the Internal Revenue Service and
Securities and Exchange Commission, utilize voluntary correction
programs. Under those programs, regulated entities identify instances
of non-compliance and report them to the agency. The agency then
reviews the self-report, collects evidence of correction, and issues a
confirming letter. Congress and the Department should consider the
benefits of developing a similar voluntary program in appropriate
circumstances--for example, in cases involving technical violations
where an institution was acting in good faith.
There should be a statute of limitations for enforcement
of Department regulations. Taking over 10 years to complete a program
review and issue fines should be unacceptable.
Under the Higher Education Act, colleges and universities are
required to submit documents and other records requested by the
Department within a prescribed amount of time. While institutions are
required to adhere to strict time lines in terms of responding to the
agency's requests, there are no time limits imposed on the Department
in terms of issuing a final determination after a program review.\6\ By
way of example, in May 2013, Yale University was ordered to repay
financial aid funds based on a Department of Education audit undertaken
in 1996. The University of Colorado received a similar demand based on
a 1997 audit. Even though the universities appealed in a timely
fashion, it took 17 and 16 years, respectively, for the Department to
take action.
---------------------------------------------------------------------------
\6\ Federal Student Aid Programs, Program Review Guide for
Institutions, 2009, available at: http://www.ifap.ed.gov/program-
revguide/attachments/2009ProgramReviewGuide.pdf.
Finally, we suggest Congress consider developing and
implementing ``risk-informed'' regulatory approaches where appropriate.
All colleges and universities are regulated in the same manner,
regardless of the level of risk involved. This forces the Department to
expend energy on institutions that should command relatively little
attention, while simultaneously skimping on those where more oversight
is warranted. Painting all institutions with the same broad brush does
not serve anyone well.
A white paper the task force commissioned to look at this issue in
greater detail is appended to our report. It includes the suggestion
that a risk-informed regulatory approach could be applied to
requirements for financial aid reporting; accreditation; and program
reviews by the Federal Student Aid office.
While a risk-informed regulatory system is not appropriate for
every issue, there is growing consensus that institutions with greater
levels of risk to students and taxpayers should be regulated by the
Department more closely. After extensive consultations with the higher
education community, Congress should require the Department to develop
and implement risk-informed regulatory systems wherever appropriate. A
more risk-informed approach--rather than a one-size-fits-all--would
represent a smarter way of regulating.
compliance with regulations is costly
While government regulation can confer significant benefits and
protections, the costs associated with heavy-handed and poorly designed
regulations can be enormous. Unfortunately, calculating the precise
benefits and costs of regulation is both difficult and time-consuming.
One reason for this is that duties and functions associated with a new
regulation are usually absorbed by staff who already perform other
duties, simply adding to their workload. Similarly, estimates of the
cost of complying with a new regulation may fail to take into account
the complicated interplay between new and existing requirements.
Regulations do not exist independently of each other, and the interplay
of multiple requirements can add exponentially to the cost of
compliance. For these and other reasons, attempts to systematically
quantify these costs have been few and far between.
Over the course of 6 months last year, Vanderbilt conducted an in-
depth analysis to look at the cost of Federal regulatory compliance,
excluding those related to our healthcare mission. We wanted to know
not only the total cost but to identify areas where we could reduce our
own internal costs. What we found is that regulatory compliance and
costs are spread across the University.
We found that Vanderbilt spends approximately $146 million annually
on Federal compliance. That represents about 11 percent of our non-
clinical expenses. Put another way, this equates to approximately
$11,000 in additional tuition per year for each of our 12,757 students.
As a major research institution with nearly $500 million annually in
federally supported research, a significant share of this cost is in
complying with research-related regulations. But we also calculated
that we spend approximately $14 million annually in compliance with
higher education-related regulations such as accreditation and Federal
financial aid.
We are now working with a number of other institutions across the
country--from all sectors of higher ed--to measure and compare our
findings. We will have conclusive data from these studies this spring.
We are hopeful that our efforts will help inform the committee's work
in reforming regulations and the regulatory process.
conclusion
Effective oversight can help colleges and universities keep costs
down, keep students safe, focus on educating students, and be good
stewards of Federal funds. In that spirit, the Task Force developed the
following guiding principles to help govern the development,
implementation, and enforcement of regulations by the Department:
Regulations should be related to education, student
safety, and stewardship of Federal funds.
Regulations should be clear and comprehensible.
Regulations should not stray from clearly stated
legislative intent.
Costs and burdens of regulations should be accurately
estimated.
Clear safe harbors should be created.
The Department should recognize good faith efforts by
institutions.
The Department should complete program reviews and
investigations in a timely manner.
Penalties should be imposed at a level appropriate to the
violation.
Disclosure requirements should focus on issues of
widespread interest.
All substantive policies should be subject to the
``notice-and-comment'' requirements of the Administrative Procedure
Act.
Regulations that consistently create compliance challenges
should be revised.
The Department should take all necessary steps to
facilitate compliance by institutions.
Apart from our interest in seeing that regulations are coherent and
fair, these principles also reflect our belief that all stakeholders--
students and taxpayers, as well as colleges and universities--reap the
benefit of well-designed regulation. We want to keep costs down, keep
students safe, focus on educating students, and be good stewards of
Federal funds. These principles will help us do that. Mr. Chairman,
under your leadership we hope this committee will also adopt these
principles as you move forward with reauthorizing the Higher Education
Act.
Again, thank you for the opportunity to co-chair this Task Force
and to present our collective recommendations to you today. Regulatory
reform seems to be an area where we can remove red tape and reduce
costs while we continue our prudent stewardship of public dollars and
provide students and families the information they need to make
informed choices. I think you will agree that the recommendations in
our report are common sense proposals that will benefit the greater
good and society at-large. Historically, universities and colleges have
served as drivers of the general national interest by promoting
education and discovery that provides solutions to the challenges that
face humanity. As a Nation, we all benefit when Federal funding is
spent to further this national interest, when universities are good
stewards, and more money is reinvested in our core mission of aiding
and advancing society. Relief from some of the most burdensome or ill-
founded regulations and a better process for developing new ones would
help higher education advance these important goals. I look forward to
your questions and to working with the committee to implement our
recommendations in the upcoming reauthorization of the Higher Education
Act.
The Chairman. Thanks, Chancellor Zeppos.
Let me go to your last point first and ask both of you.
I've only got 5 minutes, so if you could give me short answers,
I'd appreciate it, and we'll talk more later.
How can we make this a continuing conversation? For
example, would you be willing if he asked you, which I expect
he might, to sit down with Secretary Duncan and talk about the
recommendations you have that the Department by itself could
take care of?
Mr. Zeppos. Absolutely. I'm sure Nick would agree with me.
We're invested in this process now.
The Chairman. How many of the recommendations, the 59 or
the 10, roughly, could the Department itself deal with and
wouldn't require a congressional action?
Mr. Zeppos. Let me ask Terry.
Could you estimate that number?
I was going to say 10 to 12. Terry just said 12, a dozen
recommendations could probably be done directly by the
Department.
The Chairman. Maybe a quarter----
Mr. Zeppos. Right, exactly.
The Chairman [continuing]. A quarter of the recommendations
Duncan could deal with.
Mr. Zeppos. Congress could do.
Nick, I'm sure you would be pleased to join me.
Mr. Zeppos. I would be pleased. I mentioned in one of our
committees that after the terrible attacks of 9/11, I would say
that the friction between universities--research universities
and some of the law enforcement agencies and the intelligence
agencies--it got pretty intense. What I thought was wonderful
was that the director of the FBI stepped forward and said we
have export-import regulations, there are a bunch of
immigration issues that are coming up; we seem to always be in
tension. Why don't I have 15 of you meet with me twice a year
and go over----
The Chairman. If I may, I'd like to focus. Do you agree
that about a quarter of them----
Mr. Zeppos. Yes.
The Chairman. You would agree that you'd be willing to sit
down with Secretary Duncan?
Mr. Kirwan. Absolutely.
The Chairman. If he'd like to do it.
Chancellor Zeppos, as I listened to you, Vanderbilt has
about a half-billion dollars in Federal research funds, right?
Mr. Zeppos. Yes, about $500 million, about $620 total.
The Chairman. The total costs of regulation were about $150
million. I think you said that $14 million of that was not
related to research.
Mr. Zeppos. Right, right.
The Chairman. That means it sounds like about $130 million
or so is related to research. And if my math is even roughly
right, about a quarter of all your research dollars seem to go
to keeping up with rules and regulations. The head of the
National Academy of Sciences told me that their studies twice
showed that 42 percent of the time was spent on research.
Both of you represent universities that do a lot of
government-sponsored research, and all of us, every one of us
sitting at this table would like to see a thousand more multi-
year grants at NIH or the various Federal agencies.
What do you think of the idea that 42 percent of the time
is spent on administrative work by investigators, or that maybe
as much as 20 or 25 percent of the money is spent on that? Is
that excessive? If it is excessive, how should we go about
trying to reduce it? Because that might be the first place to
get another billion dollars and another thousand multi-year
grants for government-sponsored research.
Mr. Kirwan. Chairman Alexander, you're so right to focus on
this issue. It is an enormous frustration for our researchers
and our universities. It's my understanding that the National
Academy of Sciences has been charged with looking at a cost
analysis of the research enterprise, sort of in parallel to
what we have done focusing on the Department of Education. I
believe they're expected to issue a report on what you're----
The Chairman. The dollar figures and the time figures, do
they sound about right based on your experience? That's an
astonishing amount of time and money, to me.
Mr. Zeppos. I would agree with those numbers.
Mr. Kirwan. My colleague just handed me a note that we do
within the system about $1.3 billion of research, and $225
million was spent on administrative work, much of it having to
do with compliance.
The Chairman. If the head of the Academy's estimate was
right that maybe 10 percent would be more appropriate than 42
percent----
Mr. Kirwan. That's a lot of money.
The Chairman [continuing]. That's a lot of money.
Mr. Kirwan. A lot of research grants.
Mr. Zeppos. A lot of innovation, a lot of potential cures.
The Chairman. Your subject was the Department of Education,
not this. That's a very good point. That's something that we
could consider.
Why don't I go to Senator Murray? My time is up.
Senator Murray. Thank you, Mr. Chairman.
Dr. Kirwan, let me start with you. The task force suggested
that students need better information when choosing a college
to attend, and it says,
``And I agree that currently available consumer
information on higher education can be challenging for
institutions to report and doesn't always give us an
accurate picture of key data points like graduation and
transfer rates.''
In your view, can you share with us how we could change the
current Federal data system to provide better information for
prospective students and their families?
Mr. Kirwan. Well, It would require some further partnership
or collaboration between the Department of Education and
representatives from higher education, in consultation with
parents and students, to try to understand what are the really
key elements of information that students and families need.
In the spirit of good will, we could sit down, informed by
a conversation with the people we serve, the students and their
parents, and develop a list of the most important pieces of
information and have some uniform expectation that every
institution would make that information available.
Senator Murray. What do you think that system should tell
us?
Mr. Kirwan. Well, it should certainly tell us, completion
rates for students, default rates, employment rates, gainful
employment--did I say default rates?--availability of financial
aid, and average time to a degree would be some of the elements
that would be very relevant for students and their families.
Senator Murray. OK, I appreciate that. Any further thoughts
you have on that, if you could give them to us, we will work
through this.
Let me ask both of you. Students, I think we all believe,
should be able to earn their degree without fear of violence.
The reality, as we know, is that domestic and sexual assault
continue to be problems on our campuses across the country.
Both of you have been dealing with this directly, I know.
Sexual assault turns students? lives upside-down, and I
believe we have to do a lot more to prevent it at our Nation's
schools. I hope that this committee can actually have a real
conversation with higher education leaders like you about what
we can do to stop this crisis and ensure Americans that
colleges and universities are doing everything to keep their
students safe. This is a top priority for families and students
across the country. It is for me. It is for many of us.
Your report seems to suggest that universities need so-
called safe harbors to protect them from regulations and
liability in these cases in order to address this crisis. What
other efforts do you think this committee should be focused on?
I assume you're not suggesting that we should be focused on
protecting universities' legal liability rather than focused on
protecting students from campus sexual violence. What do you
think this committee should be focused on?
Mr. Zeppos. The safe harbors, what we were talking about is
we really didn't put them in the context of this specific area.
Let me emphasize that there's a lot of work to be done in this
area, and we would be more than pleased to be part of coming up
with the best solutions to address this problem, Senator
Murray.
The safe harbors we talked about were really in the areas
of some of the financial areas, maybe in terms of the Clery Act
notices where we're actually issuing the notices sometimes
after a crime occurs because we're concerned that we just
learned about it but we have to notify people anyway, just
getting some direction in that area, and then in the financial
areas we believe.
Senator Murray. The safe harbors that you were recommending
in this don't apply to the issues that we're talking about in
terms of sexual violence?
Mr. Zeppos. I don't think that's in the scope of our
report. I would say that there has been guidance from the
Department in this area that we and other universities are
following. We don't see that as an issue. We feel like we've
gotten guidance from the Department. We would welcome your kind
of full conversation with the Department and with others on how
we really crack this problem. It's a very serious problem.
Senator Murray. I know both of you have been dealing with
this on your campuses, and I really hope that we can hear from
you, as well as other commission members actually, on what
you're doing to protect students from rape and sexual assault
and what other efforts should be embraced nationwide to protect
safety. It's really important for us to hear from you and for
us to focus on this.
Mr. Chairman, I would like to, for the record, submit a
statement from the National Task Force To End Sexual and
Domestic Violence Against Women. It's important that we hear
that.
The Chairman. Thank you, Senator Murray. That will be a
part of the record.
[The information referred to may be found in Additional
Material.]
Senator Burr, and then Senator Bennet.
Statement of Senator Burr
Senator Burr. Thank you, Mr. Chairman. I, as you have
already eloquently done, thank all of the members of the
committee for their tireless work. I would also like to
highlight for my colleagues the great work of President Molly
Broad, who is a dear friend and who represented the University
System in North Carolina, as well as Chancellors Harold Martin
and the current president of the University System, Tom Ross,
who were also part of this product, this report.
Gentlemen, today I'm going to introduce legislation that's
similar to that that was just introduced by Congresswoman Foxx
in the House that would repeal regulations around defining
credit hours, State authorization, gainful employment, and
teacher preparation.
In your report you recommend repealing, at least in part,
all of these. Can you talk any further about these specific
regulations and what they mean for innovation and compliance
burdens on campus?
Mr. Kirwan. I spoke a moment ago about the State
authorization, and we certainly applaud that part of your bill
to eliminate the requirement of getting authorized in every
State where there is a student.
With regard to gainful employment, we in the report
acknowledged that there could be some value in having gainful
employment, but our concern was that the regulations have been
built up so that it is now required that something like 30
gainful employment reports for each program that a student
takes, and that just seems so excessive and a tremendous burden
to our institutions to make that kind of reporting effort on
gainful employment for programs.
Do you want to add to that?
Mr. Zeppos. Yes. I would say that our reputation as
universities is that we're usually pretty slow and sclerotic,
but I think there's much more dynamism, particularly in
distance education, flip classrooms. We have a joint class
taught with the University of Maryland in engineering, and I
think that when we see someone putting out a MOOC that's a free
course and the State says, ``Well, maybe you didn't register,''
maybe this could be a revenue collection opportunity, we kind
of feel like we're giving this away for free, we're trying to
innovate, we're trying to educate more people.
I had an experience just the other day. I'm always happy to
answer questions, but I had one come up to me where I had a
State regulatory agency ask for all my internal audit document
reports on my whole medical center, the whole place, before I
did a distance nursing program. Again, we're happy to be
cooperating, but the State authorization, this is an area where
we have a shortage of health care workers. The future of health
care is going to be teamwork. We do see the State authorization
as really limiting.
On the teacher preparation--and we talk about this in the
report, and we've been in discussions with OMB--the cost
estimates that come out of the Department, we're not two ships
passing in the night, we're two universes passing in the
multiverse. They'll get a $40 million number, and then we'll
hear from California $300 million to implement, with a $200
million computer system to implement it. All we want to do is
say, ``Where did you get these numbers from, and could we sit
down and figure it out?'' This is much, much more expensive.
We believe in these regulations, but when we see these cost
estimates coming out that seem immaterial and our numbers are
exponentially higher, we think something is fundamentally
wrong.
Mr. Kirwan. Senator Burr, if I might add, the credit hour
rule is one that I think my colleagues on the task force would
feel is increasingly problematic in this day and age where
we're moving to an era where we have competency-based credit,
credit for prior learning, and that rule is just out of sync
with the realities of the direction education is taking.
Senator Burr. Well, again, I thank you for the very in-
depth look that the panel has taken.
Thank you, Mr. Chairman.
The Chairman. Thank you, Senator Burr.
Senator Bennet.
Statement of Senator Bennet
Senator Bennet. Thank you, Mr. Chairman, and thank you for
all of your work. I also want to thank Bruce Benson from the
University of Colorado and Bill Armstrong, a predecessor of
mine here, the president of Colorado Christian University, for
their help on this report. I hope that we are using it to
inform our work going forward.
Mr. Chairman, I want to thank you for your leadership of my
favorite forum, and with your indulgence I'm going to use it, I
think I heard you say, for demonstrative purposes, once on the
floor.
Just some questions we think it's important to ask our
students before we can actually give them financial aid in this
country.
What is your and your spouse's adjusted gross income for
2014? Adjusted gross income is on IRS Form 1040, line 137,
1040A, line 21, or 1040EZ, line 4.
Another question: How much did you earn from working in
2014? How much did your spouse earn from working in 2014?
As of today, what is your total current balance of cash,
savings and checking accounts? Don't include student financial
aid.
As of today, what is the net worth of your and your
spouse's investments, including real estate? Don't include the
home you live in. Net worth means current value minus debt.
As of today, what is the net worth of your and your
spouse's current businesses and/or investments? Don't include
family farm or family business with 100 or fewer full-time or
full-time-equivalent employees.
Combat pay or special combat pay. Only enter the amount
that was taxable and included in your adjusted gross income.
Don't include untaxed combat pay.
Tax-exempt interest income from IRS Form 1040, untaxed
portions of IRS distribution, IRS Form 1040.
We had to hire people in the Denver Public Schools to
actually fill out these forms for people.
If people think this is trivial, there are millions of
students across the country that aren't getting financial aid
today because of this form. That makes no sense.
The testimony in front of this committee was that with just
two questions--and this is the bill that we have together, Mr.
Chairman--with just two questions we could answer this for 96
percent of families.
This is cruel to put people through this when we don't need
to put people through this, and I hope we will make these
changes and many of the other ones that we're all working on
together because students are dealing with this in real time,
not sometime later.
Having said all that and having gotten it off my chest, I
now have a question. I was reading some stuff on the weekend,
really interesting new reports out of the University of
Pennsylvania about student aid and cost of college, and
admittedly 1976 was the peak year, but I think in that year the
Pell Grants covered roughly 75 percent of the average cost of
attending college. Today, Pell Grants cover roughly 22 percent
of what it costs to attend college. That's largely because
college costs have been out of control, but it's also because
we haven't kept pace in terms of financial aid.
In Colorado, the cost of many 4-year colleges has almost
doubled in the last 10 years, and I suspect some of this is
because we have a compliance-driven regulatory system, not a
system that is incentivizing universities to reduce cost. I see
some examples in Colorado where colleges have done that, but I
don't think we're giving them a push toward that. I don't think
we have a structure where we are incentivizing quality, either.
I wonder whether you guys have some thoughts on what we can
do as we think about this regulatory structure. With respect to
title 4, it allows us to focus more on outcomes, more on
quality, more on affordability. What changes should we make to
the accreditation process to improve quality and create better
incentives? If you were writing on a clean slate when it comes
to outcomes and quality and accreditation, what would you
write?
Mr. Kirwan. Senator Bennet, just a sidebar comment. You
were mentioning the FAFSA form. It actually asks the people
filling it out three times what State they live in. On three
different occasions in the form, they have to say what State
they live in.
Senator Bennet. The prices don't include your home State.
[Laughter.]
Mr. Kirwan. You ask a very, very good question about the
cost.
Senator Bennet. A State of misery is the State.
[Laughter.]
Mr. Kirwan. Cost and affordability. My perspective is from
the public sector. Nick can speak from the private sector.
What's very interesting is that if you actually look at the
per-
student expenditure in the public sector of higher education
today, we are spending less dollars per student than we were 10
years ago. Now, how can that be? Because costs are out of
control, as is commonly said.
Well, what's happened over this period is that public
funds, State investment covered 75 percent of the cost 10 years
ago, and parents or students covered 25 percent. Today it's
roughly 50/50. There's been a disinvestment on the part of the
States, and, of course, what's happened is that parents and
students have had to pick up that cost.
Having said that, our institutions have an obligation to do
whatever they can to control the cost of delivering an
education, and we need to be more innovative. We need to be
ensuring that there's a smoother transition for students who
are transferring from one institution to another.
Believe it or not, more of the students in the University
of Maryland in any 1 year have had an experience at another
institution that are coming into the system, have had an
experience at another institution than are first-time freshmen.
There are more transfer students every year than there are new
students, and we need in higher education to work to make that
transition from one institution to another more seamless.
Obviously, the recommendations in this report streamlining
the regulatory process, as Nick's study from Vanderbilt has
shown, can help us reduce the cost of education. We need to
work in partnership with Congress to both share responsibility
for holding down the growth in cost, but also work with you to
ensure that there is adequate need-based financial aid for the
students that we should be serving.
Mr. Zeppos. Yes. I would just add to that, you know, I work
at a private university. As I said, I'm K through law school
public education in the great State of Wisconsin. The erosion
of State investments in the great State flagship universities
is a major national crisis. I work at a private university, and
I love that, but the access that I had as a high school student
to go to the University of Wisconsin at a very low cost is just
not there anymore. That's just not there. You're seeing very
high tuition increases at State universities, and to me, sadly,
a lot of States are taking a lot of out-of-State students to
make up for that loss of revenue. I think that has affected
things.
In my looking at kind of the cost drivers, I would say that
administrative costs grow very fast in universities. We have
our own bureaucracies that we need to tame. The second thing
that's grown significantly that the revenue just can't keep up
with are health care costs. You put in administrative costs and
health care costs, those are growing faster than your revenue.
That's not a really good financial model to look at.
You've got to look at the whole institution. This report
does a really good job of looking at our administrative
structures and where we can be better, and maybe we can work
with you and the Department to be better.
On outcomes, it has to be very institution-specific. One
school may say I want every kid to have a job. Another school
may say I expect a third of my students to go on to Ph.D.'s.
Pushing schools to say where do you fit in this beautiful
mosaic of American higher education, and then what do you
really think you are producing and delivering, and having a
recognition of that heterogeneity is important.
Senator Bennet. I'm way over time. Thank you, Mr. Chairman.
The Chairman. No, thank you. It's very interesting.
Senator Warren.
Statement of Senator Warren
Senator Warren. Thank you, Mr. Chairman. I actually just
want to add my voice to yours about the importance of
supporting public education. I grew up in a family where there
was no money for college, and I graduated from a commuter
college that cost $50 per semester, and it opened a million
doors for me and for kids like me.
It cost $50 per semester because America was investing in
education. It was investing in the future of our children, and
we have lost our way on that. We have got to get back to
investing in our kids so they get a chance to get a decent
education without being crushed by student loan debt.
Thank you, thank you very much for that.
I just want to say also, thank you, Dr. Kirwan and Dr.
Zeppos, and the other members of the task force, for your
report and your attention to the money that's being spent on
administrative costs. You know, college has taken more than
$160 billion a year in taxpayer money, and strong oversight of
that investment is powerfully important.
One of the key purposes of Federal investments in higher
education is to make college more affordable for people who
can't afford to spend tens of thousands of dollars every year
to get an education. When our colleges say that compliance with
Federal regulations is too costly, then I think we should make
some changes.
Chancellor Zeppos, in your testimony you state that
Vanderbilt would save about $14 million if Congress and the
Department of Education eliminated its higher education-related
regulations, right? That was in your testimony. I did the math.
That's about $1,100 per student at Vanderbilt. If we were to
follow the recommendations in the report and repeal those
regulations this year, would Vanderbilt commit to reduce its
tuition by $1,100 per student?
Mr. Zeppos. Here's my answer. I answer the question this
way. The first thing is I tried to personally and
institutionally address the rise in the cost of education in a
number of ways.
Senator Warren. God bless, but I just want to stick to this
point. If we reduce our end of the cost, that is the cost of
regulation, and you say that would save you $14 million, I just
want to know if that $14 million is going to be used to reduce
Vanderbilt tuitions by $1,100 per student.
Mr. Zeppos. Well, I don't think we asked for all the
regulations to be eliminated, so I don't know that----
Senator Warren. I can do the math. Do you want to do $650
for half the regulations?
Mr. Zeppos. I would go back to the Chairman's comments.
There are areas in universities that are being woefully
underinvested, and I'd look at my struggling research
scientists and future engineers and Ph.D.'s, and they can't get
a training grant. Young investigators are waiting until age 40
to 45, and universities ought to have some flexibility to say,
``OK, we brought these costs down, is there a way to
reinvest?'' I have many students who can't afford to travel in
a summer abroad program.
I understand the temptation to say I will promise to cut,
but I do think we should have the freedom to say this is an
area of underinvestment and show that to you.
Senator Warren. Fair enough, Dr. Zeppos. The point is
you've come in here--and this has been exactly what we talked
about. The cost is too high. Part of the reason the cost is too
high, you're telling us, is because of regulations imposed by
the Federal Government, and I just think if we're going to talk
about reducing those regulations, this is one place where the
Federal Government could use its leverage to say if we're going
to do this, let's estimate the cost and let's bring down those
costs for students. It's not like you'd have any less money, at
least by your own calculations. You'd have the same money. We'd
just like to know that the savings is going to be passed along
to the students.
Dr. Kirwan, maybe I should ask you the same question. Can
you estimate the savings to the University of Maryland?
Mr. Kirwan. We haven't done the same cost study that Nick
Zeppos has done at Vanderbilt, so I don't have that sharp of a
figure.
Senator Warren. OK. Well, let me ask it another way. Would
you commit if we reduce these regulations to giving a cost
estimate and to passing those savings on along to our students?
Mr. Kirwan. Well, I would respond somewhat the same way
that Nick did. There are areas at the institution that are not
getting adequately invested in because of lack of funds, let's
say need-based financial aid. We would take some of the
savings, undoubtedly, and move it into the need-based financial
aid. We might take some of the savings and increase enrollment
in some of the critical degree programs. We have lots of things
we're trying to do as an institution, and to tie this
particular dollar to a dollar reduction in tuition might not be
in the best interest of the students.
Senator Warren. Well, Dr. Kirwan, all I can say, with
respect, is that you're in here asking for a reduction in your
expenses, and I'm saying that makes a lot of sense to me. At
some point we've got to use our Federal leverage to say that
has to be passed on to savings for the students. In other
words, if you want some changes, there has to be some
accountability on the other side. For me right now, what's
right at the center of the target is that we need to bring down
the cost of college across the board for our students.
I remember that commuter college that cost $50 a semester.
It opened doors. It opened real doors for kids who otherwise
would have had no chance at all to get a college education.
It's up to us to take the first steps back in that direction.
Thank you, Mr. Chairman.
Mr. Kirwan. Senator Warren, if I could just add, we've
taken this issue of the cost to students very seriously in the
University System of Maryland, and let me just illustrate. Over
the last 8 years, tuition has gone up for in-State students a
cumulative 12 percent in 8 years. That's how seriously we have
taken the cost of tuition for our students.
Senator Warren. Dr. Kirwan, I just want to say, I'm not
saying you're not taking it seriously, either one of you. I'm
not saying that universities aren't taking it seriously. What
I'm really addressing is the question of Federal leverage.
We're putting $160 billion into universities all across this
country. The universities tell us there's a way to cut costs
for them, and I'm just saying if we're going to make changes at
the Federal level, then we should ask for something from our
colleges across the board. This isn't targeted at Vanderbilt or
at Maryland. The real point is to say we want to see something
on the other side. If it's going to save you money, we want to
see where it's going to result in a lower cost college
education for our kids.
Mr. Kirwan. I would advocate need-based financial aid.
Senator Warren. Thank you.
The Chairman. Thank you, Senator Warren.
We'll have time for another round of questions. That's an
interesting debate I'd be glad to have with Senator Warren
sometime.
Let me just express, on State support for public
institutions, I have a little--I've been around long enough to
have a strong opinion about that. The reason why State aid has
gone down to public universities, the principal reason is
because of us, the Federal Government and its rising health
care costs and its imposition of mandatory Medicaid rules and a
requirement that States maintain their level of spending on
Medicaid during a time like 2008 through 2013 when revenues
were going down.
Rather than, in the 1980s when Tennessee was paying 70
percent of the cost of its students' education, Medicaid
spending in Tennessee was 8 percent. Today it's 30 percent, and
the dollars have come right out of the University of Tennessee
and the other public institutions.
It's our fault that State support is down because we don't
give States enough flexibility, but that's a different debate.
Who wrote this report? If you don't mind me telling you, I
was reading a little bit about the Constitution the other day,
and after they had their debates they would appoint a committee
on style to put it in plain English, and I think we would agree
they did a pretty good job with the U.S. Constitution.
This is in plain English, declarative sentences, can
actually be understood. It reminds me of ``A Nation At Risk,''
when one of the Nobel Prize winners, I forget who it was, from
the University of California actually took the report home and
rewrote it and made it a compelling document. Do you mind----
Mr. Kirwan. Not at all. The task force members had many
opportunities to add their own rhetorical skills to the report,
but it was the staff at ACE, led by Terry Hartle, here to my
right, who did the bulk of the drafting of the report, subject
to the edits of the task force members.
The Chairman. Thank you. Thank you very much.
Dr. Kirwan, both of you represent large campuses, big
research universities, but you also were president of a system-
wide institution. Let's call it simplifying regulations. Is
this unnecessary burden of regulations which costs more and
suppresses innovation limited just to big universities, or is
it a problem for your smaller campuses?
Mr. Kirwan. Absolutely not. In fact, the University System
of Maryland is in many ways a microcosm of higher education in
America. We have three HBUs. We have five comprehensive
institutions, three research universities, and an online
university. We have it all, in a real sense.
The regulatory burden has--different regulations have a
different impact on different institutions. The overall
excessive burden is felt by all of the institutions in the
system. It affects the smaller institutions as well as the
larger ones.
The Chairman. Chancellor Zeppos, you were an administrative
lawyer at one point before you went to Vanderbilt. One of the
things that startles me is that there is, every workday on
average, one new ``dear colleague'' sub-regulatory guidance
letter or admonition from the U.S. Department of Education to
our 6,000 colleges and universities about something else they
should do.
We had testimony from one witness here from the Department
of Education who said--and I questioned everybody specifically
about this--that the guidance that she provides to universities
is a matter of law. I asked her, who elected you to anything?
Because we make the law. I don't remember my administrative law
course too well, but a guidance, a letter ought to be to
interpret the law and wouldn't have the force of law.
I notice in your report that you recommend that if there is
to be a guidance, that there be a public comment period, to go
through the same process that we have with a regulation.
Would you comment on the appropriate way for the Department
to issue regulations and to issue guidances or other letters
that would appear to suddenly be having the force of law and
all of the implications that large and small universities that
might have?
Mr. Zeppos. Yes. It's oftentimes welcome. It's useful to
get guidance from administrative agencies. The SEC, the IRS is
giving private letter rulings, no action letters. Those things
are useful to educate the regulated community, but those do not
have the force and effect of law. They're guidance, and if the
agency really expects to have substantive obligations that
carry the force and effect of law, they really ought to elevate
it more to a formal regulation without getting too technical,
and maybe one interpretation off the regulation as opposed to
one, two, and a thousand.
I won't get into the constitutional law part because that's
the first 5 weeks of the semester, but John Locke said
legislators can create legislation, but they can't create
legislators. We have to recognize that this body is going to
adopt the law, they're going to adopt regulations, and then
when we get to the question of guidance, I would say useful but
not binding.
The Chairman. Thanks very much.
Senator Murray.
Senator Murray. Well, thank you, Mr. Chairman. Before I ask
my questions, just a counterpoint on the fact of why colleges
have lost so much State funding. If we all remember, the
economy collapsed about 6 years ago, and revenue to States
collapsed with that as a result of what happened on Wall
Street. Because the revenue to our States dropped so much, a
lot of our States did cut back our education funding, which
created a real problem for universities, and students now are
having to make up more of their costs. Just a little
counterpoint for you.
The Chairman. That's fair enough.
Senator Murray. Dr. Kirwan, I know that Maryland has been
doing some innovative work in allowing students to take some
courses online and structure their schedules flexibly. Both of
you sort of mentioned this in your remarks. If the State
authorization rules that the report talks about haven't hit the
right mark, how do you think we should make sure that our
students are guaranteed high-quality programs in this digital
era?
Mr. Kirwan. Well, I think that any institution offering
distance education has to be authorized within the State where
it operates.
Senator Murray. Right, you mentioned that in your opening
remarks.
Mr. Kirwan. Right. That, to me, that's the obligation of
that State to ensure that the institution is providing sound
and appropriate education that can be shared with students in
other States.
Senator Murray. Mr. Zeppos.
Mr. Zeppos. Yes. The question of States putting up barriers
to entrants from other States is not a new one in America. If
we can get a system that a university is authorized in a State
and there are standards set in that State, or that universities
are already recruiting students from that State, which we all
are, maybe that creates a presumption or a kind of you're
already here recruiting our students, we believe you enough
that you can continue to offer education in some form.
The second thing is you could come up with--the Department
could have come up with some sort of effort if it wanted to go
this way to create--like they do maybe in some of the
interstate trucking industries where you've got a sticker in
one State, it covers you in another State or something, a
reciprocity program, Senator.
Senator Murray. How would you have sort of oversight of
that, so that there would be some sort of standard that we all
knew existed?
Mr. Zeppos. Well, first of all, I would look at the
standards set in each State and recognize that those standards
are already being accepted.
Senator Murray. In some States, but some States could set
really low standards. How would you make sure that you had some
kind of quality outcome?
Mr. Zeppos. There would be a threshold that they would have
to meet to get title 4 funding to be authorized in some way to
do business as a college.
Senator Murray. We would have to set that at the Federal
level.
Mr. Zeppos. That's the trick now, that they're taking that
authorization that we get in general and taking it around the
country and saying now you have to do it in every State. A
minimum Federal standard is already there, are you authorized.
If you are, then you're eligible for the funding. We would ask
why isn't that good enough to do business in this national
economy if you're already authorizing us to do business under
the program?
Senator Murray. All right. Let me ask one other question in
my last minute, and I'll ask you, Mr. Zeppos. As you know, most
Federal student aid is provided directly to students through
colleges and universities, and the task force supports an
accountable use of taxpayer dollars, but it also raises some
questions about how much it costs your institutions to verify
those Federal student aid funds are actually flowing to the
right recipients.
How can the Federal Government make sure that the students
who need the most help are actually getting it?
Mr. Zeppos. This whole question of verification of funding
that the students who participate in it would kind of start
with kind of a basic blank slate to say we are providing this
aid, who is getting this aid, for what purpose are we getting
this aid. Currently, the verification is kind of a roundabout
where the Department asks us to get information from the
parents. Sometimes the parents aren't even involved.
What we're kind of suggesting is--and this may be asking
too much, but isn't there a way to sync some of the IRS
materials, and you'd basically disintermediate us and you'd
deal directly--the Department would deal directly with the
student and say we're going to get information from the IRS. We
can verify this information as accurate tax information, and
could we just connect you together, rather than we feel like
we're the ones collecting the information that a lot of times
is IRS information. Maybe that could be more directly put into
the system, Senator.
Senator Murray. All right. I have several other questions,
but I'll submit them for the record.
The Chairman. Do you want to go ahead?
Senator Murray. No, that's all right. It's fine.
The Chairman. Just to clarify, isn't it true that if we
adopted the recommendation that you go back 2 years to find
out--let's say a student who is in her junior year would fill
out the FAFSA form and however many questions end up on it and
would find out that year how much grant or loans she might be
eligible for, which has a lot of benefit in and of itself, so
you can go shopping knowing what you've got. You then wouldn't
have most of these verification problems because you would ask
the family for permission to use the IRS figures for their
income from 2 years ago, and you're suggesting that would be
the evidence that the family was eligible for a certain level
of aid. Am I correct?
Mr. Zeppos. Exactly, Chairman.
The Chairman. That seemed to me, in listening, that we've
got some work to do. We want to make sure that the money--it's
a lot of money--goes to the right people.
Mr. Zeppos. Right, exactly.
The Chairman. The testimony we had before our committee was
that we could get most of that with a couple of questions.
Unless Senator Murray had other comments or questions?
Senator Murray. No. I really thank you for this hearing. It
was really excellent, and I know we have a lot more work to do.
I appreciate the bipartisan effort you're moving forward with.
We've got to make sure, however, that our families get
accurate consumer information. College has to be more
affordable. We all agree on that. We need to make sure our
students have a safe learning environment and we have good
accountability, no small task in front of us, but it's
important that we take this on.
The Chairman. That's a good summary upon which I think we
can agree.
When we started out with this, what I had hoped--you've
done a better job than even I had hoped might be done here,
because my hope was that this would not be seen as any sort of
partisan or axe-to-grind sort of investigation. It's just human
nature that if you reauthorize the Higher Education Act eight
times since 1965, then well-meaning Senators and Congressmen
and well-meaning secretaries--I was a well-meaning secretary--
and well-meaning assistants add their good ideas over that
period of time and nobody weeds the garden, it just gets to be
a big mess. That is what we have, in many ways.
It's just good governing to say let's take some things and
start from scratch and just come up with a plain, simple, clean
way to deal with the question of a student who withdraws from
college without costing a lot of money that could otherwise be
used to reduce tuition, add to financial aid, or pay a faculty
member more. The fact that you've come up with 59 specific
proposals is a huge help.
I'm delighted with the bipartisan support for this. I'm
delighted with Secretary Duncan's attitude toward it, because
the Department itself can do something. I look forward to
working with you in terms of how we make this a continuous
process, and Senator Murray and I will sit down in a few weeks
and we'll talk about how do we take this advice and incorporate
it into a bipartisan process as we begin to work toward the
reauthorization of the Higher Education Act.
Our thanks to you for your volunteer time and your effort
and a terrific report.
The hearing record will remain open for 10 days to submit
additional comments and any questions for the record Senators
may have.
The next HELP hearing on medical and public health
preparedness and response, ``Are We Ready for Future Threats?''
will occur on Thursday at 10 a.m. in Dirksen 430.
Thank you for being here.
The committee will stand adjourned.
(Additional Material follows.]
ADDITIONAL MATERIAL
Prepared Statement of the National Task Force on Violence Against Women
The National Task Force to End Sexual and Domestic Violence Against
Women (NTF) represents a large and diverse group of national, tribal,
State, territorial, and local organizations, as well as individuals,
committed to securing an end to violence against women. Included are
civil rights organizations, labor unions, advocates for children and
youth, anti--poverty groups, immigrant and refugee rights
organizations, women's rights leaders, education groups, and others
focusing on a wide range of social, economic, and racial justice
issues.
The National Task Force on Violence Against Women commends the Task
Force on Federal Regulation of Higher Education (``the Task Force'')
for its review of Federal regulations affecting post secondary
education. We are alarmed, however, that the Task Force's report
suggests that current Federal regulations and policies governing the
response of IHEs to crimes predominately affecting women students are
too burdensome or complex.
First, we cannot stress enough that now is not the time to lessen
Federal oversight designed to protect students from violence. Recent
efforts by Congress, the White House, and the Department of Education
to address sexual assault are beginning to show results. Many schools
are working to improve their prevention and response programs.
These Federal efforts are a response to crimes that are pervasive
on college campuses: one study of students at two large public
universities found that 1 in 5 had been sexually assaulted by their
senior year in college. This data is sadly consistent with other
studies over a 20-year period. Dating violence is common among young
people between the ages of 18-24, and young women ages 18-19 face the
highest rates of stalking in the Nation. These violent acts and the
associated trauma can negatively affect on the ability of young women
and male survivors to complete their college education.
We also strongly oppose the Task Force recommendation to change the
definitions used by schools to collect data on domestic violence,
dating violence, and stalking. These definitions are not new, but
instead were included in the Violence Against Women Act as reauthorized
by Congress in 2013. To our knowledge, the Task Force did not consult
with VAWA experts before recommending that these important definitions
be abandoned.
Additionally, the report criticizes the 2011 Dear Colleague Letter
and subsequent guidance clarifying the responsibility of IHEs to
respond to and prevent sexual assault as being too complex for schools
to understand. Yet, students who have experienced sexual assault and
advocates working on college campuses have noted the effectiveness of
these policies in improving the response of IHEs to sexual assault,
including the provision of remedies that make campuses and students
safer, and make it possible for students to pursue their higher
education goals in an atmosphere that is free of harassment and/or
violence.
We concur with the Task Force that steps can be taken to streamline
overlapping Federal laws and requirements, but such recommendations
must be informed by a commitment to both student safety and gender
equity in education.
______
University System of Maryland,
Office of the Chancellor,
Adelphi, MD 20783.
March 30, 2015.
Hon. Lamar Alexander, Chairman,
U.S. Senate,
Committee on Health, Education, Labor, and Pensions,
428 Dirksen Senate Office Building,
Washington, DC 20510.
Dear Chairman Alexander: Thank you again for the opportunity to
testify with Vanderbilt University Chancellor Nick Zeppos before the
Senate Health, Education, Labor, and Pensions Committee on February 24,
2015 to discuss the recommendations of the Task Force on Government
Regulation of Higher Education. It was a privilege and an honor to
share with you and the committee our task force's recommendations on
ways to improve the regulatory environment, ensure transparency and
accountability of public dollars and provide students and families with
the information they need to make informed decisions about
postsecondary education.
I am pleased to offer the responses below to the additional
questions posed to me by Senator Michael Enzi and Senator Al Franken on
March 16, 2015.
If you have any additional questions or need anything further,
please do not hesitate to contact me or Patrick Hogan, USM Vice
Chancellor for Government Relations at [email protected] or (301) 445-
1927.
Sincerely yours,
William E. Kirwan,
Chancellor.
______
Response by William E. Kirwan to Questions of Senator Enzi
and Senator Franken
senator enzi
The Report of the Task Force on Federal Regulation of Higher
Education provides important and useful information about the burden on
colleges and universities of specific regulations promulgated by the
Department of Education, and it cites several pertinent studies
addressing aspects of that cost burden.
Question 1. Did the Task Force attempt to obtain a reasonably
accurate estimate of the global compliance burden of all Federal
regulations (and sub-regulatory guidance) on the college and university
community? If so, please describe what efforts the Task Force
undertook, and the specific findings.
Answer 1. Our charge and responsibility was to look at Federal
statutory provisions and Department of Education Regulations that
impacted and hindered the effective and efficient delivery of higher
education. The Task Force conducted a thorough environmental scan of
all available research looking for estimates or useful methodologies
for determining the compliance burden of all Federal regulations across
all colleges and universities. Despite these efforts, we were unable to
find any study that quantified institutional compliance costs across
all Federal agencies and across all institutions. The Task Force report
cites efforts to quantify the costs of Federal regulation for three
specific institutions: Stanford University, Hartwick College and
Vanderbilt University. In addition, several Task Force members have
accepted Chancellor Zeppos' offer to have BCG visit their campus to
perform ``shallow dive'' estimates of the regulatory costs on their
campuses using the same methodology employed at Vanderbilt. While these
efforts are ongoing, we expect they will be useful in developing better
cost estimates going forward.
Question 2. What followup work would you recommend be done in order
for the committee to obtain a reasonable estimate of this global
compliance burden, and the associated expenditure made by colleges and
universities.
Answer 2. We are pleased that Congress has funded the National
Academies of Sciences (NAS) study on the costs of Federal regulation
contained in HEOA. While the Task Force's effort focused on regulations
stemming from the Department of Education, the NAS study will take an
in-depth look at the costs associated research-related regulations. We
believe this study will provide crucial additional information for
lawmakers about the costs of Federal regulation related to research.
The Task Force report also calls on the Department of Education to
provide better, more accurate estimates of the burden associated with
its regulations. Greater transparency is needed about the method by
which the Department makes its estimates. The Department should also be
required to consult with campus officials representing a broad range of
institutions in developing these estimates. Compliance costs
necessarily vary from institution to institution, based on sector,
size, and mission. For example, a small private institution may not
have economies of scale or the IT systems of a large public institution
when implementing a given regulation.
senator franken
Chancellor Kirwan, many students and families do not have a clear
picture of how much college is going to cost them. Some schools'
financial aid letters do not distinguish between loans and grants. I
have a bipartisan bill that would require universities to use a uniform
financial aid award letter so that students and their families will
know exactly how much college will cost them.
The Department of Education has created a standardized financial
aid award letter template, and approximately 2,000 institutions have
voluntarily adopted it, including 5 of your University of Maryland
campuses.
Question 1. Do you think a uniform award letter makes it easier for
parents and students to fully understand the cost of college?
Answer 1. The University System of Maryland (USM) Institutions have
adopted the voluntary standardized financial aid award letter, which is
also required under Maryland law. Our institutions have also
implemented the Net Price Calculator on our institutions' Web sites. I
feel that we are very transparent and clear about the true cost of
education for our students. Our institutions have also significantly
increased their institutional need-based financial aid awards while at
the same time over the last 8 years having the lowest tuition increases
in the Nation amounting to a cumulative 12 percent. We have gone to
great lengths in Maryland to increase affordability and accessibility
for our students, being recognized with five universities ranked as
best values in the Nation. One of the major difficulties for students,
parents and institutions is that students most often apply for
admission by November1st in their senior year in high school while
FAFSA forms are due by March 1 and until a determination is made
regarding their Federal and State financial aid packages it is not
known what institutional aid they are eligible for.
Question 2. Yet your Task Force has been critical of the
standardized award letter. Why?
Answer 2. The Task Force did not make any recommendations regarding
the Standardized Award Letter, which was outside its scope for a number
of reasons, including, most importantly, the fact that there is not
Federal statute or regulation mandating its use. The report does
mention the Shopping Sheet as an example of one of the many pieces of
information and consumer disclosures that institutions are required to
provide to students.
As a general matter, the Task Force members strongly support
efforts to ensure that students and their families have the information
they need to make good college decisions. At the same time, providing
too much or the wrong information, or providing it in a confusing
manner, can undermine these efforts. The Task Force strongly supported
increased use of focus group testing to make sure that required
consumer disclosures are providing the type of information that
students and families want and need, and in a manner that is easy to
understand.
It is our understanding that ED intends to continue to refine its
model award letter in an effort to address the concerns that exist for
some institutions. A model financial aid award notification letter--
with standardized terminology, required elements, etc.--can be a
helpful tool for parents and students comparing aid awards. However,
some feel that the current model could be improved and made more
flexible so as to provide better, clearer information to students and
families.
Vanderbilt University,
Office of the Chancellor,
Nashville, TN 27240
March 30, 2015.
Hon. Lamar Alexander, Chairman,
U.S. Senate,
Committee on Health, Education, Labor, and Pensions,
428 Dirksen Senate Office Building,
Washington, DC 20510.
Dear Chairman Alexander: Thank you again for the opportunity to
testify with Chancellor Brit Kirwan before the Senate Health,
Education, Labor, and Pensions Committee on February 24 to discuss the
recommendations of the Task Force on Government Regulation of Higher
Education. It was a privilege and an honor to share with you and the
committee our Task Force's recommendations on ways to improve the
regulatory environment, ensure transparency and accountability of
public dollars and provide students and families with the information
they need to make informed decisions about postsecondary education.
I am pleased to offer the responses below to the additional
questions posed to me by Senator Michael Enzi.
If you have any additional questions or need anything further,
please do not hesitate to contact me or Christina West, Assistant Vice
Chancellor for Federal Relations ([email protected] or
202-216-4370).
Sincerely,
Nicholas S. Zeppos,
Chancellor.
______
Response to Questions of Senator Enzi by Nicholas S. Zeppos
The Report of the Task Force on Federal Regulation of Higher
Education provides important and useful information about the burden on
colleges and universities of specific regulations promulgated by the
Department of Education, and it cites several pertinent studies
addressing aspects of that cost burden.
Question 1. Did the Task Force attempt to obtain a reasonably
accurate estimate of the global compliance burden of all Federal
regulations (and sub-regulatory guidance) on the college and university
community? If so, please describe what efforts the Task Force
undertook, and the specific findings.
Answer 1. The Task Force conducted a thorough environmental scan of
all available research looking for estimates or useful methodologies
for determining the compliance burden of all Federal regulations across
all colleges and universities. Despite these efforts, we were unable to
find any study that quantified institutional compliance costs across
all Federal agencies and across all institutions. The Task Force report
cites efforts to quantify the costs of Federal regulation for three
specific institutions: Stanford University, Hartwick College and
Vanderbilt University.
At Vanderbilt, we also did our own analysis to try and obtain an
accurate rendering of the Federal regulatory compliance burden for a
sample university. We commissioned the Boston Consulting Group (BCG), a
leading global management consulting firm, to conduct a deep-dive to
estimate the cost of Federal regulatory compliance at Vanderbilt,
excluding our Medical Center. The company performed a thorough review,
gathering cost data via surveys, interviews, and payroll and headcount
data to estimate that Vanderbilt spent about $146 million, or 11
percent of the non-clinical budget, on Federal compliance in fiscal
year 2014. Of that total, approximately $14 million was spent on Dept.
of Education-related compliance.
BCG has continued work in this area by leveraging the methodology
developed at Vanderbilt and is in process of estimating the compliance
burden at approximately 10 additional institutions that reflect the
diversity of the sector (e.g., large State flagships, a private for-
profit school, small private institutions, a community college, etc.).
This effort is ongoing at this time, and we hope to have additional
findings to share later this spring. Our hope is that these efforts
will be useful in developing better cost estimates going forward and
will be helpful as the committee works through reauthorization of the
Higher Education Act.
Question 2. What followup work would you recommend be done in order
for the committee to obtain a reasonable estimate of this global
compliance burden, and the associated expenditure made by colleges and
universities.
Answer 2. As the leader of a major research university and academic
medical center, I know first-hand that the global compliance burden
extends far beyond the scope of this Task Force. As our work with BCG
demonstrated, our largest Federal compliance burden stems primarily
from our research activities and engagement with Federal research
agencies such as the National Institutes of Health and National Science
Foundation.
To that end, I am pleased that Congress funded the National
Academies of Science (NAS) study on the costs of Federal regulation to
colleges and universities. Although funding for this study was included
in the fiscal year 2014 Omnibus Appropriations Act, it was originally
called for by this committee in the 2008 Higher Education Opportunity
Act. While the Task Force's effort focused on regulations stemming from
the Department of Education, the NAS study will take an in-depth look
at the costs associated with research-related regulations. I believe
this study will provide crucial additional information for lawmakers
about the costs of Federal regulation related to research.
Beyond the NAS, there are a number of analysts and organizations
attempting to estimate this global compliance burden, and the committee
would do well to draw on their expertise. A year ago, the National
Science Board of the National Science Foundation released a report,
Reducing Investigators' Administrative Workload for Federally Funded
Research. This report,
``describes a number of policy actions aimed at modifying and
streamlining inefficient requirements while retaining necessary
oversight of federally funded research.''
Most recently, a joint effort launched by the Association of
American Universities, Council on Governmental Relations and the
Association of Public and Land-grant Universities is gathering inputs
from a variety of institutions in the areas of research-related
compliance. This effort, currently underway, is seeking to assess
research regulatory burden among member institutions and to recommend
specific changes to reduce compliance effort and expense.
Beyond that, the effort we are currently undertaking with the
Boston Consulting Group to look at the Federal regulatory compliance
costs at approximately 10 additional institutions may serve as a useful
barometer for the compliance costs and expenditures at a range of
different institution types. Again, we expect to have findings from
that effort available later this spring.
The Task Force report also calls on the Department of Education to
provide better, more accurate estimates of the burden associated with
its regulations. Greater transparency is needed about the method by
which the Department makes its estimates. The Department should also be
required to consult with campus officials representing a broad range of
institutions in developing these estimates. Compliance costs
necessarily vary from institution to institution, based on sector,
size, and mission. For example, a small private institution may not
have economies of scale or the IT systems of a large public institution
when implementing a given regulation.
[Whereupon, at 11:36 a.m., the hearing was adjourned.]
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