[House Hearing, 115 Congress]
[From the U.S. Government Publishing Office]
IMPROVING FEDERAL STUDENT AID TO BETTER
MEET THE NEEDS OF STUDENTS
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON HIGHER EDUCATION AND WORKFORCE DEVELOPMENT
COMMITTEE ON EDUCATION
AND THE WORKFORCE
U.S. House of Representatives
ONE HUNDRED FIFTEENTH CONGRESS
FIRST SESSION
__________
HEARING HELD IN WASHINGTON, DC, MARCH 21, 2017
__________
Serial No. 115-10
__________
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COMMITTEE ON EDUCATION AND THE WORKFORCE
VIRGINIA FOXX, North Carolina, Chairwoman
Joe Wilson, South Carolina Robert C. ``Bobby'' Scott,
Duncan Hunter, California Virginia
David P. Roe, Tennessee Ranking Member
Glenn ``GT'' Thompson, Pennsylvania Susan A. Davis, California
Tim Walberg, Michigan Raul M. Grijalva, Arizona
Brett Guthrie, Kentucky Joe Courtney, Connecticut
Todd Rokita, Indiana Marcia L. Fudge, Ohio
Lou Barletta, Pennsylvania Jared Polis, Colorado
Luke Messer, Indiana Gregorio Kilili Camacho Sablan,
Bradley Byrne, Alabama Northern Mariana Islands
David Brat, Virginia Frederica S. Wilson, Florida
Glenn Grothman, Wisconsin Suzanne Bonamici, Oregon
Steve Russell, Oklahoma Mark Takano, California
Elise Stefanik, New York Alma S. Adams, North Carolina
Rick W. Allen, Georgia Mark DeSaulnier, California
Jason Lewis, Minnesota Donald Norcross, New Jersey
Francis Rooney, Florida Lisa Blunt Rochester, Delaware
Paul Mitchell, Michigan Raja Krishnamoorthi, Illinois
Tom Garrett, Jr., Virginia Carol Shea-Porter, New Hampshire
Lloyd K. Smucker, Pennsylvania Adriano Espaillat, New York
A. Drew Ferguson, IV, Georgia
Brandon Renz, Staff Director
Denise Forte, Minority Staff Director
------
SUBCOMMITTEE ON HIGHER EDUCATION AND WORKFORCE DEVELOPMENT
BRETT GUTHRIE, Kentucky, Chairman
Glenn ``GT'' Thompson, Pennsylvania Susan A. Davis, California
Lou Barletta, Pennsylvania Ranking Member
Luke Messer, Indiana Joe Courtney, Connecticut
Bradley Byrne, Alabama Alma S. Adams, North Carolina
Glenn Grothman, Wisconsin Mark DeSaulnier, California
Elise Stefanik, New York Raja Krishnamoorthi, Illinois
Rick W. Allen, Georgia Jared Polis, Colorado
Jason Lewis, Minnesota Gregorio Kilili Camacho Sablan,
Paul Mitchell, Michigan Northern Mariana Islands
Tom Garrett, Jr., Virginia Mark Takano, California
Lloyd K. Smucker, Pennsylvania Lisa Blunt Rochester, Delaware
Adriano Espaillat, New York
C O N T E N T S
----------
Page
Hearing held on March 21, 2017................................... 1
Statement of Members:
Davis, Hon. Susan A., Ranking Member, Subcommittee on Higher
Education and Workforce Development........................ 4
Prepared statement of.................................... 5
Guthrie, Hon. Brett, Chairman, Subcommittee on Higher
Education and Workforce Development........................ 1
Prepared statement of.................................... 3
Statement of Witnesses:
Chingos, Dr. Matthew M., Senior Fellow, Urban Institute,
Washington, DC............................................. 41
Prepared statement of.................................... 43
Conklin, Ms. Kristin, Founding Partner, HCM Strategists,
Washington, DC............................................. 20
Prepared statement of.................................... 22
Copeland-Morgan,, Mrs. Youlonda, Vice Provost of Enrollment
Management, University of California, Los Angeles.......... 33
Prepared statement of.................................... 35
Soucier, Ms. Joellen, Executive Director of Financial Aid,
Houston Community College System, Houston, TX.............. 7
Prepared statement of.................................... 10
Additional Submissions:
Adams, Hon. Alma S., a Representative in Congress from the
State of North Carolina:
Letter dated March 30, 2017, from United Negro College
Fund, Inc. (UNCF)...................................... 84
Mrs. Copeland-Morgan:
Article: The University of California at a Glance........ 90
Courtney, Hon. Joe, a Representative in Congress from the
State of Connecticut:
Article: The next victims of the student debt crisis: Mom
and dad................................................ 98
Questions submitted for the record by:
Ms. Adams................................................ 106
Mrs. Davis............................................... 108
Chairman Guthrie.........................................
Espaillat, Hon. Adriano, a Representative in Congress
from the State of New York............................. 109
Foxx, Hon. Virginia, a Representative in Congress from
the State of North Carolina
Takano, Hon. Mark, a Representative in Congress from the
State of California.................................... 110
Responses to questions submitted for the record:
Dr. Chingos.............................................. 116
Ms. Conklin.............................................. 117
Mrs. Copeland-Morgan
Ms. Soucier.............................................. 119
IMPROVING FEDERAL STUDENT AID TO BETTER MEET THE NEEDS OF STUDENTS
----------
Tuesday, March 21, 2017
House of Representatives
Committee on Education and the Workforce,
Subcommittee on Higher Education and Workforce Development
Washington, D.C.
----------
The subcommittee met, pursuant to call, at 10:10 a.m., in
Room 2175, Rayburn House Office Building, Hon. Brett Guthrie
[chairman of the subcommittee] presiding.
Present: Representatives Guthrie, Messer, Grothman,
Stefanik, Allen, Lewis, Mitchell, Smucker, Davis, Courtney,
Adams, DeSaulnier, Krishnamoorthi, Polis, Sablan, Takano, Blunt
Rochester, and Espaillat.
Also Present: Representatives Foxx, Scott and Bonamici.
Staff Present: Courtney Butcher, Director of Member
Services and Coalitions; Emmanual Guillory, Professional Staff
Member; Tyler Hernandez, Deputy Communications Director; Amy
Raaf Jones, Director of Education and Human Resources Policy;
Nancy Locke, Chief Clerk; Dominique McKay, Deputy Press
Secretary; James Mullen, Director of Information Technology;
Krisann Pearce, General Counsel; Jenny Prescott, Professional
Staff Member; Alex Ricci, Legislative Assistant; Mandy
Schaumburg, Education Deputy Director and Senior Counsel; Emily
Slack, Professional Staff Member; Alissa Strawcutter, Deputy
Clerk; Tylease Alli, Minority Clerk/Intern and Fellow
Coordinator; Jacque Chevalier, Minority Deputy Education Policy
Director; Denise Forte, Minority Staff Director; Mishawn
Freeman, Minority Staff Assistant; Christine Godinez, Minority
Staff Assistant; Stephanie Lalle, Minority Press Assistant;
Veronique Pluviose, Minority Civil Rights Counsel; Katherine
Valle, Minority Education Policy Advisor, and Christopher
Zbrozek, Minority Education Detailee.
Chairman Guthrie. A quorum being present, the Subcommittee
on Higher Education and Workforce Development will come to
order.
Good morning, and welcome to the first hearing of the
Subcommittee on Higher Education and Workforce Development for
the 115th Congress. I am honored to serve as the new chairman
of this subcommittee. I want to thank Dr. Foxx for choosing me
for this gavel, and I want to thank my colleagues for trusting
me to lead this important subcommittee.
It is also my honor to welcome our new ranking member,
Representative Susan Davis. I look forward to working together
this Congress. I am confident we will advance solutions that
help prepare students with the knowledge and skills they need
to succeed in the classroom, in the workforce, and in life.
Today's hearing is a part of the committee's broader effort
to strengthen higher education. We all know and have seen the
significant opportunities provided by a postsecondary
education. Unfortunately, as we have also seen, realizing the
dream of a higher education has become increasingly difficult
for many individuals across the country.
As Chairwoman Foxx pointed out at a hearing earlier this
year, college costs are rising at a rapid rate. In fact, since
2006, average tuition and fees have increased by more than 40
percent at 4-year public institutions, and almost 27 percent at
4-year private nonprofit institutions.
Meanwhile, for a variety of reasons, students are not
completing their education. It is estimated that among students
who started college in the fall of 2010, only 55 percent had
earned a degree or certificate by 2016. That is not even 4
years. It is 6 years, with nothing to show for it in the end.
These are just two statistics that will help illustrate the
challenges individuals face when they consider whether or not
they should or can pursue a higher education. They are also two
of the reasons we are working to make higher education more
accessible and affordable. One of the ways we can accomplish
this goal is by simplifying and improving Federal student aid.
Over the years, the Federal student aid system has become
too complex. Students and their families are forced to navigate
6 different types of Federal loans, 9 different repayment
plans, 8 different forgiveness programs, and 32 deferment or
forbearance options, each with its own rules and regulations.
Sounds complicated, right?
Now, imagine you are a student with no background or
experience in navigating such financial options and
responsibilities. Faced with all these choices and decisions,
some individuals do not even know where to begin. Others simply
give up. We need to get rid of the complexity. We need to
eliminate the confusion students face, and there are a number
of ways we can do both.
Just yesterday, I introduced a bill, the Empowering
Students Through Enhanced Financial Counseling Act, that would
improve the timing, frequency, and content of financial aid
counseling.
These changes to current policy would help students and
their families better understand their options and
responsibilities when it comes to paying for college. It is an
idea that has enjoyed strong bipartisan support in the past,
and I am hopeful it will be part of the discussion as we move
forward with efforts to strengthen higher education.
Another idea is streamlining Federal aid into one grant
program, one loan program, and one work study program,
``streamlining'' being the operative word there. It is not
about cutting. It is about cleaning things up, making it easier
for individuals to explore their options, find the right
school, figure out how to pay for their education, and
determine the best way to repay loans.
These ideas are just two of many solutions that have been
proposed. Each makes different reforms, but they all have the
same goal: make the system more efficient and more responsive
to the needs of students.
Simplifying Federal student aid is one principle in a
comprehensive framework that will guide our work to strengthen
higher education, but it is a critical one. Doing so will
provide students and their families with a more timely and
clearer picture of the financial assistance they are eligible
to receive.
It will ensure taxpayer dollars are supporting those
students who need help the most, and perhaps, more importantly,
it will help more Americans realize that the dream of a higher
education is within reach.
I look forward to hearing from our witnesses today and
learning more about their ideas for simplifying and improving
student aid. I know this discussion will help guide our work
ahead as we move forward to reauthorize the Higher Education
Act.
This hearing is especially important to me. When my third
child, my daughter, was born, I remember holding her and her
brother coming into the room, and I started looking at them
there together and how nice it was, baby and young son, and
then it hit me. I said 18 years from now, they are going to be
in college at the same time. Well, this is the 18th year, so I
have a senior and a freshman, one in an out-of-state school and
one in a private school. So, higher education financing is
something that is on my mind.
With that, I want to now recognize Ranking Member Davis for
her opening remarks.
[The information follows:]
Prepared Statement of Hon. Brett Guthrie, Chairman, Subcommittee on
Higher Education and Workforce Development
Today's hearing is part of our committee's broader effort to
strengthen higher education. We all know and have seen the significant
opportunities provided by a postsecondary education. Unfortunately, as
we have also seen, realizing the dream of a higher education is
becoming increasingly difficult for many individuals across the
country.
As Chairwoman Foxx pointed out at a hearing earlier this year,
college costs are rising at a rapid rate. In fact, since 2006, average
tuition and fees have increased by more than 40 percent at four-year
public institutions and by almost 27 percent at four-year private
nonprofit institutions. Meanwhile, for a variety of reasons, students
aren't completing their education. It is estimated that among students
who started college in the fall of 2010, only 55 percent had earned a
degree or certificate by 2016. That's not even four years. It's six
years--with nothing to show for it at the end.
These are just two statistics that help illustrate the challenges
individuals face when they consider whether or not they should or can
pursue a higher education. They're also two of the reasons we are
working to make higher education more accessible and affordable. One of
the ways we can accomplish that goal is by simplifying and improving
federal student aid.
Over the years, the federal student aid system has become too
complex. Students and their families are forced to navigate six
different types of federal student loans, nine different repayment
plans, eight different forgiveness programs, and 32 deferment and
forbearance options--each with its own rules and requirements. Sounds
complicated, right?
Now, imagine you are a student with no background or experience in
navigating such financial options and responsibilities. Faced with all
of these choices and decisions, some individuals don't even know where
to begin. Others simply give up.
We need to get rid of the complexity. We need to eliminate the
confusion students face. And there a number of ways we can do both.
Just yesterday, I introduced a bill--the Empowering Students
Through Enhanced Financial Counseling Act -- that would improve the
timing, frequency, and content of financial aid counseling. These
changes to current policy would help students and their families better
understand their options and responsibilities when it comes to paying
for college. It's an idea that has enjoyed strong bipartisan support in
the past, and I'm hopeful it will be part of the discussion as we move
forward with efforts to strengthen higher education.
Another idea is streamlining federal aid into one grant program,
one loan program, and one work study program--``streamlining'' being
the operative word there. It's not about cutting. It's about cleaning
things up--making it easier for individuals to explore their options,
find the right school, figure out how to pay for their education, and
determine the best way to repay their loans.
These ideas are just two of many solutions that have been proposed.
Each makes different reforms, but they all have the same goal: Make the
system more efficient and more responsive to the needs of students.
Simplifying federal student aid is one principle in a comprehensive
framework that will guide our work to strengthen higher education, but
it's a critical one. Doing so will provide students and their families
with a more timely and a clearer picture of the financial assistance
they are eligible to receive. It will ensure taxpayer dollars are
supporting those students who need help the most. And, perhaps most
importantly, it will help more Americans realize that the dream of a
higher education is within reach.
I look forward to hearing from our witnesses today and learning
more about their ideas for simplifying and improving student aid. I
know this discussion will help guide the work ahead as we continue our
efforts to reauthorize the Higher Education Act.
______
Mrs. Davis. Thank you. Thank you, Chairman Guthrie. I, too,
look forward to a strong working relationship, and thank you to
the witnesses for being here. I look forward to hearing your
testimony.
The Higher Education Act was enacted to expand access to
college and provide an affordable degree to anyone wanting to
pursue an education post-high school. Today's hearing provides
us with an opportunity to hear from experts about ways to
improve the Federal student aid system established in this
legislation.
Since HEA's enactment, the United States has made
substantial progress in college access. Students of color and
low-income students are going to college at higher rates than
ever before. Although we should celebrate these outcomes, we
know there is tremendous room for improvement.
When we look at the data closely, we realize that low-
income students are still accessing higher education at lower
rates than their more affluent peers back in the mid-1970s.
This means that instead of making college less affordable by
slashing billions from Federal financial aid programs like the
President's partial budget request, us Democrats believe that
with sufficient investment, the right targeting towards the
students with the greatest need, and an easy access to
financial aid, the current system could better serve America's
working families.
Through the HEA, the Federal Government has been able to
provide Pell grants, Federal loans, and campus-based aid to
millions of undergraduate and graduate students, but the Pell
grant program now covers the smallest share of undergraduate
costs since its inception.
As state disinvestment and demographic changes have driven
tuition up, Congress has failed to allow the program to keep up
with costs and instead has made changes to reduce eligibility
in order to keep the costs down.
We must strengthen Pell by increasing the maximum award,
indexing the award to inflation, reinstating Summer Pell, and
preserve any remaining funds to reinvest in the program in
future years. Otherwise, low-income students will increasingly
rely on loans to afford their education. With more students
taking out larger loans, we must improve the system so students
have access to favorable terms and streamlined income-driven
repayment plans.
Proposals that remove the availability of subsidized loans
for undergraduate students and eliminate PLUS loans for parents
to create a one loan system would force low-income families to
take out private loans, which lack the consumer protections of
Federal student loans.
As our country fully shifts to a knowledge-based economy,
workers with graduate degrees are increasingly sought after,
but throughout the years, graduate students have been excluded
from the Federal loan system. If we want all students to have
access to high-paying jobs, Congress must preserve access to
these loans as well.
Congress also has a unique opportunity to strengthen the
campus-based aid programs during this reauthorization. Campus-
based aid allows students to work part-time to receive
additional grant aid and borrow additional subsidized loans.
So, we should preserve and bolster these programs, not
eliminate them, as is currently being proposed.
Robust and targeted investments are just two pieces of the
puzzle. We should make financial aid easier to access. Too many
students are unaware of the financial aid options provided by
the government and forego the application process, and we know,
you know, that it is a bit overwhelming and those who do apply
find the form complex and confusing.
Although the form has been greatly improved since its
creation, we must ensure that students have a simple and
functional tool at their disposal, and the recent outage of the
IRS data retrieval tool used when filing the Free Application
for Federal Student Aid, what we know as FAFSA, has already
increased the burdensome verification process.
So, we must work together to ensure the temporary shutdown
of this tool does not negatively dissuade students from
applying for aid or attending college.
Mr. Chairman, we need to improve the system to work for all
students, and we must create policies that pay close attention
to those who have been traditionally underserved by our system.
This will ensure that we can pass a strong reauthorization of
HEA focused on access, on affordability, and, very important,
completion.
Thank you, Mr. Chairman. I yield back.
[The information follows:]
Prepared Statement of Hon. Susan A. Davis, Ranking Member, Subcommittee
on Higher Education and Workforce Development
Thank you, Chairman Guthrie. And thank you to the witnesses for
being here. I look forward to hearing your testimony.
The Higher Education Act was enacted to expand access to college
and provide an affordable degree to anyone wanting to pursue an
education post high school. And today's hearing provides us with an
opportunity to hear from experts about ways to improve our federal
student aid system established in this legislation.
Since HEA's enactment, the United States has made substantial
progress in college access. Students of color and low-income students
are going to college at higher rates than ever before. And although we
should celebrate these outcomes, there is room for improvement. When we
look at the data closely, we realize that low-income students are still
accessing higher education at lower rates than their more affluent
peers back in the mid-1970s.
This means that instead of making college less affordable by
slashing billions from the federal financial aid programs like the
President's
partial budget requests, House Democrats believe that with
sufficient investment, the right targeting toward the students with the
greatest need, and easy to access financial aid, the current system
could better serve America's working families.
Through the HEA, the federal government has been able to provide
Pell Grants, federal loans, and campus-based aid to millions of
undergraduate and graduate students.
But the Pell Grant program now covers the smallest share of
undergraduate costs since its inception. As state disinvestment and
demographic changes have driven tuition up, Congress has failed to
allow the program to keep up with costs and instead, has made changes
to reduce eligibility in order to keep the cost down. We must
strengthen Pell by increasing the maximum award, indexing the award to
inflation, reinstate Summer Pell, and preserve any remaining funds to
reinvest in the program in future years. Otherwise, low-income students
will increasingly rely on student loans to afford their education.
With more students taking out larger loans, we must improve the
system so students have access to favorable terms and streamlined
income-driven repayment plans. Proposals that remove the availability
of subsidized loans for undergraduate students and eliminate PLUS loans
for parents to create a ``one loan'' system would force low-income
families to take out private loans, which lack the consumer protections
of federal student loans. And as our country fully shifts to a
knowledge-based economy, workers with graduate degrees are increasingly
sought after. But throughout the years, graduate students have been
excluded from the federal loan system. If we want all students to have
access to high paying job, Congress must preserve access to these loans
as well.
Chairman, Congress also has a unique opportunity to strengthen the
campus-based aid programs during this reauthorization. Campus-based aid
allows students to work part-time, receive additional grant aid, and
borrow additional subsidized loans. We should preserve and bolster
these programs - not eliminate them as the President requests.
Robust and targeted investments are just two pieces of the puzzle.
We should make financial aid easier to access. Too many students are
unaware of the financial aid options provided by the government and
forego the application process. And those who do apply find the form
complex and confusing. Although this form has been greatly improved
since its creation, we must ensure that students have a simple and
functional tool at their disposal. The recent outage of the IRS Data
Retrieval Tool used when filing the Free Application for Federal
Student Aid (FAFSA) has already increased the burdensome verification
process. We must work together to ensure the temporary shutdown of
this tool does not negatively dissuade students from applying for aid
or attending college.
Chairman, we need to improve the system to work for all students
and we must create policies that pay close attention to those who have
been traditionally underserved by our system. This will ensure that we
can pass a strong reauthorization of HEA focused on access,
affordability, and completion.
Thank you, Chairman. I yield back.
______
Chairman Guthrie. Thank you. I thank the ranking member for
yielding back. Pursuant to Committee Rule 7(c), all members
will be permitted to submit written statements to be included
in the permanent hearing record. Without objection, the hearing
record will remain open for 14 days to allow such statements
and other extraneous material referenced during the hearing to
be submitted for the official hearing record.
I would now like to turn to introduction of our
distinguished witnesses. Ms. JoEllen Soucier is the executive
director of financial aid for the Houston Community College
System in Houston, Texas.
Ms. Kristin Conklin is a founding partner for HCM
Strategists, LLC, a government relations strategy and
development firm.
Mrs. Youlonda Copeland-Morgan is vice president of
enrollment management with the--we have a ball game--I am from
Kentucky, that is coming up, University of California, Los
Angeles, who will be playing the Wildcats this Friday night.
Two great programs.
Dr. Matt Chingos, who is a senior fellow at the Urban
Institute, where he studies education-related topics at both
the K-12 and postsecondary levels.
I will now ask the witnesses to stand and raise your right
hand. You do not have to stand, but since you are standing,
raise your right hand.
[Witnesses sworn.]
Chairman Guthrie. Let the record reflect the witnesses
answered in the affirmative. Thank you.
Before I recognize you to provide your testimony, let me
briefly explain our lighting system. You each have 5 minutes to
present your testimony. When you begin, the light in front of
you will turn green. When 1 minute is left, the light will turn
yellow. When your time has expired, the light will turn red. At
that point, I will ask you to wrap up your remarks as fast as
you are able. Members will each have 5 minutes to ask
questions.
First, recognized for 5 minutes for her testimony is Ms.
Soucier. Thank you. You are recognized for 5 minutes.
TESTIMONY OF JOELLEN SOUCIER, EXECUTIVE DIRECTOR OF FINANCIAL
AID, HOUSTON COMMUNITY COLLEGE SYSTEM, HOUSTON, TEXAS
Ms. Soucier. Chairman Guthrie, Ranking Member Davis, and
members of the subcommittee, good morning. Thank you for
inviting me to testify today. I am very proud to be here.
I've been a financial aid administrator for 29 years, and
am passionate about my work. I became a financial aid director
in 1992, and have held leadership positions in various sectors
of higher ed.
My current institution, Houston Community College, serves
approximately 40,000 aid recipients each year, of which over
30,000 receive a Pell grant. When I entered college, I was a
first-generation student from a low-income household. Without
financial aid, college would not have been possible.
Today, my testimony will identify some of the current
complexities and resulting challenges that exist, in the hopes
that we can move towards simplifying the entire financial aid
process.
The challenges can be categorized into four key areas, the
Federal application process, consumer information, student aid
programs, and student loan repayment.
The discussion around financial aid simplification often
centers upon the number of questions on the Federal
application. While the number can be stunning, 83 for
independent and 126 for dependent students, the advent of more
advanced skip-logic has assisted with shortening the time it
takes to complete the online application. Still, applying for
financial aid remains a barrier for many.
The confusion with the process can be demonstrated by my
experience at Houston Community College. Our communication plan
consists of robust messages. We have over 70 different email
communications sent through our aid delivery process. We employ
25 staff in our call center.
We have a detailed phone messaging system, over 50 staff
covering 14 aid offices across the city, and a communications
coordinator feeding financial aid messages through various
social media platforms. Regardless of these immense efforts,
our students are confused and frustrated.
In September of 2015, President Obama and Secretary Duncan
announced that beginning on October 1, 2016, the application
would use prior-prior income. This change results in earlier
information, reduces administrative burden, and faster delivery
of aid to students.
This type of streamlining is needed in all areas of the
financial aid process. The upcoming reauthorization provides a
great opportunity to focus on improving consumer information
that students and families receive.
There are over 65 consumer information topics that appear
in over 140 different regulations, many added in recent years.
As you might imagine, administrators in my system spend hours
tracking, collecting, reporting, and disclosing information.
Navigating consumer information is particularly difficult
for the 31 percent of our credit students that are first-
generation. These families have no experience with college, and
the students truly do not understand the incredible amount of
information that we provide, not to mention disclosures come at
a time when students are completing all other steps required to
enroll in college.
The most important document for an aid applicant is the
award letter. It informs the applicant of aid for which they
may qualify. I use the word ``may'' because each program has
different eligibility requirements, and based on student
behavior and enrollment decisions, the student may or may not
receive those funds.
There are a number of grant, loan, and work programs that a
student may see on an award letter, each with its own criteria
and requirements. It is confusing to the student and tends to
change each year, making it nearly impossible for a family to
plan for the student's entire college educational costs.
Obtaining student loan funding is the most complicated
process of all the aid programs. The complexity makes it
difficult for students to understand loan eligibility.
Reauthorization is a perfect time to examine the need to
retain annual and aggregate limits based on grade levels,
dependency status, program of studies, and attendance.
At Houston Community College, over 18,000 students borrow
from the student aid programs each year. We need greater
authority to help borrowers stay within reasonable levels of
debt, and require additional loan counseling based on the needs
of our borrowers. Right now, schools have very little control
over how much students borrow, and are prohibited from
acquiring annual loan counseling.
Reauthorization provides an opportunity to make loan
repayment easier for students. Right now, there are nine widely
available repayment plans. Understandably, this creates a great
deal of perplexity for borrowers. Many of our students can
benefit from income-driven repayment options, but are unable to
navigate the many programs to determine their best options.
Houston Community College has been challenged with an 18 to
22 percent default rate over the past 5 years. We contracted
with a third-party agency to increase outreach to students and
assist them in determining the best option for repayment. Our
fiscal year 2014 draft rate, which was released a couple of
weeks ago, came in at 11.7 percent as a result of these
increased efforts.
Since my time is limited, you will find that my full
remarks provide more detail and context regarding the student
challenges with financial aid.
In conclusion, I have seen the complexity of the student
aid process increase greatly over the past 25 years. The entire
process from application to repayment has become an intricate
puzzle that only a seasoned professional can navigate and
understand.
There are numerous opportunities for improvement,
simplification, and consolidation. It is my hope that today's
testimony will help you understand the challenges that students
face as they attempt to work through the process.
Thank you for your time and attention.
[The statement of Ms. Soucier follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Chairman Guthrie. Thank you. I now recognize Ms. Conklin
for 5 minutes for your opening statement.
TESTIMONY OF KRISTIN CONKLIN, FOUNDING PARTNER, HCM
STRATEGISTS, WASHINGTON, D.C.
Ms. Conklin. Thank you, Chairman Guthrie, Ranking Member
Davis, and members of the subcommittee for this opportunity.
My name is Kristin Conklin, and I am the first. I'm the
first in my family to earn a college degree, the first to
create jobs and start a business. I was able to graduate
college in 4 years with a Pell grant and State financial aid
without any debt.
That might not be possible for today's students. For
several years, I have been part of a chorus of experts who have
called for radical simplification of the Federal financial aid
program. Three key reforms could improve its effectiveness and
efficiency.
First, streamline all Federal financial aid programs into
one grant program, and all loan programs into one loan program.
With one grant, we can consolidate the campus-based programs
into a Pell grant that would be easier to obtain and better
target with common sense needs analysis changes.
With one loan program, we'd create one set of annual and
aggregate loan limits for undergraduates and one set for
graduates. We would offer uniform borrower benefits in one
income-based repayment program. Loan eligibility would end at
new sensible credit hour limits, such as 150 percent of program
length.
With one grant, one loan, today's students can easily find
how much aid they would be eligible for with a simple look-up
table. Just as easily, students could get instant notification
on their phones what their Federal awards would be, and what
monthly repayment would look like.
Advocates and academics have been calling for this kind of
transparency and early notification for a decade.
Second, remove the barriers to on-time completion that are
built into a Federal loan program. The single most effective
way to make college more affordable is to reduce the amount of
time it takes to earn the credential, but here, the Federal
Government is setting a too low standard backed by its $158
billion investment, and 47 States follow, which means the
simple message we send students today is you all are on track
to graduate in 5 years for a bachelor's degree.
Why is this? Policy is capping our awards at 12 credit
hours, which is even more, even for students who like to take
more. The maximum amount of the grants and loan should be
pegged to students taking 15 credit hours a term or 30 credit
hours a year. Students should also have access to grant aid
throughout the summer.
Third, I think it's important to include tax credits in
your financial aid eligibility. Now, this is well beyond the
jurisdiction of this committee. When this Congress considers
tax reform, I encourage you to consolidate the multiple
household based postsecondary benefits into a single refundable
lifelong learning tax credit.
These three simple recommendations are more than just
student-centered, they are evidence-based. Research says that
student aid works best when it's targeted, appropriately timed,
and clearly communicated, coordinated with other resources, and
designed to provide both incentives and support.
Congress can look to States to see how simplification can
make a difference for today's students. Indiana, for instance,
offers larger need-based grants to students who take 30 credit
hours a year or more, and requires its 21st Century Scholars'
students to take a true full-time course load to receive their
maximum grants.
We have early encouraging results out of Indiana. Students
receiving this financial aid are taking 30-plus credit hours
their sophomore year at higher rates than their peers, and
improvements are particularly stronger for the 2-year sector.
Minnesota consolidates its Federal and State aid, and it
gives large awards to students who take true full-time course
loads. As a result, students in Minnesota, two-thirds of them,
of the full-time students, are now on track to graduate in 4
years with a bachelor's degree or 2 years for an associate's
degree.
In California, Pell grants act as a simple, generous Cal
grant. This contributes to the University of California's
campuses enrolling a larger percentage of Pell grant students
than any other flagship in the country.
The Nation's Federal financial aid system was built for
another era. In 1965, when the first significant Federal
financial aid program began, 23 percent of Americans had a
college degree, and that attainment level was sufficient for a
vibrant middle class. That economy and those times are no more.
By 2020, 65 percent of our jobs will require some form of
postsecondary education beyond high school. A simplified
Federal financial aid system is part of the solution for our
Nation. That means many more skilled graduates, a stronger
middle class, and more opportunities.
Thank you, and I welcome your questions.
[The statement of Ms. Conklin follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Chairman Guthrie. Thank you for your testimony. Mrs.
Copeland-Morgan, you have the floor, you can get me back on the
Cats versus Bruins that is coming up this weekend. I am just
kidding. You are recognized for 5 minutes to testify.
TESTIMONY OF MRS. YOULONDA COPELAND-MORGAN, VICE PROVOST OF
ENROLLMENT MANAGEMENT, UNIVERSITY OF CALIFORNIA, LOS ANGELES
Mrs. Copeland-Morgan. Thank you, Chairman Guthrie, Ranking
Member Davis, and members of the subcommittee for inviting me
to appear before you today as you consider ways to strengthen
Federal student aid to better meet the needs of students.
My name is Youlonda Copeland-Morgan. I am the vice provost
for enrollment management at the University of California, Los
Angeles. My professional dedication to college affordability
and access long preceded my time at UCLA, but I'm here today to
share some of the successes we have had at the University of
California, and make our recommendations to improve the Federal
student aid system.
UCLA is an academically prestigious institution, and has a
consistently strong record of admitting, enrolling, and
graduating low-income students. In fact, all of the University
of California's 10 campuses are equally committed to college
affordability and access.
UC's core philosophy is to ensure that all eligible
students can enroll at any of our campuses and to keep UC
affordable. We have succeeded at this, as demonstrated through
these facts.
UC enrolls far more Pell grant recipients than any other
top research university in the country. In 2013/2014, 40
percent of our undergraduates were Pell grant recipients
compared to 22 percent at other comparable public universities.
Forty-two percent of UC's undergraduates are the first in their
family to attend college. More than half of our California
undergraduates pay no tuition.
But enrolling low-income students is not enough. We need to
see them graduate. In this respect, UC is also succeeding. UC's
Pell grant recipients' 6-year graduation rates are nearly
identical to those of their middle- and upper-income peers.
UC's success is largely the result of its partnership with
the Federal Government and the State of California, which
together provide a strong network for our California students.
My written statement outlines more details, but in the
short time that I have this morning, I would like to outline
some of UC's recommendations to the subcommittee.
My simple message is that Congress must increase its
investment in Federal financial aid programs, assure that
Federal student aid and subsidies are targeted to students with
the most financial need, and improve the programs so that they
are easy for students and their families to understand and
access.
Before I start, I want to note that President Trump's
recently released budget plans for next year would cut more
than $50 billion from nondefense discretionary appropriations,
leading to devastating cuts in all Federal education programs,
and essentially eliminating the opportunity for any significant
increases in the Federal investment in education for a long
while.
Congress must reject these cuts, and UC and staff
recommends strong, sustained, and increased funding for the
Pell grant program to increase the maximum award. Continue
annual inflationary adjustments for the award, restore year-
round Pell grants, and provide a Pell bonus to students who
take increased credits to accelerate their time to completion.
Protect and strengthen Federal campus-based aid programs,
which are critical tools for assisting low-income students in
pursuing postsecondary educational opportunities.
Simplify the student aid programs and FAFSA to increase the
number of very low-income students and families who apply for
and receive financial aid, but assure that Federal aid remains
targeted to the most financially needy students.
Updating the Federal Student Loan Program is a high
priority in the reauthorization for UC, and we will support
changes that enhance student benefits and improve how loans are
administered, dispersed, serviced, and repaid.
UC would strongly oppose reform proposals that eliminate
in-school interest subsidies for undergraduate borrowers,
limits borrowers, repayment options, or curtails graduate
incentives to engage in public service.
Again, thank you for this opportunity to testify. The
University of California looks forward to working with you to
reauthorize the Higher Education Act to expand and improve the
law.
[The statement of Mrs. Copeland-Morgan follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Chairman Guthrie. Thank you for your testimony. The ranking
member just reminded me that she is an alum of UCLA, and her
husband is from Kentucky.
Mrs. Copeland-Morgan. She's not conflicted though.
Chairman Guthrie. Dr. Chingos, you are recognized for 5
minutes for your testimony.
TESTIMONY OF MATTHEW M. CHINGOS, SENIOR FELLOW, URBAN
INSTITUTE, WASHINGTON, D.C.
Mr. Chingos. Thank you, Chairman Guthrie. Thank you,
Ranking Member Davis, and members of the committee for the
opportunity to testify today.
I'm an education policy researcher at the Urban Institute,
and the coauthor of ``Game of Loans: The Rhetoric and Reality
of Student Debt.''
The views expressed in this testimony are my own, not those
of any organization with which I'm affiliated, its trustees, or
its funders.
The main point I want to make today is that the student
loan crisis in the news is largely a distraction from the real
problems facing borrowers and taxpayers. The reality is that
most undergraduates borrow less than $40,000, and the average
economic return to a college degree is as high as it has ever
been, despite the rise in tuition. The borrowers most likely to
struggle are those who never complete a degree, many of whom
have relatively small amounts of debt.
Student borrowing has increased dramatically. As a result,
Americans are getting more education, as well as Federal and
State policy changes.
The available evidence suggests the typical borrower today
is in a stronger financial position than she was a generation
ago, and the typical monthly burden of student loan debt is
largely unchanged since the early 1990s. Most households with
education debt pay 4 percent or less of their income each month
for student loans.
Yet, all is not well with student lending in the United
States. In fact, there are five crises in student lending.
First, we have a completion crisis. Only 59 percent of students
who start at 4-year public colleges earn a bachelor's degree
from any institution within 6 years. At community colleges,
it's 39 percent.
Second, we have a default crisis. Millions of borrowers are
in default and tend to be those with the least debt.
Third, we have a repayment crisis. Borrowers could avoid
defaulting by enrolling in income-driven repayment, but
existing programs are confusing and difficult to navigate.
Fourth, we have an information crisis. Many students do not
understand what they're getting into. Only a quarter of first-
year students can accurately report how much they have
borrowed.
Finally, policymakers and taxpayers may soon face a cost
crisis in the student lending system, especially because loan
forgiveness programs may have larger costs than projected.
The popular media narrative of a broad-based student loan
crisis is problematic because it leads to the wrong policy
solutions by focusing on all borrowers, and especially
borrowers with the most debt, rather than on those who most
need help.
For example, proposals to reduce interest rates on
outstanding loans, often called ``refinancing,'' would
disproportionately benefit affluent households. Instead,
Congress should consolidate and simplify the Federal student
aid programs to make the best use of limited taxpayer dollars
to help students attend and complete college.
First, there should be one Federal grant program.
Eligibility should be determined automatically using tax
records. All Federal subsidies are currently delivered through
other programs, such as the subsidized loan programs, and
should instead be delivered as upfront grants. For example,
year-round Pell could be reinstated.
Second, there should be one Federal loan program focused on
undergraduate students, not a blank check for parents of
graduate students. The Parent PLUS Program should be eliminated
as creditworthy parents can obtain credit in the private
sector.
The Grad PLUS Program should be limited or eliminated.
Graduate students attending programs with a return that
justifies the cost will be able to obtain funding in the
private market.
Third, there should be one income-driven repayment program
which allows borrowers to make loan payments as a percentage of
their income through the tax withholding system. The sole
purpose of the income-driven repayment program should be to
insure borrowers against the risk that they'll be unable to
afford their payments.
Forgiveness should only be provided as a last resort, and
the Public Service Loan Forgiveness Program should be
eliminated.
Policymakers seeking to subsidize employment in certain
sectors of the economy should do so directly rather than
through loan forgiveness.
In conclusion, student loan debt is not inherently good or
bad. It enables students to make investments in their futures,
but those investments do not always pay off. The key challenge
facing policymakers is to reduce bad investments and the harm
they cause while resisting political pressure to further
subsidize individuals who enjoy taxpayer subsidies, but do not
need them.
The upcoming reauthorization of the Higher Education Act
provides an important opportunity for Congress to ensure that
the Federal student aid programs do less harm and more good for
students and taxpayers.
Thank you again for the opportunity to testify today. I
look forward to answering any questions.
[The statement of Mr. Chingos follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Chairman Guthrie. Thank you very much. I thank all the
witnesses for testifying. Now, we will go to member questions.
I will first recognize the chairman of the full committee, Mrs.
Foxx of North Carolina. Dr. Foxx. I apologize.
Dr. Foxx. It is okay. Thank you very much, Chairman
Guthrie, and I want to thank all of the witnesses. You have
given great testimony this morning. We appreciate you being
here.
Ms. Soucier, I am aware of Houston Community College
participating in ``Aid Like A Paycheck'' experiment, where
students receive aid incrementally instead of in a lump sum at
the beginning of the year or semester. Have you seen any
results from this experiment or any evidence that such a
disbursement method would be useful for both students and
taxpayers?
Ms. Soucier. Yes, thank you. We have been participating in
Aid Like A Paycheck for the last 3 years. The data are just
starting to come in, but internally, we have seen improvements
in retention of students, not for the reasons why you might
have guessed.
We have a system in place right now called ``Return of
Title IV,'' so when a student withdraws during a semester, we
have to recalculate the rate eligibility. And a lot of times
they have to return aid that they already received, causing the
students to be left with a balance due, which means as long as
that balance is due, they can't come back to school, which is a
problem, because many of our students drop out for personal
reasons and life happens, basically. So, they want to come
back, but they can't until that debt is paid, and the problem
is they don't have the funds to do so.
So, Aid Like A Paycheck, what it has done is it has spread
out the disbursements over the entire semester, so we give out
the disbursements every 2 weeks. So, those students who have
had to withdraw, they now no longer owe money because they
haven't received the funds yet. So, recalculating their aid is
causing them to basically break even for the most part, and in
a lot of cases, we actually owe them a little bit of money
based on the calculation, return on the Title IV calculation.
So, we have seen that students don't have that debt when
they want to come back the next semester or a year later. So,
it has benefitted students greatly in that aspect.
Dr. Foxx. Thank you very much, great insight. Dr. Chingos,
thank you very much for your book. I am going to read it this
weekend. You advocate eliminating subsidized loans and instead
using the dollars to provide grants that reduce the cost of
college for students.
Ms. Conklin's testimony also suggested a one loan program
that eliminates the distinction between the subsidized and
unsubsidized loans. Ms. Soucier discusses the confusion in
delays.
Can you expand on why you suggested elimination of the
undergraduate subsidized loan, and your thoughts on whether
this subsidy is effective in helping the neediest students, or
are there other ways we could better target limited Federal
funds? Actual limited, hard-working taxpayer dollars, which is
what we are talking about.
Mr. Chingos. Thank you for the question, Dr. Foxx. The idea
of eliminating the in-school interest subsidy on loans isn't to
take resources away from anyone, but it's to deploy them in the
way where they are most likely to impact behavior.
So, if we want to help low-income students complete
college, I think it's better if we're going to give them a
subsidy to give it all as an upfront grant, to reduce the price
that they pay for college on day one, rather than reducing an
interest rate that accrues during college.
So, I just think it makes the most sense to provide all
those dollars as upfront grants rather than burying them in a
subsidy that students may not really understand.
Dr. Foxx. Thank you very much. Ms. Conklin, you bring up an
important point about what constitutes full-time enrollment. As
you point out, 12 hours is now considered full-time by the
Federal Government. It is a message to students because only 55
percent of them are graduating within 6 years.
I am intrigued by the State results that States have seen
when setting the expectation for on time completion. Would you
want to say a little bit more about what this does about
college affordability, and can you explain the relationship
between enrollment intensity and the odds of completion?
Ms. Conklin. Dr. Foxx, thanks for that question. I'll
probably run out of time and submit a full answer for the
written record.
Simpler tells the truth they need to hear, the best way you
are going to save money, as much as 50 percent on your
education, is to finish on time. When you give these realistic
expectations to students, as we have seen in Indiana, we not
only tell students what they need to do, we tell colleges.
In Indiana, they've started opening up their summer
resident halls at a discount or for free. We see reduced
tuition. We see changes in guidance. That is why we see the
improvements across the board in both 2-year and 4-year
sectors.
Chairman Guthrie. I think maybe you will be able to cover
that in further time, but the Chairwoman's time has expired.
Dr. Foxx. Thank you very much.
Chairman Guthrie. I appreciate your answer. We will get to
that, I am sure, as we move forward. I recognize the ranking
member, Ms. Davis, for 5 minutes of questions.
Mrs. Davis. Thank you, Mr. Chairman. I wanted to direct my
first question to Mrs. Youlonda Copeland-Morgan. The
President's budget would make significant cuts, as we know, to
campus-based aid programs, and would deprive millions of
students of much-needed aid.
How would the elimination of these programs or a reduction
in funds impact the students on your campus and across
California, and can you be as specific as possible?
Mrs. Copeland-Morgan. Yes. Let me just state for the
record, I'm a first-generation college student and benefited
from all of these programs, and as a result of that, the
Federal Government made less investments in my children, which
is exactly what we are trying to do here.
First of all, these programs are critical to not only
access, but to retention of these students. The idea that we
would have one loan and one grant sounds simple enough, but, in
fact, life is complex and being a student is complex.
Our responsibilities as financial aid officers are to
ensure that students have mentors there who can help them fill
the gap, and that's what campus-based aid does. Without campus-
based aid, the Federal Perkins Loan Program, Work Study
Program, and FSEOG Program, we would not have the tools that
are necessary to target the most neediest students, and that's
what really allows us not only to provide access to these
students, but to graduate them.
So, we're advocating - and I've, as past chairman of the
College Board, on our national association, and for decades,
we've been saying especially because of the loss in the Federal
Pell grant program, the loss of purchasing power there, that
we're advocating that we retain these programs. They work.
We certainly believe that there are more improvements that
can be made, but the continuous investment in campus-based
programs, increase in maximum Pell grant amounts, and continued
Federal investment in these programs are key given the
demographics of our society today.
Mrs. Davis. If we were somehow able to keep the amount the
same, and that's the difficulty with trying to simplify is that
we lose generally whenever we try to consolidate, that seems to
happen, would there be a reduction in the complexity if, in
fact, that could be done at some levels, and why do you think
that is not likely to happen?
Mrs. Copeland-Morgan. I doubt it because the financial aid
program--financial aid comes from State sources and
institutional sources, which all have different forms, but
right now, the current FAFSA allows many States to eliminate
having their own application.
So, eliminating or simplifying, oversimplifying, the FAFSA
form would simply result to where we were decades ago, where
every time a student wanted to apply for State aid or
institutional aid, they had to fill out a separate application
because the Federal Needs Analysis did not meet the needs of
the States or institutions who were interested in making sure
that their financial aid is targeted to the most needy
students.
I think of this sort as the IRS process. We do not allow
all citizens to fill out a 1040A. The IRS process is
complicated, overly complicated, but the idea is that we want
to be able distinguish our low-income students from middle-
income students, from those families who have the ability to
pay.
So, I do believe that going back, oversimplifying the FAFSA
form, will result in a more complex process for our students.
Mrs. Davis. Thank you. Ms. Soucier, I wonder if you could
speak for a second, I know in your written testimony you spoke
about the fact that many, many students on campus are subject
to FAFSA verification, and you mentioned out of 80,000 aid
applicants, 38,000 were selected for verification. And you also
indicated that low-income students who may have a harder time
providing required documents are more likely to be forced out
through the verification process because they are not able to
complete that.
Could you speak to us a little bit about that, and how do
we deal with that? What happens to those students?
Ms. Soucier. Sure. I'd be happy to. In what I call my
``backroom operation,'' I have 18 people, and all they do is
verification day-in and day-out. There are a multitude of
different types of students that attend Houston Community
College. We're a melting pot. Our city has people from all
over, with all different circumstances.
So, we deal with a lot of unusual situations, especially
with the tax law. We deal with a number of students who were
unable to fill out their taxes correctly, and we have to look
at that information when we're doing verification.
So, basically what's happening is the forms themselves are
taking time for students to complete.
Chairman Guthrie. Maybe we can get to those as we move
forward.
Ms. Soucier. Yes, I'd be happy to give you more details on
that.
Chairman Guthrie. I recognize myself for 5 minutes for
questions. Ms. Soucier, the statistics Dr. Chingos highlighted
in his written testimony were stunning. According to a study by
The Brookings Institute, which Dr. Chingos coauthored, only a
quarter of first year students could accurately report how much
they had borrowed, and 14 percent of the students who had
borrowed money thought they had no debt at all.
This information problem is very concerning to me, and it
is why I introduced the bill I mentioned earlier, that would
require improved Federal aid counseling for aid recipients
throughout their education.
Are you noticing trends Dr. Chingos discussed in his
testimony on your campus, and can you discuss the benefits to
students where you have been able to counsel them about their
financial aid?
Ms. Soucier. Absolutely. As a matter of fact, we have six
financial coaches on staff at our institution. Those coaches
work very closely with students that are willing to come to our
counseling sessions and are willing to come to our workshops
that talk about debt and student loan repayment options.
However, we can't require it, so we are prohibited from
requiring them to come before we can deliver the funding to
them, so it's difficult to get students to want to come to
these sessions and learn about student aid and student loan
debt.
If we had the ability to require them to even do an online
process, put together some online videos and watch what it
means to have a student loan and repay those student loans, I
think that would benefit them greatly.
Our students are defaulting on the loans because they don't
understand it. They don't understand they even took out a loan.
All they're doing is signing a piece of paper, electronically,
online. They're accepting a loan. They're going in and doing a
quick and easy online promissory note, and they're not reading
the fine print, and they don't understand what they're getting
into until they graduate and walk away.
Chairman Guthrie. I would like to move to Ms. Conklin.
Thank you for your answer. Ms. Conklin, I noticed that HCM's
proposal eliminates current deferment and forbearance options,
which allow borrowers to suspend payments during times of
economic hardship.
Can you explain how the Technical Panel arrived at the
conclusion the elimination was better for borrowers, and can
you discuss the impact such a proposal would have on borrowers
struggling to make their payments?
Ms. Conklin. Thank you, Mr. Chairman. So, what he's
referring to is the Technical Panel I led back in 2012, a
bipartisan group of academics and financial aid experts.
What we recommended was the single loan program is an
income-based loan repayment program, so basically a family
would have the ability to take up to 300 percent of their
family income--300 percent of their family income would be
deducted from their available income--and then they didn't have
a decision to pay up to 15 percent of that.
So, being able to adjust your payments based on your income
is the relief that you would need in repayment. Again, you take
the lower of the two payments. So, it's putting everybody into
that default loan repayment, but itself is the borrower
benefit.
Chairman Guthrie. Thank you. Now, Dr. Chingos, the topic of
the Bennett hypothesis would suggest that increases in
available Federal student aid corresponds with increased
tuition prices, and often comes up as we discuss the aid
programs provided by the Federal Government.
The last thing we want to do as Federal policymakers is
make higher education more expensive. Can you discuss your
thoughts on the hypothesis and what we should consider as we
reauthorize the Higher Education Act?
Mr. Chingos. Right. I think the Bennett hypothesis had a
lot of intuitive appeal, make more money available for
something and it enables institutions or, in the long run, at
least makes it easier for them to raise their prices.
The evidence on it is somewhat mixed. I think Federal
policymakers ought to be most concerned about situations where
the Federal funding footprint is the largest, so cases like
with graduate loans where graduate students can borrow up to
the total cost of attendance, no questions asked, I think we
should be concerned there.
I think we ought to be concerned with institutions where
Federal grants and loans make up a very large share of student
aid.
Chairman Guthrie. Thank you. That concludes my questions. I
will now recognize Ms. Adams. I am sorry. I will recognize Mr.
Espaillat for 5 minutes for questions.
Mr. Espaillat. Thank you, Mr. Chairman. Dr. Chingos, you
have mentioned you advocate for the elimination of loan
forgiveness programs. Loan forgiveness programs have for many
years, since at least 2007 for sure, have been a part and
parcel of a mechanism to bring professional help and public
service to distressed areas across the Nation.
For example, school districts that have shown for many
years to lack academic achievement levels that we could all be
proud of have used forgiveness loans to attract very qualified
teachers to come to those school districts, to try to pull them
by their bootstraps.
Communities that do not have the adequate health care often
resort to loan forgiveness programs to bring in doctors and
nurses that will help them become healthy again.
So, this is a very important program, not only for those
that will benefit from the loan forgiveness, but for
communities across the country that are facing dramatic
challenges.
Why adopt this heavy-handed approach to eliminate loan
forgiveness programs when, in fact, these are essential and
basic to many neighborhoods throughout the country, and
particularly those neighborhoods that are facing great
challenges in education, health care, and other arenas where we
could bring the best professionals that we have available?
In some cases, we have had to go abroad to bring qualified
teachers to our school districts. We have had to go abroad to
bring medical professionals to our neighborhoods.
Why be punitive and say you are not going to be rewarded
for coming into these very and distressed neighborhoods that
require the public service that you are able to provide?
Mr. Chingos. Thank you, Congressman, for the question. My
view is that loan forgiveness is a very blunt instrument for
attacking those extremely important problems that you
identified. The problem is that loan forgiveness, particularly
the public service loan forgiveness program, delivers what
amounts to taxpayer subsidies in a very arbitrary manner.
So, it's true that those high needs areas you identified
could potentially benefit, but roughly one-quarter of the
economy is defined as public service under the law. So, the
amount of benefits someone gets relates to sometimes an
arbitrary distinction between whether their organization
qualifies or not, so doctors in nonprofit hospitals get it, but
not doctors in for profit hospitals, even though they may be
doing similar work. And the amount of benefit you get relates
to not just the importance of the work you're doing, but how
much you borrowed for school.
So, you could have two people working in the same
nonprofit, one of them worked their way through a public
college, didn't take on a whole lot of debt, and the other
person went and borrowed as much as they could to get an
undergraduate degree and a graduate degree somewhere, and that
second person would get a whole lot larger subsidy.
So, I think there is just much better targeted ways of
helping people and, as I said in my testimony, subsidizing
people in certain sectors of the economy rather than
forgiveness.
Mr. Espaillat. Getting to the minutia of things, sometimes
you could lose the forest for the trees. Let me give you an
example. Bilingual teachers, certified bilingual teachers,
which are essential to many neighborhoods, many districts, many
States across the country, where we want to bring recent
arrivals, English language learners up to par with everybody
else, are lacking. And as a result, we have to go to Spain,
Chile, all over the planet to get these certified teachers to
come in, these bilingual teachers to come into our districts.
Why not create an incentive in our higher education system
to have the best that are local here to come to those
districts? Health areas, many districts lack primary care
physicians, emergency room physicians. We have to go abroad to
get doctors. By the way, some of them may not be able to come
in through the, because of the Muslim ban now. But we have to
go abroad to get these doctors.
Why not create an incentive here locally for our U.S.
students to come into these districts and get access to these
loan forgiveness programs? What is wrong with that?
Mr. Chingos. My view is those incentives be provided
directly by either tax credits to those people or just ways to
increase their salaries and not through loan forgiveness
programs that also have to give away money to a bunch of other
people.
Mr. Espaillat. I think tax credit programs are often
backdoor mechanisms that are not always needed by the
recipient. Thank you, Mr. Chairman. I yield my remaining time.
Chairman Guthrie. Thank you, appreciate it. I now recognize
Ms. Stefanik for 5 minutes for questions.
Ms. Stefanik. Thank you, Mr. Chairman, and thank you to the
witnesses for your testimony on this very important issue
today.
I also was the first member of my immediate family to
graduate from college, so making higher education more
affordable and more accessible is one of my top priorities.
I have worked closely with schools in my district, in New
York's 21st congressional district, to address the challenges
of affordability, and these conversations, particularly with
community colleges, have laid out what can be accomplished if
we modernize the Federal Pell grant program.
So, my first question is for Ms. Soucier. You and other
witnesses today have mentioned year-round Pell grants as a way
to help students complete their education more quickly. You
also mentioned the implementation difficulties of the old year-
round Pell grant program.
Earlier this month, I reintroduced the bipartisan Flexible
Pell Grants for the 21st Century Students Act, which reinstates
year-round Pell grants, but my bill also addresses
implementation concerns by specifying that institutions can
decide which award year to assign the payment toward for
payment spanning two award years.
Would this address some of the implementation concerns you
mentioned, and can you expand on how you believe year-round
Pells would benefit students?
Ms. Soucier. Well, I think year-round Pell was a success
once we implemented the complexity of it. It took us a couple
of years to get our systems to understand how to treat students
under that new framework, but once we did it, we started seeing
the benefit of it.
I, personally, did my bachelor's degree in 2-1/2 years, and
I know how much money that saved me. I didn't have year-round
Pell back then. I just had the straight Pell and lots of
student loans.
I know it is a tremendous saving of time and money to
enable students to go year-round. It's also a retention tool
because keeping the student engaged over the summer is a big
deal. We lose a lot of students, especially at the university
level, during the summer, as things start to happen in their
life. Keeping them engaged during the summer is a huge benefit
to the student and the school, and improves completion rates.
So, I do know for a fact year-round Pell benefitted
students, and we were actually unhappy to see it go away when
it did.
Ms. Stefanik. Thank you for adding in the importance of
college completion, because as we grapple with the student loan
crisis, raising that completion rate is a critical piece to the
puzzle.
My next question, which is on the same issue, is for Ms.
Conklin. In your testimony, you discuss how year-round
assistance and increased flexibility would help improve access
for nontraditional students.
Can you expand upon how increased flexibility in the
disbursement of Federal Pell would assist the student, for
example, who is slightly older, is working part-time, is a
parent?
Ms. Conklin. Thank you, Congresswoman, for your focus on
what we call ``today's students'' in the business. Most of our
students today are what used to be nontraditional, and they, in
fact, do have to juggle work and children in order to earn
their credential.
So, what we are seeing more and more in higher education is
real innovation in delivery, where people are able to do self-
paced learning, we're able to put remedial courses in the
middle of the credit-bearing courses, and give students
additional support so they get out of remedial education
quickly. All those innovations require flexibility around the
disbursement of money.
Some of our most successful programs for nontraditional
students, I think about CUNY ASAP, which is being replicated in
other places like Ohio, that is a set of guided pathways for
nontraditional students. It costs more in those first 2 years
to be able to educate them, but at the end, it's a lower cost
per degree for taxpayers and for students.
So, what we need to be able to do is frontload some of that
Pell money for those early years, to fund that integrative
program which has very good results.
Ms. Stefanik. Thank you very much. I just want to take a
moment to thank the committee for their support and thank my
colleagues who have signed on as cosponsors. This is a
bipartisan bill, and for any of my colleagues who are not
cosponsors, I want to encourage you to look at the Flexible
Pell Grants for 21st Century Students Act.
This is modernizing Pell. It is bipartisan, and I am
hopeful we can get this passed in this Congress. Thank you, and
I yield back.
Chairman Guthrie. Thank you. Thank you for yielding. I now
recognize Ms. Adams for 5 minutes of questions.
Ms. Adams. Thank you, Mr. Chair, and thank you, Ranking
Member Davis, for hosting this hearing, and to those of you who
are here testifying, we thank you very much as well.
Ensuring that students have greater access to an affordable
higher education is critical to adjusting our Nation's skill
gap and preparing Americans for the jobs and the economy in the
21st century. I would just add to the comments that have been
made that I, too, was a first-generation college student.
Last year's Republican platform called for a stop to the
direct loan program and to return to a system similar to the
Federal Family Education Loan Program, where private lenders
originated federally guaranteed loans and services. Think
tanks, however, have argued that going back to this type of
system would only increase costs to the taxpayers.
Therefore, more recent proposals have now focused on
scaling back or eliminating Federal lending for two groups. The
authors of these proposals argue that because these two groups
of individuals have a credit history, the private market can
serve them just as well as the Federal Government, if not
better.
My question, Mrs. Copeland-Morgan, I want to focus on
Parent PLUS loans, and would like to know if eliminating Parent
PLUS loans would be detrimental to students in your opinion,
and, if so, why?
Mrs. Copeland-Morgan. Indeed, it would be detrimental to
the student and to the families. The fact is not all families
can get access to private loans. Secondly, there are predatory
practices out there in the private loan area, an area that
since going to direct loans we've spent less time counseling
parents and students on, and also PLUS loans allow families who
have not had the ability to save for college to contribute to
their children's education. I think that is a fact that is
overlooked.
The private loan market simply did not serve our most
neediest families well, nor did it serve those families,
working middle-income families, well at all.
So, I would certainly remind us to look at some of the
challenges that we were dealing with before direct loans.
Ms. Adams. Thank you for that response. As you mentioned,
eliminating Parent PLUS loans would be detrimental to a number
of students, particularly students at HBCUs and low-income
students seeking graduate degrees.
I have a letter, Mr. Chair, from Dr. Michael Lomax,
president and CEO of UNCF, which supports college success for
minority students, outlining the need to provide Federal
investment in Pell grants, including restoring year-round Pell,
increasing the maximum awards, and so forth, and I would like
to submit this for the record.
Chairman Guthrie. Without objection, so ordered.
Ms. Adams. Thank you. Knowing that the President's budget
blueprint raised nearly $4 billion from Pell, this letter is
even more important so I thank you for receiving it.
Mrs. Copeland-Morgan, the reauthorization of the Higher
Education Act affords Congress with an opportunity to simplify
the financial aid system, specifically FAFSA. Research has
shown that this form presents barriers for low-income and
first-generation students. In fact, about $24 billion goes
unclaimed each year, including $2.7 billion in Pell grant
funding.
Although the form has been simplified throughout the last
two decades, I believe that more can be done, but I also know
that simplification comes with tradeoffs. Making it too simple
means aid will be less targeted by States and institutions,
many of which rely on information found on the FAFSA to
determine State and institutional aid, and may no longer have
sufficient information to make accurate awards.
Do you agree that these are valid concerns, and, if so,
what considerations should we be mindful of as we work to
simplify FAFSA?
Mrs. Copeland-Morgan. I do agree that oversimplification is
a valid concern. I think there are improvements that can be
made, for example, taking advantage of the Federal Government's
vast database around other need-based programs and simplifying
the process for low-income students who have already been
verified through other Federal means-tested programs. It's one
way of simplifying that.
I think also if we go back to--I want to emphasize this--
back to an oversimplified Federal form, it will complicate the
process for low-income students. We've been here before, where
every State had its own form, every institution had their own
form, because the needs analysis from the Federal Government
was not sufficient.
The other alternative is to have students use documents
like the College Board's Profile Form, which is a fee-based
form, which would be another barrier to low-income students.
Ms. Adams. Thank you very much. I am out of time. I yield
back.
Chairman Guthrie. Thank you. I now recognize Mr. Allen for
5 minutes of questions.
Mr. Allen. Thank you, Mr. Chairman, and thank you, panel,
for being with us today.
Mr. Chingos, the current year statistics point that
students are actually entering higher education, and obviously
the result is that they do not really know exactly why they are
there, or they would probably complete that education.
In other words, you ought to begin with the end in mind,
meaning that there should be a career path. That is the reason
you get an education, is to get a good job. Everywhere I go in
the school systems, I ask these students, why are you getting
an education? A lot of them do not know why they are doing
that.
So, in your testimony, you state that there are five real
loan crises, and none of them involve the $1.3 trillion in loan
debt, the number we commonly cite. Why do you think this is the
case, and how can we turn the narrative around to focus on
solutions to these very high education challenges facing
students and borrowers?
Mr. Chingos. Thank you, Congressman, for the question. I
think the way the narrative around student loan debt has
evolved to focus so much on that $1.3 trillion number has as
much to do with who is borrowing as how much they're borrowing.
How things have shifted over the last couple of decades is
that in earlier years, Federal student loans were a targeted
program. They were means tested for almost their entire history
until the 1992 reauthorization of HEA. The folks that borrow
tend to be lower- and middle-income people.
Now, it evolved to a point where high-income students were
borrowing a lot, they were especially borrowing a lot to go to
graduate school, and now the top fifth of the income
distribution holds something like 40 percent of the outstanding
student loan debt.
So, I think what you're seeing is relatively affluent,
politically more vocal groups of people trying to represent
their interests, which focus on the $1.3 trillion, getting
forgiveness for large graduate loans, getting reductions in
their interest rates, when the real problems are among folks
who are struggling under small amounts of debt, low-income
single moms who have a couple of credits at a for-profit
college, a couple thousand dollars in debt. Those are the
people we should be worried about, even though they're not
always the people who get heard the loudest.
Mr. Allen. You suggested that the current Federal Student
Loan Aid Program is doing harm to students. Where do you see
this the most? With the low-income population borrowing
substantial sums of money to get an education? Where do you see
the most damage here?
Mr. Chingos. The real tradeoff we face here is between
wanting to provide access to everyone and wanting people to
make good investments that will pay off for themselves, because
it's their time and money, too, and for taxpayers.
So, I'm very sympathetic to the need to provide as much
broad access as possible, but, at the same time, there are lots
of students going into programs with very poor track records of
success, very high default rates.
So, I think in the next reauthorization of HEA, it's worth
taking a hard look at what programs are eligible for students
to use Federal dollars to go to them, and how do we hold them
accountable, by also providing access to students.
Mr. Allen. Ms. Conklin, as you are aware, the Federal Work
Study Program received its funding through a complicated two
part formula. Can you discuss whether you believe the current
funding structure is appropriately targeting aid to needy
students, and why this matters to the program's effectiveness?
Ms. Conklin. Thank you. It's a good question, and I think
it's important to note that Technical Panel whose
recommendations I represented today did call for consolidating
Work Study into a Pell grant program, but I can see a path that
looks like what the chairman described, one grant, one loan,
one work study, but that work study would need to be reformed.
Right now, again, the work study distribution is built on
an old system. Not all institutions are eligible for it. We see
a skewing of dollars that doesn't look like need. Ten percent
of work study families make more than $100,000 a year. Only 5
percent of public 4-year students are getting work study.
Columbia University, for instance, is one of those
institutions first into the program. They're getting three
times more money than Florida State, who has four times more
students and many more Pell students.
So, again, simpler targets our Federal dollars on the
neediest students and the broad group of open access
institutions that support them, so if we keep work study, let's
upgrade it for today.
Mr. Allen. Thank you so much, and I yield back.
Chairman Guthrie. Thank you. The gentleman yields back. I
was at parent weekend at my daughter's college in Chicagoland
the weekend before the election.
The best political ad I saw all season was this guy came
on, and I said I am really going to like this guy, hope I never
have to pronounce his name, because the political ad was about
dealing with his name, but I am going to do it, and I
appreciate it, and it was a great ad.
It was my good friend from Illinois, Mr. Krishnamoorthi.
You are recognized for 5 minutes for questions. That was a good
ad.
Mr. Krishnamoorthi. Thank you, Congressman. Just call me
Raja. Thank you so much. I am honored to be here, to be able to
ask questions of you folks.
I was able to attend college based on financial aid and
loans and scholarships. You know, making postsecondary
education more affordable and accessible is one of my top
priorities, and I believe that financial aid should be enhanced
if the cost of college is indeed a severe impediment to
accessing postsecondary education.
I have a couple of quick questions that I want to ask of
you. Dr. Chingos, my constituents are telling me that colleges
are spending a lot of money on fancy dining halls and rock
climbing walls or unnecessary administration. How can we nudge
these schools and institutions to lower the cost of college,
which will give greater purchasing power to enhance Pell grants
and other student aid?
Mr. Chingos. Thank you, Congressman, for the question. I've
heard those concerns as well. I think they do apply to a
particular part of the higher education market. I don't think
at community colleges we're seeing lazy rivers and climbing
walls, so I think it's important to bear that in mind.
At the same time, I think we ought to be concerned about
rising college costs. So, as Congress thinks about
reauthorizing the Higher Education Act, you have to go back and
worry about this Bennett hypothesis, as the chairman
recognized. Are these programs making it too easy for colleges
to raise their prices and spend money on things that students
want?
The problem is that to push back against that, you need to
have the Federal Government getting involved and trying to
create incentives for how institutions spend their money, so
sort of a question over the Federal role there and the right
way to balance those incentives with the need to provide these
important financial aid programs to students that you
mentioned. There is some tension there, I guess is what I'm
saying.
Mr. Krishnamoorthi. There is a tension, but I do not want
to burn up increased aid on increased tuition costs. That is my
biggest concern, which is I am all in favor of increasing Pell
grants, because I do believe they serve a very important role
in allowing needy students to access higher education, but, at
the same time, I am just concerned about the galloping costs of
higher education.
People in my district are really unable to save and afford
college for their kids because it is just getting so far out of
reach. I am trying to figure out what carrots and sticks the
Federal Government can offer to make sure that costs of college
do not rise at the same time we are increasing Federal aid.
Ms. Conklin, I want to follow up what I just said with this
statistic. In 2015, researchers from the Federal Bank of New
York and Brigham Young University released a paper suggesting
that schools raised tuition by 55 cents for each $1 increase in
Pell grants that undergraduates received, and by 60 to 70 cents
for each extra $1 of subsidized student loans. That is very
concerning to me.
Again, I want to enhance financial aid, and I want to make
sure that our students have the tools to access postsecondary
education, but I do not want it to be burned up in just
increasing tuition costs.
Can you comment on this, please?
Ms. Conklin. Thank you for the question and for your
interest and the representation of Americans concerned about
affordability. It's the top two, three concerns among
Americans.
What you have is the same concern that State policymakers
have, and what State policymakers have, many of them have
tuition-setting authority. So, we see in those States with
tuition-setting authority, when they put caps or bans that look
like increases in family income, we see a lower rate of tuition
increases.
That's not something that the Federal Government can do. At
the Federal Government level, again, we're talking about
getting rid of the Grad PLUS Loan Program with no loan limits
at all, and what that does to pricing sensitivity in the
market. We're talking about sensible loan limit lengths, about
150 percent of the time, that puts some limits, but then we
also talk about what's the relationship.
We did see in States that with the increase in the Pell
grant program, the rapid increase in the Pell grant program
between 2008 and 2013, that a number of States increased
community college tuition.
Like in Alabama, where you had about a $27 a year increase
between 2004 and 2008 to their community college tuition. Come
2008, when we started to put more money into Pell, community
college tuition was going up $280 a year.
A lot of that is related to what the State was doing, and
the States face Medicaid pressures and other funding
priorities, but all-in-all what you see is this spiraling
tuition that if you saw the CNBC report this weekend, they said
if you were born today, 18 years later, it could cost half a
million dollars to go to college.
So, there's a collective shared responsibility between the
Federal Government, States, and institutions to really not just
keep tuition at the rate of family income, but actually try to
find ways to cut tuition and cut time.
Mr. Mitchell. [Presiding] Thank you. The member's time has
expired.
Mr. Krishnamoorthi. Thank you.
Mr. Mitchell. They have thrown a substitute in here.
Mr. Krishnamoorthi. You suddenly look different.
Mr. Mitchell. I know. Second verse, same as the first.
Believe it or not, I recognize myself for 5 minutes as well.
Dr. Chingos, let me talk to you a little bit about exactly
your concern, which is the information crisis. I believe the
information crisis goes deeper than just whether students know
they have a loan or not. I think and I agree--Mr.
Krishnamoorthi, I am going to agree with you. We do have a
crisis on our hands, one of information needed by students to
make a wise decision, students and families, on return of
investment.
Far too frequently, students going to college--like the
tradition here, I was the first in my family to even see a
college, my extended family, never mind graduating from
college.
You have to guess whether or not you are likely to succeed.
You have to guess at whether or not you are lucky to get a job.
You cannot get that information from most colleges or
universities. That information is not there. That lack of
information does not allow the consumer to make valid choices.
Dr. Chingos, how do we get to a point where consumers are
aware what the likely cost of attending college will be, and
their likelihood of success? How do we get that information so
they know that when they decide to become an architect at the
University of Michigan, for example?
Mr. Chingos. Thank you, Congressman. It's a really
important point that this information crisis extends well
beyond that one statistic I mentioned. So, on the front end,
because the aid process is so confusing and hard to navigate,
people don't know how much aid they're getting from the Federal
Government until they apply to college, fill out a FAFSA, and
get aid offers.
So, I think simplification--not simplifying the FAFSA, get
rid of it entirely. Base these people's aid awards on the
average family income when they were growing up, say from age
10 to 16, put that money in an account and tell them at age 16,
no forms, no prior-prior year, here's how much you are eligible
for. So, I think we can fix it on that side.
But you're right, we also need better information on the
other end. How much can I expect to make, and will I be able to
pay my loans if I go to a particular college or program of
study?
I think the Obama administration made important advances
there with the College Scorecard, providing information at the
institution level. I think we can go a step further, as many
States have, provide that information at the level of program
of study with data that already exist and can easily be
approached.
Mr. Mitchell. Let me suggest, I spent 35 years, my entire
professional career, in workforce development and postsecondary
education. We reported every year completion rates by program,
by location, the employment by program, by location, the wage
they made by program, by location, for 19 campuses.
You cannot find that information out in most public
universities and colleges for a program. You can get aggregate
information.
So, I guess, Mrs. Copeland-Morgan, how do we get
universities to understand that information is critically
needed by consumers to make wise decisions so they can be in
control, frankly, rather than administrators and the Federal
bureaucracy being in control?
Mrs. Copeland-Morgan. Thank you for your question. Many
universities do surveys. The response rates are not necessarily
where they need to be, but I think that we can certainly
incentivize institutions to get that information. It is in our
best interest to make sure that students understand what the
labor market will be for them once they are pursuing those
majors.
I would go back to the front end in terms of
simplification. We often think of that as being a form, but I
agree, and some of the work by Susan Dynarski shows us that
early notification of eligibility for financial aid is key, not
only to access, but in terms of the retention of those
students.
There is a lot of research that shows us intergenerational
transfer of poverty, so the idea of doing a needs test via the
FAFSA or other methods each year also complicates the process.
So, I certainly have found in almost 40 years of being an
aid administrator that for my low-income students, they don't
suddenly get rich the next year, so another area of
simplification is not just the front end, but in terms of
helping those students to stay in our institutions and
graduate, incentivizing institutions--
Mr. Mitchell. Let's talk about graduation rates for a
moment. I think the data that Dr. Chingos put forward, and I am
running out of time here, is critically important. The average
completion rate for a community college is 39 percent. Now, as
I said, I led a group of private career schools, and the
accreditation standard was 70 percent or you no longer were
able to be a viable institution.
How is it when you talk to students when they go to
community college about the likelihood of succeeding, they do
not have that information along with how much they borrowed?
That lack of information, I think, we are all responsible for
making sure it is communicated effectively to students, what
the likelihood of success is and how we help them to succeed,
but they need to know to make that investment.
They are borrowing money right now at a guess they can
succeed and move their career forward on a hope and a prayer
because they do not have information, and we are all
responsible in this room for making sure we have better
information, and that puts them in control rather than
institutions, rather than bureaucrats.
My objective on this committee, in fact, is to focus on
that. My time is up, and I will recognize the next member.
Thank you. Mr. Polis, you are recognized for 5 minutes.
Mr. Polis. Thank you. I want to begin by thanking our chair
and ranking member for holding the hearing. Frankly, the timing
of the hearing is excellent.
It was only last week when President Trump and Secretary
DeVos put an end to a prohibition on certain fees on student
loans. After being in office only a few weeks, President Trump
and Secretary DeVos have actually increased the cost to student
loan borrowers.
So, clearly, any progress on this area will have to be made
by Congress, which is why I am excited that we are having
today's hearing. I also want to point out that of course we all
agree there are ways to make financial aid simpler for students
and families. I think we can do that together.
I was encouraged to hear Chairman Guthrie say that
simplifying financial aid does not mean cutting it, because,
unfortunately, the one grant, one loan proposals we have seen
also happen to reduce the overall Federal investment in
financial aid.
So, again, those two are not mutually exclusive, but so far
the proposals we have seen, like the President's proposal to
eliminate the Supplemental Educational Opportunity Grants, do
not suggest that money is reinvested in actually helping to
make college affordable.
The truth is that I hear across my district, as so many
other representatives do, that students and families have
already a hard enough time paying for college. Cutting the
amount of financial aid is not going to make it easier to
attend college.
My first question is for Youlonda Copeland-Morgan about
income-driven repayment plans, which I feel are essential for
borrowers who are not able to afford monthly payments under a
standard repayment plan.
Right now, there is an excessive amount of income-driven
repayment plan options that often leaves borrowers confused or
not enrolled about what might be best with their own budgets.
How can we simplify repayment plans while ensuring
borrowers have generous terms, and can you talk about the
different protections provided by income driven repayment
plans?
Mrs. Copeland-Morgan. Thank you for the question,
Congressman. I would really encourage the committee to think
about income repayment plans being the base, the default
repayment plan for students. As you've heard, many of the
students who are in default have very small amounts of loans.
The requirement that students have to verify their income every
year is burdensome. Students forget about it.
Again, when you look at the intergenerational transfer of
poverty or for many of our students who go into service areas
working as teachers and other professions of service, I think
we could use the IRS data and other kinds of data that's i
accessible to the Federal Government to prevent some of those
defaults.
Mr. Polis. It sounds like what you are recommending is
either universality of income-based repayment or an opt-out of
income-based repayment. Ms. Soucier, do you agree with that
statement?
Ms. Soucier. Absolutely.
Mr. Polis. I also want to ask about flexibility for Pell
dollars. In my district, we have Colorado State University in
Fort Collins. We have seen the number of Pell-eligible students
enrolling in summer programs double when they were able to use
Pell dollars over a summer term.
Unfortunately, that flexibility no longer exists, and
students who depend on Pell dollars only use them in the fall
and spring semesters, therefore, increasing the time it takes
for them to reach graduation.
Almost every time I meet with students in my district at
universities like CSU and CU and community colleges, like
Colorado Mountain College or Front Range, one of the first
things I hear is restore year-round Pell.
I know many of us are optimistic that we can use some of
the additional dollars in the Pell reserve towards improvements
in the Pell program like year-round Pell, and I was hoping, Ms.
Copeland-Morgan, you could speak to the benefits of year-round
Pell.
Mrs. Copeland-Morgan. Thank you again. I think year-round
Pell is one of the most positive things we have done in the
financial aid program. It allows students to accelerate their
time to degree. Oftentimes, students are staying in an
additional full year when they could graduate in the summer by
taking one or two courses that they need. I was one of those
students who took the fourth year of financial aid when I only
needed six units.
I would really encourage the committee to look at the
maximum Pell award, increase the maximum so that it does allow
a student to take full advantage of the opportunity to go for
summer, and I think that would be a good use of the surplus
that we see in the Pell program at this time.
Mr. Polis. Last Congress, I joined a number of colleagues
introducing legislation allowing students to use prior-prior
year tax data when completing a FAFSA. The Obama administration
made that change, but we are now in a period of time where the
Trump administration seems to be undoing a lot of things that
the Obama administration did.
So, I think we should have more concern than ever to simply
put that change in statute rather than leave it up to the whim
of the administration.
Just as an example, in Colorado, FAFSA completion rates
increased substantially this fall after students were able to
fill out the FAFSA earlier.
I just want to end, since my time is up, by encouraging
this committee to put that large noncontroversial step in
statute to prevent it from being at the whim of the Secretary
or President. It is a commonsense measure that makes it easier
to fill out that form and apply for student aid, and to find
out what you are getting, and I am happy to yield back.
Chairman Guthrie. [Presiding] Thank you. I appreciate the
gentleman yielding. I now recognize Mr. Lewis for 5 minutes for
questions.
Mr. Lewis. Thank you very much. As a parent who annually
fills out the FAFSA forms, I can tell you this is a much-needed
hearing, and I appreciate everybody attending today.
Let me start at 30,000 feet here with Mr. Chingos for a
moment. One of the oldest rules in economics or the insurance
industry or anything in regard to finances is the third-party
payment rule or the moral hazard. When we see third parties
come in--frankly, we are debating this in health care right
now, but it could be any particular commodity, it is certainly
true in higher education, when we see third parties come in and
assume the costs, what we see in many cases are inflated costs.
So, if tomorrow, all of a sudden, somebody said, gosh, for
every cup of Starbucks you buy, the Federal Government is going
to issue you a Starbucks grant, and it is going to cover $3 of
the cost of a pound of coffee or whatever. I will take the bet
that the pound of coffee price is going to go up, and it is
going to go up because the providers know there is a subsidy.
We have seen a massive increase in tuition at 4-year
liberal arts schools and for-profit schools; across the board,
we have seen an increase. The big picture for me is how do we
provide the need that is there without inducing this moral
hazard?
The cost of attending a 4-year public institution has
increased by more than 40 percent in just a decade. The only
thing rising faster than tuition are textbooks. So, we have a
situation here where everybody is talking about, oh, gosh, we
have to make it easier for folks to borrow, we have to decrease
the cost of borrowing, let's make more student loans, more Pell
grants. Pell grants alone have skyrocketed. I do not have the
figure right in front of me here, but to, what, $30 billion?
We are inducing the moral hazard here, so how do we provide
a program, Mr. Chingos, that (a) provides what we want for
access, but (b) does not induce this moral hazard?
Mr. Chingos. Thank you, Congressman. I think you accomplish
that goal by having programs that are targeted and narrowly
tailored to particular Federal interests, such as helping low-
income students go to college.
To go back to your Starbucks example, if only 1 in 10
customers got that Starbucks grant, it is going to be harder
for Starbucks to raise the price, because 9 out of 10 customers
coming in the door, they don't know they have that grant. If we
give everyone enough of a grant to get up to the most expensive
cup of coffee you can get, then you have to be more concerned
about that.
I think by being targeted, by focusing on students who have
been historically underserved, you accomplish both the goals of
helping them and of limiting the moral hazard problem that you
highlighted.
Mr. Lewis. Has the tripling of the Pell grants from $13
billion in 2006 to $36 billion in 2010 added to that?
Mr. Chingos. I mean, I think we ought to be most concerned
about Pell grants at the places that enroll large numbers of
Pell grant students. At an institution that has a relatively
small number of Pell eligible students, it's going to be harder
for them to raise prices, to extract that money, whereas at
institutions that rely almost entirely on aid, I think we have
to be more concerned and think about the right way to balance
access to those institutions with whether it's the best use of
Federal resources.
Mr. Lewis. Ms. Conklin, a question for you on
simplification, I think we moved up the FAFSA time periods now,
so you can fill them out earlier, so I get to do that and my
taxes right away, so the first of the year gets off to a
rousing start in the Lewis household.
Again, from a more global perspective or 30,000 feet, we
have a program in Minnesota that offers aid in higher ed that
you do on your tax return. In a perfect world, talking about
simplifying, talking about a three tier, if we are going to do
tax reform in fiscal year 2018, we hope, is there a way to just
to really simplify this down to a 1040?
Ms. Conklin. There certainly is. What we have recommended
in our Technical Panel, and it actually mimics what the College
Board offered 10 years earlier, it is what Susan Dynarski has
analyzed. Poor is poor, and assets aren't really a factor for
low-income students; we only ask for that because we subsidize
loans. If we didn't subsidize loans, we wouldn't need all that
income and all the asset data.
So, what we should do is ask for the data we already give
to the Federal Government. There is a Gates paper, if you want
to keep your subsidized loan program and you want to keep that
information, you still just stick to what is already provided
in the IRS tax forms, with a schedule and basic adjusted gross
income.
Other than that, we are over asking the same questions, and
we are asking students to be financial managers, and that's not
reasonable.
Mr. Lewis. Conceivably, you could do it?
Ms. Conklin. Absolutely. We have recommended if you have
already qualified for a Federal means tested program across the
Federal Government, why do you go through this process again to
certify you're poor? You might already be kind of put to the
front of the line as an eligible student.
Mr. Lewis. I thank the panel, and I yield back.
Chairman Guthrie. Thank you for yielding. I now recognize
Mr. Sablan for 5 minutes for questions.
Mr. Sablan. Thank you very much, Mr. Chairman and Ranking
Member Davis, for having today's hearing. Welcome, everyone. As
an original cosponsor of SAFRA, I also find this hearing today
very timely.
In my district in the Northern Mariana Islands, we only
have a small community college with a little more than 1,000
enrolled students. A large majority of the students come from
low-income families.
Dr. Chingos, sir, over 90 percent receive Pell grants, so
making it possible to pursue their higher education
aspirations. And the minimum wage, sir, is $6.55 an hour, and
you cannot get in a car and drive across a county line to go to
college elsewhere. It is going to be very expensive.
So, the President recently released budget would cut $3.9
billion of the funding currently reserved for the Pell grant
program, and leaves the program on an unstable footing for
future generations. On top of that, the majority of this
committee have also separately proposed to eliminate funding.
As stated in the budget, the estimate for fiscal year 2018, the
proposal will eliminate all of Pell's mandatory funding.
I strongly believe the continued success of people in my
district and the Northern Marianas, and in our country, lies
with the ability to train our citizens through higher education
to be productive members of our society, and this money that
the President and the majority are trying to take away from
needy college students is necessary to ensure Congress can
continuously modernizes and strengthen the program to better
support students.
Instead of cutting or reducing student financial aid, we
should be investing in this program.
Mrs. Copeland-Morgan, how can the Pell grant program be
strengthened and not weakened?
Mrs. Copeland-Morgan. Thank you, Congressman. The program
could be strengthened by increasing the maximum award. The Pell
grant is only paying about 19 percent, the average award is
only paying about 19 percent of costs for students.
It can be strengthened by continuing to target the funds to
the most neediest students.
I will add that a lot of committee members have been
concerned about institutional behavior. Incentivizing
institutions who are enrolling and graduating Pell grant
students will help to change some of that behavior. I encourage
you to look at that.
Year-round Pell is key to acceleration. It is costly for
students to hang around our institutions for an additional year
when if they had a Pell to take those extra three to nine
units, they could be out in 4.1 years rather than 5 years. I
think you are hearing a theme here across all of the witnesses
today that year-round Pell along with prior-prior year have
been good movements toward simplification.
Mr. Sablan. I have one more question, Mrs. Copeland-Morgan,
if I may. I have recently heard from some of my colleagues on
the majority that Congress should create programs to target
middle-income students and not low-income students because low-
income students are already taken care of by grant aid.
Is this what you see in your institution, your University
of California, and around the Nation?
Mrs. Copeland-Morgan. That has not been the case in the 40
years that I've been in higher education. Sixty-one percent of
Pell grant recipients borrow to complete their degree compared
to about a little less than a quarter of non-Pell recipients.
So, the Federal investments in campus-based programs, for
example, subsidized loan programs, are very key for completion
of these students, and I might add that at the University of
California, again, we see 4-year graduation rates are amongst
the highest in the country, 76 percent, and 6-year graduation
is 92 to 93 percent; system-wide, 86 percent. The 92 to 93 is
at UCLA.
Yet, we are 40 percent first-generation college students,
and most of our campuses are anywhere from 35 to 45 percent
Pell eligible students.
Mr. Sablan. Thank you. Actually, I am very happy because my
daughter graduated 2 years ago, my son is getting out in May.
Thank God, because people back home say if you are a child of
someone in Congress, then Congress pays for your child's
education. I do not know where they hear that. I really think
it is Fox News, because that is the only news we have,
unfortunately. It is true. It is fake news, right?
Chairman Guthrie. Thank you. The gentleman's time has
expired.
Mr. Sablan. Thank you, Mr. Chairman. I yield back.
Chairman Guthrie. I now recognize Mr. Messer for 5 minutes
for questions.
Mr. Messer. Thank you, Mr. Chairman. Thank you to the
panel. Obviously, a very important issue today as we work
through what we can do to improve Federal student aid. We have
talked a lot about student borrowing.
Many on the panel are probably well aware, but according to
a recent Brookings Institute study, too many students just do
not know how much they are borrowing. I think it is part of
what contributes to the high dollars that students do borrow.
According to the study, roughly 28 percent of students with
Federal loans said they had no Federal loans at all, and 14
percent said they had no debt at all, even though they had
student loans.
Based on these statistics alone, it is clear that somewhere
along the way we failed to communicate to students how they are
financing their education and what that means for their future.
The Higher Education Opportunity Act of 2008 required the
Federal Reserve to reform the private student loan disclosure
form and use consumer testing to improve it. As a result, today
we have a private student loan disclosure that gets down to
brass tacks. It clearly and boldly discloses things like total
loan amount, the interest rate, total payments made over the
life of the loan, and other disclosures that are essential for
a student to know before they take out a loan.
Contrast that, on the other hand, with the Federal Master
Promissory Note, the MPN, I think it is technically called,
which is used as the primary contract for all Federal student
loans. It is an 11-page fine-print document that is
incomprehensible unless you happen to specialize in higher ed
finance.
Ms. Soucier, I was going to ask you, do you think consumer
testing of the Federal Master Promissory Note paperwork and
other disclosures like it would make those forms more useful to
students?
Ms. Soucier. Absolutely. I think we need not just more
information out to the students, but we need it more often.
Students are required to get entrance loan counseling at the
start of getting their loan. They are getting that loan at 17,
18 years old, when they don't understand, they've never
received any debt, they don't understand what they're reading.
So, what we need to do is we need to give it to them more
often, and we need to be able to require it before they receive
funding. For us, it would be every semester. Some schools, they
may only need it every year. I think we need the flexibility
based on student population to require them to come in and get
additional information, both in writing, in person, online, by
video, however we can get the information to them so they can
understand what it is they are getting.
Mr. Messer. I will give you a practical answer from Indiana
University in my home State. They put together essentially a
letter of notice to students, that every year in the fall, it
went to each student at IU and disclosed what track they were
on as far as student borrowing, and what the cost of their
education would be if they continued on the same track.
They saw that student borrowing went down as much as a
quarter to a third just by simply every year sending a clear,
readable letter that notified those students of what their debt
path was.
We are working on legislation that would make that
national. It has already been a law in Indiana that now applies
to every university, not just Indiana University, and we are
hoping we can take that national.
My next question in the limited time I have left is for Ms.
Conklin. You mentioned in your testimony that you think
aggregate Federal student loan limits should be reduced and
simplified. You went on to imply that any void in lending
created as a byproduct of that could be filled by private
financing like income share agreements, if the appropriate
incentives are created to serve low asset individuals. There is
a Purdue program that has been sort of cutting edge nationally.
Could you explain some of the types of incentives that
could encourage income share providers to serve low asset
borrowers like Pell grant students?
Ms. Conklin. Thank you, Mr. Messer, for your question. One
point of clarification. The proposal of the Technical Panel
actually called for an increase in loan limits for
undergraduates and graduates, just one set per. That is an
example of some of the savings in our simplification, that we
reinvested for students' benefit.
On the issue of income share agreements, it is a promising
new private financing vehicle whereby an investor can identify
students who are able to repay their loans based on a share,
like 5 percent of their income, and if they're not able to make
that income, they don't make those payments. So, it's a pure
income-based payment program.
But it's going to create incentives with colleges to be
able to make sure they are focused on the returns and those
labor market returns, which we heard was important to the
committee earlier. It's going to cause students to need that
information that we've been talking about that is so important,
about choosing programs carefully, about borrowing carefully,
and about using your time well.
So, it's going to bring, I think, more transparency. It's
not in lieu of the loan programs we have, but particularly at
the graduate level, I think, there is just real promise.
Mr. Messer. Thank you. Income share agreements are not the
answer for everybody, but I think they are the answer for more
people than are currently being served by them now. Hopefully,
we can make some headway on that issue in the coming weeks and
months.
I yield back to the chairman. Thank you.
Chairman Guthrie. The gentleman yields back. I now
recognize Mr. Takano for 5 minutes for questions.
Mr. Takano. Thank you, Mr. Chairman. Before I begin, I
would like to say a few words on this idea that we cannot
increase financial aid because some people think that is what
causes tuition increased, the so-called ``Bennett hypothesis.''
First, the best studies on this find that it is not the
case at public and nonprofit colleges. However, we do have
quality evidence showing this does occur at for-profit schools,
which strongly suggests that we need better oversight of this
sector.
More importantly, we need to take a step back and reject
the cynicism that this idea implies. By all means, let's look
for ways to make tuition more affordable, but let's not throw
up our hands and say we should not increase aid because of, I
think, the misleading indications of this theory, the Bennett
theory.
Mrs. Copeland-Morgan, many of my colleagues on the other
side of the aisle believe that financial aid, including Pell
and Federal loans, have driven the increase in tuition. In all
your decades of experience working at various institutions, has
this ever been the case?
Mrs. Copeland-Morgan. Thank you, Congressman. It has not
been in my experience. I know there is a small amount of
research that shows there may be a correlation between
increases in aid in the for-profit sector, and I think simple
oversight, greater oversight of that area, where those schools
are not graduating Pell recipients and low-income.
But I think you find partners in 4-year higher education
institutions, and I would encourage, therefore, greater
investment, particularly again for those who are serving
disproportionate numbers of low-income and Pell grant
recipients. That, I would say, also includes the campus-based
programs, and we have not talked much about Perkins loan today,
which you know will come to an end this September.
The Federal Government has not invested in Perkins loans
for over a decade, and I would really encourage the committee
to consider legislation that would allow institutions to
continue to award under the Perkins Loan Program, which is a
better option than private loans for these low-income working
families.
Mr. Takano. Thank you. Does institution leadership make
decisions based on these increases in aid?
Mrs. Copeland-Morgan. Again, I think that bit of research
is a distraction from the bigger issue of investing in our
young people so they can achieve their career goals. I've not
sat around the table, that's not been my experience.
I think as some of your members have mentioned,
overwhelmingly, and you two in your opening comments,
overwhelmingly, public institutions and many private
institutions, the not-for-profit private institutions, are also
investing their own dollars in financial aid programs.
The UC system, for example, a third of our tuition revenue
goes right back into grant programs for low-income students.
So, that's not been my experience.
Mr. Takano. What in your estimation does drive the cost of
tuition, in a nutshell?
Mrs. Copeland-Morgan. Well, if there is insufficient aid
for students, certainly again, at the University of California
system, we put a third of our financial aid back into financial
aid programs.
I think the cost of technology, quite frankly, today, as
someone who has gone through no technology to the technology we
see today, is a big driver. I think the students are interested
in multiple disciplines, and certain interdisciplinary
education is more costly. I think institutions are trying to
find ways to deliver a quality education in a more cost-
effective way.
I know I spend probably 30 percent of my time in those
kinds of conversations. That might be one area that the
committee can spend more time talking about, how do you help
institutions in that area to keep costs affordable so we can
serve more students and graduate our students earlier?
Mr. Takano. Mr. Chingos, you mentioned in your earlier
testimony institutions that primarily rely on financial aid.
Are you referring to the for-profit college industry as one of
those categories of institutions?
Mr. Chingos. Sure. A lot of them.
Mr. Takano. Increased Federal aid does seem to be linked to
increases in costs at those institutions. Is that what you are
referring to?
Mr. Chingos. There is some evidence to indicate that's the
case, as several folks have mentioned today.
Mr. Takano. Ms. Conklin, can you comment on your own Pell
grants as far as how they might help students before their
freshman year in college and after their senior year? Do we
know much about these summer bridge programs to increase
preparedness, you know, to be ready for college, with English
or math?
Chairman Guthrie. The gentleman's time has expired.
Mr. Takano. My time has expired.
Chairman Guthrie. Hopefully, within some questions, you
will be able to get an answer. That is a good question, but,
unfortunately, your time has expired.
I now recognize Mr. Smucker for 5 minutes for questions.
Mr. Smucker. Thank you, Mr. Chairman. I appreciate the
opportunity to be part of this hearing. I am a father of two
girls who are in college, so I went through this process. I
must admit, I was chair of the Education Committee in the
Pennsylvania State Senate and served as one of the directors on
PHEAA, the Pennsylvania Higher Education Assistance Agency, and
I still found it confusing.
I think it is overdue to simplify and create a more
efficient system. I look forward to being part of that
discussion.
Mr. Messer asked questions in regards to student knowledge
about the loans they have taken out, the provisions of those
loans, and so on. I would like to take that a step further.
I think one of the things we do not do very well in our
system of higher education is provide information to students
about the earnings potential for a specific major, maybe
earnings potential for a specific major at a specific school.
At the end of the day, you are taking out the student loan
with the hopes of being able to pay that back. It is an
investment. I do not think from what I see we do a very good
job of educating students about their ability to repay.
Maybe I will start with you, Mr. Chingos. I would like to
get your impression on that, and I would like to ask what your
impression is of how we do on that, and whether if we are
talking about reconfiguring our Federal student aid system
there would be a way to tie in additional information in
regards to the ability to pay back based on the major a student
is choosing?
Mr. Chingos. Thank you for the question. I think it is
critically important that students have better access to
information and what they can expect down the road when they're
deciding where to go to college, how much to pay, how much to
borrow.
I think some progress has been made. A couple of years ago,
we didn't know for the whole country average earnings for each
college, and now we have that through the College Scorecard. We
do need to go one step further and get that information down to
the program level, which some States have done, but we don't
have it at the national level yet.
Then we can think about as we are thinking about counseling
around borrowing and repayment finding ways to get that
information to students.
Some research we are doing at the Urban Institute suggests
that you can't just build it and they will come. You can't just
put the information out there. You have to think about how to
make it intelligible to students, how do they know what a
$45,000 starting salary means for what they can expect to
borrow. There is progress to be made.
Mr. Smucker. Do students currently get any of that
information as a part of the application for assistance?
Mr. Chingos. Not that I'm aware of.
Mr. Smucker. Would there be a way to link those in some
way?
Mr. Chingos. I think through disclosures. One of my
colleagues might be able to better address this, doing the work
on the ground, but I imagine there would be.
Mr. Smucker. Anybody else care to address that?
Mrs. Copeland-Morgan. I would just mention that in our
career centers, we do provide this information. We do survey
our graduates after they graduate, 5 and 10 years out, and I
think that is probably an area that we can do more in. I agree,
certainly technology allows us to provide more links for
students in that regard.
Ms. Conklin. Mr. Smucker, Ms. Soucier works in a State,
Texas, that is one of the States that is innovative in linking
their labor market data with their postsecondary student data.
So, at the State level, they have demonstrated the
leadership to create these metrics. The State makes them
publicly available to students, and then community
organizations, high school counselors, can provide that
information to students in a variety of ways, but the State has
taken on the role to make that transparent. That's an example
of progress, I believe.
Mr. Smucker. Thank you. I am just going to shift gears. I
have a minute. Ms. Soucier, your written testimony specifically
mentioned the gainful employment regulation and how it can
ultimately harm today's students.
In about 55 seconds, could you expand on that briefly?
Ms. Soucier. I'd be happy to, thank you. My biggest
concern--we spend a lot of time trying to comply and report the
information being required. We've spent hours and hours with
our technology groups doing that.
What my biggest concern is--our Workforce Office does a
great job working with business and industry around Houston to
create programs to get students trained into certain jobs, and
my concern is if the data isn't fully accurate or doesn't fully
represent the program, that it could make programs in jeopardy
of being disbanded after they put so much effort in creating
the program.
Mr. Smucker. I would be interested in continuing that
discussion with you at a later time. Thank you. Thank you, Mr.
Chairman.
Chairman Guthrie. The gentleman yields back, and I
recognize Ms. Blunt Rochester for 5 minutes for questions.
Ms. Blunt Rochester. Thank you, Mr. Chairman and Ranking
Member. I really want to thank this panel. This hearing was
really interesting and exciting, even if you do not think it is
exciting. It is exciting to me.
I come from the State of Delaware, so I represent the
entire State. The issue of college affordability was talked
about up and down the State, particularly as we talk about
strengthening our economy. It's connected to everything.
I particularly liked the five crises, Dr. Chingos. That was
pretty interesting to me, when I think a potential crisis is a
cut to these programs. That's another potential crisis.
My question is directed to Mrs. Copeland-Morgan. It is
basically a recent report by the National Center for Education
Statistics found that one in five undergraduate students
surveyed in their study did not seek out any form of financial
aid.
When students were asked why, the majority of them cited
misinformation. Forty-four percent thought they were ineligible
for aid, and another 43 percent thought they could afford
college without the help. This tells me that there is a lack of
information on the part of students and families on how
financial aid works and the true cost of going to college.
How can Congress ensure more students are receiving the
needed information to make informed choices post high school?
Mrs. Copeland-Morgan. Thank you for your question. I think
early outreach is key. Investment in programs like TRIO and
GEAR UP, the funding of Perkins loan, which we use those
dollars also to administer loan programs, Federal work study,
we deploy students into communities to help get that word out
about financial aid.
I mention those to say that the Federal aid programs,
particularly like work study, allow us to get that message out
to those communities most in need.
I think simplification of the FAFSA, and when we simplify
it, put that information out there early. I call it ``baby
college,'' that students would know from the time of birth they
are eligible, particularly the low-income students, again,
where they have been through need-tested programs or we use IRS
data to understand what their income is.
So, it is a concern. I think probably many of you as first-
generation probably experienced this as well, but the
investment in outreach programs are key, and right now, many of
those programs are subject to cuts as well.
Ms. Blunt Rochester. I follow up on that to say I, like
many of my colleagues up here, have two children that went
through the whole process with FAFSA. I have seen the changes,
promissory notes, all of that, and myself participated in work
study programs. It is complicated for almost everyone. To see
the bipartisan conversation is a positive.
My second question is for you as well. As our country fully
shifts from an industrial economy to a knowledge-based economy,
higher education has increasingly become the surest way out of
poverty. You talked a lot already about the goal of coming out
of poverty.
Now, more and more jobs are looking for workers that
graduate with master's degrees and doctorate degrees,
respectively. Twenty-two percent and a 20 percent increase in
the number of those.
We are hearing about proposals that would limit graduate
students from accessing Federal dollars. What can the Federal
Government do to continue to provide access to capital for
individuals wanting to pursue graduate degrees?
I actually served as Secretary of Labor in my State, so I
understand the correlation between education and jobs, and
also, I was pleased to hear the conversation about labor market
information as well and connecting that to what we are doing at
the university level.
Can you talk a little bit about that? Anyone on the panel.
We have 53 seconds.
Mrs. Copeland-Morgan. I would just say, historically, grant
programs have been targeted to undergraduates and less
investment has been made at the Federal level through the
Federal loan programs for graduates. And if we're going to meet
the technological advances and the ingenuity that's needed for
our society today, we have to provide a financial investment
way, a pathway, for students to continue their education so
they can get those graduate degrees and become productive,
contributing members of our labor market in that regard.
Ms. Blunt Rochester. Other members?
Ms. Conklin. I think I want to echo what the chairman said
earlier about simplification does not equate with cutting in
the perspective that I have, and that this Technical Panel I
represent here today has.
We recommend again one set of annual and aggregate loan
limits for graduate students, and they increase. So, you could
borrow $90,000 through the Federal program to support your
graduate education and training. That would be added to your
undergraduate loans, for a maximum of $125,000. That would be
the new umbrella that we're offering.
Ms. Blunt Rochester. Thank you. I yield back.
Chairman Guthrie. Thank you for yielding back. I recognize
Mr. Grothman for 5 minutes to ask questions.
Mr. Grothman. Sure. We mentioned the Pell grants a little
bit before, and maybe I will direct this to Ms. Conklin, but
anyone else can jump in if they want.
I think the Pell grant program and other programs have been
subject to criticism even when I was in college by the middle
class. People get tired of the American government hating the
middle class, and they have to kick in for their kids'
programs, so their kids have to take out loans. Well, maybe
kids from some other families seem to get things for free.
Do you think one way to deal with this problem would be to
say no Pell grants in your freshman year? At least for the
freshman year have the kids who are not in the middle class
take out loans like the kids in the middle class already have
to, and that way you could make sure that everybody who is
going to college, after they at least get through the first
year, are more serious about college. Do you think that would
be a fair thing to do?
Ms. Conklin. Congressman, I think what you're asking is if
there is a Robin Hood effect in higher education, where middle
class and upper middle class people are paying for poor people,
and who aren't ready for college. Am I understanding your
question?
Mr. Grothman. Well, just the unfairness, the resentment. I
know in many ways in this country we hate the middle class. We
love the rich. We love the poor. We hate the middle class.
Sometimes they use these Pell grants for goodies and
electronics, and they resent the fact that by doing it right,
their kids are penalized.
Ms. Conklin. One thing that we struggle with is the Pell
grant is a tangible voucher and it's a target. I grew up in
California, went to a public college. Keeping tuition low in a
State is the largest subsidy of middle-class students we have
in the State of California. Keeping the University of
California affordable and accessible is a very large middle
class subsidy.
So, the middle class in California as part of higher
education is heavily invested in it. At the University of
California at Berkeley, where I think one of our members is a
graduate, the average family income is higher than Stanford,
but tuition is heavily subsidized by public taxpayers.
So, I think the middle-class angst is targeting a Pell
grant program, which was shown to be pretty effective at
getting students to enroll, when really the hidden subsidy to
middle class is we keep our public tuition low.
Mr. Grothman. I think that subsidy sometimes leads us to
excess academic staff, but I suppose it also--you did not say
benefits the students. Again, I am going to come back.
Do you think it would be fair--if tuition is low for
everybody, would it be fair? Right now we have an unknown
number of people who are getting Pell grants who will not
graduate, and I think to make sure that we are not wasting the
money, it might not be a bad idea to have people at least in
the first year take out loans rather than grants. That was kind
of my question.
We will move on to the next question. I received anecdotal
evidence in my district of people not getting married because,
of course, if you do not get married, it is easier to be in
poverty and get Pell grants. Would you care to comment on that?
Anybody can comment on that. I have heard it from several
people. You are the experts.
Ms. Soucier. I'd be happy to comment on that. People are
making personal decisions based on financial aid eligibility.
We know that. We know people who have gotten divorced because
it would be more beneficial for those students to qualify for
aid. Is that what you're asking?
Mr. Grothman. Exactly. Is that not horrible, the way our
government--like Karl Marx said, we just want to destroy the
American family?
Ms. Soucier. Again, it goes back to your comment about the
middle income, who feel like they're not getting treated as
well in terms of Federal funding. It goes back to that.
If you have two middle-income families come together, they
don't qualify for aid, but a single parent would in that same
circumstance. So, they're making that decision based on
qualifying for eligibility.
Mr. Grothman. I will give you one more question, just to
make sure we are on the same page here. As I tour my trade
schools and see people want to become a carpenter's apprentice
when they are 28, after they realized their college degree was
a waste, or people go back and become welders when they are 33,
college was a waste.
We all agree that we have too many people going to college
now. You all agree with that?
Mrs. Conklin. What's the definition of ``college?'' As I
use it, it's any education and training after high school. It's
that air-conditioning certificate program. That's college to
me.
Mr. Grothman. Let me put it this way, do we have too many
people going to 4-year college?
Mrs. Conklin. We are under producing certificates in this
country in sub-associate credentials.
Mr. Grothman. In other words--
Mrs. Conklin. We need to create really good pathways to
those--
Mr. Grothman. Could you just say it for me?
Chairman Guthrie. Your time has expired. I would like to
recognize Mr. DeSaulnier for 5 minutes for questioning.
Mr. DeSaulnier. Thank you, Mr. Chairman. I want to thank
you and the ranking member, a proud graduate of the University
of California at Berkeley, Ms. Davis, for this hearing.
I cannot think of many things that for the long-term health
of this country is more important than figuring this out.
Coming from the Bay Area, what I get from both researchers and
people from the private sector, as opposed to the last
interchanges, more people who have bachelor's degrees and
graduate degrees in a knowledge-based economy that requires
people who can move and think and contribute to innovation,
certainly that we get in the San Francisco Bay Area.
One of the challenges, it strikes me, as a father of two
kids who, fortunately, are out of college and are done with
their student debt, but still struggle with kind of making the
income that was available in my generation, is this perfect
storm of access for kids who really work hard, to all of your
comments, particularly disadvantaged.
I was at Berkeley last week, and I have heard this over and
over again, and Mrs. Copeland-Morgan, because you are in a high
cost area, and maybe Ms. Conklin, the cost of housing, the
external costs.
So, a lot of these kids, and it is CSUs in East Bay, they
are putting more capital improvements in our community college
that attract kids to go to school and stay, but the CSUs are
not providing dormitories and housing. So, you get speculators
in a high-cost area where the cost of housing is going up more
and more.
I have a bill that is getting some support from the other
side that in the dangers of overstating this to make sure it is
used right, but for kids who cannot afford the housing costs to
be at Berkeley or UCLA, are you seeing that?
At least anecdotally, I am getting that a lot from
students, both at CSUs and UCs. They can afford the tuition,
but if they had more flexibility through Pell grants and
financial aid, they could get cheaper housing off campus if
they had access to financial aid for that.
Mrs. Copeland-Morgan. Certainly, the cost of living in some
States is exorbitant, even for nonstudents. Our focus is on
helping students to make wise financial decisions, and again,
acceleration of their time to degree through programs like the
year-round Pell grant program, through our Perkins loans, and
other kinds of things.
The institution is very involved with the community and
trying to find housing. That is for all of our campuses,
affordable housing for students. Students are willing to do
what they need to do to get their education, so it's not
unusual that a student will have four roommates so they can
keep borrowing down and be close to the institution, or on our
campuses, so they can manage the educational costs. I think
students' primary goal is to be a student, to get their degrees
and graduate.
I think, again, we have been talking about ways of
simplifying the process, which is key. I'd love to see a 4-year
award letter for low-income students because their income
doesn't change over those 4 years, and I'd love to see a
continuation of funding like the ACA for the campus-based
programs, so that we can continue to put more counselors on the
ground to address the kinds of concerns you've raised here
today.
Mr. DeSaulnier. I have read articles about this with CUNY
as well. Obviously, New York, it is a high-cost area. Ms.
Conklin--it strikes me, part of it, that if you were going to
give more flexibility for housing, the oversight to make sure
that it is done efficiently and effectively and not abused
would be a challenge.
Ms. Conklin. I'm not prepared to comment on those oversight
issues with any expertise, but I will compliment you on this
understanding you have that the total cost of attendance,
particularly for low- and moderate-income students in high-cost
areas, is a huge barrier to retention.
I can commend to you something Lumina Foundation has
created. They are working with a number of university systems
around the country. I am going to call it ``beyond financial
aid,'' but it is the idea of how do you start them at the
Federal level if your foundational single grant, single loan
program, how do you then make sure that institutions and their
communities are accessing means tested benefits, food banks
that are local, shelters? That there is a set of resources that
students, particularly nontraditional students, need to know
about, and it is the responsibility of a community to come
together to share those.
I want to say it's not just a Pell grant and paying for
tuition that will make a difference in student success.
Mr. DeSaulnier. It resonates with me personally. When my
dad lost his job when I was a freshman in college, I could put
together the money for the tuition, but I could not for room
and board. It was easier to do it in Worcester, Massachusetts,
than in the Bay Area, Los Angeles today, than it was in the
1970s.
When I hear these kids have done everything right and they
get accepted, they are 4.0s, and they cannot afford the cost of
housing, and they live on sofas with other friends and then
leave because they cannot afford it, it just seems to be a
striking example of how we need to be adaptable.
Thank you, Mr. Chairman.
Chairman Guthrie. Thank you. The gentleman yields back. I
have to correct the record. Earlier, I guess I said our ranking
member was from UCLA. She is California, but the Berkeley
campus.
Mr. DeSaulnier. That is a big mistake.
Chairman Guthrie. I now recognize Mr. Courtney for 5
minutes for questions.
Mr. Courtney. Thank you, Mr. Chairman. Thank you to the
witnesses, really thoughtful hearing today; some good ideas in
terms of moving forward finally with reauthorization of the
Higher Education Act.
If you drill down in some of the testimony, you can
actually find a few areas of overlap that is unexpected and
helpful, and obviously there are some issues that we really do
have to make some decisions on.
Dr. Chingos, I am pleased to see that on page 6 of your
testimony where you said the student loan program should break
even fiscally and not make profits off of students.
This morning's 10-year Treasury notes, in other words, the
amount of interest that the government is going to pay on a 10-
year note, is 2.44 percent. We are still in a place right now
where the government is collecting legacy interest rates from
10 years ago which far exceed 2.44 percent.
People, obviously, who do not have equity to refinance
those loans again are really kind of helpless in terms of being
able to take advantage of a low-interest environment. That has
been, you know, the reality of our economy for a number of
years.
The Bank on Students Emergency Loan Refinancing Act, which
was introduced last year by myself and Senator Warren, would
have actually given people an opportunity to refinance down,
and CBO estimated that about $50 billion would be saved for
borrowers who were still paying some of these legacy loans.
It would not be loan forgiveness. It would not be discharge
of the debt. It would just simply, I think, align this debt
burden with other forms of consumer debt.
It will be introduced again in this Congress, and again,
hopefully, we can get strong support on that if the Higher
Education Reauthorization Act is submitted.
The other issue which I wanted to just touch on a little
bit is the issue of public service loan forgiveness, which,
again, there is some disagreement between some of the testimony
today.
Mrs. Copeland-Morgan, in your testimony you expressed
support for public service loan forgiveness. Just to take an
example of the National Health Service Corps, which again is a
very strong incentive to serve in underserved areas as an
example, maybe you could sort of talk about the benefits of
that program from your experience.
Mrs. Copeland-Morgan. Thank you, Congressman. I do disagree
with my colleagues about loan forgiveness for public service. I
think it's a good thing. The examples that were mentioned that
are concerns I think can be addressed within current
legislation.
We need to find ways of encouraging young people to go into
these large areas of need within our States and within their
communities. I think there is evidence that those programs are
working, and again, I think overall, when we hear about those
areas where there are some small problems, we need to make sure
we don't allow those to be distractions to what is overall a
solid program, and a very small program in the large scale of
what we're talking about here in higher education.
Mr. Courtney. Thank you. I could not agree more. The mental
health bill, which we passed at the end of the last Congress
and was signed into law by President Obama, one provision in it
was to actually extend National Health Service Corps' loan
forgiveness to pediatric and adolescent psychiatry, which in
the wake of Sandy Hook -- I'm from Connecticut--you know, it
was a bitter lesson about the fact that this is one of the most
critical areas of our healthcare system that is just alarmingly
understaffed across the country.
The problem is the reimbursement. If you are a graduating
medical student wanting to go into psychiatry, there is this
disparity if you treat kids versus adults.
If we do not do something about it, we are going to see
more of these problems proliferate out there. And you talk to
people in preschool and K-5, I mean that is again a really
alarming trend in terms of young kids who are experiencing
that.
Again, it was great to see bipartisan support for that loan
forgiveness effort to address something that as a Nation we
really have, I think, a moral duty to perform.
Again, if there are fixes needed in the programs, let us
deal with that. Let us not just eliminate what I think has been
a really healthy way to get underserved occupations as well as
regions of the country, critical public service jobs. And with
that, I yield back.
Chairman Guthrie. The gentleman yields back. We have from
the full committee with us, who is very interested in these
issues, we worked together on these in a very bipartisan way,
Ms. Bonamici. You are recognized for 5 minutes for questions.
Ms. Bonamici. Thank you very much, Chairman Guthrie and
Ranking Member Davis, for holding this hearing, and for
allowing me to join your subcommittee today. This is an issue
my constituents in Oregon care about a lot.
I am someone who worked my way through community college 2
years and 2 years at University of Oregon, and 3 years in law
school. I did that all with a combination of loans, grants, and
work study.
When I graduated, I went into public service, not to a
private firm, but I still had little difficulty repaying my
student debt. That experience is less common today. As we know,
more students are borrowing, they are borrowing larger amounts,
and at the same time, there are millions of students, many of
whom were for some reason or another unable to complete their
programs, and they are behind on their payments or they are in
default, which is causing an enormous drag on our economy.
We face a lot of challenges, and I hope that this committee
will take a comprehensive approach to making higher education
accessible and affordable.
I wanted to follow up on the comment that was made about
better, more frequent information from our panelists. I am
pleased to partner with Chairman Guthrie on the Empowering
Students Through Enhanced Financial Counseling Act, long title,
but important piece of legislation, that will help students
with better information, more frequent information, and help
them limit borrowing and plan ahead for repayment.
So we have a pretty long list, strengthening Pell grants,
simplifying loan repayment and access, providing evidence-based
support to students to help with completion rates, especially
for the first-generation students. We have some great model
programs out in Oregon in that regard.
Students who are parents, students with disabilities,
students returning from the workforce, veteran students. There
is a long list.
I just want to also make a comment about the income-driven
repayment discussion that I have heard here today. There are
bipartisan efforts. I have the SIMPLE Act that is a bipartisan
piece of legislation to get more people into income-driven
repayment and to keep them there. It's an annual
recertification that can sometimes get people out. We are
working on that again in a bipartisan way. That is an important
piece as well.
I really wanted to talk about the Federal work study
program today. As someone who greatly benefited from it myself,
I know that work study can give students valuable real-world
experiences, reinforce what they are learning in the classroom,
and the program requires a match from employers, so we see
Federal funding go further.
So I was, needless to say, disappointed to see the
President proposed a budget that would significantly reduce
Federal work study investment.
Mrs. Copeland-Morgan, how can the Federal Government
maintain flexibility in the work study program while also
helping institutions connect more students with work-based
learning opportunities that align with their interests and
career goals? I want to ask another question, too.
Mrs. Copeland-Morgan. Thank you for the question. Let me
just state for the record that I got into education being a
Federal work study student, working in financial aid for 4
years as a student.
The Federal work study program is one way of bringing
parity for internships, work experience, and other things. It
reduces the cost of students working. It retains them on campus
because they are in generally the academic environment.
Certainly, more funding in work study, we'd love to see that. I
think this is a bipartisan issue.
We have seen that work study aids in retention. Certainly,
our community partners which- the Federal work study program
allows us to partner with community-based organizations to
employ students, to help do some of the work that you're
talking about here today, outreach work, getting the word out
about financial aid, job location development program.
I think the real issue is we have to make a greater
investment in these programs that work, and Federal work study
is arguably one of the best along with the Pell grant.
Ms. Bonamici. Thank you. I am glad you mentioned
internships because we see it is a real equity issue. Some of
the affluent students can do a prestigious internship, but
students with more modest means cannot. That is a place where
work study can help.
I know Representative Allen earlier asked a question about
the formulas for allocating campus-based aid to institutions,
and those formulas have changed very little since the 1970s,
and that was a long time ago. Some of my colleagues probably
were not born.
For the work study program, the majority of the funding is
distributed to institutions based on how much they received
decades ago. I know Ms. Conklin explained our neediest students
are often left out by this formula.
Mrs. Copeland-Morgan, how can work study funding be
allocated more equitably?
Mrs. Copeland-Morgan. Let's get rid of the base guarantee
in the campus-based program. We've been talking about this
since I've been in the profession. To make it more modern and
distribute those dollars where the lowest income and neediest
students are. We can't do that without making a greater
investment in the program.
Ms. Bonamici. Thank you very much. My time has expired.
Again, thank you, Mr. Chairman and Ranking Member, for allowing
me to join you today.
Chairman Guthrie. Thank you for being here today. The
gentlelady yields back.
Seeing no other members present for questions, I would like
to again thank our witnesses for taking the time to testify
before the subcommittee today.
I now recognize Ranking Member Davis for any closing
remarks she may have.
Mrs. Davis. Thank you, Mr. Chairman. I also thank you very
much. I think it has been a good and strong discussion, and a
lot of contributions all the way around in terms of some of the
things that we actually can change without hurting students and
furthering their education. That is really the bottom line for
me, it has to help rather than hurt.
I also wanted to put into the record the article Mr.
Courtney had regarding mental health. I want to place that.
Chairman Guthrie. Without objection.
Mrs. Davis. I did hear some consensus, as a number of
people mentioned. It is a great first start, Mr. Chairman, and
I certainly hope we can come back together and look at some of
the details and some of the best practices so we actually can
do something that is going to make a difference. Thank you.
Chairman Guthrie. Thank you. I appreciate that. I just want
to close with these comments. You know, we are looking at
simple, how to make it easier, how to make it more simple.
I mentioned I have a couple of children in college now,
going through those kinds of programs. We need to make it
simple, but we do need accurate data. I think Mrs. Copeland-
Morgan said we need to make sure we have accurate data.
I had somebody say the other day what if we made it so
simple for Federal, then the campuses that do campus-based aid
would have to have separate forms. We do want to make it easier
for people to use.
The year-round Pell, something I am very interested in, was
talked about. It is not to accelerate because of 2-1/2 years of
college versus 3 or 4, it is cheaper, which it is, that is
obviously true.
I worked in manufacturing before, and I saw a lot of people
that needed to go back, were qualified, needed, and wanted to
go back and get a secondary education. But when you are 18 to
22 and know your parents are there for you, it is easier. When
you are 30 and you are a parent and you have maybe two or three
children, an example I know, just the idea that it is going to
take me 4 years to get somewhere, it is very difficult for
people to do. But if you can spell out some things we can look
at in accreditation for life experiences, and get somebody into
that 2-1/2-year timeframe, it is something that is doable, and
we want to encourage that.
This has been very informative for me. I appreciate the
ranking member and all the members' questions and the
witnesses.
And without objection, there being no further business, the
committee will stand adjourned.
[Additional submission by Ms. Adams follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
[Whereupon, at 12:28 p.m., the subcommittee was adjourned.]
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