    [Senate Hearing 115-725]
    [From the U.S. Government Publishing Office]

                                                            S. Hrg. 115-725

                               REAUTHORIZING THE
                             HIGHER EDUCATION ACT:
                          FINANCIAL AID SIMPLIFICATION
                                AND TRANSPARENCY

    =======================================================================

                                    HEARING

                                     OF THE

                        COMMITTEE ON HEALTH, EDUCATION,
                              LABOR, AND PENSIONS

                              UNITED STATES SENATE

                         ONE HUNDRED FIFTEENTH CONGRESS

                                 SECOND SESSION

                                       ON

    EXAMINING REAUTHORIZING THE HIGHER EDUCATION ACT, FOCUSING ON FINANCIAL
                      AID SIMPLIFICATION AND TRANSPARENCY

                                   __________

                                JANUARY 18, 2018

                                   __________

     Printed for the use of the Committee on Health, Education, Labor, and Pensions

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

            Available via the World Wide Web: http://www.govinfo.gov

                                 ______

                 U.S. GOVERNMENT PUBLISHING OFFICE
     28-424 PDF          WASHINGTON : 2019

              COMMITTEE ON HEALTH, EDUCATION, LABOR, AND PENSIONS

                      LAMAR ALEXANDER, Tennessee, Chairman

    MICHAEL B. ENZI, Wyoming            PATTY MURRAY, Washington
    RICHARD BURR, North Carolina        BERNARD SANDERS (I), Vermont
    JOHNNY ISAKSON, Georgia             ROBERT P. CASEY, JR., Pennsylvania
    RAND PAUL, Kentucky                 MICHAEL F. BENNET, Colorado
    SUSAN M. COLLINS, Maine             TAMMY BALDWIN, Wisconsin
    BILL CASSIDY, M.D., Louisiana       CHRISTOPHER S. MURPHY, Connecticut
    TODD YOUNG, Indiana                 ELIZABETH WARREN, Massachusetts
    ORRIN G. HATCH, Utah                TIM KAINE, Virginia
    PAT ROBERTS, Kansas                 MAGGIE HASSAN, New Hampshire
    LISA MURKOWSKI, Alaska              TINA SMITH, Minnesota
    TIM SCOTT, South Carolina           DOUG JONES, Alabama

                   David P. Cleary, Republican Staff Director
             Lindsey Ward Seidman, Republican Deputy Staff Director
                     Evan Schatz, Democratic Staff Director
                 John Righter, Democratic Deputy Staff Director

                                C O N T E N T S

                                  ----------

                                   STATEMENTS

                           THURSDAY, JANUARY 18, 2018

                                                                       Page

                               Committee Members

    Alexander, Hon. Lamar, Chairman, Committee on Health, Education,
      Labor, and Pensions, Opening Statement.........................     1
    Murray, Hon. Patty, Ranking Member, Committee on Health,
      Education, Labor, and Pensions, Opening Statement..............     4

                                   Witnesses

    Keane, Laura, Chief Policy Officer, uAspire, Philadelphia,
      Pennsylvania...................................................     7
        Prepared statement...........................................     9
        Appendix A: Award Letter.....................................    18
        Appendix B: Award Letter Format Cases........................    21
        Summary statement............................................    24
    Lowery-Hart, Russell, President, Amarillo College, Amarillo,
      Texas..........................................................    25
        Prepared statement...........................................    26
        Summary statement............................................    38
    Darcus, Joanna, Massachusetts Legal Assistance Corporation,
      Racial Justice Fellow, National Consumer Law Center, Boston,
      Massachusetts..................................................    39
        Prepared statement...........................................    41
        Summary statement............................................    49
    Chingos, Matthew, Director, Education Policy Program, Urban
      Institute, Washington, DC......................................    49
        Prepared statement...........................................    51
        Summary statement............................................    55
    Dynarski, Susan, Professor of Public Policy, Education and
      Economics, University of Michigan, Ann Arbor, Michigan.........    56
        Prepared statement...........................................    58

                       Additional Material for the Record

    Laura Keane:
        Addendum to Testimony........................................    88
        ``A Court Recorder's Response to the HELP Hearing on
          Financial Aid''............................................    89
    Higher Education Loan Coalition, Prepared Statement..............    89
    uAspire, ``Award Letter Checklist: Critical Terms, Calculations,
      and Formatting Practices for Every Financial Aid Offer''.......    91

                               REAUTHORIZING THE

                             HIGHER EDUCATION ACT:

                          FINANCIAL AID SIMPLIFICATION

                                AND TRANSPARENCY

                                  ----------

                           Thursday, January 18, 2018

                                           U.S. Senate,
           Committee on Health, Education, Labor, and Pensions,
                                                        Washington, DC.
        The Committee met, pursuant to notice, at 10:07 a.m., in
    room SD-430, Dirksen Senate Office Building, Hon. Lamar
    Alexander, Chairman of the Committee, presiding.
        Present: Senators Alexander [presiding] Enzi, Collins,
    Cassidy, Young, Scott, Murray, Casey, Bennet, Baldwin, Murphy,
    Warren, Kaine, Hassan, Smith, and Jones.

                     OPENING STATEMENT OF SENATOR ALEXANDER

        The Chairman. Good morning. The Senate Committee on Health,
    Education, Labor, and Pensions will please come to order.
        This is another in a series of hearings as we work to get a
    result by early spring on reauthorizing the Higher Education
    Act. Today, we are looking at ways to simplify and make more
    effective Federal regulations to make it easier for students to
    pay for college, to pay back their loans, and to reduce red
    tape so administrators can spend more time and money on
    students.
        Senator Murray and I will each have an opening statement,
    and then we will introduce the witnesses. After the witnesses'
    testimony, Senators will each have 5 minutes of questions.
        Our Nation's first higher education institution was Harvard
    University, founded in 1636 just 16 years after the Mayflower
    arrived in Plymouth. There was, of course, no Federal role in
    higher education at the time. There was no Federal Government.
    During Abraham Lincoln's presidency, the Federal Government
    enacted the Land Grant College Act in 1862. But a century later
    at the end of World War II, just 5 percent of Americans had
    bachelor's degrees.
        The Federal Government's major role in higher education
    dates back only to 1965. When Congress enacted the Higher
    Education Act that year, the number with bachelor's degrees had
    increased to 10 percent. And today, it is 35 percent.
        Today, we have 6,000 colleges and universities. The Federal
    Government's role primarily is to help 20 million students pay
    for their education at a variety of institutions--graduate
    schools, 4-year colleges, community colleges, technical
    institutions, profit, for-profit, religious, public. All these
    form a higher education system that has often been called the
    best in the world.
        This involves a huge amount of money. There were 28 billion
    in Pell Grants last year, dollars, that students don't have to
    pay back. That number was over $30 billion just a few years
    ago. In addition, there were $92 billion in new Federal loans
    last year that students do have to pay back.
        The last time we took a comprehensive look at our higher
    education system was 2008. Since then, Congress and the
    President did something I didn't agree with by making the
    Federal Government the provider of nearly all loans to
    students. I didn't believe that the Federal Government had the
    capacity to be one of the largest bankers in the world, and the
    Department's performance to date has demonstrated I was correct
    about that.
        We began thinking about this authorization 4 1/2 years ago
    when we held our first hearing on reauthorizing of the Higher
    Education Act in September 2013. Since then, we have had 18
    hearings. These hearings have produced a large number of
    proposals, mostly bipartisan, ranging from simplifying student
    aid to improving the accreditation system.
        The House Education Committee approved their updated Higher
    Education Act late last year. It is now time to bring our
    process in the Senate to a conclusion and present our
    recommendations to the full Senate for action.
        Senator Murray and I are working to do this as we have done
    in other large issues--the law fixing No Child Left Behind, the
    21st Century CURES Act, a reauthorization of the FDA user fee
    agreements--in a process that is based on bipartisan consensus.
    It is our goal for the Committee to mark up a comprehensive set
    of recommendations and send them to the full Senate by the
    early spring.
        The consensus I see emerging is this--student focused.
    Simpler, more effective regulations to make it easier for
    students to pay for college and to pay back their loans,
    reducing red tape so administrators can spend more time and
    money on students, and making sure a degree is worth the time
    and money that students spend to earn it, and helping colleges
    keep students safe on campus.
        One area of consensus that has emerged, something we have
    heard over and over from students, parents, and administrators,
    is that the Federal financial aid form itself is overly
    complicated and needs to be much simpler. As a result of our
    hearings, we figured out we can drastically shorten the Free
    Application for Federal Student Aid, or the FAFSA, from 108
    questions to 15 to 25 questions using information the
    Government already has.
        This should be a welcome relief for the nearly 20 million
    students that complete the FAFSA each year. The president of
    Southwest Community College in Memphis told me he believes he
    loses 1,500 students each semester because of the complexity of
    the FAFSA. A woman who has mentored with Tennessee's Free
    Tuition Program, Tennessee Promise, said the complex form has
    ``a chilling effect, intimidating parents who may themselves
    never have attended college and who have no experience
    navigating the process.''
        Over and over, families have asked me this. ``I have
    already given most of this information to the Federal
    Government when I paid my taxes, why do I have to do it again?
    Once should be enough.''
        We also consistently hear from students, parents, and
    administrators that students looking for Federal financial aid
    to go to college need a much simpler system for the nearly $30
    billion in grants and roughly $100 billion in new loans and the
    repayment plan for those loans so the financial aid system
    isn't a barrier to college for the very students it is intended
    to help.
        Today's hearing is to see if we can reach a result on
    simplifying grants, loans, and repayment plans. Currently, we
    have two grant programs, five loan programs, nine repayment
    plans. This is a complicated system for students. It leads to
    confusion about the aid and repayment options they are eligible
    for. It ultimately makes it harder for them to get that aid.
        The Federal financial system is so complex that even those
    in the higher education system have trouble navigating it. At a
    roundtable at the University of Tennessee-Martin, a Tennessee
    college president told me it took him months to figure out how
    to help his daughter pay off her Federal student loans in full,
    even with the money in hand.
        As one of our witnesses today, Laura Keane, will describe,
    many students can't tell the difference between a grant and a
    loan when they receive their financial aid from institutions.
    According to Ms. Keane, some letters don't clearly identify
    loans as loans, while other letters refer to the same Federal
    loan with different names, causing even more confusion when the
    student tries to compare the aid they might receive.
        Senator Bennet and I, along with Senators Burr, Booker,
    Isakson, and King, introduced a proposal last Congress to
    streamline Federal aid and repayment to One Grant, One Loan. It
    would have combined two Federal programs into one grant program
    and reduce five different Federal loan programs into three--one
    loan for undergraduate students, one loan for graduate
    students, and one parent loan.
        It would also simplify repayment options by streamlining
    complicated repayment programs into two simple plans, an
    income-based plan and a 10-year repayment plan. Today, I hope
    to hear from our witnesses about our One Grant, One Loan idea
    as well as other proposals.
        In addition to Ms. Keane, our witness include an adviser
    who counsels students on how to repay loans after their
    graduation, a community college president who has worked to
    enroll low-income students and keep them in school, and experts
    who will lay out their own research in simplifying Federal
    financial aid.
        We have several proposals introduced by Senators to discuss
    with our witnesses. All reflect a consensus that our grants,
    loans, and repayment plans need to be simpler. Senator Enzi,
    for example, has the Transparency in Student Lending Act that
    would provide the annual percentage rates of Federal loans on
    student aid letters, so students can compare public and other
    loans more easily.
        Senators Grassley, Cardin, Coons, Gillibrand, Warren, and
    Whitehouse have the Understanding the True Cost of College Act,
    which would address the lack of uniformity of financial aid.
    Senators Grassley, Coons, and Kaine have the Net Price
    Calculator Improvement Act that would streamline the net price
    calculator on college and university websites some families use
    to predict the cost of schools.
        Senators Grassley and Ernst have the Know Before You Owe
    Federal Student Loan Act. Senators Burr and King have the Repay
    Act, to simplify Federal repayment plans into two programs.
    Senators Warner and Rubio have the Dynamic Student Loan
    Repayment Act that would streamline repayment.
        As we continue to work on reauthorizing the Higher
    Education Act, I hope we can work together in a bipartisan way
    to make it clearer to students what grants they are eligible
    for, how much they are able to borrow, and provide simpler and
    manageable ways to repay their loans.
        Senator Murray.

                      OPENING STATEMENT OF SENATOR MURRAY

        Senator Murray. Well, thank you very much, Chairman
    Alexander, and thank you to all of our witnesses for being here
    today. I look forward to your perspectives on how simplifying
    Federal financial aid and improving transparency can help more
    students attend and afford college and higher education.
        But before we begin, I do want to talk about our Nation's
    K-12 education lobby, Every Student Succeeds Act, because it is
    important to consider the implementation of our last education
    law as we start to update this one. Almost everyone agreed that
    No Child Left Behind was badly broken. So Chairman Alexander
    and I agreed to work together to write a law giving states more
    flexibility while maintaining strong Federal guardrails to help
    make sure no student falls through the cracks.
        However, Secretary DeVos' implementation of our bipartisan
    law has proved problematic. The Department of Education is
    approving state plans that do not comply with all of ESSA's
    guardrails and now issuing waivers of the law before it is even
    fully implemented.
        Now I know Chairman Alexander and the Republicans who
    worked on ESSA are just as proud of that law as I am. I would
    assume they would want to see this law implemented as we
    intended and oppose waiving provisions before the law is even
    fully implemented by the states. The waivers are also being
    approved, by the way, without full transparency provided to
    Congress or, more importantly, to the public.
        I think it would be a shame if Republicans refused to stand
    up to this administration when they disregard the law we wrote.
    I do appreciate the Chairman's willingness to meet with the
    Department on these issues, but it is imperative that we do
    keep these discussions going.
        I hope the Chairman and my colleagues across the aisle
    would join me in advising the Department to implement ESSA as
    Congress intended, which brings me back to the Higher Education
    Act. If we can't trust our good faith bipartisan work on the
    last education law will be implemented, well, how can we work
    together on this bill? That is a question that we are going to
    have to grapple with in the months ahead.
        Nonetheless, I do want to say I am hopeful and optimistic
    we can work together to put the Department on the right path
    and that these conversations will then be instrumental in
    maintaining good faith and confidence in our bipartisan
    approach as we now begin to reauthorize the HEA.
        Now we can all agree navigating the financial aid process
    and the student loan repayment system are just some of the many
    challenges facing students. They also struggle to afford
    housing and textbooks and childcare and a lot more. Many of our
    low-income and first-generation students have a difficult time
    getting through the door in the first place. And the rise of
    discrimination and harassment and violence on campuses means
    too many students are worried about--more about their safety
    than their education.
        So in order to make a meaningful impact for our students,
    we have to pass a comprehensive reauthorization of the Higher
    Education Act that addresses all of the challenges
    simultaneously. Anything less is a disservice to our students.
        Now I am pleased we are continuing our conversation about
    simplifying financial aid and increasing the transparency of
    how much college will cost for our families. But I hope we can
    all agree the purpose of our financial aid programs is to help
    open the doors of opportunity and higher education for students
    who feel that those doors have been shut.
        We have to acknowledge that simplification cannot mean
    elimination of aid, especially as college costs continue to
    rise. We should be reducing the barriers facing students at
    every stage of financial aid before they apply, while they are
    enrolled, and after graduation. So let me go into each of those
    a little bit.
        First of all, far too many students are held back from even
    applying to schools because it is simply not affordable.
    Navigating our complex financial aid system can be
    overwhelming, especially for first-generation students.
    Financial aid offers can be confusing and impossible to compare
    as there is no required standard format or terms. And by the
    way, high school counselors are few and far between.
    Nationally, there is about one high school counselor for every
    500 high school students. So students need more help and more
    transparent information.
        Second, I believe both our Federal aid system and schools
    and universities need to play a bigger role in helping enrolled
    students understand the complex maze of eligibility
    requirements for their financial aid. And we should be
    providing students with the support they need to maintain their
    financial aid.
        Unfortunately, some colleges are part of the problem by
    lowering students' financial aid after the first year, even as
    their tuition prices go up, a classic bait-and-switch that
    leads to many students dropping out when they can no longer
    afford their education.
        Finally, we have to help the millions of student loan
    borrowers struggling to manage their student debt with few
    resources that have their best interest in mind. Borrowers are
    experiencing delays and errors and mismanagement of their loans
    and are often getting conflicting and inaccurate information.
    And new research shows that a crisis of students defaulting on
    their loans could be getting worse.
        Simply consolidating Federal loans and grants would not
    address those deep-seated problems. We need sweeping
    improvements so servicers are held accountable, students know
    where to go for help, repayment is simple, and relief is within
    reach. So I am really glad we are having this conversation
    today, and I look forward to hearing from all of our witnesses
    and, again, appreciate all of you being here.
        By simplifying the financial aid process and making it more
    transparent, we can help more students afford higher education
    and lower barriers for students who can't afford to attend
    college otherwise. But these challenges are not singular. So in
    order to truly help our students, we have to tackle all of the
    challenges in higher education and negotiate a full and
    comprehensive reauthorization of the Higher Education Act.
        Thank you, Mr. Chairman.
        The Chairman. Thank you, Senator Murray.
        We will welcome our witnesses today. I would ask you to
    summarize your remarks, if you will, in 5 minutes. There is a
    little clock in front of you. And then we will ask--then that
    way, the Senators will have more time to have conversations
    with you, and we will try to keep them to 5 minutes as well in
    the back and forth.
        I turn to Senator Casey to introduce our first witness, Ms.
    Laura Keane.
        Senator Casey. Thank you, Mr. Chairman.
        I am pleased to introduce Laura Keane. Ms. Keane serves as
    the Chief Policy Officer at uAspire, a nonprofit organization
    headquartered in Boston, Massachusetts. In her role, Ms. Keane
    is responsible for leading the organization's Federal and state
    policy efforts focused on the advancement of student-centered
    policies that ensure that all young people can find an
    affordable pathway to the completion of a college degree.
        Prior to joining uAspire, she served as the Director of
    College Initiatives at Mastery Charter Schools in Philadelphia.
    An educator by training, she taught high school history for 6
    years in both New York City and Philadelphia. She earned her
    B.A. at the University of Notre Dame and a Masters of Education
    at Harvard. She now resides in Philadelphia, Pennsylvania, with
    her three children.
        Ms. Keane, we are grateful that you are here and grateful
    for your testimony. Thank you.
        The Chairman. Thank you, Senator Casey.
        Our next witness is Dr. Russell Lowery-Hart, President of
    Amarillo College, he previously served as Vice President of
    Academic Affairs at Amarillo, chaired the Texas Higher
    Education Coordinating Board Undergraduate Education Advisory
    Committee charged with evaluating and redesigning the State of
    Texas general education requirements. He was named the National
    Council of Instructional Administrators Academic Leader of the
    Year.
        I turn to Senator Warren to introduce Ms. Darcus.
        Senator Warren. Thank you, Mr. Chairman.
        It is my pleasure to introduce Ms. Joanna Darcus. Ms.
    Darcus is a Massachusetts Legal Assistance Corporation Racial
    Justice Fellow at the National Consumer Law Center in Boston,
    Massachusetts. The National Consumer Law Center is a nonprofit
    that works on behalf of consumers and has been doing
    extraordinary work in the area of student loans for decades
    now. I am very grateful for their work.
        Ms. Darcus represents low-income student loan borrowers
    through advocacy and through litigation. And prior to joining
    the National Consumer Law Center, Ms. Darcus was a supervising
    attorney at the Community Legal Services, Incorporated, of
    Philadelphia, where she represented low-income consumers who
    were struggling with consumer debt and with student loans. Ms.
    Darcus is a graduate of Williams College and Duke University
    School of Law.
        Ms. Darcus, thank you for the work you do for consumers and
    students in Massachusetts and all across the country. We are
    delighted to have you here and look forward to your testimony.
        The Chairman. Thank you, Senator Warren.
        Our next witness is Dr. Matthew Chingos, Director of the
    Urban Institute's Education Policy Program. He is co-author of
    The Game of Loans: The Rhetoric and Reality of Student Debt,
    Crossing the Finish Line: Completing College at America's
    Public Universities. He received degrees from Harvard.
        Our final witness is Dr. Susan Dynarski, Professor of
    Public Policy, Education, Economics at the University of
    Michigan. She is also Faculty Research Associate at the
    National Bureau of Economic Research, a nonresident Senior
    Fellow at the Brookings Institution, and the president of the
    Association for Education, Finance, and Policy. In 2009, she
    received the Huff Golden Quill Award from the National
    Association of Student Financial Aid Administrators. She earned
    her Ph.D. at MIT.
        I look forward to everyone's testimony. Why don't we begin
    with you, Ms. Keane?

       STATEMENT OF LAURA KEANE, CHIEF POLICY OFFICER, UASPIRE,
                       PHILADELPHIA, PENNSYLVANIA

        Ms. Keane. Mr. Chairman, Ranking Member Murray, and Members
    of the Committee, thank you for this opportunity to testify on
    financial aid simplification and transparency. uAspire is a
    national nonprofit hyper-focused on college affordability as a
    way to close the achievement gap in our country. We advise over
    10,000 high school and college students a year to find an
    affordable pathway to college. We also train frontline staff in
    27 states to do the same.
        Choosing to attend and pay for college is an investment in
    one's future. Millions of students make this decision every
    year, yet just 55 percent of those who start college finish. A
    major reason for this is that college costs aren't transparent.
        We advise our students celebrate, then decide. Celebrate
    when you get accepted, but decide only after you review the
    financial aid award letter, which explains your aid. This is
    the deciding moment for our students who are predominantly low-
    income, first-generation, and students of color.
        But award letters are confusing, if not misleading. They
    fail to provide the consumer--in this case, students and
    families--with key financial information.
        Let me tell you about Ella. Ella was granted a state school
    scholarship that covered her tuition fees and room and board.
    Her award letter showed no further costs. Ella's family was
    elated. Her father had passed away, and this was his alma
    mater. Her mother worked tirelessly as a social worker, so
    funds were tight.
        Once on campus, Ella realized how expensive textbooks were,
    and although she worked, she didn't have enough money to cover
    the science textbooks, in particular, and her grades suffered.
    When her GPA fell below a 3.0, she lost her aid and was forced
    to drop out. Now she has a debt and no degree and no
    transcript, by the way, because she still had money she owed to
    the college. So she had no credits as well.
        This is why, at uAspire, we have held over 10,000 award
    letter conversations with students and collected over 50,000
    award letters. And we have discovered three troubling trends.
    First, the cost of attendance is often incomplete or missing
    altogether. One-third of letters we analyzed don't list any
    cost at all. There is literally no price tag. One-third of
    letters mention only direct costs, what students have to pay to
    college to enroll and start school.
        Only one-third of these letters did what we believe they
    should, which is to include both direct costs and indirect
    expenses like books and transportation. That is what pulled
    Ella off track.
        Second, the formatting of the award letters often doesn't
    make sense. How schools list the aid affects how students do
    the math. Over two-thirds of the letters we analyzed--again,
    two-thirds of the letters we analyzed lump grant aid and loans
    together. It is unclear what is a gift and what needs to be
    paid back.
        Third, there is no standard terminology for students to
    compare offers. We found financial aid terms titled differently
    from letter to letter; the same thing written many different
    ways.
        For example, we found the Federal unsubsidized loan did not
    even use the word ``loan''--excuse me, let me start over. We
    found the Federal unsubsidized loan presented in 143 different
    ways. In 26 of those cases, the colleges did not even use the
    word ``loan'' to describe it.
        On the heels of complicated FAFSA and verification, these
    award letters really trip up our students. Students like Leon.
    Leon was a bright, but unmotivated young man who had a very
    difficult home life. An athletic program provided him with a
    love of learning and an ambition to attend college. Leon
    excitedly shared the news of a $20,000 scholarship to his top
    choice and committed to the college. Yet in August, he faced a
    $17,000 bill. Leon didn't go to college that year. This an
    example of summer melt, a phenomenon when students who are
    college ready and college intending never reach campus.
        Which brings me back to how you can help. While these
    letters lack consistency and transparency, there is a proven
    strategy of guidelines for providing clear information to
    consumers. It has been done successfully in other areas of
    commerce, including FDA food labels, the HUD-1 Settlement
    Sheet, and credit card statements. Please do the same for our
    Nation's students.
        This is a system-wide problem and needs a systems-level
    solution. Not enough counselors are there to help students
    navigate these tricky layers. We have a clear ask. Set standard
    requirements for financial terms and definitions and formatting
    to protect both our students and our taxpayers' investments.
        Simplifying award letter communication is vital. Yet
    simplification of grants and loans should not mean a reduction
    of funds for students who need it most.
        In closing, we are so grateful you invited a student-
    centered organization to be part of this important conversation
    for our country. We know that students and those who serve them
    have insights to help make policy work.
        Thank you.
        [The prepared statement of Laura Keane follows:]
                       prepared statement of laura keane
        Mr. Chairman, Ranking Member Murray, and Members of the Committee,
    thank you for this opportunity to testify on ``Reauthorizing the Higher
    Education Act: Financial Aid Simplification and Transparency.'' My
    organization, uAspire, is a national nonprofit hyper-focused on college
    affordability. In the last year, uAspire advised over 10,000 students
    in the states of Massachusetts and California and virtually advised
    another 15,000 students in seven states on how to find an affordable
    pathway to a college degree. In addition, we trained 2,100 counselors
    who served another 350,000 students in 27 states across the country. We
    serve all postsecondary students attending a variety of institution
    types.
        We are a student-centered organization, working with one student at
    a time, and on a policy level, we utilize our learnings to make
    financial aid systems more equitable, efficient, and effective. We
    would love to put ourselves out of a job 1 day.

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        The topic of how to pay for college is one discussed at the kitchen
    table for many Americans--at least for the lucky ones. Others,
    including many of the students we serve, assume it's simply out of
    their reach--not because of their academic performance, but because of
    cost. This problem is rooted in both perception and reality. Sometimes,
    the cost is out of reach. The price of college has skyrocketed faster
    than the rate of inflation for years now, while the purchasing power of
    the Pell Grant has dropped from covering nearly 80 percent of student
    need when created 40 years ago, to covering less than 30 percent of the
    cost of a 4-year, public degree today. \1\ Sometimes, it's not the cost
    that is a barrier for our students, but the confusing terminology or
    complex processes required to access and understand financial aid,
    which can be akin to the old board game of Chutes and Ladders. Often
    times, it's both high costs and lack of clarity of those costs at play.
    ---------------------------------------------------------------------------
        \1\  Protopsaltis, S. Parrott, S. 2017 ``Pell Grants--a Key Tool
    for Expanding College Access and Economic Opportunity--Need
    Strengthening, Not Cuts'' Center on Budget and Policy Priorities.
    ---------------------------------------------------------------------------
        My testimony today will focus on the student experience with our
    current financial aid system. Lack of clear and consistent information
    combined with messy, complicated systems denies students and families
    the ability to be smart consumers and make financially informed
    decisions in the higher ed marketplace. This leaves too many Americans
    at the doorstep of earning a higher education degree, but unable to do
    so, especially low-income Americans for whom the financial aid system
    was designed to reach. My goal today is two-fold: to share with you the
    common challenges our students face as they navigate financial aid and
    offer proposals from the front-line that we think can help improve the
    system. Given the focus of this hearing, we will do so looking at three
    phases of the student experience in the financial aid process: choosing
    an affordable college; transitioning to college; and during college.
               Student Experience: Choosing an Affordable College
        Finding an affordable college is a confusing process for students
    and families. Students confront a detrimental lack of information and
    transparency when making one of the biggest financial decisions of
    their lives. Though the mysteries should end when they receive
    financial aid award letters, often they do not. Some students may be
    stuck in the verification process and therefore unable to receive a
    final award letter or any financial aid. Others may have received award
    letters from multiple colleges but are unsure how to determine and
    compare the bottom line costs because their letters are filled with
    inconsistent terminology and vary greatly in format. Appendix A: Award
    Letters: Three Examples contains a sample of letters that showcase the
    divergence of formats, terms, and math at the root of the confusion.
        This section shares our insights based on two sources: our advising
    work where we have conducted thousands of award letter review sessions
    with students; and data analysis of our collection of over 50,000
    financial aid offers sources by students and advisors during award
    letter reviews. We are currently underway with an extensive research
    project with New America, a research and policy institute located here
    in Washington, DC. Together we are conducting both quantitative and
    qualitative analyses of our Class of 2016 data. This data set contains
    11,334 award letters from 6,023 students at 936 colleges. Of those
    students, 76 percent are Pell Grant recipients, making our analysis
    particularly relevant for the issues low-income students are facing. We
    are unaware of any other analyses of this sort that have been conducted
    at such a large scale.
        We conducted a deep qualitative review of 515 award letters
    provided to Pell-eligible students and have identified seven key areas
    as particularly problematic, illustrated by both our analysis and
    student and practitioner stories of how these issues have impacted
    their decisions. See Appendix B: Award Letter Format Cases for examples
    of the problems highlighted below.

              1. Inconsistent/inaccurate terminology: Financial aid
            award letters are filled with jargon that leave students and
            families scratching their heads. In our sample, we had 454
            letters that offered the Federal direct unsubsidized loan.
            After accounting for differences of punctuation and minor
            formatting, we identified 143 unique titles for the direct
            unsubsidized loan. Of those, 26 letters do not even identify it
            as a loan (e.g., ``Fed Direct Unsub,'' ``Unsubsidized DL'').
            Additionally, colleges sometimes misuse important financial aid
            terminology, such as ``net costs.'' This lack of
            standardization and improper usage of terms makes it very hard
            for students and families to compare offers.

              2. Missing cost information: More than one-third of
            the letters in our sample did not include any notation of cost
            on the page that listed the awards. This lack of information
            puts the consumer in the dark. Students cannot contextualize
            their financial aid offers without knowing the cost, as $20,000
            of aid means something very different from a college that costs
            $25,000 than at one that costs $65,000. Further, of those
            colleges that included cost, nearly half only included direct
            costs (i.e., tuition/fees, room/board) and did not mention any
            indirect expenses (e.g., books, supplies, transportation).
            Failing to communicate full cost of attendance (COA)--direct
            costs and indirect expenses--can later put students at risk of
            insufficient funds to persist through college, or even to meet
            basic food and housing needs. Last, assumptions made to
            determine the cost, such as residency (in-state/out-of-state)
            and housing (on/off campus) are often unstated, which limits
            students' ability to confirm whether the cost of attendance is
            accurate.

        As an example of how this can affect students, a Pennsylvania
    senior \2\ received a $10,000 scholarship at his top choice school.
    Beaming with pride, he shared the news with family and friends. Since
    COA was missing on the letter, the student didn't realize it was only
    20 percent of the cost and he still owed $40,000, even after the Pell
    Grant is applied. In the rush of excitement, the student already
    accepted the offer and deposited at that school--money he lost when he
    had to switch to a more affordable college option.
    ---------------------------------------------------------------------------
        \2\  Student examples are actual stories from uAspire advising.
    Names have been withheld to protect student privacy.

              3. Combined and undefined aid types: Less than one-
            third of the letters in our sample split out different types of
            aid (i.e., grants/scholarships from loans, work-study). The
            majority of letters group all aid together and most do not
            include definitions of different types of aid, making it hard
            for student--particularly those not familiar with financial
            aid--to understand the long-term implications of their offer.
            And in cases where letters do include definitions, some of
            those definitions provided may actually cause more confusion
            for the student, as illustrated by the example from an actual
    ---------------------------------------------------------------------------
            award letter below:

            Work Study Earnings are normally used to defray personal
            expenses during the school year. However, by participating in
            the Work Credit Plan, you may contract to apply up to 90
            percent of your work authorization to your statement of account
            (example, $2,200 x 90%=$1,980).

              4. Missing and varied calculation of remaining costs:
            Many award letters fail to calculate for students what it will
            cost to enroll after taking into account their financial aid.
            Based on our initial analysis, only about two in five letters
            provided some calculation of remaining costs, yet there were no
            clear trends of how that calculation was made. That is, were
            they subtracting aid from the full COA or just from direct
            costs? Were they calculating costs before loans, after loans,
            or both? Were they subtracting out the EFC? Different
            calculations across letters make it difficult for students and
            families to compare and make financially informed decisions. We
            believe that displaying ``net costs'' (i.e., COA minus grants
            and scholarships) is critical to show what a student's all-in
            cost will be to complete the year. In addition, based on our
            advising experience, students and families want to know what
            the bill will be--namely, what they have to pay now. As a
            result, we help them calculate ``estimated bill'' (i.e., direct
            costs minus grants and scholarships and loans) to show what
            they would need to pay the college to start school.

              5. Direct PLUS Loan listed under awards: Nearly 15
            percent of letters we analyzed included the PLUS loan in the
            list of awards and calculations. The PLUS loan is particularly
            troubling given how high the dollar amounts are that parents
            could be ``offered.'' Our data analysis showed an average PLUS
            loan amount offered for a single academic year as nearly
            $10,000 for students who receive the full Pell Grant amount and
            over $18,000 for students who are not Pell-eligible.

            In our advising, we frequently encounter situations where
            students see their stated remaining costs are $0 and do not
            realize a PLUS loan has been included in the calculation. As an
            example of such a letter, see example #3 in Appendix A: Award
            Letters: Three Examples. When faced with these situations, our
            advisors explain the PLUS loan to students, who then realize
            they cannot afford to go to these colleges. In some cases, a
            student knows their parent would be denied the PLUS loan. For
            other families, even if a parent is approved, they know they
            will be unable to repay such large loans. Regardless of
            financial situation, however, including the PLUS loan as though
            it is an award is confusing to students and families.

              6. Work-study listed under awards: Many award letters
            include work-study as an award, as though it is available at
            the beginning of the semester to help pay the first bill. Our
            data analysis showed a median work-study amount of $2,349 is
            offered on the award letter, meaning if misinterpreted as aid
            available immediately, it could leave a student with a larger-
            than-expected bill. Further, work-study is not guaranteed at
            all. Students need to apply for and receive a job, and then
            they can earn up to the amount offered on the award letter,
            depending on working the requisite amount of hours to reach
            that number.

            Our advisors report students are frequently confused by award
            letters that include ``Federal work-study'' under awards. They
            often interpret this aid to be available immediately, as
            opposed to a potential job that could slowly earn money on a
            bi-weekly basis.

              7. Lack of clear next steps: Only about half of the
            letters included any indication of what, if any, aid would be
            accepted on the student's behalf and what the student needed to
            do in order to either accept or decline their awards. Given the
            differences in policies across colleges, the path to unlock aid
            is neither consistent nor clear. Therefore, it is important to
            require each institution to identify next steps on award
            letters so that students do not inadvertently miss out on aid.
            Due to such disparity of next steps and the lack of consistent
            communication, uAspire developed a summer program to fill this
            gap and offer clarity on next steps as well as support to
            successfully complete them.

        Americans are hungry for clear information to help them navigate
    the maze that is our current financial aid system. Beyond award letter
    terminology and format, we can better educate students and families on
    the key takeaways of award letters so they are better equipped to make
    a financially informed decision. FAFSA completion media campaigns are a
    strong example, yet the FAFSA itself is only the beginning of the
    financial aid process. In the Spring of 2017, uAspire partnered with
    the Office of the Massachusetts Attorney General to launch an online
    and social media campaign to help families better understand financial
    aid packages and college costs. Over 4,600 people have accessed the
    online tools to make an informed college choice, and our educational
    videos have reached an audience of over 20,000. Social media campaigns
    on making a financially informed college choice can promote improved
    student decisionmaking.
              Proposals to Improve Choosing an Affordable College:
        Based on our experience and learnings from the field, we suggest
    the following proposals to improve the current system for students and
    families when choosing a college:
              Conduct consumer testing with a multi-statkeholder
            group to identify a required set of defined terms and
            formatting practices for all financial aid award letters.
              Require standard terms with federally defined,
            student-friendly definitions on the award letter: Cost of
            Attendance; Direct Cost; Indirect Expenses; Gift Aid; Loans;
            Net Costs; Estimated Bill; and Work-study.

                   Require 5 formatting practices:
                   COA broken down to include line items for direct
            costs and indirect expenses
                   Residency and housing assumption stated on
            financial aid offer
                   Aid broken down by grants/scholarships and loans
                   Estimated bill and net cost calculations
                   PLUS Loan and work-study offers listed outside
            of aid calculations as potential options to cover remaining
            costs
                  Student Experience: Matriculating to College
        As students move from high school to college, they cross the ``no-
    man's land'' between the systems of K-12 and higher education. High
    schools are funded per student up to graduation day, and school
    counselors are typically 10-month employees creating a significant gap
    in support services during a critical time for financial aid
    requirements. It is rare for students to have access to college &
    financial aid counseling during the summer months as they prepare to
    head off to college. \3\
    ---------------------------------------------------------------------------
        \3\  Castleman, B., Page, L. and Schooley, K. 2013 ``The Forgotten
    Summer: Does the Offer of College Counseling After High School Mitigate
    Summer Melt Among College-Intending, Low-Income High School
    Graduates?'' EdPolicyWorks Working Paper.
    ---------------------------------------------------------------------------
        There are many financial aid steps students must currently take in
    order to successfully matriculate to postsecondary education. The list
    includes: accessing and navigating college portals; reviewing and
    approving aid; selecting housing and meal plans; securing loans; taking
    placement tests and registering for classes; enrolling or waiving
    health insurance; and paying their college bill. Often this is the
    first time our students confront any of these type of tasks, and they
    are doing so without guidance given momentary lull between K-12 and
    higher ed systems. We'll focus here on two key moments: securing
    student loans and covering the college bill.
        Securing a student loan by signing the ``MPN'' or Master Promissory
    Note and by completing Entrance Loan Counseling are entirely new and
    intimidating tasks for recent high school graduates. Most students do
    not understand what an MPN is, or what exactly they are signing. It's
    often their first time reviewing a financial contract and the language
    is unfamiliar and overwhelming. While the current requirements for
    receiving a Federal student loan include Entrance Loan Counseling, its
    effectiveness as a counseling resource is questionable and the bar to
    determine proficiency is low, as demonstrated by a student study that
    indicated 40 percent of Federal loan borrowers had no memory of
    completing loan counseling \4\. Many of our students are easily able to
    complete entrance counseling without understanding the responsibilities
    and obligations of the loans they are assuming.
    ---------------------------------------------------------------------------
        \4\  Whitsett, H., and O'Sullivan, R. 2010 Lost Without a Map: A
    Survey about Students' Experiences Navigating the Financial Aid Process
    NERA Economic Consulting & Young Invincibles.
    ---------------------------------------------------------------------------
        Additionally, the bill that students receive from their college
    looks totally different than the award letter, and the numbers don't
    often add up in the same way. Before joining uAspire, one of my stellar
    students in Pennsylvania received a $20,000 institutional scholarship
    in May and excitedly committed him to the college. Then a few months
    later in August, he received an unexpected $17,000 bill. The full terms
    and implications of the financial aid award resulted in $17,000 of
    unmet need that was not made clear until the bill arrived. Because of
    this enormous and unexpected out-of-pocket expense, this student didn't
    go to college that year.
        Besides differing numbers, the bill often comes from an unfamiliar
    and separate office from financial aid. The silos in higher education--
    in particular for where and how to access help for a financial issue--
    create additional barriers for students to troubleshoot problems. Below
    is a text message a uAspire advisor received from a student in
    California, for whom a clerical error resulted in her financial aid
    being withheld. This became apparent when she compared her college bill
    to what her award letter listed:

            ``The due date is today and there's no way I can get it there
            on time. I could have sent what they needed together. Also I
            KNOW I sent the correct paperwork in. My mother keeps all
            important documents in folders at home and the contents of the
            packet were labeled. I scanned and copied everything myself . .
            . I'm just so tired and frustrated with all this stuff before
            school even starts!''

        In order to meet this deadline, the student had to drive 70 miles
    to hand deliver the form. It was a narrow miss, as a single missing
    link in the chain of requirements and documentations, can erase years
    of work that the student has put into their college goals.
        Collectively each of these challenges contribute to the phenomenon
    known as ``summer melt'', by which college-ready, college-intending
    students fail to successfully enroll in college in the fall following
    high school graduation. Despite having gained admission into a college,
    and completed many of the requirements to enroll, they are ensnared in
    the labyrinth of summertime pre-matriculations steps with little or no
    support at their disposal. Their individual missed opportunities for
    college and career are a tragedy for our country; a systemic failure
    that constrains our labor market and limits our tax base.
        uAspire partnered with researchers Drs. Ben Castleman and Lindsay
    Page to test and then prove that summer melt can be effectively
    decreased with scalable, inexpensive text reminders--behavioral
    economic nudges that provide the right information at the right time to
    students ripe for a reminder.

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Overall, students who received texts during summer months were 7.1
    percentage points more likely to complete enrollment steps to
    matriculate into a postsecondary institution than those who did not
    receive texts. The impact was even greater for students who did not
    have specific college plans at the end of high school, showing 11.3
    percentage points greater matriculation than those without text
    prompts.
                      Matriculating to College Proposals:
        Based on our experience and learnings from the field, we suggest
    the following proposals to improve the current system for students and
    families when matriculating to college:

              Simplify FAFSA and verification to yield much needed
            college-level counseling capacity in the summer to deliver
            increased student advising of financial steps for enrollment.
              Conduct research to identify ways that Master
            Promissory Note requirement could also educate students about
            borrowing terms, concepts and responsibilities.
              Require estimated bill to be on award letter
            notifications so students and families can financially plan
              Assign Federal Student Aid responsibility to
            systematically communicate with all students on the key
            financial steps to matriculation.
              Task Federal Student Aid to deliver financial aid
            information and supports via mobile app or text and improve
            customer service for supports therein.
                       Student Experience: During College
        College affordability is often misconstrued as the money it takes
    to start college, not how much it costs to finish. We have become
    deeply concerned that while college enrollment is up, college
    completion is not. We see students leave college without a degree,
    simply because they cannot afford to stay. For our students, it is a
    consistent story of ``not enough.'' Not enough financial aid to cover
    the reality of their indirect expenses. Not enough time to navigate
    loopholes and potholes to access aid they qualify for. Not enough
    opportunities via Federal Work-Study. And, not enough loan counseling
    to make informed financial decisions each year.
        As stated in uAspire's Affording to Finish report, meeting the
    financial need of students is a challenge for increasing numbers of
    both two and 4-year public institutions. Nationally, 4-year public
    colleges are able to meet full need for only 12 percent of their aid
    applicants. \5\ Significant decreases in State higher education funding
    since the 2009 recession have negatively impacted the affordability of
    public colleges and universities. Forty-six states are spending less
    per student than they did just prior to the recession. Cuts in State
    funding have resulted in increases in tuition and fees at public
    colleges by as much as 33 percent at 4-year publics since 2007-08. \6\
    Students from families in the lowest income quartile feel the effects
    deeply, it is estimated that over 90 percent have unmet need. \7\
    ---------------------------------------------------------------------------
        \5\  CollegeInsight. 2013-14. Financial Aid--Undergraduates. April
    25, 2017. http://college-insight.org/-topics/
    go&h=9c7b6be0256bf370a9ea749afedcf7fb. Oakland, CA: The Institute for
    College Access and Success.
        \6\  Mitchell, M., Leachman, M., & Masterson, K. 2016. State Cuts
    to Higher Education Threaten Quality and Affordability at Public
    Colleges. Washington, DC: Center on Budget and Policy Priorities.
        \7\  Walizer, L. 2015. Barriers to Success: High Unmet Financial
    Need Continues to Endanger Higher Education Opportunities for Low-
    Income Students. Washington, DC: CLASP, Center for Postsecondary and
    Economic Success.
    ---------------------------------------------------------------------------
        When funding isn't enough, it's not the institution that gets
    short-changed, but the student. In order to enroll, direct costs are
    paid first, whereas indirect expenses go unmet. Today, the majority of
    U.S. college students live off-campus, attend 2-year schools and 47
    percent are financially independent. \8\ When advising students we
    consistently see that indirect expenses are not adequately estimated
    nor accounted for in financial aid determinations. This puts students
    at risk for meeting educational expenses and even sometimes basic
    needs. Our students share stories of being increasingly forced to make
    choices between books and food. This mirrors recent research that
    documents trend of food & housing insecurity across community colleges
    citing one-third of students regularly go hungry and 14 percent are
    homeless. \9\ When students struggle to afford basic needs while in
    college, information and access to public benefits can make a big
    difference--to get by and get through. Advisors share the relief they
    feel when students are at colleges with dedicated offices to support
    benefits access such as SNAP and transportation passes. Given the
    complexities of applying, more innovative government partnerships are
    needed to support coordination & administration of benefits to our most
    vulnerable, and increasingly most common college students.
    ---------------------------------------------------------------------------
        \8\  ``Today's Student Statistics'' 2018 Retrieved from https://
    www.luminafoundation.org/todays-student-statistics.
        \9\  Goldrick-Rab, S., Richardson, J., & Hernandez, A. Hungry and
    Homeless in College: Results from a National Study of Basic Needs
    Insecurity in Higher Education. Wisconsin HOPE Lab. (2017).
    ---------------------------------------------------------------------------
        For today's typical college student, working while in school is a
    must. Our advising experience, as well as numerous research shows that
    students with work-study do better in school by GPA and rates of degree
    completion. Federal Work-Study provides a strong return on investment
    on both the individual and Federal levels. Specifically, community
    college students' who participate in Federal Work-Study demonstrate a
    12-15 percent increase in persistence to their second year \10\ Due to
    the antiquated formula of FWS allocation biasing historical
    participation versus a needs-based analysis, students at community
    colleges face a dearth of available work-study positions. As a result,
    the need to work draws them to off campus employment--decreasing
    flexibility and increasing potential disconnectedness. As a result they
    spend even more time with employers disconnected from their college
    pursuits and needs.
    ---------------------------------------------------------------------------
        \10\  Poison, C., and Weisburst, E., 2014. Work-Study Financial Aid
    and Student Outcomes: Evidence from Community Colleges in Texas.
    Austin, TX: Department of Economics, University of Texas Austin.
    ---------------------------------------------------------------------------
        Financial implications of academic decisions present as another
    hurdle for postsecondary students; credit and GPA requirements tied to
    financial aid are incredibly complex & hard to grasp. Within our
    advising program, students often run into financial barriers via
    academic decisions, from using time-bound Pell for development courses
    to losing aid eligibility if not meeting Satisfactory Academic Progress
    (SAP) standards. Research from Judith Scott-Clayton and Lauren Schudde
    of Teacher's College at Columbia University demonstrates this point.
    According to Schudde, ``Meeting SAP is a non-trivial hurdle for many
    students: a quarter of first year Pell recipients at public
    institutions have GPAs low enough to place them at risk of
    ineligibility, representing hundreds of thousands to over a million
    college entrants each year.'' \11\ Students receiving need-based aid
    who do not meet SAP after the first year lose their access to the
    dollars that level the playing field for them. Their full-pay student
    counterparts usually have until graduation to meet the same GPA
    requirements. The concept of SAP is not articulated to students
    clearly, yet even when students grasp the concept, most institutions'
    SAP policies tend to be obscure and complex even for college academic
    advisors, making it easy for students to miscalculate (credits
    accumulated/credits attempted) and lose track. Last year, over one-
    third of our advising sessions with students centered around SAP, often
    spent educating and calculating so students would be aware of their
    status in the future.
    ---------------------------------------------------------------------------
        \11\  Schudde, L. and Scott-Clayton, J.(2014) Pell Grants as
    Performance-Based Aid? An Examination of Satisfactory Academic Progress
    Requirements in the Nation's Largest Need-Based Aid Program. CAPSEE
    http://ccrc.tc.columbia.edu/media/k2/attachments/pell-grants-
    asperformance-based-aid.pdf.
    ---------------------------------------------------------------------------
        Trellis (formerly TG) conducted extensive user-research on loan
    counseling that uAspire used to redesign how we counsel our college
    attendees. Core tenets of effective loan counseling were identified to
    be timely, personal, and interactive. \12\ Instead of offering all
    students the same advising, we offer annual loan counseling with
    personal real-time data from their award letter and National Student
    Loan Data System (NSLDS) account. We coach students to map out
    anticipated expenses and plan the best way to apply their aid, earnings
    and family support, to meet their needs. Students resist these
    sessions, they don't want to talk about it and face an accumulating
    debt that they don't know how they will repay. We have found annual
    loan review normalizes the relationship with borrowing and standardizes
    loan review behavior that is critical for the long-term. Given Federal
    Government only requires entrance and exit loan counseling, we provide
    the support in between. We believe all student loan borrowers, not just
    ours, need personalized and interactive loan counseling--looking at
    their debt total--on an annual basis timed to inform decisions about
    borrowing each year. Technology and data integration can lead the way
    so that scale can be reached.
    ---------------------------------------------------------------------------
        \12\  Fernandez, C., Fletcher, C., Klepfer, K., & Webster, J.
    (2015). A Time to Every Purpose: Understanding and improving the
    borrower experience with online student loan entrance counseling. TG
    Research. Retrieved from: http://www.tgslc.org/research/.
    ---------------------------------------------------------------------------
        Addressing insufficient loan counseling is also critical given the
    steady rise of delinquency and default. And the ultimate price for
    overcoming these obstacles is often more daunting for students of
    color. Although default rates are on the rise overall, recent research
    by Dr. Judith Scott-Clayton shows that ``Black B.A. graduates default
    at five times the rate of white B.A. graduates (21 percent to 4
    percent),'' and this disparity almost doubles for attendees of for-
    profit institutions (23 percent to 43 percent for the 1996 cohort
    compared to the 2004 cohort). \13\
    ---------------------------------------------------------------------------
        \13\  Scott-Clayton, J. (January 11, 2018). The looming student
    loan default crisis is worse than we thought. Retrieved from https://
    www.brookings.edu/research/the-looming-student-loan-default-crisis-is-
    worse-than-we-thought/.
    ---------------------------------------------------------------------------
                            Postsecondary Proposals:
        Based on our experience and learnings from the field, we suggest
    the following proposals to improve the current system for students and
    families while attending college:
              Maintain aid levels for Pell-grant students tied to
            inflation to cover growing costs.
              Increase Pell Grant dollars as students progress to
            incentivize completion and help meet increased costs per year.
              Align interagency data and services to offer
            postsecondary students access to SNAP food stamps and other
            public benefits for which they qualify.
              Adjust Federal Work-Study formula to ensure it is
            going to students who need it most and increase investment to
            reach more students.
        Simplify and increase clarity of Satisfactory Academic Progress
    (SAP) requirements. Ensure requirements are equitable and not more
    stringent that those for full-pay students.

              Change Federal loan counseling requirement from
            entrance and exit-only, to annual.
                                   CONCLUSION
        Mr. Chairman, Ranking Member Murray and Members of the Committee,
    we appreciate the opportunity to contribute to this important dialog on
    financial aid simplification and transparency. We greatly value this
    series of hearings and urge the Committee to address these issues in a
    holistic manner and focusing across the full lifecycle of a
    postsecondary student, from making an affordable college choice,
    eliminating barriers during the transition to college and ensuring that
    students have access to clear information to ensure they maintain aid
    and stay on a path toward their degree while enrolled in school.
        We believe that financial aid simplification matters, but know it
    won't solve the college affordability issue alone. While these efforts
    do not directly address the much-discussed cost barrier, they will make
    a real and measurable impact on the lives of students across this
    country. Streamlining systems to reduce bureaucratic inefficiencies and
    removing additional barriers for students to navigate will make the
    pathway to a college degree easier for many Americans. Our students can
    focus their efforts on making financially informed decisions rather
    wasting time and frustration navigating confusing terms, unnecessary
    processes. Our counselors and financial aid administrators can spend
    more time advising students on key decisions related to their
    postsecondary education, instead of having to devote valuable time
    bogged down navigating bureaucratic inefficiencies.
        Our goal as an organization is to help more Americans earn a
    college degree with less debt. uAspire believes that the proposals we
    have shared to simplify financial aid practices and increase
    transparency for students, families and practitioners will contribute
    greatly toward reaching that goal. We look forward to working
    collaboratively with government, K-12 and higher education systems and
    others in our field toward pursuing these cost-effective changes which
    will bring a college degree within greater reach for all Americans who
    wish to pursue one.
        Thank you.
                                    APPENDIX
        Appendix A: Award Letters: Three Examples
        Appendix B: Award Letter Format Cases

        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                       [summary statement of laura keane]
        uAspire is a national nonprofit hyper-focused on college
    affordability and working with students directly. Last year, we
    assisted over 10,000 students in MA and CA, virtually advised another
    15,000 students in 7 states and trained 2,100 counselors serving
    350,000 students in 27 states. On a policy level, we utilize our
    experiences with students to make financial aid systems more equitable,
    efficient, and effective.
        Lack of clear and consistent information combined with complicated
    systems disempowers students and families to be smart consumers in the
    higher ed market and to make financially informed decisions. My goal
    today is two-fold: to share the common challenges students face as they
    navigate financial aid and offer proposals from the front-line that we
    think can help. I will review three phases of the student experience in
    the financial aid process: (1) choosing an affordable college; (2)
    transitioning to college; and (3) attending college.

              (1) Students confront a detrimental lack of
            information and transparency when making one of the biggest
            financial decisions of their lives. In reviewing 515 financial
            aid award letters received by Pell-eligible students, we
            identified significant barriers to making an informed and
            affordable college choice, including inconsistent/inaccurate
            terminology, missing cost information, and problematic
            formatting practices that mislead consumers.
              (2) As students move from high school to college,
            they cross the ``no-man's land'' between the systems of K-12
            and higher education and have reduced access to adequate
            guidance. At the same time, students must complete a number of
            required financial tasks alone before they can transition to
            college, including securing education loans and paying their
            college bill. This contributes to the phenomenon known as
            summer melt, by which college-ready, college-intending students
            fail to successfully enroll in college in the fall following
            high school graduation. Students who wind up ensnared in the
            labyrinth of summertime pre-matriculations steps are casualties
            of this systemic failure that constrains our labor market and
            limits our tax base.
              (3) College affordability is often misconstrued as
            the money it takes to start college, not how much it costs to
            finish. We have become deeply concerned that while college
            enrollment is up, college completion is not. We see students
            leave college without a degree, simply because they cannot
            afford to stay. For our students, it is a consistent story of
            ``not enough.'' Not enough financial aid to cover the reality
            of their indirect expenses. Not enough time to navigate
            loopholes and potholes to access aid they qualify for. Not
            enough opportunities via Federal Work-Study. And, not enough
            loan counseling to make informed financial decisions each year.

        Based on our experience and learnings from the field, we offer the
    following proposals to improve the current system for students and
    families:

              Choosing an Affordable College: Conduct consumer
            testing with a multi-stakeholder group to identify a required
            set of defined terms and formatting practices for all financial
            aid award letters. Require standard terms with federally
            defined, student-friendly definitions on the award letter: Cost
            of Attendance; Direct Cost; Indirect Expenses; Gift Aid; Loans;
            Net Costs; Estimated Bill; and Work-study. Require 5 formatting
            practices.

              Transitioning to College: Simplify FAFSA and
            verification to yield much needed college-level counseling
            capacity in the summer to deliver increased student advising of
            financial steps for enrollment. Identify ways that Master
            Promissory Note requirement could also educate students about
            borrowing terms, concepts and responsibilities. Require
            estimated bill to be on award letter notifications so students
            and families can financially plan. Assign Federal Student Aid
            responsibility to systematically communicate with all students
            on the key financial steps to matriculation. Task Federal
            Student aid to deliver financial aid information and supports
            via mobile app or text and improve customer service for
            supports therein.

              Attending College: Maintain aid levels for Pell-grant
            students tied to inflation to cover growing costs. Increase
            Pell Grant dollars as students progress to incentivize
            completion and help meet increased costs per year. Align
            interagency data and services to offer postsecondary students
            access to SNAP food stamps and other public benefits for which
            they qualify. Adjust Federal Work-Study formula to ensure it is
            going to students who need it most and increase investment to
            reach more students. Simplify and increase clarity of
            Satisfactory Academic Progress (SAP) requirements. Ensure
            requirements are equitable and not more stringent that those
            for full-pay students. Change Federal loan counseling
            requirement from entrance and exit-only, to annual.

        Our goal as an organization is to help more Americans earn a
    college degree with less debt. uAspire believes that the proposals we
    have shared to simplify financial aid practices and increase
    transparency for students, families and practitioners will contribute
    greatly toward reaching that goal.
                                     ______

        The Chairman. Thank you, Ms. Keane.
        Dr. Lowery-Hart, welcome.

    STATEMENT OF RUSSELL LOWERY-HART, PRESIDENT, AMARILLO COLLEGE,
                            AMARILLO, TEXAS

        Dr. Lowery-Hart. Chairman, Ranking Member Murray, and
    honorable Senators, it is a pleasure to sit before you today.
        I grew up in a small town in West Texas on a farm, never
    imagined myself sitting here advocating for community college
    students. But I come here as a small business owner worried
    about economic development turned educator and a community
    leader turned community college student advocate. I know that
    the future of our country, at least the part that I live in, is
    uncertain. With automation, robotics, biogenetics, the future
    of work in our economy is shifting, and I am worried that our
    students in our communities aren't prepared. But I know that
    the solution is education and job training.
        I also know that our future rests in the hands of a rather
    remarkable student. At Amarillo College, we call her Maria. She
    is the typical student in higher education in this country
    today. She is 26. She is a mother. She is a volunteer in her
    church and her student organizations, and she is working two
    jobs and going to school.
        Maria is dramatically different from the traditional
    student of the past. She is often the first in her family to go
    to college. She has kids or has to support her family. And she
    is working two jobs, minimum wage, 38 hours a week, often a
    graveyard shift, and she still has to turn to financial aid not
    only for her tuition and her books, but to make sure that she
    can meet her basic living expenses.
        Community college is far from free. The price is still a
    driver for dropouts. In Texas, community college students
    borrow on average $16,000 on top of work to finish their
    certifications and degrees. Even with full Pell and maximizing
    her loans and working two jobs, Maria cannot afford school. But
    she is amazing. Our country's future rests in her capable
    hands. She just needs your support and our support and help.
        Our economy depends on Maria in every community in this
    country to complete her degree. Economist Edward Glaeser wrote
    a book called Triumph of the City, where he looked at cities
    that exceeded and cities that failed. The common denominator
    was human capital and education attainment. His prediction for
    the future is that for every 10 percent we increase education
    attainment, we get a 22 percent increase in GDP. But we need
    financial aid to help Maria and students like her in all forms
    to ensure that our economy can grow.
        We need financial aid because it helps Maria focus on and
    complete her degree. It not only helps Maria, it helps her
    family and her kids. And the data that we have, including my
    own data where I have used my students as secret shoppers to
    test my own college's work, shows that the process of financial
    aid is confusing, frustrating, and even fear-inducing.
        So Maria and her communities across this country need a
    simplified FAFSA application process. They need a curtailed
    verification process. They need increases in maximum Pell
    awards. They need increased funding and greater alignment
    between students and specialized programs for food, housing,
    childcare, and transportation.
        In my own school, this past fall, 1,400 of my 10,000
    students who are going to school and working and raising a
    family, and volunteering in our community, needed the use of
    our food pantry. Students are working hard. They are doing what
    we ask them to do. We just have to give them more support to
    help them do it.
        So thank you for your leadership. My community, the place
    that I am raising my own family, and my students need you. But
    more importantly, you and your communities need my students.
        Thank you.
        [The prepared statement of Dr. Lowery-Hart follows:]
                   prepared statement of russell lowery-hart
        Students attending Amarillo College, and community colleges across
    the country, define the future of our country, and its capacity for
    economic growth and prosperity in a global society. Today's community
    college student is dramatically different from the ``traditional''
    college student of the past. She is often the first in her family to
    attend college, has children or supports other family members, work
    multiple jobs for minimum wage and frequently during the graveyard
    shift, and yet still has to turn to financial aid not only for tuition
    and books but also to cover basic living expenses. But community
    college is far from free--the price is still a driver of dropout. In
    Texas, community college students must borrow $16,000, often on top of
    working, to finish their degrees.

        Financial Aid Increases Education Attainment and Economic Growth

              Financial aid increases degree completion rates;
            without it more students would drop out of college.
              Economic growth is directly linked to education
            attainment in urban and rural communities: only 30 percent of
            citizens have any post-secondary credential, putting the
            economy at risk, and for every 10 percent increase in education
            attainment, GDP increases 22 percent.

        Shifting Student Demographics Make Financial Aid More Important

              The typical student at Amarillo College is a 27-year
            old Hispanic mother who is a first-generation student going to
            college part-time while working two jobs.
              In Texas, 54 percent of all college students are
            enrolled in a community college. And, 35 percent of Bachelor's
            degree graduates transferred to a Texas university from a
            community college. 60 percent of Amarillo College students
            leverage Pell grants, student loans and scholarships to
            succeed.

        Financial Aid Addresses Barriers to Student Success

              Funds from financial aid help keep students focused
            on school rather than work.
              Financial aid not only helps parents in college but
            also their children.
              But data--including from ``secret shoppers'' reveals
            that financial aid's ineffective processes, regulations, and
            bureaucracy make it hard to get the dollars and create
            confusion, frustration, and even fear for students.

        Fixes for Financial Aid

              1. Simplify the FAFSA application process to obtain
            aid and curtail the Verification process.
              2. Increase the maximum Pell grant award by an
            additional $4,500 per year. Current Pell awards fund less than
            50 percent of today's real higher education costs.
              3. Increase funding for specialized programs that
            assist college students with housing, food, childcare, and
            transportation needs.

        The students attending Amarillo College, and community colleges
    across the country, define the future of our country. I want to
    introduce you to this important student because her future impacts your
    own. We call her ``Maria.'' She is smart, determined, hardworking,
    church-going mother and she is dramatically different than the typical
    higher education students from the past century.
        Maria faces significant barriers to success, including a
    bewildering financial aid process. She needs you to truly see and
    understand her. Mostly, Maria, and the communities in which she
    resides, need you to advocate for her as if our country's future
    depends on her success--because it does.

        Financial Aid Increases Education Attainment and Economic Growth

        The education attainment for students like Maria will determine
    which of our communities flourish or perish. When Maria is successful,
    we are all successful. In fact, ``As the share of the population with
    college degrees increases by 10 percent, per capita gross metropolitan
    product rises by 22 percent'' according to economist Edward Glaeser
    (2011, p. 27). To grow our economy, we must grow the education
    attainment of our citizens. Yet, only 30 percent of our country hold
    any postsecondary education credential or degree (U.S. Census). Our
    country is becoming less educated and less capable. This educational
    crisis will have a lasting, generational impact on our country.
        In 1973, Senator Claiborne Pell and his colleagues understood that
    our economy would depend on an educated middle class. The Pell Grant
    fundamentally created the world's largest middle class (Goldrick-Rab,
    2016.) Almost 50 years later, with economic inequality on the rise, and
    low-income and middle-class Americans under pressure, this generation
    must meet the challenge of making one of the best ways out of poverty
    and into the middle-class--a college education--affordable for all''
    (Goldrick-Rab, 2016, p. 260.)
        We triumph as a country when we advocate for Maria's college
    education by understanding and adapting to her. When we make Maria the
    focus of our processes, policies, and partnership, our country and
    economy wins. In fact, students who complete an Associate's degree are
    more employable. The unemployment data for citizens with an Associate's
    degree is a full 4 percent lower than those with a high school diploma
    These same students make, on average, $42,600 a year--a living wage in
    almost every community in the country (Data Points, 2017). These
    students move from poverty to self-sufficiency.
        Federal Financial Aid is the single greater contributor to moving
    students out of dependence and into a robust economic contributor. With
    an economy on the verge of changing through automation, robotics, and
    biogenetics, our communities and this country will suffer severe
    economic consequences if we are not able to guide more students through
    completion of a degree. Currently, 72 percent of all students in higher
    education require financial Aid (Data Points, 2017.) If we cannot
    simplify these financial aid systems for a more effective interface,
    Maria will more likely be sitting on the sidelines needing more
    government assistance, when she desperately wants to earn a living
    wage.
        At Amarillo College, we have adopted a No Excuses philosophy in
    serving Maria and the thousands of students just like her. We know that
    if we cannot dramatically shift our effectiveness in ensuring more
    students finish what they start, our Texas Panhandle will suffer
    serious, long-term harm.
        Amarillo College was the first higher education institution in the
    country to implement the No Excuses University philosophical framework
    developed by Damen Lopez's Turn Around Schools organization (see http:/
    /noexcusesu.com/about/). The framework has prompted college leadership,
    faculty, and staff to take responsibility for the whole student by
    setting high expectations and assisting students in reaching these
    expectations. When our students are not successful, we explore the
    reasons for their lack of success; but WE, Amarillo College, ultimately
    bear the responsibility for having the right people, processes, or
    policies in place to support our students. As a college, we have No
    Excuses for student failure.

        As the Amarillo College president, I am ultimately responsible for
    ensuring excuses do not derail our ability to more creatively,
    effectively, and efficiently serve our students and community. I am not
    asking our Federal Financial Aid systems to improve without a deep
    understanding and commitment that my college and all higher education
    institutions must also take responsibility. We need innovation
    throughout the higher education sector with business and industry
    guiding us and the U.S. Federal Government as a full, faithful partner.
    Our country's economic future depends on our ability to ensure more of
    our neighbors obtain a post-secondary credential. Together, we will
    improve all of our systems. This innovation and improvement starts with
    understanding who our students really are and what they need from us.

        Shifting Student Demographics Make Financial Aid More Important

        As president for Amarillo College, I implore my colleagues to serve
    the student we have, rather than the student we thought, or wished, we
    had enrolled. Maria is the student we have. She is capable of
    shouldering our Nation's future. Yet, Maria is often ignored or
    dismissed. Much of the political attention and funding center on the
    traditional, 18-year-old university freshman. The reality is our higher
    education student landscape looks dramatically different.
        Community colleges serve nearly every square inch of the country.
    Community colleges serve as the job training center of a region as well
    as open the door to the higher education pipeline for most individuals
    to attend a university. Community colleges are critical to the health
    and wealth of the United States. Public 2-year community colleges
    enrolled 51 percent of all undergraduate students attending a public
    higher education institution in 2015-2016 (Ginger, Kelly Reid, & Mann,
    2017). Per the 2017 Texas Higher Education Coordinating Board Almanac,
    54 percent of Texas higher education students are enrolled in community
    colleges. Moreover, 75 percent of Texas bachelor's degree earners in
    2015-2016 attended a community college Nationally, 49 percent of all
    students who completed a Bachelor's degree attended a community college
    (Snapshot Report, 2017).
        Realizing today's college students either attend or did attend a
    community college is critical to understanding the challenges these
    students face in higher education. Today's college student looks like
    Maria, a 27-year old Hispanic mother who is a first-generation student
    going to college part-time while working two jobs. Today's students IS
    Maria. And, Maria is remarkable. She demands our attention. She
    deserves our support. Maria holds the future of America's economic
    growth and prosperity in her hands.

    ----------------------------------------------------------------------------------------------------------------
             Table 1: Community College Student Profile               Amarillo College               Nation
    ----------------------------------------------------------------------------------------------------------------
    Full-Time Enrollment                                         40%                        38%
    ----------------------------------------------------------------------------------------------------------------
    Receive Financial Aid (PELL, Student Loans, Scholarships)    60%                        58%
    ----------------------------------------------------------------------------------------------------------------
    Transfer-Focus                                               51%                        59%
    ----------------------------------------------------------------------------------------------------------------
    First-Generation                                             71%                        36%
    ----------------------------------------------------------------------------------------------------------------
    Female                                                       65%                        56%
    ----------------------------------------------------------------------------------------------------------------
    Minority                                                     54%                        52%
    ----------------------------------------------------------------------------------------------------------------
    Average Age                                                  27                         28
    ----------------------------------------------------------------------------------------------------------------
    Data Sources: Amarillo College Report Card, 2017; American Association of Community Colleges Fast Facts, 2017

        As a college president, I spend a great deal of time talking with
    our students. I am desperate to understand the ambitions and challenges
    of our students, our Maria. Maria works hard and struggles to
    experience the fruits of her labor. ``Today, the promise of a college
    degree in exchange for hard work and dedication no longer holds true''
    (Goldrick-Rab, 2016, p.1). Instead, Maria is drowning in bureaucracies
    and processes designed for a different type of student.
        Per the Wisconsin HOPE Lab, ``the FAFSA represents a significant
    hurdle that students from many families must overcome in order to
    attend and pay for college. Research indicates that the complexity of
    the application and the difficulty of the process involved in
    completing it may prevent some students from obtaining financial aid.''
    This same report declares 28 percent of community college students
    spent between one to 3 hours completing the FAFSA, not the 20-minutes
    touted by the U.S. Department of Education. Six-percent of community
    college students spent over 3 hours completing the form.
        Maria also faces a cost to college not captured in our laws and
    regulations. Our national and State financial aid bureaucratic
    requirements unintentionally extend Maria's time to degree--if she can
    afford the degree at all. The percent of students receiving aid
    increased from 70 percent to 77 percent between 2009-2010 and 2014-2015
    (U.S. Department of Education, 2017). The student need is growing and
    my rural community's economic future rests in our ability to leverage
    financial aid to ensure students complete a degree and find a job
    paying a living wage.

        Financial Aid Addresses Barriers to Student Success

        At Amarillo College, we have restructured our entire college around
    Maria's needs and removing the barriers to her success. As a first-time
    college president, I wanted to truly understand the student experience
    with Amarillo College. I hired two dozen first-time students to
    secretly experience the entire college on boarding process and give me
    feedback on what worked and what became a barrier. What I learned from
    these students changed who I am professionally and personally. After
    listening to student voices for months, three major barriers to student
    success emerged.
       Barrier One: First-Generation students feel isolated and fearful.
        From the parking lot to the graduation stage, first-generation
    students are afraid they do not belong in higher education. Their
    initial experience with higher education is with confusing forms and
    unfamiliar language. Many of these secret shoppers felt they were the
    only student who did not understand how to navigate through the higher
    education processes. Much of higher education processes are built with
    an erroneous expectation that students and their families bring
    ``culture capital'' to any college interaction (Ward, Siegel, &
    Davenport, 2012).
        Traditionally, families who experienced college themselves, help
    their students navigate college admission, enrollment, finances, and
    social connections. For first-generation students, the lack of cultural
    capital leaves students with little familial and social support.
    Because these students do not have a cultural sense of what behaviors
    and choices lead to classroom and social success, they often experience
    lower academic achievement and lower degree attainment.
        My first-generation ``secret shoppers'' are 71 percent of the
    entire student body for Amarillo College. They often thought they were
    the only students unable to find a class, understand written
    instructions for financial aid applications, or anxious when
    interacting with faculty. As such, these students often felt
    embarrassed, insecure, and alone.
        For Amarillo College, the most powerful No Excuses impact on our
    students is two-fold: culture shift and relationship. I asked our
    students to tell what their ``ideal'' college looked and felt like.
    Their responses were insightful. Because they are first-generation
    students they wanted a college that served them with the effectiveness
    of some of our country's greatest companies. These students needed
    responsive, honoring customer service.
        As a college, we knew we needed to embrace a culture of good
    service and intense caring. We looked at the values of companies known
    for great service. We asked students to review the list of values from
    a dozen companies (some local and some national.) Our students
    identified college values that focused on understanding the first-
    generation college student experience and responding with a culture of
    caring and service. The new Amarillo College Values our students chose
    were not typical ``higher education'' lingo: Caring through WOW,
    Innovation, Family, Fun and Yes.
        These values are written into every employee job description and
    merit pay evaluation. The first week of classes, we put these values on
    significant display by placing employees all over our campuses--from
    parking lots to classrooms--to ensure students have someone to walk
    them to their class, take them to the bookstore, guide them through
    advising, and serve them as if our community's future depended on it.
    Our most at-risk students receive a ``coach'' to support them through
    their first year in college.
        The No Excuses Culture of Caring values and relationships are
    working. Our college retention and completion rates are improving
    dramatically because we listened to our students and looked to our
    business partners for best practices. Our Federal Financial Aid systems
    would be well served to take the same approach to service,
    effectiveness, and efficiency.
            Barrier Two: Student poverty derails educational dreams.
        As a good, strong ``academic,'' I thought the greatest barriers to
    student success were poor academic preparation and study skills. I was
    wrong. In talking with my secret shoppers (and subsequently hundreds of
    other Amarillo College students,) the Top 10 barriers to student
    success in the classroom had nothing to do with the classroom. The most
    powerful and debilitating barrier to success in the classroom for our
    students is poverty related issues with transportation, childcare,
    food, housing, healthcare, utilities, and legal services. Good will and
    caring was not enough to help Maria succeed. She, like many of her
    peers, live in the war zone of generational poverty (Beegle, 2007).
        According the 2014 U.S. Census report Dynamics of Economic Well-
    Being, 32 percent of the U.S. population lives in poverty for at least
    2 months annually. ``When students cannot cover their living expenses
    through financial aid or other benefits, they often compensate in ways
    that make them less likely to graduate'' (PD&R Edge, 2015, p. 1). When
    Maria cannot cover her living and educational experiences, she tries to
    pick up extra shifts from her current two jobs and avoids not
    purchasing course supplies and textbooks. When students like Maria face
    these difficult choices, they are much more likely to drop out, default
    on their loans, and never complete a degree (Goldrick-Rab, 2016.) When
    Maria has a sick child, her car breaks down, or her employer changes
    her shift times, she is often trapped between her educational goals and
    meeting her basic needs. Our current financial aid system is not
    helping Maria find her path forward and achieve educational success.
        No Excuses opened the door for us to recognize that our
    preconceived notions did not match reality. In the past, we held a
    narrow view of our students, believing that their college experiences
    were similar to our own. We did not see poverty as an issue demanding
    action. Yet we came to see that fulfilling the college's mission--which
    focuses on changing lives, educating students, meeting industry needs,
    and serving the community--requires us to fully understand our students
    and the barriers they face. Our students were working two jobs and
    still struggling to pay their bills.
        With intentional community partnerships, Amarillo College developed
    a robust social-services system to ensure students are able to finish
    the education they start. With food pantries, clothing closets, case-
    management systems and direct connections to social service-providers,
    Amarillo College connects students to resources and emergency aid. If
    Maria's child needs health care or Maria's car needs repairs she could
    not afford it, she would drop out of school and take a third job or
    work an additional shift. She focuses on meeting her immediate needs
    rather than fulfilling her long-term educational and career goals.
        With intense community support and college employee buy-in, we have
    a system that removes life barriers when our students have no other
    options. Maria stays in school and defeats poverty by completing her
    degree. In Fall 2017, our social services system connected over 1,400
    students (15 percent of our entire student body) to services in one
    semester. The needs our students bring to campus can be overwhelming.
    As a No Excuses college, we can understand their poverty, but we cannot
    use it as an excuse. We see, every day, where greater financial aid and
    a more simplified, user-friendly interface, would ensure more students
    completed degrees.
       Barrier Three: Financial aid does not cover educational costs and
                                living expenses
        I was stunned when my Amarillo College students explained how they
    managed their finances. Many students did not need ``financial
    literacy''--these students are well equipped to make a dollar stretch
    well beyond expectations.
        The Federal Financial Aid system leverages grants and loans to
    assist students. Yet, even with two jobs, students are unable to afford
    the cost of college. In 1979, Pell grants covered 99 percent of all
    community college costs. By 2014, Pell grants only covered 52 percent
    of college costs (Data Points, 2016). For Maria, and those like her,
    parents are unable to contribute to her education. In some cases, my
    own Amarillo College students reported their obligations to help
    support their parents and siblings. The reality of our student lived
    experience is not covered by the financial aid grants and loans
    available.

    ----------------------------------------------------------------------------------------------------------------
              Typical Amarillo College Student Budget                      Income                    Expense
    ----------------------------------------------------------------------------------------------------------------
    Pell Award                                                   $6,000.00                  ........................
    ----------------------------------------------------------------------------------------------------------------
    Financial Aid Loans--Reduced due to Pell Award               $8,914.00                  ........................
    ----------------------------------------------------------------------------------------------------------------
    Part-Time Job #1 -19 hours at $7.25/hour                     $6,612.00                  ........................
    ----------------------------------------------------------------------------------------------------------------
    Part-Time Job #2 -19 hours at $7.25/hour                     $6,612.00                  ........................
    ----------------------------------------------------------------------------------------------------------------
    Tuition & Fees--Fall                                         .........................  $ (1,335.00)
    ----------------------------------------------------------------------------------------------------------------
    Tuition & Fees--Spring                                       .........................  $ (1,335.00)
    ----------------------------------------------------------------------------------------------------------------
    Tuition & Fees--Summer                                       .........................  $ (534.00)
    ----------------------------------------------------------------------------------------------------------------
    Books--Fall                                                  .........................  $ (836.00)
    ----------------------------------------------------------------------------------------------------------------
    Books--Spring                                                .........................  $ (836.00)
    ----------------------------------------------------------------------------------------------------------------
    Books--Summer                                                .........................  $ (335.00)
    ----------------------------------------------------------------------------------------------------------------
    12-Months Rent--$781 per month                               .........................  $ (9,372.00)
    ----------------------------------------------------------------------------------------------------------------
    12-Months Utilities--$150 per month                          .........................  $ (1,800.00)
    ----------------------------------------------------------------------------------------------------------------
    12-Months Food--$550 per month                               .........................  $ (6,600.00)
    ----------------------------------------------------------------------------------------------------------------
    12-Months Childcare--$600 per month                          .........................  $ (7,200.00)
    ----------------------------------------------------------------------------------------------------------------
    12-Months Transportation--$250 per month for gasoline        .........................  $ (3,000.00)
    ----------------------------------------------------------------------------------------------------------------
    Totals                                                       $28,138.00                 $ (30,183.00)
    ----------------------------------------------------------------------------------------------------------------
    Net Income                                                   $ (2,045.00)               ........................
    ----------------------------------------------------------------------------------------------------------------

        Maria is full Pell eligible. Even with two part-time jobs at 38
    hours a week, Maria must take out a loan for her education. After
    securing Pell grants and student loans, Maria is STILL unable to pay
    for her living expenses and college. What my secret shoppers helped me
    understand, as a college president, is their ``budgets'' are built on
    smoke and mirrors.
        For the budget in Table 2 to work, Maria will have to go hungry on
    some days, forgo some books for classes, potentially drop a course and
    prolong her time-to-degree, and ration her transportation. Maria must
    hope and pray her child does not get sick, her car does not break down,
    gas prices do not surge, and cross her fingers that her utilities and
    rent do not increase.
        This is not a sustainable model for education attainment. The
    financial barriers of life do not prioritize the completion of a
    degree.
        At Amarillo College, we know we must accelerate Maria's time-to-
    degree and hold costs down for her. The longer Maria takes to complete
    her degree, the more costly it becomes and the less likely she is to
    graduate. With an intentional system to graduate every student in 3
    years, Amarillo College innovatively accelerates Maria's learning. By
    transitioning over 80 percent of our classes to an accelerated, 8-week
    format, Maria is not only completing her degree on time, she is
    learning more in the process. Maria was taking, on average, 6 hours a
    semester, 12 hours a year. Best case scenario, Maria would graduate in
    5 years. Most students at Amarillo College were taking over 6 years to
    complete--if they completed at all.
        Our data indicates that the overwhelming majority of our students
    dropped out of school in weeks 10 to 12 as their ``life'' barriers
    became too much to bear. They cannot see the finish line to completion
    and drop out to take additional work and meet their immediate needs.
    Our social services combined with a transition to 8-week learning model
    changed everything about our student success. (Please see Amarillo
    College Report Card, pages 17-18.)
        Now, Maria is able to take 6 hours each Fall Term I and II and 6
    hours each Spring Term I and II. By doing so, Maria has become a full-
    time student, taking 12 hours over a ``semester.'' She is in her 8-week
    class the same number of hours as the traditional course. She just goes
    to class every day of the week. Not only is Maria accelerating her
    time-to-degree. She is learning. Students in our 8-week classes
    increased their course success rates by over 12 percent compared to the
    traditional class. When our first-generation, poverty-ridden students
    can see the finish line, their hope carries them to success.
     Barrier Four: Long-term planning is often derailed for short sighted
                                    reasons
        Students, especially those living in the war zone of poverty, are
    all too adept at financial effectiveness. Their poverty is not because
    of poor financial planning skills. Their poverty is because of too
    little resources (Beegle, 2007). Generational poverty, however, does
    teach the need to solve the immediate need rather than plan for long-
    term success (Beegle, 2007). The loans available to students are
    critical to ensuring education is a possibility. Many of our students
    are debt adverse and avoid loans--even when they would be the best
    option. We need more robust loans for students, but wrapped in fewer,
    easier to understand options.
        At Amarillo College, our Money Management Center is dedicated to
    counseling students about their loan options. Yet, we often do not have
    enough time or resources to more carefully guide students through a
    long-term financial planning process. One of our students helped me
    understand how desperately we need easier to understand financial aid
    information.
        ``Harrold'' worked for a large, national retail/grocery box store.
    They offered Harrold a 29 hour a week job as an assistant manager
    making $12 an hour. He excitedly told his family. They begged him to
    take the job and drop out of Amarillo College. He attempted to drop. No
    Excuses prevented this attempt. Through money management counseling,
    Harrold told us that if he worked as the Assistant Manager for 2 years,
    he could be promoted to Manager and make $15 an hour and potentially
    receive benefits. When counseling a student whose family has been mired
    in generational poverty, the promise of benefits and $15 an hour is too
    great an offer to turn down. Yet, Harrold was 18 months from completing
    a degree in computer science. When he successfully completed his
    degree, he could start in a job, with benefits, at $35 an hour.
        We had to help Harrold understand that he was sacrificing long-term
    success for a short-term fix. We literally had to map out his financial
    future on paper and show him what his financial future would look like
    if he dropped out of school and if he stayed and graduated.
        Harrold was excited and frightened. He knew the raise and promotion
    in his current position would help his family. He had not considered,
    if he stayed the course, he could actually be costing his family
    financial freedom long term. With his new reality, Harrold started
    crying and asked one question: ``Would you come with me and explain
    this to my family?''
        We are not just educating a student. We are charting a path for
    entire families. Greater financial information about potential jobs and
    what they would pay is critical the helping students stay in school,
    focus on developing their skills and planning for their careers. When
    you are hungry, lack of transportation and access to healthcare,
    talking about careers a few years down the road can seem frivolous and
    silly.
        If we remove these four barriers to our students' success, and
    Amarillo College is making strides, we can ensure a robust economy for
    everyone--especially for rural communities in the ``fly over'' regions
    like the Texas Panhandle. We need the U.S. Department of Education and
    Federal Financial Aid as partner on this journey. Maria and Harrold's
    futures hold in the balance.
           How Students Experiences the Federal Financial Aid Process
        For Maria, the cost of higher education is far more than money.
    Current Federal financial aid covers only a fraction of what it costs
    to complete a college degree. Tuition costs are only a fraction of a
    student's payments. Thus, all current Federal loan programs are a
    necessary evil. When students are counseled to avoid loans, they end up
    dropping out of college all together because, even if full Pell
    eligible, Maria has no way to pay for the true cost of a degree. When
    she drops out, she is not only hurting her family, she is hurting
    employers and communities. Maria works two jobs. She is trying to get
    her education. Yet, she needs more financial aid, not less.
        To curb the loans (and debt), Maria must complete her degree. She
    needs more access to Federal work-study programs so that her job is on
    campus, with inherent support, and a greater likelihood of success.
    Currently, funding levels for Federal work-study programs could not
    begin to support the need that currently exists in community colleges
    across the country.
        The process of completing the FASFA is so complicated, many
    students give up before completing application. Many students simply do
    not think they can afford college and do not believe they would be
    eligible to receive aid. As a result, students and their families opt
    out, choosing a life limited without a certificate or degree. According
    Data Points (2016), the overwhelming reason students do not complete
    the FASFA is they think they are ineligible. Over 44 percent of all
    community college students do not complete the FASFA.
        At Amarillo College, we have reduced this number significantly with
    robust relationships with students and their families starting early in
    high school. Through our Money Management Center, the college starts
    financial counseling early and often so students learn of their
    eligibility well before they graduate high school. Still, these efforts
    are laborious and costly. Because the process is so confusing, many of
    my ``secret shoppers'' thought if they were not smart enough to
    complete the form, they would not be smart enough to complete a degree.
        Maria is drowning in bureaucracy. Verification is confusing, time
    consuming, and has no real savings to the Federal Government. According
    to The Institute for College Access and Success study (Ahlman,
    Cochrane, & Thompson, 2016), over 95 percent of all verified applicants
    saw no change to their eligibility, nationwide. For Maria, this is time
    wasted. When Maria needs real counseling about her options and help
    mapping out a financial plan, she finds her financial aid staff
    spending their time on verification bureaucracy.
        Many of my Amarillo College students simply misunderstand the
    verification process. For so many ``Marias'' verification is seen as
    punishment. Maria questions whether she did something wrong and the
    process create needless fear and anxiety. I had one student and his
    father ask me if the family had done something wrong. My students and
    their families simply do not understand what verification means. When
    the U.S. Department of Education selects them for verification, these
    students do not receive any communication explaining verification. For
    my low-income, first-generation college students, verification is one
    more bureaucratic process that affirms they do not belong in higher
    education.
        For many students, their verification process conflicts with
    payment deadlines and they face having their classes dropped. They have
    to make a payment and their aid is not available to them in time to
    secure their schedule. These layers of bureaucracy create additional
    barriers that push students out of higher education. Yet, our economy
    and country cannot afford to lose these students. The economic
    viability of our country depends on their success in college.
        When Maria survives the verification process, she often does not
    have time for full counseling on her loan options. When she does visit
    with her financial aid officers, she learns of nine different loan
    options. She is confused. Her counselor does not have the time to spend
    at a minimum a full hour explaining each option and helping Maria
    decide which option is the best for her. Critically, Maria must have
    these loan options.
        Simplifying the loan options and narrowing the choices will help
    Maria and college financial aid staff. But in doing so, we cannot
    reduce the amount of aid available to students like Maria. If aid is
    reduced because loan options are reduced, Maria will not be able to
    enroll in college and achieve her educational aspirations.
        We certainly should simplify the loan program and curb student
    debt. To do so, we must reduce expenses for housing and food by helping
    college students' access affordable food and housing via other State
    and Federal programs. Students, like Maria, learn it is harder to get
    affordable food and housing if you ARE enrolled in college.
        Per the Wisconsin HOPE Lab report, Hungry and Homeless in College,
    studies indicated ``substantially higher rates of food insecurity among
    community college students than previously reported. Our 2015 report
    indicated that about half of community college students were food
    insecure, but this study found that two in three students are food
    insecure. Both surveys revealed that about half of community college
    students were housing insecure, and 13 to 14 percent were homeless''
    (Goldrick-Rab, Richardson, & Hernandez, 2017). At Amarillo College, 54
    percent of our students are food insecure, and 11 percent are housing
    insecure. Per the U.S. Department of Housing and Urban Development
    report, Housing Barriers to College Success (PD&R Edge, 2015), ``more
    than 56,000 college students indicated they were homeless on the FAFSA
    in 2013--and that figure almost certainly underestimates the true
    total.'' This is particular true given we know low-income, first-
    generation students are less likely to complete the FAFSA because they
    believe they will not qualify for assistance.
        Maria needs support to complete her degree. She and her peers do
    not need one more reason to push them out of attaining a degree and
    achieving their educational dreams. Rather than increase their fears of
    they do not belong in higher education, we must help them overcome
    poverty barriers hindering their success. We must help them navigate
    higher education and provide financial support in drastically different
    ways than have been provided in the past. We owe this to Maria. We owe
    this to our country's economic growth and viability.
        At Amarillo College, we leverage our Texas Panhandle P16 Council,
    with all 62 school districts and all four higher education partners to
    dramatically increase the FASFA completion with trained college
    employees to guide families through the application.
        We know the financial aid system is laborious and ineffective. Yet,
    we are a No Excuses college. We are working to build intentional
    partnerships with all 62 Texas Panhandle school districts to guide
    families more effectively through the FASFA process. This past year,
    our Panhandle P16 Council created a FASFA Scholarship competition for
    all area high schools. The rules? Every high school with 100 percent
    FASFA completion would receive a scholarship from the Amarillo Area
    Foundation to be distributed to one of their students.
        Amarillo College Financial Aid Office employees and a plethora of
    trained college employees traveled the Panhandle helping families
    complete the FAFSA--literally morning, noon and night. With 5,224
    graduating seniors Panhandle-wide, we ensured 3,522 submitted their
    FAFSA. Our goal is to guide 100 percent of our graduating seniors
    through this process. It is difficult. Simplifying the Financial Aid
    process is critical to our ability to get students a post-secondary
    credential.
        Additionally, we work with our Independent School District partners
    to start talking with families the moment they arrive in high school.
    With our Money Management Center, we are able to counsel students about
    their financial aid options. We work with local banks to assist our
    students in opening their own accounts. In our First Year Seminar
    course, we help students develop a budget. Financial Aid opens the door
    to a larger system of financial literacy--for our students and their
    families.
        Yet, these efforts are not enough. We need a more robust
    partnership with the U.S. Department of Education for a user-friendly
    FASFA interface, a more simplified form, a more limited verification
    process, and a realistic gainful employment accountability.
        Fixes for Financial Aid
        Education is the most reliable predictor to economic growth and
    education policy is an important factor (Glaeser, 2011). In order to
    help Maria and students like her, I recommend changes to our financial
    aid system. And by simplifying the Federal financial aid system and
    making a more robust funding stream to support today's college
    students, America's Maria will graduate from college and drive
    America's growing economic prosperity in the 21st century.
        1. Simplify the FAFSA Application and Verification Process.
        Base Pell awards on a limited number of data elements that are
    already available from the IRS so that eligibility is easier, more
    transparent and then a separate application is not needed. Equally as
    important would be to create a multi-year award for easy of student
    counseling, planning, and funding without the need for yearly
    reapplications. Summarize family and student eligibility is a simple,
    easy to read format that schools, counselors, and community partners
    easily distribute. Consider using IRS information to preemptively
    communicate with potential students and families about their likely
    Pell eligibility so students know they would qualify for financial aid
    earlier and see college as a real and viable option for them. Finally,
    eliminate the verification process or at least limit it to a single
    verification with better communication. Once a student is subjected to
    verification with no changes to their status, they should be exempt
    from verification in the future.
        2. Increase the maximum Pell grant award by an additional $4,500
    per year.
        Current Pell awards fund less than 50 percent of today's true costs
    to obtaining a higher education degree. By increasing Pell awards, we
    can offset student loan debt, decrease a student's time-to-degree, and
    increase college completion rates.
        3. Increase funding for specialized programs that assist college
    students with housing, food, childcare, and transportation needs.
        College students today need financial support to meet basic life
    needs. And by offering financial assistance to meet these needs, we are
    overcoming poverty barriers hindering Maria, and students like Maria,
    from enrolling in a college much less completing her college degree.
    Increased funding for financial assistance programs will decrease a
    student's need for student loans to pay for basic life needs like
    housing, food, childcare, and transportation. Without financial
    assistance programs like these, students will continue to rely on
    student loans at alarmingly high rates.
        Specific Federal policy changes could directly raise the education
    attainment rates in communities across the country. Identified by the
    Wisconsin HOPE Lab, please consider (Goldrick-Rab, Richardson, &
    Hernandez, 2017, p. 24):

              Promote degree completion by expanding the SNAP
            eligibility requirements for college students to allow all
            work-study eligible students (not only those receiving the very
            limited pool of work-study funds) to meet the work requirement,
            and reducing or eliminating the 20 hour per week requirement
            affecting many other students (or, count college attendance
            toward the work requirement).
              Simplify the FAFSA application process for
            establishing independence, particularly for homeless students.
              Create incentives for community colleges to offer
            benefits access opportunities on their campuses (including
            employing a dedicated staff member if there is sufficient
            demand) and work to align social and educational policies to
            ensure that access for students is as seamless as possible.
              Encourage State and Federal investment in targeted
            aid programs that reach students with the most financial need,
            and/or Promise programs that help students who otherwise would
            not access financial aid for fear of the price being out of
            reach.
              Re-institute year-round Pell so students have access
            to summer support to make progress in their studies and to
            contribute to living expenses.
              Change American Opportunity Tax Credit (AOTC)
            requirements so that students who receive Pell can access AOTC
            as well.

        The future of our communities, urban and rural, rests on our
    abilities to more completely and effectively support our students from
    the enrollment to graduate to employment. With important shifts in
    Federal Aid policy and processes, students will complete degrees and
    meet employer needs--no excuses.

        Reference/Bibliography
        Ahlman, L., Cochrane, D., & Thompson, J. (2016.) On the Sidelines
    of Simplification: Stories of navigating the FASFA Verification
    Process. The Institute for College Access & Success. November, 2016.
        Bailey, T., Smith Jaggars, S., & Jenkins, D. (2015). Redesigning
    America's Community Colleges: A clearer path to student success.
    Cambridge, MA: Harvard Education Press.
        Bartlett, V., Bugg-Levine, A., Erickson, D., Galloway, I., Genser,
    J., & Talansky, J. (Eds.) (2017.) What Matters: Investing in results to
    build strong, vibrant communities. Federal Reserve Bank of San
    Francisco & Corporation for Enterprise Development. San Francisco:
    Federal Reserve Bank of San Francisco.
        Beegle, D. M., Ellis, D., & Akkary, R. (2007). See poverty--be the
    difference!: Discovering the missing pieces for helping people move out
    of poverty. Tigard, Or: Communication Across Barriers, Inc.
        Bok, D. (2017). The Struggle to Reform our Colleges. Princeton and
    Oxford: Princeton University Press.
        Brown McNair, T., Albertine, S., Cooper, M.A., McDonald, N., &
    Major, Jr., T. (2016). Becoming a Student-Ready College: A new culture
    of leadership for student success. San Francisco: Jossey-Bass.
        Choi, L., Erickson, D., Griffin, K., Levere, A., & Seidman, E.
    (Eds.) (2015). What It's Worth: Strengthening the financial future of
    families, communities and the Nation. Federal Reserve Bank of San
    Francisco & Corporation for Enterprise Development. San Francisco:
    Federal Reserve Bank of San Francisco.
        Cushman, K. (2005). First in the Family: Advice about college from
    First-Generation students. Providence, RI: Next Generation Press.
        Data Points. (2016). The value of Pell. American Association of
    Community Colleges. Vol. 4, 14.
        Data Points. (2017). More education = better jobs. American
    Association of Community Colleges. Vol. 5, 19.
        Dubick, J., Mathews, B., & Cady, C. (2016). Hunger on Campus: The
    challenge of food insecurity for college students. http://
    studentsagainsthunger.org/wpcontent/uploads/2016/10/Hunger--On--
    Campus.pdf. October, 2016.
        Desmond, M. (2016). Evicted: Poverty and profit in the American
    city. New York: Broadway Books.
        Ginder, S.A., Kelly Reid, J.E., and Mann, F.B. (2017).
    Postsecondary Institutions and Cost of Attendance in 2016--17; Degrees
    and Other Awards Conferred, 2015--16; and 12-Month Enrollment, 2015--
    16: First Look (Provisional Data) (NCES 2017-075rev). U.S. Department
    of Education. Washington, DC: National Center for Education Statistics.
    Retrieved January 13, 2018 fromhttp://nces.ed.gov/pubsearch.
        Glaeser, E. (2011). Triumph of the City: How our greatest invention
    makes us richer, smarter, greener, healthier, and happier. New York:
    Penguin Books.
        Goldrick-Rab, S. (2016). Paying the Price: College costs, financial
    aid, and the betrayal of the American dream. Chicago and London: The
    University of Chicago Press.
        Long, A. (Ed.) (2016). Overcoming Educational Racism in the
    Community College: Creating pathways to success for minority and
    impoverished student populations. Sterling, VA: Stylus.
        PD&R Edge. (2015). ``Housing Barriers to College Success.''
    Insights into Housing and Community Development Policy, U.S. Department
    of Housing and Urban Development, 1 Feb. 2015, www.huduser.gov/portal/
    pdredge/pdr--edge--featd--article--030915.html.
        Snapshot Report. (2017). Contribution of Two-Year Public
    Institutions to Bachelor's Completions at Four-Year Institutions.
    National Student Clearinghouse Research Center. Spring.
        Taylor, P. (2014). The Next Generation: Boomers, Millennials, and
    the looming generational showdown. New York: Public Affairs.
        U.S. Department of Education, National Center for Education
    Statistics. (2017). The Condition of Education 2017 (NCES 2017-144),
    Sources of Financial Aid.
        Ward, L., Siegel, M., & Davenport, Z. (2012). First Generation
    College Students. San Francisco: Jossey-Bass.
        Wyner, J. (2014). What Excellent Community College Do: Preparing
    all students for success. Cambridge, MA: Harvard Education Press.

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                                     ______

                   [summary statement of russell lowery-hart]
        Students attending Amarillo College, and community colleges across
    the country, define the future of our country, and its capacity for
    economic growth and prosperity in a global society. Today's community
    college student is dramatically different from the ``traditional''
    college student of the past. She is often the first in her family to
    attend college, has children or supports other family members, work
    multiple jobs for minimum wage and frequently during the graveyard
    shift, and yet still has to turn to financial aid not only for tuition
    and books but also to cover basic living expenses. But community
    college is far from free--the price is still a driver of dropout. In
    Texas, community college students must borrow $16,000, often on top of
    working, to finish their degrees.
        Financial Aid Increases Education Attainment and Economic Growth
              Financial aid increases degree completion rates;
            without it more students would drop out of college.
              Economic growth is directly linked to education
            attainment in urban and rural communities: only 30 percent of
            citizens have any post-secondary credential, putting the
            economy at risk, and for every 10 percent increase in education
            attainment, GDP increases 22 percent.
        Shifting Student Demographics Make Financial Aid More Important
              The typical student at Amarillo College is a 27-year
            old Hispanic mother who is a first-generation student going to
            college part-time while working two jobs.
              In Texas, 54 percent of all college students are
            enrolled in a community college. And, 35 percent of Bachelor's
            degree graduates transferred to a Texas university from a
            community college. 60 percent of Amarillo College students
            leverage Pell grants, student loans and scholarships to
            succeed.
              Financial Aid Addresses Barriers to Student Success
              Funds from financial aid help keep students focused
            on school rather than work.
              Financial aid not only helps parents in college but
            also their children.
              But data--including from ``secret shoppers'' reveals
            that financial aid's ineffective processes, regulations, and
            bureaucracy make it hard to get the dollars and create
            confusion, frustration, and even fear for students.
                            Fixes for Financial Aid
              1. Simplify the FAFSA application process to obtain
            aid and curtail the Verification process.
              2. Increase the maximum Pell grant award by an
            additional $4,500 per year. Current Pell awards fund less than
            50 percent of today's real higher education costs.
              3. Increase funding for specialized programs that
            assist college students with housing, food, childcare, and
            transportation needs.
                                     ______

        The Chairman. Thank you, Dr. Lowery-Hart. Ms. Darcus,
    welcome.

      STATEMENT OF JOANNA DARCUS, MASSACHUSETTS LEGAL ASSISTANCE
       CORPORATION, RACIAL JUSTICE FELLOW, NATIONAL CONSUMER LAW
                     CENTER, BOSTON, MASSACHUSETTS

        Ms. Darcus. Mr. Chairman, Ranking Member Murray, and
    Members of the Committee, the National Consumer Law Center
    thanks you for inviting us to testify today.
        As Senator Warren mentioned, before I joined NCLC, I was a
    legal aid lawyer in Philadelphia. There, I provided free legal
    help to hundreds of low-income clients who were struggling to
    repay student loans. I continue that work at NCLC with the
    other members of the Student Loan Borrower Assistance Project.
    We train and support attorneys who represent student loan
    borrowers nationwide. We offer this testimony on behalf of
    NCLC's low-income clients.
        Student success in school and borrower success in repayment
    depend on building a financial aid system that facilitates
    their access to the benefits and information they need to
    thrive. Pursuing higher education should increase opportunity,
    not restrict access to necessities of life. Simplification and
    transparency can help, but at this crucial moment, we can also
    design a Federal aid system that maintains its integrity
    through real accountability.
        The Federal aid program should be tailored to the needs of
    all students and borrowers, working seamlessly for their
    benefit. However, those who need aid the most are often those
    who struggle to obtain the protections and safeguards that aid
    promises.
        A distinct majority of our student loan clients have been
    people of color. Because of persistent historical income and
    wealth disparities along racial and ethnic lines, people of
    color rely on financial aid more than their white counterparts.
    If our financial aid system works well, it can help close gaps
    in higher education attainment, income, and familial wealth.
    However, if it performs poorly, then it may, instead, worsen
    long-standing inequities.
        Therefore, the Federal financial aid system should be easy
    for students and borrowers to understand and navigate.
    Simplifying the current system can help achieve this goal, but
    only if it is designed to accomplish twin objectives. First, it
    must serve everyone who needs access to it. Second, it must
    make extra efforts to ensure that those for whom financial aid
    is a critical pathway to educational opportunity receive all
    the benefits of the program.
        One of our current clients attended a for-profit school
    that was sued by the Attorney General of Massachusetts for its
    false and deceptive enrollment practices. Our client completed
    her program, earning a medical assistant certificate, but could
    not find a job in that field. She worked off and on, but never
    enough to afford her student loan payments.
        She has been out of school for 5 years and is still in good
    standing on her loans due to her extreme diligence. Each year,
    she dutifully contacted her servicer and submitted income
    documentation only to be directed to a deferment or
    forbearance--never to income-driven repayment. Before meeting
    with us, she did not know what income-driven repayment was.
        IDR is at the heart of making student loan repayment
    sustainably affordable for borrowers like our clients. IDR can
    certainly be simplified, but our experience with borrowers has
    shown us that they struggle to access these plans, not
    necessarily because the plans are complicated, but because, as
    described in the CFPB's enforcement action against Navient,
    servicers consistently fail to inform borrowers of IDR as an
    option for managing their repayment obligations.
        Due to servicing failures, the client I mentioned has
    missed out on the benefits of IDR, including working toward
    forgiveness by making affordable payments. Now she will be
    stuck in repayment longer and may pay hundreds or thousands
    more over the life of her loan because of interest
    capitalization and lost time. Income-driven repayment--whether
    it consists of one plan or 20--will only work for borrowers
    when servicers fulfill their responsibility for properly
    administering it.
        Borrowers need help navigating repayment. That is the
    precise function servicers are supposed perform. Unfortunately,
    due to inadequate servicing, a number of borrowers default.
    Neither the servicers nor the debt collection companies to
    which we pay billions of taxpayer dollars each year are
    actually guiding borrowers to and through the programs that
    could ensure repayment success.
        Our system of financing higher education through debt is
    deeply flawed if we only hold the borrowers and not other
    parties accountable. While the Department of Education
    continues to award lucrative contracts to companies that
    consistently fail borrowers and taxpayers, it is often the
    borrowers, our low-income clients, who bear the risk when their
    educational investment does not pay off. A fair system of
    financial aid would also hold accountable the many institutions
    students interact with from enrollment and loan origination
    through repayment.
        Thank you for this opportunity to testify. I'd be happy to
    answer your questions.
        [The prepared statement of Ms. Darcus follows:]
                      prepared statement of joanna darcus
        Mr. Chairman, Ranking Member Murray, and Members of the Committee,
    the National Consumer Law Center (NCLC) thanks you for holding this
    hearing and for inviting us to testify today. We care deeply about
    making a financial aid system that is affordable and accessible to
    students and student loan borrowers. Prior to joining NCLC, I was an
    attorney at Community Legal Services of Philadelphia. While there, I
    provided free legal help to hundreds of low-income borrowers who
    struggled to repay their student loans. I continue that work at NCLC,
    as I represent individual clients, and work with the other members of
    the Student Loan Borrower Assistance Project to train and support
    consumer law practitioners, including legal aid attorneys who represent
    student loan borrowers. NCLC also publishes Student Loan Law (5th ed.
    2015), a comprehensive practice manual for advocates representing
    student loan borrowers. We publish reports on student loans,
    participate in student loan rulemakings, and advocate for fair student
    loan policies at the State and national level. We offer this testimony
    on behalf of NCLC's low-income clients. \1\
    ---------------------------------------------------------------------------
        \1\  The National Consumer Law Center (NCLC) is a nonprofit
    organization specializing in consumer issues on behalf of low-income
    people. Since 1969, we have worked with thousands of legal services,
    government, and private attorneys and their clients, as well as
    community groups and organizations that represent low-income and older
    individuals on consumer issues. NCLC's Student Loan Borrower Assistance
    Project provides information about student rights and responsibilities
    for borrowers and advocates, and provides direct legal representation
    to student loan borrowers. Most of the clients we represent are low-
    income borrowers living in Massachusetts. We work with other advocates
    across the country representing low-income clients. We also seek to
    increase public understanding of student lending issues and to identify
    policy solutions to promote access to education, lessen student debt
    burdens, and make loan repayment more manageable. See the Project's
    website at www.studentloanborrowerassistance.org. This testimony was
    prepared by Joanna Darcus and Persis Yu, with assistance from Carolyn
    Carter of NCLC.
    ---------------------------------------------------------------------------
        At present, millions of students are enrolled in school and relying
    on grants, Federal work-study, and Federal student loans to cover the
    cost. Many millions more are working toward repaying student loans.
    Here, I will provide an overview of the barriers my clients face when
    accessing the current Federal student aid system. I will then make
    specific recommendations about how to improve student outcomes in
    school and borrower outcomes in loan repayment.
                  II. Make Higher Education a Reality for All
        Title IV of the Higher Education Act (HEA) authorizes a financial
    aid program that promotes access to postsecondary education for all,
    especially students from low-income families. \2\ It gives students and
    borrowers a number of safeguards, such as the right to loan
    cancellation in the event of death or disability and the right to repay
    loans through monthly installments based on the borrower's income
    rather than the total balance owed, when they take advantage of Federal
    student aid programs. Pursuing higher education should increase
    opportunity, and not restrict access to necessities of life. Yet for
    far too many student loan borrowers, that is exactly the outcome that
    our Federal student aid system produces. The system has failed these
    borrowers. We need to do better.
    ---------------------------------------------------------------------------
        \2\  20 U.S.C. 1070 (describing the purpose of grants).
    ---------------------------------------------------------------------------
        Many people contact us, sharing their stories, and asking for help.
    Last year, a borrower wrote to us, and described experience as follows
    (reproduced in her own words and unedited): ``The 15 percent that is
    taken each month, BTW I'm 69 years old. I'm a widower on my own and
    Social Security is my only money. I skip doctors and have taken meds on
    an every other day basis. . . It's very hard live so poorly. The 15
    percent is an enormous burden.'' She was living on a fixed income of
    Social Security, and 15 percent of those funds were taken each month to
    repay her defaulted student loans. I have represented many older
    clients who are still repaying student loans and have lived this story,
    too. I have watched them cry as they have explained their desire to
    repay their student loans, and described what they have to sacrifice to
    make repayment possible: food, medication, and paying utility bills.
        We have a chance to revisit what is working and what is not in our
    Federal student aid system. This testimony is informed by our work with
    individual borrowers. Their experiences illustrate the problems that
    this Congress has the power to resolve through its reauthorization of
    the HEA. We need a system that works for the students it is supposed to
    serve. A highly educated workforce is good for all of us. Taxpayers
    benefit the most when students complete their studies, get good jobs,
    and repay their loans.
       III. Financial Aid: An Overview of Problems Stymying Student and
                                Borrower Success
        The Federal student aid programs should be tailored to the needs of
    all students and borrowers, working seamlessly for their benefit. But
    our clients are often forced to navigate a number of frustrating, but
    common, issues in Federal student loan repayment. The Federal student
    aid system is quite complex. Complexity alone is not necessarily a
    problem. However, complexity becomes problematic when students and
    borrowers cannot access the aid or loan features they need to thrive.
    Many borrowers successfully select their repayment plans and are on
    track to manage their loans. However, other borrowers become derailed
    and have difficulty obtaining the complete, accurate information they
    need to assess their options and the path forward.
        For low-income individuals and families who do not have extra
    dollars in their budgets, getting off track and facing involuntary
    collection activities, such as reductions of their monthly Social
    Security benefits or withholding of their tax refunds, can be utterly
    devastating. Though hardship programs are available to help borrowers
    through these situations, as the Government Accountability Office (GAO)
    recently noted, borrowers are not routinely told about these programs
    and the application forms are buried deep in obscure websites. \3\
    ---------------------------------------------------------------------------
        \3\  U.S. Gov't Accountability Office, Social Security Offsets:
    Improvements to Program Design Could Better Assist Older Student Loan
    Borrowers with Obtaining Permitted Relief, GAO-17-45 (Dec 19, 2016).
    ---------------------------------------------------------------------------
        Families with young children are similarly impacted. Last year, we
    met with a client experiencing homelessness who was raising 5-month-old
    twins. She had paid her rent, but was evicted from her last apartment
    when the building was sold to a new owner who did not renew her lease.
    Her twins were less than a month old at that time. When she had filed
    her taxes, she was expecting a tax refund of approximately $7000--
    mostly from the Earned Income Tax Credit. However, she later found out
    that the entire tax refund was taken by the Federal Government to pay
    her defaulted student loan. She had not received the notice warning
    that her refund could be taken because it was mailed to her old
    address. NCLC helped her submit a request for the return of tax refund
    on the basis of extreme financial hardship. Her request showed that she
    was homeless and unable to meet her and her sons' basic living needs.
    She was planning on using her tax refund to secure stable housing.
    However, her request was denied because she had not experienced a
    foreclosure or eviction within 30 days of her tax refund being taken.
    Therefore, she could not meet the Department's narrow definition of
    extreme financial hardship.
        Although many of our clients are among those who borrowed
    relatively less than other student loan borrowers, they find
    themselves, nonetheless, with low earnings or limited means. \4\ Far
    too many borrowers, like our clients, have struggled to access critical
    features of their Federal loans just when they needed them. As a
    result, a large number experience distress and default. Those who need
    aid the most are often among those who struggle to obtain the benefits,
    protections, and safeguards that aid promises.
    ---------------------------------------------------------------------------
        \4\  Marshall Steinbaum & Kavya Vaghul, ``An introduction to the
    geography of student debt,'' Washington Center for Equitable Growth
    (Dec. 1, 2015), available http://equitablegrowth.org/research-analysis/
    an-introduction-to-the-geography-of-student-debt/. See also Adam Looney
    & Constantine Yannelis, A Crisis in Student Loans? How Changes in the
    Characteristics of Borrowers and in the Institutions They Attended
    Contributes to Rising Loan Defaults, Brookings Papers, (Fall 2015),
    available at https://www.brookings.edu/bpea-articles/a-crisis-in-
    student-loans-how-changes-in-the-characteristics-of-borrowers-and-in-
    the-institutions-they-attended-contributed-to-rising-loan-defaults/.
    ---------------------------------------------------------------------------
        A distinct majority of the student loan borrowers we have worked
    with are people of color. Because of persistent, historical income and
    wealth disparities along racial and ethnic lines, people of color
    continue to rely on financial aid more than their white counterparts.
    \5\ If our Federal student aid system works well, it can help close
    gaps in higher education attainment, income, and familial wealth.
    However, if it performs poorly, then it may, instead, exacerbate long-
    standing inequities. Many of our clients are also the first in their
    families to pursue higher education. Others are veterans. And some are
    parenting students. We need a Federal aid system that serves students
    from each of these groups--and others--well.
    ---------------------------------------------------------------------------
        \5\  Id. See also Scott A. Ginder, Janice E. Kelly Reid & Farrah B.
    Mann, ``Preliminary Data Report: Graduation Rates for Selected Cohorts,
    2008--13; Outcome Measures for Cohort Year 2008; Student Financial Aid,
    Academic Year 2015--16; and Admissions in Postsecondary Institutions,''
    Fall 2016 (NCES, Sept. 2017), available at https://nces.ed.gov/
    pubs2017/2017150.pdf; Ben Miller, ``New Federal Data Show a Student
    Loan Crisis for African American Borrowers'' (Center for American
    Progress, Oct. 2017), available at https://www.americanprogress.org/
    issues/education-postsecondary/news/2017/10/16/440711/new-Federal-data-
    show-student-loan-crisis-african-american----borrowers/; Marshall
    Steinbaum & Kavya Vaghul, ``How the student debt crisis affects African
    Americans and Latinos,'' Washington Center for Equitable Growth (Feb.
    17, 2016), available at http://equitablegrowth.org/research-analysis/
    how-the-student-debt-crisis-affects-african-americans-and--latinos/.
    See also, Letter from NCLC et al, to U.S. Secretary of Education, John
    B. King, Jr. (Aug. 17, 2016) available at http://
    www.studentloanborrowerassistance.org/wp-content/uploads/2013/05/ltr-
    sec-king-race-student-debt.pdf.
    ---------------------------------------------------------------------------
        Because our clients are in distress and default before they meet
    with us, something or many things have already gone wrong before they
    make it to our office.

              The school may have failed to deliver the education
            it advertised.
              The borrower may have been laid off or become
            disabled.
              The servicer may have misplaced paperwork or
            miscalculated the borrower's monthly payment.
              The private collection agency (PCA) may have
            misinformed the borrower about options to get out of default.

        Any one of these possibilities is sufficient to impede borrower
    success in repayment.
                           Navigating Loan Repayment
        When we meet with a new client for the first time, our first
    challenge is to identify the type(s) of loans they have. Different
    loans have different rules and present borrowers with different options
    for getting and staying on track through repayment. For example, a
    borrower could have a Federal Family Education Loan Program (FFELP)
    Stafford loan eligible for the Income-Based Repayment (IBR) plan using
    the 15 percent formula, a Direct Stafford loan eligible for the Revised
    Pay as You Earn (REPAYE) plan using the 10 percent formula, and a
    Perkins loan with no income-driven repayment (IDR) option at all. We
    then have to figure out the history and the status of each loan, for
    instance whether the loan is current, delinquent, or defaulted, using
    the scant amount of information provided in the National Student Loan
    Data System (NSLDS) data base. Only then can we begin to work on
    resolving the issue that prompted the borrower to seek legal
    assistance.
        Of the borrowers who could benefit from the help of an attorney,
    far too few are likely to find such an attorney available to them. Few
    civil legal aid programs have sufficient resources to provide
    assistance to student loan borrowers, as they are grappling with
    meeting a wide range of legal needs for their low-income clients.
    Borrowers need help navigating repayment, and unfortunately, due to the
    void left by inadequate servicing, a number are preyed upon by
    illegitimate debt relief operations that siphon funds from borrowers
    without leaving those borrowers better off or delivering the services
    they claimed they would provide. \6\
    ---------------------------------------------------------------------------
        \6\  State and Federal regulators are working together to protect
    borrowers from these predatory companies. See Federal Trade Commission,
    Press Release: FTC, State Law Enforcement Partners Announce nationwide
    Crackdown on Student Loan Debt Relief Scams--Scammers made false
    promises and charged illegal up front fees of more than $95 million
    (Oct. 13, 2017), available at https://www.ftc.gov/news-events/press-
    releases/2017/10/ftc-state-law-enforcement-partners-announce--
    nationwide-crackdown.
    ---------------------------------------------------------------------------
        Borrowers should not need the help of an attorney to understand how
    to meet their repayment obligations. This is exactly the function that
    servicers should be performing before borrowers default. Unfortunately,
    the servicing companies and then the debt collection companies to which
    we pay billions of dollars each year are not adequately ensuring that
    borrowers are able to easily access the programs that could ensure
    their success.
                                 Accountability
        Our system of financing higher education through debt is deeply
    flawed if we only hold students accountable for their degree of success
    in repayment. But that is exactly what is happening, in the experience
    of our clients, it is often the student or borrower who bears the brunt
    of the risk when an educational investment does not pay dividends of
    stable employment or decent wages. A fair system of financial aid would
    also hold the many institutions students interact with accountable for
    student outcomes, including borrower outcomes in repayment.
        We have created a Federal student aid system that enriches private
    companies who collect student loan debt from borrowers who have limited
    ability to repay. This collection activity often causes these borrowers
    even greater difficulty in repaying because collection costs and fees
    are added to the already daunting debt levels these borrowers face.
                                   Servicing
        The Federal financial aid system relies on a complex patchwork of
    entities hired to provide loan servicing to borrowers. Few borrowers
    understand what loan servicing is or which company services their
    loans. Worse yet, some borrowers have more than one servicer for their
    loans. Different servicers have different practices and some are easier
    to reach or work with than others. Borrowers with more than one
    servicer often believe they have done their part to stay current on
    their loans by working with one servicer, and only learn otherwise when
    they begin facing debt collection activity on another batch of loans.
    Many borrowers (who generally do not get to choose their servicer) have
    had a dispute with their servicer or have concerns about their
    servicer's quality and effectiveness.
        NCLC had one client whose 11 loans were held by three different
    lenders. When she tried to consolidate her loans, a single loan was
    left off despite the fact that she had included it on her consolidation
    application. The consolidation summary is challenging to read, and
    because some of the loans from that lender had been included, she
    believed all of them to be included. To confuse the matter more, the
    lender who held the one unconsolidated loan also held her private
    loans. Instead of helping her navigate this situation, her lender
    (which is also a Department of Education servicer) routinely told her
    that she had called the wrong part of the company.
        To the extent that low-income individuals and families must borrow
    student loans to pay for college, those loans should come with
    protections, including high-quality servicing and affordable repayment
    plans, that will support borrowers throughout the life of their loans.
                          Default and Debt Collection
        Currently, borrowers get stuck in default and do not understand
    their options for getting out or staying out. It should be hard to
    enter and easy to exit default. Particularly for low-income borrowers,
    defaults can be prevented by enrollment in income-driven repayment
    plans. Nonetheless, too many borrowers slip through the cracks of the
    current loan servicing system and find themselves in default. Borrowers
    should not have to suffer such onerous consequences from default. The
    negative credit reporting alone can impede access to housing,
    employment, and other credit. Further, default precludes access to
    additional Federal financial aid, including grants and other non-loan
    aid. This is particularly problematic for borrowers who desire to
    continue their educations, especially those who did not obtain their
    degree or credential when they first attended school.
        Unfortunately too few debt collectors adequately explain the
    options available to borrowers for getting out of default. NCLC served
    a 60-year old woman who was living on less than $700 of Social Security
    Disability Insurance (SSDI) and Supplemental Security Income (SSI). The
    debt collector insisted that she had to rehabilitate her loans, and for
    reasons explained in greater detail below, insisted that her payments
    had to be $200 per month. This client tried in earnest to follow the
    rehabilitation plan for over 2 years, but, because it was unaffordable,
    she was never able to successfully make the nine on-time payments the
    program required. She was never informed of consolidation as an option
    for curing default. Throughout this time, the debt collector, despite
    knowing the source of her income, never told her about the Total and
    Permanent Disability discharge program. It was not until she reached
    NCLC that she ever learned about this program, and we were able to help
    her cancel her loans.
        Effective servicing and affordable monthly payments would leave
    fewer borrowers subject to default and its attendant debt collection.
    \7\ That would save taxpayers money because borrowers will be repaying
    their loans and the government will not have to spend money trying to
    collect outstanding loans.
    ---------------------------------------------------------------------------
        \7\  National Consumer Law Center, Pounding Student Loan Borrowers:
    The Heavy Costs of the Government's Partnership with Debt Collection
    Agencies (Sept. 2014), available at https://www.nclc.org/issues/
    pounding-student-loan-borrowers.html.
    ---------------------------------------------------------------------------
    IV. Future of Federal Student Aid: Implementing Changes for Student and
                                Borrower Success
        When students receive the benefits of the Federal aid program, we
    all win. On the front end, we can prevent uncertainty and challenges in
    repayment by ensuring that the neediest students receive all of the
    grant and non-loan aid for which they are eligible. Grants are a
    vitally important component of a financial aid system designed to
    ensure affordable access to higher education. They help make higher
    education a reality for students from low-income backgrounds.
            Increasing Access and Affordability Through Non-Loan Aid
        The lowest-income students, those with the most need should not
    wind up mired in unaffordable debt. Smoothing access to grants and non-
    loan aid would allow more students to complete their programs and
    benefit from the credential they worked diligently to earn. When low-
    income students borrow less, then there is less risk on the back-end
    with loan repayment. This puts them on a path to achieving the
    financial independence that will support loan repayment success--if
    they have to borrow loans at all.
         Increasing Affordability Throughout the Federal Loan Lifecycle
        Income-driven repayment (IDR) offers many borrowers a sustainable
    way to ensure that their monthly loan payments are and remain
    affordable. Although there are a number of IDR plans, they share
    important features:

              (1) they require borrowers to pay only a reasonable
            percentage of their earned income toward their student loans,
              (2) they acknowledge that borrowers must cover basic living
            expenses by exempting a portion of income based upon the
            Federal poverty levels for their family size,
              (3) they allow borrowers to report changes in their income at
            any time, and
              (4) they ensure that borrowers are not obligated to take
            their student loan debt to the grave by providing forgiveness
            after a fixed period of time.

        No borrower should remain indebted forever, and IDR enables
    borrowers to meet their student loan obligations while also working
    toward retiring the debt, regardless of the borrower's means.
        Without IDR, many borrowers have become delinquent and defaulted
    not because they are unwilling to repay their loans, but because they
    are unable. I have represented borrowers with decades-old outstanding
    Federal student loans. Many of them exhausted their forbearances long
    ago and ran out of chances to cure default because their monthly
    payments were not affordable. As soon as they exited default through
    consolidation or rehabilitation, they were set up to fail when they
    were placed back on the Standard or another unaffordable, balance-based
    repayment plan. This issue is particularly prevalent among those who
    exit default through rehabilitation. Because there is no statute of
    limitations on the collection of Federal student loans, any barriers to
    repayment only increase the risks of nonpayment and default for the
    borrower, taxpayers, and the government.
        Loan repayment should be affordable for all borrowers: students and
    parents borrowing for undergraduate education, as well as students
    borrowing for graduate education. To make it through loan repayment,
    borrowers need to know that IDR plans are available. Further, they need
    to understand how to enroll and stay enrolled. Finally, borrowers for
    whom the existing IDR plans still pose a financial hardship should have
    options for further reductions in their payment obligations on a
    temporary and long-term basis.
                          Supporting Borrower Success
        The Federal financial aid programs should be easy for students and
    borrowers to understand and navigate. All students and borrowers who
    need Federal aid should have an appropriate option available to them.
    Simplifying the current aid system can help achieve this goal, but only
    if it is designed to accomplish twin objectives. First, it must serve
    everyone who needs access to it. Second, it must make extra efforts to
    ensure that people for whom Federal aid is a critical pathway to
    educational opportunity receive all the benefits of the program.
        Income-driven repayment is at the heart of making student loan
    repayment affordable for borrowers like our clients. IDR can certainly
    be simplified, but our experience with borrowers has shown us that
    borrowers struggle to access these plans not necessarily because the
    plans are complicated, but because servicers consistently fail to
    inform borrowers of IDR as an option for managing their repayment
    obligations.
        A current NCLC client went to a local for-profit school which was
    recently sued by the Attorney General of Massachusetts for false and
    deceptive enrollment practices. She completed a certificate in the
    medical assistant program, but she was unable to find a job in her
    field of study. She worked off and on but never enough to afford her
    student loan payments. She dutifully contacted her servicer every year
    and has submitted income documentation. She has never been enrolled in
    an IDR plan. Before coming to our office, she had never heard of IDR.
    Although she called her servicer every year to discuss her financial
    situation, she was always directed to a deferment or forbearance. She
    has been out of school since 2012 and is still in good standing due to
    her extreme diligence. Yet that time has been wasted because she could
    have been in an IDR plan making affordable qualifying payments. The
    capitalization of the interest alone during this time period has cost
    her hundreds if not thousands of dollars. Moreover, she will be paying
    on this loan for five more years than necessary. IDR--whether it
    consists of one repayment plan or twenty--will only work for borrowers
    when servicers fulfill their responsibility for properly administering
    it.
        Two common-sense steps would help borrowers succeed in repayment.
    First, financial aid begins and ends with completing forms. The forms
    are long, confusing, complex, and not necessarily language-accessible.
    Submitting paperwork to servicers and debt collectors can result in
    delays or hassles that extend the repayment period and increase the
    amounts borrowers will pay over the life of their loans. And the costs
    of missing a paperwork deadline can be extraordinary. Therefore, forms
    should be more straightforward, translated into multiple languages,
    including Spanish, and readily available to borrowers when they need
    them, including through www.studentloans.gov. Also, fewer forms should
    be required where the government already possesses the information it
    needs to determine that a borrower would benefit from a particular loan
    benefit.
        Second, automatically enrolling or retaining borrowers in programs
    that will ensure their long-term success in repayment could reduce the
    cost of administering the Federal aid program, while also ensuring that
    more borrowers are on track to succeed in repayment. Reauthorization of
    the HEA should prioritize moving forward with information-sharing
    agreements and coordination between the U.S. Department of Education
    (Department) and other agencies to ensure that borrowers remain on
    their IDR plans from 1 year to the next or are identified as eligible
    for Total and Permanent Disability Loan Discharges in a timely manner,
    for example. \8\ Further, if there is a mechanism to automatically
    enroll borrowers who are in the late stages of delinquency onto IDR
    plans, then those borrowers may be spared the consequences of default
    and also continue to move toward repayment of their loans. \9\
    ---------------------------------------------------------------------------
        \8\  U.S. Dep't of Educ., Press Release, U.S. Department of
    Education Acts to Protect Social Security Benefits for Borrowers with
    Disabilities (Apr. 12, 2016).
        \9\  As the CFPB noted in its 2017 Student Loan Ombudsman annual
    report, following voluntary changes made by private lenders that
    automatically placed eligible service members in interest rate
    reductions, one government study found that the number of
    servicemembers who received the interest rate cap on at least one of
    their private student loans more than doubled, from 14,970 to 33,309.
    The CFPB posited that policymakers and market participants may find
    this example instructive as they consider steps to strengthen policies
    or practices where invocation of other benefits and protections depends
    on a similar process. Because borrowers must self-identify their
    eligibility in order to invoke their various rights and servicers rely
    on manual processing to apply benefits and protections to borrowers'
    accounts, many borrowers fall through the cracks. This likely widens
    the gap between the total population of eligible beneficiaries for each
    of these protections and the segment of borrowers able to successfully
    invoke their rights. As the Bureau's research has noted in the past, it
    is often the most vulnerable student loan borrowers who fall through
    this gap. See Consumer Fin. Prot. Bureau, 2017 Annual Report of the
    CFPB Student Loan Ombudsman 44-46 (Oct. 2017).
    ---------------------------------------------------------------------------
      Supporting Borrower Success Through Transparency and Accountability
        As we seek to make student loan repayment as simple for borrowers
    to manage as possible, we should continue to explore ways to ensure
    that borrowers have important information at crucial intervals and the
    public has access to data sufficient to evaluate the performance of the
    Federal aid system. On the front end, before they borrow, individuals
    and families should know the cost of the educational program and their
    options for using Federal aid to meet their needs. They should be
    informed of the outcomes of other students and borrowers while in that
    educational program and in loan repayment.
        While it is important for loan and educational program details to
    be disclosed at the outset, information about student loan repayment
    options provided at entrance or exit counseling may grow stale before
    borrowers know whether they will need to act on it. The time at which
    the information is presented renders the information irrelevant.
    Borrowers may also experience information overload and lack a sense of
    how to retain or track the information provided to them because they do
    not yet know whether they will need that information. Ultimately, those
    borrowers need a clear source of good information and comprehensive
    counseling when it is time for them to act.
        A single, online loan-servicing portal could provide key benefits
    to those borrowers. Ensuring that borrowers always know where to go to
    get up-to-date, accurate loan information is essential to ensure that
    they can meet their loan repayment obligations. It would also ensure
    that borrowers know how to communicate with the entity responsible for
    guiding them through loan repayment. The portal should also help
    borrowers understand their rights and learn about the services they
    should be able to obtain during repayment.
        Our experience representing borrowers has taught us that tasking a
    single servicer with responsibility for the Federal student loan
    portfolio would not be a panacea. Without competition, adequate
    oversight, or accountability, our clients and those of the advocates
    with whom we work, continue to uncover repayment issues that arose when
    a single company serviced the Direct Loan portfolio. \10\ As a result,
    some borrowers who are working toward repaying their loans on an
    income-driven repayment plan will pay more than necessary and spend
    more time in repayment.
    ---------------------------------------------------------------------------
        \10\  Danielle Douglas-Gabriel, ``ACS's $2.4 million settlement in
    Massachusetts highlights problems in student loan servicing,'' The
    Washington Post, Nov. 22, 2016, available at https://
    www.washingtonpost.com/news/grade-point/wp/2016/11/22/acss-2-4-million-
    settlement-in--massachusetts-highlights-problems-in-student-loan-
    servicing/'utm--term=.05fc565139ef.
    ---------------------------------------------------------------------------
        Our experience representing borrowers has also taught us that
    servicers often act to maximize their compensation in ways that do not
    necessarily correlate with borrower success in repayment. We believe
    borrowers will receive consistently receive high-quality servicing when
    financial incentives for servicers are closely aligned with optimizing
    borrower outcomes.
        To ensure accountability, there must be appropriate, common
    servicing standards and real consequences when servicers underperform
    or violate borrower rights. Relative performance metrics, compliance
    with Federal and State consumer protection laws, as well as borrower
    complaint data should be shared with the public and factored into
    decisions regarding sanctions and future contract awards and account
    allocations.
        Over the past several years, an increase in public enforcement
    actions at the Federal and State levels based upon violations of the
    rights of borrowers who were attempting to repay their Federal loans
    has resulted in improvements in servicing. The Consumer Financial
    Protection Bureau (CFPB) has responded to borrower complaints and
    disputes by holding servicers and debt collectors accountable for
    depriving borrowers of the benefits and protections they are due. \11\
    Federal and State regulators and enforcement agencies, coupled with
    private enforcement, are needed to promote strong oversight of an
    effective servicing system that protects borrower rights.
    ---------------------------------------------------------------------------
        \11\  Consumer Financial Protection Bureau, Press Release: CFPB
    Sues Nation's Largest Student Loan Company Navient for Failing
    Borrowers at Every Stage of Repayment--Navient, Formerly Part of Sallie
    Mae, Illegally Cheated Borrowers Out of Repayment Rights Through
    Shortcuts and Deception (Jan. 18, 2017), available at https://
    www.consumerfinance.gov/policy-compliance/enforcement/actions/navient--
    corporation-navient-solutions-inc-and-pioneer-credit-recovery-inc/;
    CFPB v. Navient Corporation; Navient Solutions, Inc.; and Pioneer
    Credit Recovery, Inc., No. 3:17-cv-00101 (M.D.Pa. Jan. 18, 2017).
    ---------------------------------------------------------------------------
        To ensure that borrowers receive consistently high quality service,
    borrowers and their advocates should have access to the guidelines and
    standards that the Department provides to contractors. Unfortunately,
    the recent past has shown us that some violations of borrower rights
    stemmed from the instructions that the Department provided to its
    contractors. \12\ In 2012, Bloomberg News reported that the
    Department's contract with private collection agencies paid the PCAs 16
    percent of the loan balance when a borrower completed a rehabilitation
    plan. However, it only paid this high commission rate if the borrower's
    monthly payments equaled between 0.75 percent to 1.25 percent of the
    entire loan balance despite the law requiring that the payment amount
    be reasonable and affordable based upon the borrower's circumstances.
    As the former debt collector quoted in the story said, ``It would be
    ``a cold day in Hades'' before collectors would tell borrowers about
    options with lower payments.'' \13\
    ---------------------------------------------------------------------------
        \12\  Jack Remondi, Setting the Record Straight on SCRA, Medium.com
    (Mar. 13, 2016), https://medium.com/@JackRemondi/setting-the-record-
    straight-on-scra-e642fa370d0a#.2lpfahnii (following U.S. Department of
    Justice enforcement action, CEO of Navient stated that Navient's
    violations of the Servicemembers Civil Relief Act were a result of its
    having followed the Department of Education's guidance).
        \13\  John Hechinger, Obama Relies on Debt Collectors Profiting
    from Student Loan Woes, Bloomberg News (Mar. 26, 2012) available at
    https://www.bloomberg.com/news/articles/2012-03-26/Obama-relies--on-
    debt-collectors-profiting-from-student-loan-woe.
    ---------------------------------------------------------------------------
        Also, providing this information to borrowers will help borrowers
    to distinguish between legitimate and illegitimate debt collection and
    debt relief companies. Borrowers are unlikely to willingly work with
    debt collection companies when they cannot be certain that those debt
    collectors are truthful. A few years ago, the Department fired five
    debt collectors because those companies were misleading borrowers about
    their default resolution options. \14\ It would be easier to identify
    problematic practices like those even sooner if borrowers have access
    to better information about their options apart from what the debt
    collectors say. It would also help if borrowers know what to expect
    from the debt collectors, including what authority and discretion the
    collectors have to help borrowers exit default and get back on track to
    repayment.
    ---------------------------------------------------------------------------
        \14\  U.S. Department of Education, Press Release: U.S. Department
    of Education to End Contracts with Several Private Collection
    Agencies--After finding high incidences of materially inaccurate
    representations, Department acts to protect consumers (Feb. 27, 2015):
    https://www.ed.gov/news/press--releases/us-department-education-end-
    contracts-several-private-collection-agencies.
    ---------------------------------------------------------------------------
        Recently, the Department of Education announced that it was
    rehiring a private collection agency (PCA) that has faced private
    litigation due to its refusal to allow borrowers to enter into
    reasonable and affordable loan rehabilitation agreements in violation
    of the Department of Education's regulations and the Fair Debt
    Collection Practices Act. \15\ Private enforcement will continue to be
    an important way to highlight issues before they become systemic and
    create greater risk for more borrowers and taxpayers.
    ---------------------------------------------------------------------------
        \15\  Love v. Windham Professionals, Inc., 1:13-cv-01649-BMC
    (E.D.N.Y.) (settled prior to rulings on cross motions for summary
    judgment); see Andrew Kreighbaum, ``Debt-Collection Contracts Awarded
    to 2 Companies,'' Inside Higher Ed, Jan. 15. 2018, available at https:/
    /www.insidehighered.com/quicktakes/2018/01/15/debt-collection-
    contracts-awarded-2-companies.
    ---------------------------------------------------------------------------
        The public should also have access to information about student and
    borrower outcomes. True oversight and accountability depend on
    collecting and sharing this kind of information. At present, little
    information about borrower outcomes, servicer performance, and debt
    collector behavior is publicly available. In its current iteration, the
    Department of Education's office of Federal Student Aid (FSA) resists
    disclosing the kind of information that could encourage real
    accountability, including public and private enforcement of the legal
    rights of borrowers. This is largely because the structure of the FSA
    produces some of the ongoing conflicts of interest within the
    Department. While FSA is supposed to act on behalf of its customers,
    there is no single priority group of customers. The priority group
    category includes not only students, but also financial institutions
    and schools. The FSA, by its very nature, has multiple constituencies,
    often with conflicting needs and goals. \16\ Thus, it often takes steps
    to protect financial institutions and schools to the detriment of
    students. Further, without access to information about borrower
    outcomes, future students and their families will continue to be
    deprived of the information that could help them determine which
    educational programs would be a good investment of their time and
    money.
    ---------------------------------------------------------------------------
        \16\  NCLC, Pounding Student Loan Borrowers, supra, at 4.
    ---------------------------------------------------------------------------
                                 V. Conclusion
        Student success in school and borrower success in repayment depend
    on building a student aid system that allows students and borrowers to
    access the benefits and information they need to thrive. Simplification
    and transparency can help, but at this crucial moment, we can also
    design a Federal aid system that maintains its integrity through real
    accountability.
        Thank you for the opportunity to testify today. I would be happy to
    answer any questions.
                                     ______

                      [summary statement of joanna darcus]
        The National Consumer Law Center (NCLC) is a nonprofit organization
    specializing in consumer issues on behalf of low-income people. I
    joined NCLC after working at a civil legal aid organization in
    Philadelphia. At both organizations, I have represented student loan
    borrowers who are in distress and default.

        In this testimony, I provide an overview of the barriers my clients
    face when accessing the important safeguards that the system offers. I
    then make recommendations about how to improve student outcomes in
    school and borrower outcomes in loan repayment because pursuing higher
    education should increase opportunity, and not restrict access to
    necessities of life.
                              Overview of Problems
        For low-income individuals and families who do not have extra
    dollars in their budgets, getting off track and facing involuntary
    collection activities, such as reductions of their monthly Social
    Security benefits or withholding of their tax refunds, can be utterly
    devastating. Although many of our clients are among those who borrowed
    relatively less than other student loan borrowers, they find
    themselves, nonetheless, with low earnings or limited means. Far too
    many borrowers, like our clients, have struggled to access critical
    features of their Federal loans after something went wrong. Common
    factors, include

              The school failed to deliver the education it
            advertised.
              The borrower got laid off or become disabled.
              The servicer misplaced paperwork or miscalculated the
            borrower's monthly payment.
              The private collection agency (PCA) misinformed the
            borrower about options to get out of default.

        Unfortunately, servicers and debt collectors fail to provide the
    help borrowers need to understand their options and repay their loans.
                             Overview of Solutions
        The Federal student aid programs should be easy for students and
    borrowers to understand and navigate. All students and borrowers who
    need Federal aid should have an appropriate option available to them.
    As we seek to make student loan repayment as simple for borrowers to
    manage as possible, we should continue to explore ways to ensure that
    borrowers have important information at crucial intervals and the
    public has access to data sufficient to evaluate the performance of the
    Federal aid system. This will help ensure its integrity and that it
    delivers on its promise of making higher education accessible to all.
                                     ______

        The Chairman. Thank you, Ms. Darcus.
        Dr. Chingos, welcome.

       STATEMENT OF MATTHEW CHINGOS, DIRECTOR, EDUCATION POLICY
                PROGRAM, URBAN INSTITUTE, WASHINGTON, DC

        Dr. Chingos. Chairman Alexander, Ranking Member Murray,
    Members of the Committee, thank you for the opportunity to
    testify today about how our Nation's Federal student aid
    programs can be simpler and more transparent.
        I direct the Education Policy Program at the Urban
    Institute, where my colleagues and I provide original data and
    analysis to support education policymaking. I am proud of the
    work we do at the Urban Institute, but I should emphasize that
    the views expressed in this testimony are my own, not those of
    any organization with which I am affiliated, its trustees, or
    its funders.
        Federal student aid programs provide vital assistance to
    students and further national goals of increasing educational
    attainment and economic mobility. But they face serious
    challenges which are especially severe in the student lending
    system.
        For most students, debt is a tool that allows them to
    access educational opportunities that pay off in the long run.
    But for far too many borrowers, student loans are doing more
    harm than good.
        The number of borrowers in default has more than doubled
    over the past 4 years to nearly 5 million even though the
    default rate has fallen over this period. This is because
    default is like a hotel where you check in, but never check
    out.
        Borrowers with relatively small amounts of debt, especially
    college dropouts, are most likely to default. And there are
    troublingly large racial disparities. New data show that black
    college graduates more likely to default than white dropouts.
        Professor Dynarski has aptly described the state of affairs
    as a repayment crisis. Existing income-driven repayment plans
    provide a safety net for struggling borrowers but have failed
    to sufficiently mitigate defaults. Ending the student loan
    repayment crisis and better supporting college students through
    need-based grants can be accomplished through HEA
    reauthorization. My recommendations are rooted in the following
    principles--targeting support to students who need it most,
    fairness and transparency for students, and efficiency for
    taxpayers.
        My first recommendation is that there should be one Federal
    grant program. The best way to help students pay for college is
    to reduce the prices they pay at the time of enrollment.
    Benefits that only arrive after students have left college,
    such as the in-school interest subsidy and the Public Service
    Loan Forgiveness Program, should be repurposed into need-based
    grants.
        My second recommendation is to move to a single Federal
    loan program that is focused on extending credit to
    undergraduate students. Essentially unlimited lending to
    graduate students poses a risk to the fiscal sustainability of
    the program and should be addressed by limiting graduate loan
    amounts or their eligibility for forgiveness.
        My third recommendation is to create a single income-driven
    repayment plan that looks significantly different from any
    existing repayment plan today. An incremental step would be to
    automatically tie payments to borrowers' incomes using tax
    data. Payments would adjust annually but would not be
    responsive to short-term changes such as a job loss.
        A bolder change would have all borrowers make income-driven
    loan payments through the tax withholding system. In an
    automatic system, it would be difficult for most borrowers to
    default on their loans in the same way that it is difficult to
    underpay payroll taxes. A modernized loan repayment system
    would also address the problem with current policy, which is
    that borrowers pay the same percentage of their income toward
    their student loans regardless of whether they are a college
    dropout with $5,000 in debt or a doctor with $200,000.
        This can lead to overborrowing by students, make it easier
    for colleges to raise tuition, and entail significant cost for
    taxpayers. A solution is to tie the percentage of income paid
    or number of years prior to forgiveness to the amount borrowed.
        Even with these two changes, problems would remain. A
    borrower whose income-driven payments do not even cover the
    accumulating interest each month will see an increasing loan
    balance, which could have a psychological toll or make it
    harder to access other forms of credit, such as a mortgage. And
    taxpayers would continue to assume all the risk of nonpayment
    and reap none of the reward when borrowers are economically
    successful.
        An alternative would be to require borrowers to pay a set
    percentage of their income for a fixed period of time, even if
    it exceeds what the borrower would have paid under a
    traditional loan. A system along these lines, which would be a
    public sector analogue of an income share agreement, would
    eliminate the concept of a loan balance, and interest rates
    would no longer be needed.
        In conclusion, a single need-based grant program, combined
    with a loan program that protects borrowers and taxpayer
    dollars through automatic income-driven repayment, will
    increase the effectiveness of Federal support for higher
    education and reduce the harm that noncompletion and loan
    default disproportionately inflict on disadvantaged
    individuals. Designing these programs well requires considering
    how they interact with each other and with other components of
    the Higher Education Act.
        Protecting students and taxpayers from low-value
    institutions is especially critical to a well-designed system
    of Federal student aid. HEA reauthorization provides an
    important opportunity for Congress to streamline and strengthen
    the Federal aid programs that are critical to educational and
    economic opportunity in the United States.
        I hope my testimony will contribute to that important
    effort. I will be happy to answer any questions.
        Thank you.
        [The prepared statement of Dr. Chingos follows:]
                     prepared statement of matthew chingos
        Chairman Alexander, Ranking Member Murray, and Members of the
    Committee, thank you for the opportunity to testify today about how our
    Nation's Federal student aid programs could be simpler and more
    transparent for students.
        I direct the Education Policy Program at the Urban Institute here
    in Washington, DC. My colleagues and I provide original data and
    analysis to support education policymaking from pre-kindergarten
    through postsecondary. This year, we will focus significant attention
    on the Higher Education Act (HEA), producing original empirical
    analyses of reauthorization proposals and creating evidence-based tools
    aimed at elucidating tradeoffs created by different policy options.
        I am proud of the work we do at the Urban Institute, but I should
    emphasize that the views expressed in this testimony are my own, not
    those of any organization with which I am affiliated, its trustees, or
    its funders.
        My testimony will provide an overview of how Federal policy
    provides vital support, credit, and insurance for college students but
    could greatly benefit form modernization and reform through
    reauthorization of the HEA. Most important, the student loan system is
    harming too many students while providing arbitrary subsidies to
    others.
        My analyses and recommendations are rooted in three principles:

            First, Federal support for higher education should be allocated
            in ways that help students who need it most, with the goal of
            increasing educational attainment and economic mobility,
            especially for students from disadvantaged backgrounds.
            Second, Federal aid programs should treat students fairly. This
            does not mean treating all students the same, but aid programs
            should treat students from similar circumstances similarly and
            be easily understood by students and families.
            Finally, the system should be as efficient as possible so
            taxpayer dollars are used to maximum effect.
                         Student Loan Repayment Crisis
        For most students, debt is a tool that allows them to access
    educational opportunities that pay off in the long run. \1\ Loans allow
    students to borrow from their higher-income future selves to invest in
    their educations today. The Federal Government, through the HEA, plays
    a critical role in extending credit to all college students, regardless
    of whether a private bank would make those loans.
    ---------------------------------------------------------------------------
        \1\  Beth Akers and Matthew M. Chingos, Game of Loans: The Rhetoric
    and Reality of Student Debt (Princeton, NJ: Princeton University Press,
    2016).
    ---------------------------------------------------------------------------
        But for far too many borrowers, student loans are doing more harm
    than good. The number of borrowers in default has more than doubled
    over the past 4 years, to 4.6 million, even though the default rate has
    fallen over this period. \2\ This is because defaulted loans are
    unlikely to return to good standing. \3\ Defaulting harms borrowers'
    credit and ability to borrow in the future. \4\
    ---------------------------------------------------------------------------
        \2\  Paul Fain, ``Growing Number of Borrowers Are In Default,''
    Inside Higher Ed, December 14, 2017, https://www.insidehighered.com/
    quicktakes/2017/12/14/growing-number-borrowers-are-default; and ``U.S.
    Department of Education Releases National Student Loan fiscal year 2014
    Cohort Default Rate,'' U.S. Department of Education, press release,
    September27, 2017, https://www.ed.gov/news/press-releases/us-
    department-education-releases-national-student--loan-fy-2014-cohort-
    default-rate
        \3\  Executive Office of the President, Investing in Higher
    Education: Benefits, Challenges, and State of Student Debt (Washington,
    DC: Executive Office, 2016, https://Obamawhitehouse.archives.gov/sites/
    default/files/page/files/20160718--cea--student--debt.pdf), p. 33.
        \4\  There is little systematic evidence on the consequences of
    student loan default, but because defaults appear on borrowers' credit
    records, they should mechanically reduce credit scores and future
    ability to borrow.
    ---------------------------------------------------------------------------
        Default affects some groups of student borrowers more than others.
    Borrowers with relatively small amounts of debt, especially college
    dropouts, are most likely to default. \5\ These patterns are linked to
    low college completion rates because earning a degree increases a
    borrower's earning capacity and ability to repay her loans. \6\
    Additionally, new data show large racial disparities in default rates,
    with black college graduates more likely to default than white
    dropouts. \7\
    ---------------------------------------------------------------------------
        \5\  See Meta Brown, Andrew Haughwout, Donghoon Lee, Joelle Scally,
    and Wilbert van der Klaauw, ``Looking at Student Loan Defaults through
    a Larger Window,'' Liberty Street Economics (blog), Federal Reserve
    Bank of New York, February 19, 2015,http://
    libertystreeteconomics.newyorkfed.org/2015/02/looking--at--student--
    loan--defaults--through--a--larger--window.h tml; and Figure 2015--14A,
    ``Two-Year Student Loan Default Rates by Repayment Cohort and Degree
    Completion Status, 1995--96 to 2011--12,'' Trends in Student Aid,
    College Board, https://trends.collegeboard.org/student-aid/figures--
    tables/two-year-student-loan-default-rates-degree-completion-status-
    over-time.
        \6\  Only 59 percent of students who start at 4-year public
    colleges earn a bachelor's degree from any institution within 6 years
    (the corresponding figure for private, nonprofit colleges is 72
    percent). Among students who start at community colleges, only 39
    percent earn any degree from any institution within 6 years (Completing
    College: A National View of Student Attainment Rates -- Fall 2010
    Cohort [Herndon, VA: National Student Clearinghouse, 2016], figure 12).
        \7\  Judith Scott-Clayton, The Looming Student Loan Default Crisis
    Is Worse Than We Thought (Washington, DC: Brookings Institution, 2018),
    https://www.brookings.edu/research/the-looming-student-loan-default-
    crisis-is-worse-than-we--thought/.
    ---------------------------------------------------------------------------
        Broadly speaking, there is a repayment crisis in student lending.
    \8\ A fixed monthly payment may work for a car loan, but the 10-year
    standard repayment plan asks too many student borrowers to make
    unaffordable payments shortly after leaving college, when their incomes
    are low. As a result, even students who have taken on reasonable debt
    levels to earn valuable degrees may struggle to repay early in their
    careers.
    ---------------------------------------------------------------------------
        \8\  Susan Dynarski and Daniel Kreisman, Loans for Educational
    Opportunity: Making Borrowing Work for Today's Students (Washington,
    DC: Brookings Institution, 2016), https://www.brookings.edu/wp--
    content/uploads/2016/06/THP--DynarskiDiscPaper--Final.pdf.
    ---------------------------------------------------------------------------
        Existing income-driven repayment plans provide a safety net for
    struggling borrowers, which in theory should prevent defaults. But
    those plans have failed to do so, in part because they are too
    complicated. There are multiple programs with different rules, which
    borrowers often need to navigate at times of financial stress. \9\
    Borrowers need to reapply every year; between 2013 and 2014, half
    failed to do so. \10\
    ---------------------------------------------------------------------------
        \9\  Game of Loans, p. 118.
        \10\  Kelly Field, ``Thousands Fall Out of Income-Based Repayment
    Plans,'' Chronicle of Higher Education, April 2, 2015, http://
    www.chronicle.com/article/Thousands-Fall-Out-of/229031.
    ---------------------------------------------------------------------------
                               Options for Reform
        The current Federal aid programs resulted from years of well-
    intentional policy changes that would now benefit from consolidation
    and simplification. In my view, each set of programs should be limited
    to the purpose for which it is best suited: grants to reduce the prices
    that students pay, loans to provide credit on reasonable terms, and
    income-driven repayment to provide insurance against unaffordable loan
    payments.
        Options for reform range from modest efforts to simplify and reduce
    the number of grant and loan programs (and repayment plans) to bolder
    proposals that would more fundamentally change how the student aid
    programs function. I discuss a range of options that Congress should
    consider as it reauthorizes the HEA.
                              One Grant, One Loan
        Consolidating Federal aid programs into one grant program and one
    loan program would make these programs more effective and easier for
    potential students to navigate. \11\ The grant program could better
    support the college enrollment and completion of disadvantaged students
    by repurposing poorly targeted subsidies from other programs. And
    moving away from multiple loan programs might reduce the troublingly
    large number of students who are unaware of how much they have
    borrowed, or whether they even have a loan. \12\
    ---------------------------------------------------------------------------
        \11\  The grant program might be bifurcated into one component for
    traditional-age college students and a second for older adults who
    return to school, including after a period of unemployment (see Sandy
    Baum et al., ``Rethinking Pell Grants'' [New York: College Board,
    2013]; and Sarah Turner, Labor Force to Lecture Hall: Pell Grants and
    Postsecondary Policies in Response to Job Loss [Washington, DC:
    Brookings Institution, 2017],http://www.hamiltonproject.org/papers/
    labor--force--to--lecture--hall--pell--grants--and--postsecondary--
    policies--in--resp o).
        \12\  Elizabeth J. Akers and Matthew M. Chingos, Are College
    Students Borrowing Blindly? (Washington, DC: Brookings Institution,
    2014).
    ---------------------------------------------------------------------------
        Whenever possible, Federal subsidies to college students should be
    delivered through a grant program. \13\ This is the most effective
    mechanism for delivering subsidies to students, as it reduces the
    prices students pay at the time of enrollment and it can be targeted to
    students who most need assistance. For example, the need-based in-
    school interest subsidy would be better used to reduce college costs
    for lower-income students at the point of entry rather than the loan
    payments they make after leaving college. Likewise, the cost of the
    Public Service Loan Forgiveness (PSLF) program, which
    disproportionately benefits high-debt borrowers even if their incomes
    are not that low, could be repurposed into need-based grants. \14\
    ---------------------------------------------------------------------------
        \13\  Federal tax credits are outside the scope of the Higher
    Education Act, but there is strong evidence that these credits have no
    impact on college enrollment (George B. Bulman and Caroline M. Hoxby,
    ``The Returns to the Federal Tax Credits for Higher Education,''
    Working Paper 20833 [Cambridge, MA: NBER, 2015]). The tax credits
    should be eliminated and the funds used to expand need-based grants.
        \14\  PSLF is likely to deliver the largest benefits to borrowers
    with graduate degrees, who can borrow much more than individuals with a
    bachelor's degree or less. Repurposing PSLF might involve creating a
    grant program for graduate programs (e.g., one targeted to individuals
    from disadvantaged backgrounds entering socially valuable fields).
    ---------------------------------------------------------------------------
        The primary purpose of the single Federal loan program should be to
    extend credit to undergraduate students. Policymakers should consider
    capping or eliminating lending to parents of undergraduate students,
    perhaps in combination with increasing undergraduate loan limits,
    rather than operating a predatory lending program. \15\ Limits on
    lending to graduate students should also be reinstated, or the
    eligibility of those loans for forgiveness curtailed, to preserve the
    fiscal sustainability of the Federal lending program.
    ---------------------------------------------------------------------------
        \15\  Rachel Fishman, ``An Unsatisfying Consensus Reached on PLUS
    Loans,'' EdCentral, New America Foundation, May 27, 2014, https://
    www.newamerica.org/education-policy/edcentral/unsatisfying-consensus-
    reached-plus-loans/.
    ---------------------------------------------------------------------------
        Streamlining existing aid into one grant and one loan program would
    help students who are already navigating the system, but it would not
    reach students who lack awareness of their eligibility for Federal aid.
    Simplifying the Free Application for Federal Student Aid (FAFSA) is a
    modest first step, but a more ambitious option is to target aid based
    on information the Federal Government already collects rather than
    through a separate form.
        Eligibility for Pell grants could be determined automatically using
    tax records. For example, families could learn about Pell eligibility
    when their children are in elementary or middle school, perhaps through
    an ``account'' that would increase in value each year the family's
    economic circumstances made them eligible. This notification could be
    sent to all families who claim one or more children on their Federal
    income tax returns. \16\
    ---------------------------------------------------------------------------
        \16\  Alternative means would be needed to identify eligible
    children whose parents do not file Federal tax returns. Congress would
    also need to decide whether to use this determination to calculate a
    lifetime Pell award, or whether Pell should continue to be available to
    low-income adults who were not economically disadvantaged as children.
    ---------------------------------------------------------------------------
        Providing aid to families based on average income over a long
    period would preserve needs-based targeting, and it would arguably be
    fairer than considering a single year's income. It would also allow for
    communicating eligibility directly, early, and clearly, without the
    need for an onerous application. Research indicates that lowering these
    kinds of barriers can increase the rates at which children from low-
    income families enroll in college. \17\
    ---------------------------------------------------------------------------
        \17\  Eric P. Bettinger, Bridget Terry Long, Philip Oreopoulos, and
    Lisa Sanbonmatsu, ``The Role of Application Assistance and Information
    in College Decisions: Results from the H&R Block FAFSA Experiment,''
    Quarterly Journal of Economics 127, no. 3 (2012): 1205--42, https://
    academic.oup.com/qje/article-abstract/127/3/1205/1921970.
    ---------------------------------------------------------------------------
        An aid application would not be needed to administer a single
    Federal loan program that provided credit on the same terms to all
    undergraduate students. Encouraging colleges to offer Federal loans to
    all their students could reduce the likelihood that students borrow too
    little. A recent study found that nudging community college students to
    borrow--in this case, by including nonbinding loan offers in financial
    aid award letters--increased both the amounts they borrowed and their
    academic success rates. \18\
    ---------------------------------------------------------------------------
        \18\  Benjamin M. Marx and Lesley J. Turner, ``Student Loan Nudges:
    Experimental Evidence on Borrowing and Educational Attainment,''
    Working Paper 24060 (Cambridge, MA: NBER, 2017), http://www.nber.org/
    papers/w24060.
    ---------------------------------------------------------------------------
        Ending the Repayment Crisis
        Streamlining income-driven repayment into a single plan would be a
    useful step forward from current policy, which provides borrowers with
    several options including the original income-based repayment (IBR), a
    newer version of IBR, pay as you earn (PAYE), and revised pay as you
    earn (REPAYE). When a borrower faces financial hardship, it will be
    easier to pick a single income-based option than decide among several.
        But simply reducing the number of plans is unlikely to
    significantly stem the rising tide of defaults. A borrower would still
    have to know that income-driven repayment is an option and take
    proactive steps to enroll and remain enrolled. And moving to a single
    plan is unlikely to address concerns about the fiscal sustainability of
    current policy. \19\
    ---------------------------------------------------------------------------
        \19\  See, for example, Jason Delisle, The Coming Public Service
    Loan Forgiveness Bonanza (Washington, DC: Brookings Institution, 2016).
    ---------------------------------------------------------------------------
        Making income-driven repayment automatic would do much more to
    reduce student loan defaults. Borrowers could be placed into such a
    plan after leaving college, using their prior-year income to calculate
    payments (which would change each year). Payments would generally start
    out low and increase with the borrower's income. Although this type of
    plan would adjust payments annually, it still would have limitations.
    For example, it would not be responsive to short-term changes such as a
    job loss. And borrowers might still fail to make payments, even
    affordable ones.
        The boldest proposals would have all borrowers make income-driven
    loan payments through the tax-withholding system (while retaining the
    option to pay them off more quickly). For example, under the Dynamic
    Repayment Act proposed by Senators Warner and Rubio, employers would
    collect payments and remit them to the Federal Government in the same
    way that they withhold income taxes. \20\
    ---------------------------------------------------------------------------
        \20\  S. 799, 115th Cong., https://www.Congress.gov/bill/115th-
    congress/senate--bill/799'q= percent7B percent22search percent22
    percent3A percent5B percent22Dynamic+Repayment+Act percent22 percent5D
    percent7D&r=1
    ---------------------------------------------------------------------------
        In an automatic system, it would be difficult for most borrowers to
    default on their loans in the same way that it is difficult to underpay
    payroll taxes. \21\ This is the approach taken by several countries,
    including England and Australia, and it is also used in the U.S. in the
    form of ``wage garnishment'' for severely delinquent loans. \22\
    ---------------------------------------------------------------------------
        \21\  Nonwage employees (including ``gig'' workers) could be a
    subject to a system modeled on the IRS's estimated tax system. All
    workers would be subject to an annual reconciliation of earnings and
    debt payments. For a detailed proposal along these lines, see Sandy
    Baum and Matthew Chingos, ``Reforming Federal Student Loan Repayment: A
    Single, Automatic, Income-Driven System'' (Washington, DC: Urban
    Institute, 2017), http://urbn.is/2D6iY09.
        \22\  ``EPI's DC Conference, `Restructuring Student Loans: Lessons
    from Abroad,' '' Gerald R. Ford School of Public Policy, University of
    Michigan, June 14, 2016, http://fordschool.umich.edu/news/2016/epis-dc-
    conference-restructuring--student-loans-lessons-abroad
    ---------------------------------------------------------------------------
        A significant downside of current income-driven plans is that
    borrowers pay the same percentage of income, regardless of whether they
    borrowed $10,000 for an undergraduate degree or $100,000 for a
    professional degree. \23\ Combined with loan forgiveness options after
    10--25 years, this means that a borrower can take on more debt without
    necessarily paying back any more. \24\ This could lead to price-
    insensitivity among students, further driving up the prices that
    institutions (especially graduate programs) can charge and the costs to
    taxpayers.
    ---------------------------------------------------------------------------
        \23\  Under REPAYE, borrowers pay for up to an additional 5 years
    if they borrowed to attend graduate school (seehttps://
    studentaid.ed.gov/sa/repay-loans/understand/plans/income-driven), but
    the percentage of income paid each month is the same.
        \24\  See Jason Deslise and Alexander Holt, Zero Marginal Cost
    (Washington, DC: New America Foundation, 2014), https://
    www.newamerica.org/education-policy/policy-papers/zero-marginal-cost/;
    and Matthew M. Chingos, ``Jeb Bush's Student Loan Plan Should Outlive
    His Campaign'' (Washington, DC: Brookings Institution, 2016),.
    ---------------------------------------------------------------------------
        This problem can be solved by tying the amount borrowed to the
    percentage of income paid. \25\ For example, borrowers might pay 1
    percent of their income for each $10,000 that they borrow. Under such a
    system, the undergraduate borrower with $10,000 in debt would pay 1
    percent of income, whereas the graduate degree holder with $100,000
    would pay 10 percent. Payments would continue until the loan is paid
    off (with interest), or Congress could specify a maximum period after
    which any remaining balance is forgiven (which could also be linked to
    the amount borrowed).
    ---------------------------------------------------------------------------
        \25\  Alternative solutions include loan limits (especially for
    graduate students), making forgiveness provisions less generous (e.g.,
    eliminating Public Service Loan Forgiveness), or tying the length of
    time prior to forgiveness to the amount borrowed.
    ---------------------------------------------------------------------------
        Even with these changes, two significant drawbacks of income-driven
    repayment would remain. First, an increasing loan balance (i.e.,
    negative amortization) could impose psychological harm on borrowers and
    prevent them from taking on other forms of debt such as mortgages.
    Second, taxpayers assume all the risk of nonpayment and reap none of
    the reward when borrowers are economically successful (beyond repayment
    of principal and interest).
        An alternative would be to require borrowers to pay a set
    percentage of their income for a fixed period (which could vary based
    on the amount borrowed), even if it exceeds what the borrower would
    have paid under a traditional loan. \26\ A system along these lines,
    which would be a public-sector analogue of ``income share agreements,''
    would eliminate the concept of a loan balance, and interest rates would
    no longer be needed.
    ---------------------------------------------------------------------------
        \26\  Total payments would likely need to be capped (e.g., at some
    multiple of the amount borrowed). Otherwise, the fiscal sustainability
    of the system would be undermined by borrowers with high earnings
    potential turning to the private market for financing.
    ---------------------------------------------------------------------------
                                     * * *
        A single need-based grant program, combined with an easy-to-
    understand loan program that protects borrowers through automatic
    income-driven repayment, will increase the effectiveness of Federal
    support for higher education and reduce the harm that noncompletion and
    loan default disproportionately inflict on disadvantaged individuals.
        Optimal design of Federal grant and loan programs requires
    considering how they interact with each other and with other components
    of the HEA, such as the rules that govern institutional eligibility to
    award Federal grants and loans. How to protect students and taxpayers
    from low-value programs is beyond the scope of this hearing, but it is
    critical to a well-designed Federal aid system.
        The reauthorization of the HEA provides an important opportunity
    for Congress to streamline and strengthen the Federal aid programs that
    are critical to college access and completion in the United States. I
    hope my testimony will contribute to that important effort, and would
    be happy to answer any questions.
                                     ______

                     [summary statement of matthew chingos]
        Federal student aid programs provide vital assistance to students
    and further national goals of increasing educational attainment and
    economic mobility, especially for students from disadvantaged
    backgrounds. The reauthorization of the Higher Education Act provides
    an opportunity to modernize and reform these programs to better support
    these goals.
                         Student Loan Repayment Crisis
        For most students, debt is a tool that allows them to access
    educational opportunities that pay off in the long run. But the student
    loan system is harming too many students while providing arbitrary
    subsidies to others.

              4.6 million borrowers are in default, a number that
            has doubled over the past 4 years even as the default rate has
            fallen.
              Borrowers with relatively small amounts of debt,
            especially college dropouts, are most likely to default.
              Income-driven repayment plans provide a safety net
            for struggling borrowers but have failed to sufficiently
            mitigate defaults.
                              One Grant, One Loan
        Federal aid programs for undergraduates should be streamlined into
    a single grant program and a single loan program.

              Federal subsidies to college students should be
            delivered through need-based grants to the greatest extent
            possible, as grants reduce the prices students pay at
            enrollment and can be targeted to students who most need
            assistance.
              Subsidies currently embedded in the loan programs,
            such as the in-school interest subsidy and Public Service Loan
            Forgiveness, should be repurposed into need-based grants.
              Eligibility for grants could be determined through a
            simplified form or existing government records, enabling early
            communication with students and families.
                          Income-Driven Loan Repayment
        Moving to a single income-driven repayment plan is a step in the
    right direction, but it is unlikely to stem the rising tide of defaults
    if borrowers must proactively enroll every year.

              Participation in income-driven repayment should be
            automatic, with payments made through the tax withholding
            system (as is done in England and Australia).
              The percentage of income paid or number of years
            prior to forgiveness should be tied to the amount borrowed, to
            ensure fairness to borrowers and reduce unintended consequences
            such as tuition inflation.
              The loan structure could be maintained, or Congress
            could move toward a system where borrowers pay for a set period
            rather than a set dollar amount, eliminating the need for a
            loan balance and interest rate.
                                     ______

        The Chairman. Thank you, Dr. Chingos.
        Dr. Dynarski, welcome.

       STATEMENT OF SUSAN DYNARSKI, PROFESSOR OF PUBLIC POLICY,
      EDUCATION AND ECONOMICS, UNIVERSITY OF MICHIGAN, ANN ARBOR,
                                MICHIGAN

        Dr. Dynarski. Chairman Alexander, Ranking Member Murray,
    Members of the Committee, thanks for the opportunity to testify
    today.
        First thing I want to say is that I am a first-generation
    college grad. My dad was a high school dropout. Expanding
    opportunity for low-income students motivates my work and
    everything I say today. So that is what underpins all my
    recommendations.
        I am going to be focusing on what we can learn from other
    countries in repaying student loans, but I want to first
    express my strong support for simplifying the aid process for
    students. When I say ``for students,'' I mean where they
    actually meet the student aid system is where we need to change
    things if it is going to be more effective in getting more
    students into college.
        So in the U.S., student debt has risen sharply over the
    past few decades, but we should be clear, the typical
    undergraduate debt is not what we see in the headlines. For
    those who don't complete a B.A., half the students who don't
    actually complete a B.A., debt is less than $10,000. For those
    who do complete a B.A., it is about $30,000, and only 15
    percent of those who complete a B.A. actually end up with more
    than $30,000. Just 2 percent of undergrads end up borrowing
    more than $50,000.
        Now borrowing for college is common around the world. In
    Sweden, where they don't even have any tuition charged at all,
    people still borrow to pay their living expenses; about $20,000
    for their university education. In Australia, it is about a
    22,000. In England, about 70,000 for the typical university
    graduate. So what is exceptional about the U.S. is not the
    borrowing levels, but the default rates.
        Other countries--in other countries, loans do not send
    millions of borrowers into financial distress. In the U.S.,
    loan distress is concentrated among those who borrow just a few
    thousand dollars to attend a for-profit or a community college.
    It is these smaller loans that go into default, not the larger
    ones. When fees and interest and penalties get piled onto small
    balances, they can balloon into much larger debt and then end
    up in default.
        Default is very costly. It does enormous damage to
    borrowers' credit ratings. It leads to higher interest rates on
    credit cards, on cars. Employers regularly check credit reports
    of their applicants, and so do landlords. So defaulting on a
    loan is devastating to a person's financial life. We need to
    stop student debt from ruining people's lives.
        So I am going to tell you what other countries do to make
    their debt work. First, they allow borrowers to spread their
    payments over more years. In the U.S., the standard repayment
    period is 10 years; Sweden 25, Germany 20, England 30,
    Australia, there is no time limit at all. I know of no other
    country that has a repayment period as short as ours.
        But more importantly, in Australia and in England, loan
    payments change with earnings. Payments are deducted from
    paychecks, rising and falling along with pay. This is like the
    system used in the U.S. to collect Social Security
    contributions and other payroll taxes.
        In England, there are no loan payments at income below
    30,000, and then they are 9 percent of income. So it works out
    that if your annual income is about 50,000, your payments are
    about 150 per month. In Australia, the loan payment is 4
    percent of all income, works out about the same. You don't pay
    until your earnings hit $46,000 and then around $150 a month,
    again.
        In both countries, the key is that loan payments change
    automatically with paychecks, just like our payroll taxes and
    income taxes do. If pay drops, we pay less in payroll taxes
    automatically. In fact, we are pretty annoyed if our hours were
    cut, but our payroll taxes stayed the same.
        In the income-based plans in the U.S., payments do not
    adjust automatically. Instead, they are based on the previous
    year's income. If a borrower needs to adjust her payment, she
    has got to fill out an application. The CFPB has shown that
    this is often a bumpy process that can take months.
        Borrowers cannot apply by themselves. Their loan servicers
    have to move the application along. Meanwhile, the student loan
    bills keep coming, no matter how small the paycheck is, and
    millions of borrowers end up in default.
        Now some worry that payroll withholding puts student loans
    above other expenses. Why should a student loan get priority
    over food and rent? But this is exactly what payroll
    withholding prevents. In Australia and England, when earnings
    drop, loan payments disappear immediately. So borrowers can
    devote those shrunken paychecks to essential needs. This
    effectively acts as social insurance against shocks to wages
    and hours.
        Now we actually have a system of automatic loan payments
    right now run by the Federal Government, but it is brutal. If a
    borrower goes into default, the Department of Education can
    collect payments via the Treasury Offset Program. Last year,
    this program seized $3 billion in Federal payments, including
    tax refunds like the earned income tax credit and Social
    Security payments to deceased, disabled, and retired people and
    their dependents.
        Through Social Security, 15 percent of the monthly benefit
    gets lopped off to pay a loan in default. The GAO finds
    garnishments are pushing Social Security recipients below the
    poverty line. We are already doing automatic withholding of
    loan payments, but in a way that hurts the most vulnerable
    people.
        There are many models for funding college, in conclusion.
    Some advocate for free tuition, others for a system of targeted
    need-based aid. No matter what, loans are going to be part of
    our system, whether they are large or they are small. Even in
    tuition-free Sweden, students borrow. We, therefore, need to
    make loans and loan repayment work. We need to overhaul a
    punishing system that turns manageable debt into a financial
    disaster for millions of student borrowers.
        Thank you, and I look forward to your questions.
        [The prepared statement of Dr. Dynarski follows:]
                      prepared statement of susan dynarski
        Chairman Alexander, Ranking Member Murray, and Members of the
    Committee, thank you for the opportunity to testify today.
                  U.S. Student Loans in International Context
        Americans owe $1.3 trillion in student loans. Nearly five million
    borrowers are in default, and millions more are behind on their
    payments.

        Borrowing for college is common across the globe.

              Sweden: While tuition is zero, students typically
            borrow $20,000 to pay living expenses
              Australia: Students borrow about $22,000
              England: Students borrow about $70,000

        In the United States, typical undergraduate debt is less than
    $10,000 for those who don't complete a 4-year degree and about $30,000
    for those who do.
        What's exceptional about the United States is therefore not student
    borrowing but a rigid, archaic repayment system that unnecessarily
    plunges millions into financial distress.
        Millions of U.S. borrowers with small loans--often less than
    $5,000--are ending up in default. In fact, it is the smallest loans
    that are most likely to go into default.
                            The High Cost of Default
        Default is costly to both government and citizens. It undermines
    the foundation of our system for funding college.

              Default does enormous damage to borrowers' credit
            ratings.
              Defaulters face higher interest rates on cars and
            credit cards.
              Employers regularly check credit reports, so those in
            default miss out on job opportunities.
              Landlords also check credit reports, so borrowers in
            default have a harder time finding housing.

        It doesn't need to be this way. Students in England borrow far more
    than ours do, but they have a simple, flexible repayment system that
    keeps borrowers current on their loans. The same is true of Australia.
        What do other countries do that makes their systems work better
    than ours?
                              Length of Repayment
        In the United States, the typically expected repayment period is 10
    years.

              In Sweden payments are spread out over 25 years
              In Germany, students pay their loans over 20 years
              In England, students pay their loans over 30 years
              In Australia, there is no time limit, with students
            taking as long as they need to pay

        A longer repayment horizon makes sense. A core principle of finance
    is that the life of debt should align with the life of the asset. We
    pay for cars over 5 years and homes over 30 years because homes last a
    lot longer than cars. An education pays off over a lifetime, so student
    loans should be paid off over a long horizon.
                             Income-Based Repayment
        In Australia and England, loan payments are set as a percentage of
    earnings. This is analogous to the process used in the U.S. to collect
    Social Security contributions. Payments are deducted from paychecks,
    rising and falling along with pay.

              In England, loan payments are 9 percent of income
            above $30,000.
                 A person with an income of $50,000 would therefore
            pay $1,800 (9 percent of $20,000).
              In Australia, there are no loan payments while a
            person's income is below $46,000. Once that threshold is
            crossed, the loan payment is 4 percent of all income.
                 A person with an income of $50,000 would therefore
            pay $2,000 (4 percent of $50,000).
              Automatic Adjustments to Payments If Income Changes
        In England and Australia, the loan payment automatically changes if
    pay changes. These payments are set on a dynamic basis, with the rate
    applied according to the annualized value of a person's given weekly or
    monthly paycheck.
        This is exactly as our payroll taxes and income taxes work.
    Payments are deducted directly from our paychecks, as a percentage of
    the pay period's earnings.
        Payroll withholding is the only way to provide an immediate link
    between fluctuations in earnings and loan payments. Any other system
    delays the protections that low-income borrowers desperately need.
        Automatic, Income-Based Repayment Is Effective Social Insurance
        Some worry that payroll withholding gives student loans primacy
    over other expenses. Why should a student loan get paid before more
    basic needs such as food and rent?
        No one facing economic hardship should have to choose between
    paying student debt and paying for basic necessities.
        Prioritizing basic needs is exactly what the Australian and English
    systems do. When earnings drop, loan payments drop immediately,
    allowing borrowers to devote their shrunken paychecks to essential
    needs. Borrowers don't have to fill out an application to have payments
    adjusted, or even make a phone call.
             Adjustment is Not Automatic in U.S. If Income Changes
        In the income-based plans in the United States, payments do not
    adjust automatically. Instead, payments are based on the previous
    year's income and are constant for a year.

              In the U.S., if a borrower's earnings fluctuate
            during the year and she wants to adjust her payment, she must
            fill out new paperwork. That can take months to process.

        After a year, a borrower is ejected from the income-based plan
    unless she completes a re-application.

              In the U.S., even staying in an income-based
            repayment requires an annual, 12-page application. Many who
            successfully enter an income-based plan find themselves kicked
            out the next year, if they (or their loan servicers) don't
            complete the required paperwork on time.

        In the United States, student loan bills keep coming, no matter how
    small the paycheck. It's up to the borrower to apply for a reprieve if
    their financial situation worsens. Getting on an income-based repayment
    plan depends on getting a loan servicer to complete the complicated
    paperwork. As shown by the Consumer Financial Protection Bureau, this
    is often a bumpy process that can take months. In the meantime, the
    bills keep coming--and millions of borrowers end up in default.
        This is no way to protect borrowers--especially young, low-income
    workers--against shocks to their earnings.
        Repayment Can End Faster With Automatic, Income-Based Repayment
        While automatic, income-based repayment protects low-income
    borrowers, it also speeds repayment by high earners.

              The typical Australian borrower discharges student
            debt within eight to 12 years.
              Those with very high earnings (for example, lawyers)
            finish in as few as 5 years.

        This is because payments rise automatically when earnings do. As a
    result, high earners pay down their debt more rapidly than they would
    in a system of flat repayments.
      U.S. Government Garnishes Benefits to Low-Income People for Student
                                     Loans
        We have a system of automatic payroll deduction for student loans
    already, and it's brutal.
        If a borrower goes into default, the Department of Education can
    direct Treasury to collect payments via the Treasury Offset Program.
    This program seizes Federal payments to student borrowers who are in
    default.
        In 2017, $2.8 billion in payments went to the Department of
    Education from this program. These payments were seized from:

              Tax refunds, including the Earned Income Tax Credit
              Social Security payments to retired and disabled
            workers
              Social Security payments to the dependents of
            retired, disabled, and deceased workers
              Black Lung benefits

        These garnishments are far more punitive than the income-based
    withholding proposed in this testimony. The garnishment rate for Social
    Security beneficiaries in default on student loans is 15 percent--far
    higher than the rate on any proposed income-based repayment program.
        The Government Accountability Office has found that Social Security
    beneficiaries are being pushed below the Federal poverty line by these
    garnishments. While beneficiaries can appeal to protect their benefits,
    these appeals must be repeated annually.
                 Make a Loan Repayment Work for Borrowers . . .
        The loan repayment program must be designed with borrowers in mind.
    Its goal should be to recoup the government's investment while causing
    as little financial distress as possible.
        Calibrating the elements of the loan program requires care and
    attention. The critical elements of an income-based repayment program
    include:

              Threshold above which payments begin
              Percentage of income deducted for payments
              Interest rate
              Borrowing limits
              Maximum length of repayment
              Conditions for early repayment

        These parameters can be set so that a loan program pays for itself.
    As we are putting such a program into place, the focus should be on
    getting these parameters right so that the system is sustainable for
    both borrowers and the loan program.
            . . . And Only Then Turn to Accountability for Colleges
        In a properly functioning income-based repayment program, there are
    no defaults. While we now use cohort default rates to hold colleges
    accountable for their performance, we should not fear the loss of this
    metric. To state the obvious, borrowers should not suffer the financial
    devastation of default so that we can hold schools accountable.
        An effective, income-based program will naturally generate
    administrative data that link earnings and borrowing at the individual
    level. These data will allow the creation of detailed, accurate
    measures of repayment burdens by school, cohort, and demographic
    characteristics. These measures will allow for fine-tuning of the
    parameters of the loan repayment program discussed above.
        These data can also be used in an accountability system to reward
    and punish schools, since they can be calculated by college and sector.
    These repayment-burden data are improvement over cohort default rates,
    since they arrive much faster and they are less easily gamed by
    schools.
                           What About Very High Debt?
        An automatic, income-based loan repayment program will work for the
    98 percent of undergraduates who borrow a manageable amount. For the
    other 2 percent, we need stronger consumer protection:

              Private student loans should not survive bankruptcy
              Loans that need a credit check should not be marketed
            as student loans
              Students should exhaust Federal student loans before
            being allowed to take out any private loans
                                   Conclusion
        What's exceptional about the United States is not how much we
    borrow for college. What's exceptional is an antiquated, rigid
    repayment system that turns manageable debt into a financial disaster
    for millions.
        The repayment system in the United States was built when students
    borrowed little to nothing. Other countries have overhauled their loan
    systems to reflect changing times. It is time for the United States to
    do the same.
                                     ______

        The Chairman. Thank you, Dr. Dynarski.
        Well, thanks to all of you. We will now begin a 5-minute
    round of questions, and we will start with Senator Young.
        Senator Young. Dr. Dynarski, thank you for your testimony.
    I have seen countless Hoosiers in my travels and visited with
    them, and student debt has, indeed, ruined their lives.
        In the U.S., as I understand it, there are roughly 44
    million borrowers with loans totaling $1.4 trillion. In order
    for a student to be considered in default on their student
    loans, the Department of Education tells us that a student
    mustn't have made a payment in 270 days. The majority of
    students who default on their loans have very little debt. But
    ignoring student loan debt can have real-world consequences, as
    you know, both individually for the student and for the broader
    economy.
        Students who default on their Federal loans will face
    difficulties buying a house, buying a car, renting an
    apartment, and receiving a tax return. Furthermore, students
    who default won't be eligible for other Federal financial aid
    opportunities, which may prevent them from enrolling in an
    education program in the future.
        So I am going to ask you a two-part question following your
    well-received recommendations. In your opinion, Doctor, is
    there adequate information available for at-risk students to
    prevent defaults, and secondarily, what role does the Federal
    Government play in ensuring that students are fully aware of
    the consequences of defaulting on their student loans?
        Dr. Dynarski. I will echo the earlier testimony that often
    info about borrowing is unclear in the award letters, and
    information about how to avoid default is unclear and
    complicated in the repayment process. There are two ways to
    deal with the very complicated system. You can try to push out
    lots of information that explains to people this very
    complicated system. You can simplify the system so that it
    doesn't need so much explaining.
        That is, in part, what I am advocating for is that you
    might not know or I don't know the insides and outs of how the
    payroll tax works, but somehow it smoothly works on a monthly
    basis that the right amount comes out of my paycheck. I don't
    have to engage in the complicated paperwork. So I think
    streamlining things on the Government's end is the best way to
    get to fixing things for student borrowers.
        Senator Young. Is there research that exists that supports
    this claim, that is, streamlining and simplifying the process
    will alleviate the number of students who end up defaulting?
        Dr. Dynarski. We have evidence that when people are moved
    into income-driven repayment, perhaps because they ended up
    with the right call agent who actually was good at making this
    happen, that it reduces defaults, that it increases
    homeownership. So there is excellent research by a Princeton
    economist that looked into this, and indeed, it improves
    people's financial lives.
        Senator Young. Okay. I may follow-up about that evidence.
    For borrowers who have defaulted, Doctor, what assistance
    should be provided to make sure their accounts are healthy
    again?
        Dr. Dynarski. Moving people automatically into an income-
    based repayment program, I think, would be the best bet and
    preventing those defaults up front. So one option is that as
    soon as somebody falls behind, instead of waiting for the
    servicer to provide an application for income-driven repayment,
    that they are automatically moved into the program. And ditto
    for somebody who has been in default.
        Senator Young. Thank you.
        Doctor Chingos, while our Federal student loan programs
    have become increasingly implicated and convoluted and
    difficult to navigate, innovative financing options for
    students are crowded out. I have spoken many times at this
    Committee and other forums to highlight how income share
    agreements, which you mentioned, are an emerging tool for
    students to pay for college.
        I first began working on this issue in the U.S. House of
    Representatives, and since that time, Purdue University,
    located in my home State of Indiana, has developed the first
    large-scale income share agreement called Back a Boiler.
        In October of last year, I visited with one student
    benefiting from this program. His name is Andrew Hoyler. Andrew
    was worried about how much monthly income he was going to have
    to contribute to student loan payments. As an out-of-state
    student, Andrew sought out of Purdue because of its world-class
    aviation program. But by participating in this program, it has
    allowed him to budget for the future and create peace of mind.
        I have introduced legislative with Senator Rubio that would
    provide a regulatory framework for so-called ISAs and instill
    consumer protections for students. And so, Doctor, I ask you,
    can you speak to the effects of a complicated student loan
    system and how that can potentially stifle other innovative
    financing mechanisms like ISAs?
        Dr. Chingos. I think part of what makes the student loans
    complicated is we advertise them as loans, but then now we are
    all saying we should get people into income-driven repayment on
    the other end. So up front, people think they are taking a
    loan, but we really want them to pay it as a percentage of
    income.
        So I talked about sort of a public sector analogue of an
    ISA, but I think in the private sector, ISAs are certainly
    worth experimenting with, especially as an alternative to
    private loans. I think that is where the case is strongest. We
    know that the private loan market has not served students and
    borrowers well. I think ISAs could be a promising alternative
    if the right regulatory framework and consumer protections that
    you talked about are in place.
        Senator Young. Mr. Chairman, thank you.
        The Chairman. Thank you, Senator Young.
        Senator Murray, excuse me.
        Senator Murray. Thank you. Again, thank you to all of you
    for your testimony and for being here today.
        Dr. Lowery-Hart, let me start with you. Again, thank you
    for your testimony.
        You touched on how students struggle to figure out how they
    are going to pay for college and their basic needs like food,
    and childcare, and transportation, healthcare, housing. I was
    glad you mentioned how student loans are one way that students
    meet those needs when their grants so often don't cover the
    cost of college and like most working families, they can't pay
    for those expenses out of pocket.
        Now, some have proposed making students pay more interest
    on their loans or reducing the sources of grant aid. Can you
    talk a little about how those would impact your students?
        Dr. Lowery-Hart. So if you were to talk to Maria, she
    doesn't understand any of the policy implications. She just
    knows what she is trying to do on a daily basis, which is
    change the economic outlook up for herself and her family.
        When I first came to Amarillo College, I looked at our
    success rates, and I was embarrassed of them. I was preparing,
    as a good academic recovering faculty member myself, to require
    more tutoring, which is important, and more academic
    preparation. I wanted to talk to my students, what was keeping
    them from being successful in the classroom? And what they told
    me changed who I am, personally and professionally. It is
    transportation, childcare, healthcare, legal services, utility
    payments, healthcare. Those were not things that a higher
    education entity was set up to do.
        SEOG helps us serve students in a profound way. Maria can
    be full Pell eligible, can maximize her loans, work two jobs,
    and still on her yearly budget come $2,000 to $3,000 short. So
    any funds that are removed from our ability to ensure that
    Maria can finish what she starts not only damages her, but it
    damages the economic outlook in my community.
        Senator Murray. Okay. Thank you.
        Ms. Darcus, I am extremely concerned that many of the 42
    million Americans with student loan debt are being driven into
    default. The poor practices in student loan servicing are
    failing our borrowers, who are being misled and mistreated, all
    while student loan companies make billions of dollars from
    taxpayers.
        If there was one a simple thing the Department of Education
    should do today to help struggling borrowers, from your
    viewpoint, what would that be?
        Ms. Darcus. The Department of Education has incredible
    responsibility to provide oversight to the contractors it
    hires. Both servicers and debt collection companies should be--
    are responsible for student success, and they should be held
    accountable when students do default. Clients like mine,
    borrowers like our low-income clients, unfortunately don't get
    the help that they need to navigate repayment, and we need to
    know that the Department of Education is going to hold their
    agents, their servicers accountable.
        If they are not going to step up enforcement, then I am
    glad we have the Consumer Financial Protection Bureau, the FTC,
    and State Attorneys General who are willing to take up the
    charge. Students need to know that they are going to be able to
    get something out of the investment they made and that the
    companies that are supposed to serve them, if they are not
    serving them--if they are misleading them, if they are lying to
    them, if they are denying them opportunity to repay their
    loans--that those companies aren't going to be in the business
    anymore.
        Senator Murray. So students have somebody at their back at
    the Department of Education holding their feet to the fire?
        Ms. Darcus. Yes.
        Senator Murray. Okay. Dr. Lowery-Hart, I have been very
    concerned to see the new research that I mentioned that shows
    student defaults might be getting worse in the near future,
    with potentially up 4 in 10 borrowers defaulting over the
    course of the repayment. Taking away resources from students,
    including their ability to borrow when funds run short, will
    only make their lives worse. So as we now look at reauthorizing
    HEA and seeking to reduce student debt, what are some of the
    better alternatives than just restricting borrowing?
        Dr. Lowery-Hart. Well, there are several, but I would say,
    given the students that we serve that are now the typical
    student in higher education, one of the most important things
    that we can do is to align with resources that are already
    there. So for some of the resources that are available in our
    communities, with housing and food and other types of aid,
    being a student actually precludes you from accessing those
    resources. If we could align the work that we are doing in
    higher education with----
        Senator Murray. Because being a student, you can't apply
    for some of those other resources?
        Dr. Lowery-Hart. Yes. That is what it means. Or you fall
    down on the priority list for housing, for instance. The
    alignment between Government programs that already exist to
    serve students and exist to serve our communities, if those
    could be aligned and better integrated, more resources would be
    available to our students, which would mean they could complete
    a degree, which is an economic impact that our communities
    desperately need.
        Senator Murray. Okay. Thank you, thank you for in your
    testimony saying that we need your students. I thought that was
    an important point. Thank you.
        The Chairman. Thank you, Senator Murray.
        Senator Enzi.
        Senator Enzi. Thank you, Mr. Chairman and Ranking Member
    Murray, for putting together this series of hearings. It is due
    for reform and modernization. Student borrowers do face
    difficult decisions when they are choosing how to pursue a
    higher education, and they have a difficulty by the existence
    of so many choices, particularly in regards to the repayment.
    Simplification is a crucial goal for the reauthorization.
        Then there is the alarming GAO report that shocked me when
    I found that the Department of Education's approach to
    estimating income-driven repayment plan costs and quality
    control didn't ensure reliable budget estimates, with the
    actual costs found by the GAO to be more than double what was
    originally expected. Due to the popularity of these repayment
    plans, improving the Department of Education's estimation
    approach is critical to knowing how much these plans will cost
    taxpayers. We can't make good decisions about what to do with
    those plans unless we have that information.
        Ms. Keane, you mentioned the one-third of the letters that
    you have that had sufficient information in them. Do you have a
    checklist that you can share with us for what is insufficient
    information?
        Ms. Keane. Absolutely. Yes, absolutely. We really believe
    that on every award letter, it is very important that the
    students see cost clearly marked out. To be specific, first
    off, it is what are the net costs? That is, all in, what you
    need to pay to start and finish school. This takes away any
    grant aid that might be applied, any free money that has been
    offered to the student as gift aid for attending.
        Then from there, it is important to note what are direct
    costs to college as well as what are the indirect expenses.
    Indirect expenses are paid to other vendors at different times.
    The direct costs are paid to the school as a bill.
        When we talk to students about this, we call it an
    estimated bill. So we would love to see on every award letter
    both the net costs, the all-in costs you need to start and
    succeed in school, as well as the estimated bill that students
    can expect to get in August so that students like Leon don't
    get caught $17,000 short.
        Senator Enzi. Thank you, if you could provide that
    checklist to me, I would really appreciate it.
        Ms. Keane. Yes. I have a few more terms, so I am happy to
    share that afterwards.
        Senator Enzi. I thought there was probably more to it than
    that.
        Dr. Chingos, you mentioned the Government Accountability
    Office issuing that report in 2017 that kind of shocked us to
    find that $28 billion of loans between 2009 and 2016 are going
    to be in default. And although there could be some disagreement
    on the root of the problem, and complexity has to be a part it,
    but based on your previous research into simplified financial
    models, how significantly would a One Grant, One Loan style
    financial and model impact administration and cost estimation
    at the departmental level? Do you have any estimate?
        Dr. Chingos. Thank you, Senator.
        I agree that carefully and accurately estimating the cost
    of these programs is critically important to ensuring their
    fiscal sustainability. I was also troubled by that GAO report.
        I think where this really matters is on the repayment end.
    You know, grants, you write those checks out, you know what
    those cost today. It is really hard to measure the cost of the
    loan programs because the loans are paid back over--it used to
    be 10 years, and now it is much longer, especially in these
    income-driven plans. So having accurate estimates of what these
    plans are going to cost is really important.
        Senator Enzi. Yesterday, one college told me about a person
    that had just applied that was 30 years old and has already
    collected several degrees but can defer having to make the
    payments and the interest until they quit getting degrees. And
    the person now owes $500,000 and so can't afford to quit going
    to school. That is a problem I hadn't heard of before.
        Ms. Darcus, earlier this Congress, I introduced the
    Transparency in Student Lending Act, which would require the
    disclosure of the annual percentage rate for Federal student
    loans. Currently, this information is available to borrowers
    who get private loans, but not borrowers who get loans from the
    Department of Education. In your opinion, would that disclosure
    provide more useful information to student borrowers, and is
    there any other useful information that could help student
    borrowers?
        Ms. Darcus. At NCLC, we always support improving
    disclosures and ensuring that consumers have the information
    they need about the financial transaction they are entering
    into. They need comprehensive counseling at every stage, from
    when they are trying to decide whether to borrow to when they
    are figuring out how to repay, to when they are struggling to
    repay.
        So in addition to disclosing APR, there is a number of
    other factors and piece of information that we would hope would
    also be provided to students, and disclosures alone won't
    resolve the problem. So we hope that this Congress will go
    further and also ensure that there is real accountability if
    someone else doesn't--like breaks the rules and students have
    trouble repaying.
        Senator Enzi. You would provide me with that list of
    additional things, too, then?
        Ms. Darcus. Yes.
        Senator Enzi. Thank you.
        The Chairman. Thank you, Senator Enzi.
        Senator Bennett.
        Senator Bennet. Thank you, Mr. Chairman. Thank you so much
    for holding this hearing with the Ranking Member. I hear about
    it every single time I go home to Colorado.
        Dr. Lowery-Hart, just a little, slightly off topic. How
    does Maria get childcare?
        Dr. Lowery-Hart. It is difficult, and in most communities
    like mine, there is a shortage of childcare. As a college, we
    are working now to provide childcare for students.
        Senator Bennet. Can you tell us about that a little bit?
        Dr. Lowery-Hart. So we have two childcare options for our
    students. One that we have recently opened, the Hagy Childcare
    Center. It is especially important for students that are going
    in medical fields because they have clinicals that are 8 to 12
    hours long, and so they need childcare at off hours. But it is
    not something that we are financially set up to do.
        We have had to partner with childcare agencies in the
    community. We have had to seek philanthropy. I am still trying
    to find a long-term financial solution for that. What Maria
    ends up doing when she can't access our childcare is someone in
    her apartment is watching several kids while people go to work
    and go to school, which means childcare isn't as professional
    or as safe or as reliable.
        Senator Bennet. It always seemed to me--I used to be a
    superintendent of schools. It always seemed to me that
    community college provides the opportunity to have a building--
    it may not be perfectly set up for child--a building, people
    that are learning how to be teachers or childcare providers,
    and that ought to create an opportunity for us to think----
        Dr. Lowery-Hart. Well, and that is what we are--that is
    what we are doing with our childcare center right now, but it
    is scaling it for impact that is the biggest worry.
        Senator Bennet. Yes, thank you.
        I want to ask Dr. Chingos and Dr. Dynarski an unusual
    question, actually, which is what is the best argument against
    automatic income-driven repayment? It sounds to me like a
    pretty elegant solution to a lot of what ails the people that I
    represent. Is it? If you were taking the other side of that
    argument, what would you say?
        Dr. Chingos. So I think the best argument against it is
    that it's going to lead to price inflation. Once we tell
    students, ``Borrow whatever you need to go to college, and you
    will pay it back based on your income later,'' the colleges
    will just say, ``Oh, thank you very much,'' and we will just
    raise our prices. So that is why I talked in my testimony about
    the need to tie the amount that students are borrowing to the
    amount that they pay. So that they pay it when they can afford
    it, but that they still pay in relation to what they borrow. So
    they remain price sensitive and keep the institutions in check.
        Senator Bennet. I would argue that the existing system does
    a pretty good job of incentivizing people to raise their rates.
    But that is something we need to worry about.
        Dr. Dynarski. I would say that starting any new program has
    hiccups. Starting a program of payroll withholding will require
    planning, and it will be challenging. I do think we need to
    have caps on the borrowing for the reasons just described. But
    some way to make sure, if we are using the full force of the
    Government to collect loans, that we are on the other side
    making sure we are regulating carefully the providers, so that
    nobody is being forced to pay for an education they didn't
    actually get.
        Senator Bennet. Just along those lines, Dr. Chingos
    mentioned in his testimony just briefly that as part of
    whatever we do, we need to protect against I think what he
    described as ``low-value institutions.'' I just wonder, with my
    last minute and a half, whether there is anybody on the panel--
    maybe I will start with you, Dr. Chingos--could tell us how we
    could better protect people from low-value institutions?
        Dr. Chingos. Well, I think that is more than a minute and a
    half question. But I think one thing that is really important--
    --
        Senator Bennet. Unfortunately, it is all I have.
        Dr. Chingos ----is to look at the outcomes of students from
    different----
        Senator Bennet. That is what----
        Dr. Chingos ----colleges, seeing how well do people do in
    the labor market. Now we have to--college isn't just about
    getting a job. It is not just not about earning money, but I
    think people go to a college with an expectation they are not
    going to live a life in poverty afterwards. So if we see
    colleges or programs of study where people go, and they enter
    in poverty and they leave in poverty, well, that is probably
    not a place where we want people spending their own money, and
    it is certainly not a place where we want to be spending
    taxpayer money.
        Senator Bennet. Do you have--do we have the longitudinal
    datasets to be able to understand that now?
        Dr. Chingos. So through the College Scorecard, we have a
    partial version for people who participate in the aid programs,
    but as I am sure you know, there are limitations right now on
    the Government's ability to link data that it already collects.
    That could be used to provide a much more robust data system
    both for consumers and for policymakers.
        Senator Bennet. Is there anybody else? Yes, Ms. Keane?
        Ms. Keane. Yes. I would say that the best way to do it is
    to arm consumers with the information to have choice. Right
    now, students are so overwhelmed getting through--as well as
    counselors and financial aid administrators--getting through a
    complicated FAFSA and verification that they don't have time to
    look at the quality of institutions as they are going through
    that process. That is a big problem.
        I have tried in our work when I was at Mastery Charter
    Schools to include information about the quality of the
    education, and students just are already saturated. They are
    exhausted. It has been so complicated, they can't concentrate.
        Senator Bennet. I am out of time. I appreciate it. Mr.
    Chairman, let me say that I regret for many reasons that we
    have not been able to get our FAFSA bill finished, but now my
    greatest regret is that we are now in the process of having to
    fill one of those forms out.
        [Laughter.]
        The Chairman. Well, if we work really hard and fast in a
    bipartisan way, maybe we can help you and get it done quickly.
        Senator Collins.
        Senator Collins. Thank you Mr. Chairman.
        Dr. Dynarski, this year the authority for the Federal
    Perkins Loan Program expires. I joined a bipartisan group of
    Senators in pressing for an extension of that program in 2015,
    and I have done so again while this Committee continues to
    wrestle with higher education reauthorization proposals.
        Every single campus of the University of Maine participates
    in the Perkins Loan Program. Eighteen Maine educational
    institutions made $8.6 million in Perkins loans to 4,500
    students. So when they hear us discuss One Loan, One Grant, it
    makes them very nervous about whether they will be able to fill
    the gaps in financial aid packages for their students.
        What they liked best about the three forms of campus-based
    aid--Perkins, the Federal Supplemental Educational Opportunity
    Grant, and work-study--is the flexibility to make institution-
    specific decisions that meet the needs of their students. There
    is also institutional buy-in because the college or university,
    as you know, has to match a percentage of the funds.
        In your judgment, is there any place for campus-based aid
    like Perkins and work-study programs as we revamp these
    programs?
        Dr. Dynarski. Nobody likes to get rid of any programs once
    they are in place. Everyone wants to hang onto them. The main
    challenge with the campus-based programs is that they make it
    impossible at the Federal level to tell somebody up front what
    aid they are eligible for because they have to instead first go
    to the institutions to get their campus aid packaged.
        I have full faith in the inventiveness of Congress to find
    ways to hold institutions harmless and convert those funds
    perhaps into other forms that would give them the flexibility
    to help students who are in need. So the work-study program,
    for example, is very small at this point, and it is inequitably
    distributed across institutions. So there needs to be some
    revamping of the campus-based programs so that they are
    actually serving the goals that they are supposed to.
        Senator Collins. Well, I have no faith in Congress to come
    up with--that is not really fair, given the track record of the
    Chairman and the Ranking Member of this Committee, which is a
    spectacular one. But having worked at a university before I was
    elected to the Senate, I had a work-study student. It gave me
    the opportunity to encourage her to stay in college when she
    was under a lot of pressure to leave and get to work, get a
    job. I think these programs, in Maine's experience, have been
    absolutely critical in filling gaps and thus allowing students
    to complete their education.
        Ms. Keane, let me switch to an issue that you raised. You
    raised so many excellent--by the way, Senator Casey is one of
    those who worked with me on Perkins Loan Program. You raised so
    many very good program points about the need for more
    transparency so people know what they are getting into. I have
    seen firsthand students becoming discouraged from completing
    their degrees because they start to feel overwhelmed by college
    costs, debt going up, repayment. Sometimes I have heard their
    parents say, ``Why are you accumulating all of this debt when
    you could be working right now and earning money and getting a
    job?'' That is particularly true of the first-generation
    college students.
        So Hudson University in Bangor, Maine, which is where I
    worked prior to my election to the Senate, requires all
    freshman students to enroll in a one-credit student success
    seminar, and it includes financial literacy and other essential
    life skills development. What do you think of efforts like
    that?
        Ms. Keane. I absolutely applaud the institution for doing
    that. I know our Vice President of Knowledge, Holly Morrow, at
    uAspire is often talking with me about the importance of
    financial literacy support for students. It is hard to counsel
    students if they don't know the terms. We need to do better to
    set them up for success.
        Senator Collins. Thank you, Mr. Chairman.
        The Chairman. Thank you, Senator Collins.
        Senator Warren.
        Senator Warren. Thank you, Mr. Chairman.
        So I think we should run our student aid programs with two
    goals in mind. First, help more students graduate from good
    schools and with less student loan debt; and second, help
    students get out from underneath their debt burdens faster and
    easier.
        Simplification could help us achieve that goal, but it goes
    the other way, too. I want to build on what Senator Collins was
    asking about and the point she made. If it isn't done right,
    simplification can also increase student debt loans. So I want
    to talk about both sides of the coin.
        Let me start with you, Dr. Dynarski. There are nine student
    loan repayment plans. Do you think that is too many?
        Dr. Dynarski. Yes, it is too many. It is too confusing. It
    is too complicated for borrowers to figure out which program
    they should be enrolled in.
        Senator Warren. Right. So the Federal--under the current
    system, the Federal Government pays private student loan
    companies like Navient, hundreds of millions of dollars a year
    to help borrowers navigate all those complicated repayment
    plans and to pick out the one that would be best for them. So
    in your view, Dr. Dynarski, is that system working?
        Dr. Dynarski. No, it is not. And CFPB, I think, has done a
    good job at showing that it is not working. This is very much
    like what happened during the mortgage crisis where we had a
    goal of getting people's loans restructured so that they
    wouldn't lose their homes. But doing so very much depended on
    the servicers doing the restructuring, and it just didn't
    happen.
        Senator Warren. Right.
        Dr. Dynarski. That is exactly what we are seeing right now
    with the loan companies often shifting people into the programs
    that require the least paperwork rather than the one that might
    be best for the borrower.
        Senator Warren. So the loan companies' incentives are not
    the same as the students' incentives? So let me ask you, Dr.
    Chingos, if the student is in a good income repayment plan--let
    us say they navigated, got to the right place--is it simple for
    that student to stay in the plan until she is able to pay off
    her loan or the loan is forgiven?
        Dr. Chingos. It is not simple. You have to recertify every
    year, submit documentation every year about your income from
    the prior year, and I think the data show us between 2013 and
    2014, about half the people failed to do that. And if you fail
    to do it, you get kicked automatically back into the 10-year
    plan when you probably can't afford the payments.
        Senator Warren. Okay. So too many repayment plans, too much
    money for private student loan servicers who don't help
    students navigate these plans, and too hard for people to stay
    in the best repayment plans. Got it.
        Ms. Darcus, that does not make sense to me. Does this sound
    to you like a place where simplification is needed?
        Ms. Darcus. I agree that simplification could help, but
    only if we preserve the programs or enhance the programs that
    deliver the maximum benefit for borrowers. That includes
    preserving forgiveness. There needs to be a light at the end of
    the tunnel.
        Senator Warren. I think that getting rid of these plans
    makes sense, but it can go either way on this. If you get rid
    of the plans with the best terms for students, then will the
    students actually be worse off?
        Ms. Darcus. Yes.
        Senator Warren. Yes, that is what is going to happen here.
    So thank you.
        You know, this is also true when it comes to simplifying
    the number of loans that we offer. Right now, for example, low-
    income students can get interest waived on their loans while
    they are still in school. That is a pretty good deal for those
    students. But some Senators have proposed scrapping that
    program as part of simplification. Ms. Darcus, would students
    be better off or worse off if this program were ended?
        Ms. Darcus. Absolutely worse off. That is a program
    designed to benefit the lowest-income borrowers, and they would
    just graduate with more debt. We already know what that--the
    world of hurt that causes.
        Senator Warren. Good, anyone else want to weigh in on this?
    All right. We got it. Go ahead, Mr. Chingos.
        Dr. Chingos. Sure.
        Senator Warren. Dr. Chingos.
        Dr. Chingos. I mean, the argument I was making in my
    testimony is that a benefit people get down the road for low-
    income students is best done up front. So I think low-income
    students would be better off if we gave them a bigger Pell
    Grant, even if they paid a little more interest down the road.
        Senator Warren. Okay. So I understand the point that there
    are a lot of different ways to design this. But what I think is
    most important here is that we not use simplification as a ploy
    to leave students with more debt. The way to simplify the
    student aid system is to make it cheaper for students, to make
    it easier to find a high-quality school, and to make the path
    out of debt smoother.
        It seems to me that should be our principal focus here, Mr.
    Chairman. Thank you.
        The Chairman. Thank you, Senator Warren.
        Senator Cassidy.
        Senator Cassidy. Well, I am glad Senator Warren didn't
    steal my thunder. I wanted her to because it is a thunder that
    we are both ``by Jove-ing,'' if you will. Which is to say that
    we have a bill that would increase transparency; that would ask
    that a student who is enrolling in a university would have a
    sense of how much she or he is going to earn if they complete;
    what is the likelihood of someone in their situation completing
    the course; how much debt would they end up with, et cetera.
        It has been endorsed by multiple organizations, including
    uAspire, and is with Hatch, Whitehouse, Cassidy and Warren. So
    anyway, Senator Warren--and it really speaks to a lot of what
    you spoke of.
        By the way, almost all of you, your testimony, I agreed
    with. We need more transparency. We need more simplicity, et
    cetera. So I am here not to challenge, but just kind of push
    the envelope a little bit of our understanding of what you are
    saying.
        Ms. Keane, it sounds like since a third of the universities
    have a letter like this and a third like that and a third like
    this, and most of them entirely inadequate, you are suggesting
    that there be a standardized letter that would go out. That
    would perhaps be prescribed by the Department of Education, but
    ideally, universities would agree to it. Kind of a Good
    Housekeeping, if you will, Seal of Approval of ``This is what
    you can expect.'' Fair statement?
        Ms. Keane. Yes. I want to note that we are very clearly
    stating terms with federally defined definitions, as well as
    format practices that show the important equations that need to
    be clear to students are what is a must. In terms of whether it
    is an entire exact form like a HUD-1 Settlement Sheet, I want
    to respect that institutions really want to communicate their
    school and important things that are very specific to their
    context to students as well. So I don't know if it has be an
    absolute requirement----
        Senator Cassidy. But your broad categories, which is
    transportation, books--my daughter just bought a book for 200
    bucks. I'm sitting there thinking, ``200 bucks, give me a
    break.'' So anyway, that said, it would be nice if you had,
    okay, tuition, fees, if you are in science, this is what your
    books would count; if you are in art--you see what I am saying?
        Ms. Keane. Yes, absolutely.
        Senator Cassidy. That seems like it would give itself to,
    one, you don't have to be incredibly detailed, but it still
    says--it seems it would give itself to standardization.
        Ms. Keane. Yes, standardization, absolutely. In terms of
    what needs to be on cost of attendance, including both direct
    cost to the college and then indirect expenses. In terms of the
    terms of level of detail of how deep that needs to go, I really
    recommend consumer group testing and talk with students and
    multiple stakeholders to understand what is going to work best
    for the student.
        Senator Cassidy. Sounds like a great project for uAspire,
    who will then bring the data back to us to attempt to
    implement.
        Ms. Keane. Senator Cassidy, I really appreciate that. And
    we are about to embark on some focus groups with students due
    to a project that we are doing with New America, as well as
    some work we are doing with Colorado State University, who is
    choosing to make their financial aid notification programs more
    student friendly in how they communicate. So some folks do this
    electively as well.
        Senator Cassidy. Mr. Chingos, you suggested a belief in the
    so-called ``Bennett Effect,'' that the more money that is
    available, the more tuition will rise. I always compare it to
    Tantalus. That is a Greek myth in which that which the
    gentleman wants is always just beyond his reach--from which we
    get the word ``tantalize.'' Do you except that?
        Dr. Chingos. I think the research on the Bennett Effect is
    mixed. But I think it is mechanically true if you make it
    easier for people to pay for something, they are going to be
    able to pay more for it. So it is something we ought to be
    worried about, and I think it makes the case for targeting
    these programs to the greatest extent possible. When we have
    universal benefit to lots of people, I think that creates more
    risk of a Bennett Effect than programs that are targeted to
    achieve particular purposes.
        Senator Cassidy. Got it. And now on the other hand, Ms.
    Dynarski points out very provocatively that really it is not
    the guy that graduates from med school and then neurosurgery
    with $200,000 in debt who is defaulting. It is actually
    somebody who owes 5K and can't make that last payment.
        Now a couple of things about that Ms.--Dr. Dynarski, it
    almost seems, I bet you that there is a characteristic
    demographic. I think--Ms. Darcus, I smile, a Philadelphia
    lawyer, I am sure you have heard that before. But you said it
    is people of color, people of first generation. You can kind
    of, okay, these are the folks who really need counseling. To
    what degree could we take this complexity and use big data just
    to focus it down and say you are going to be at high risk of
    not passing?
        We had, a couple of years ago, a great committee. Georgia
    Southern came here in here. They got like a 200-point thing,
    and they can really guide people through. And sometimes it is a
    $500 loan that allows them to complete. To what extent does all
    this complexity boil down to maybe just knowing which kids we
    need to counsel?
        Dr. Dynarski. Colleges have done a great work with their
    internal data to understand who is at risk of dropping out and
    to steer them toward enhanced mentoring resources, tutoring
    resources, emergency loans. So I think colleges could be
    helping out more.
        Senator Cassidy. You say--I just heard two things. Colleges
    could be helping out and that colleges have done a great job.
        Dr. Dynarski. Some have done a great job using their data.
    All of them could do a great job, and there is a lot more
    progress to be made.
        Senator Cassidy. I will just finish with this quick
    question. If that were done, if all colleges did this great
    job, would we have this panel today?
        Dr. Dynarski. Absolutely. Because incomes, earnings, the
    labor market, it is uncertain. Young people come out, their
    hours are uncertain. Their wages are uncertain. They don't have
    crystal balls, and there is going to be people who fall through
    the net no matter what, and we need to make sure they are
    protected.
        Senator Cassidy. Thank you. I yield back. Thank you.
        The Chairman. Thank you, Senator Cassidy.
        Senator Smith.
        Senator Smith. Thank you, Mr. Chair and Senator Murray.
        This is a very interesting--it has been very, very
    interesting to hear from all you of you. What I am taking out
    of this is that certainly there is lots that we can do around
    simplification. Simplification is a good thing, reduces
    complexity that is a barrier to people that are trying to apply
    for loans and grants. But that also affordability is a driving
    issue, and also there is an accountability problem that a lot
    of you are talking about.
        Ms. Keane, I wanted to just start with you. You have some--
    the examples that you have of documents that students and
    families might get explaining, I am saying in quotes, kind of
    what the ``financial packages'' are completely discombobulating
    and hard for anybody to understand. So my question is--and you
    have some also very good suggestions for ways to move toward
    simplification and make that easier for people to understand.
        But my question is usually complexity happens for a reason,
    it doesn't just happen. So what do you think are the underlying
    reasons for all of this complexity, and how can we address
    those so that it doesn't kind of just recreate itself again?
        Ms. Keane. My experience is very much on the receiver end
    as a practitioner and with students, not on the building of
    system side. So it is not exactly my area of expertise as to
    why the complexity exists. That said, I do want to support
    arguments already made by others testifying that simplification
    does not necessarily work for students if it means one thing
    for all. Equity needs to be at the core of how simplification
    occurs to ensure that those who need it most get what they
    need.
        Senator Smith. Yep. Thank you.
        I think Senator Murray started out by talking about how
    this needs to be student focused in the way that we do things.
    I must say as I listen to some of this, it sounds as if some of
    this is more lender focused.
        Maybe, Ms. Darcus, could you comment a little bit on ways
    that we could take--you have some great information in your
    testimony--ways in which we can take this whole process and
    make it more student focused and get that accountability in the
    system that we really need.
        Ms. Darcus. We definitely need a system that serves
    borrowers like my clients who are struggling with debt, deep in
    debt that they can't afford to repay, and they are not getting
    the help they need. So we could start out with improving
    accountability by ensuring that those students have a private
    right of action, so that they can go after the companies that--
    that mislead them, the schools that defraud them, if necessary.
    We also need to hold other players accountable, including the
    Department of Education, for their role in ensuring students'
    success in repayment.
        Senator Smith. Great. Thank you.
        Does anybody else want to comment on that?
        Dr. Dynarski.
        Dr. Dynarski. I would agree with student centered. The
    whole point of--the simplification is not an aesthetic. You
    know, it is not that we want things simple because it is
    pretty. We want to make the given dollar that we give to
    students work well, and that is my goal, is that if we are
    going to spend a certain amount of money, do it in a way that
    makes it work for students.
        Senator Smith. Thank you.
        Dr. Lowery-Hart, I was really struck by what--your
    conversation about Amarillo College, and it reminds me of a
    visit that I made to the community and technical college in
    Minnesota, Alexandria Community and Technical College, where
    the typical student there is very similar to the typical
    student at your institution. They have an incredible rate of
    placement. The kids, the students, not kids--they used to be
    kids, they are now adults--that graduate, they have like a 98
    percent placement rate.
        But what happens with those students sometimes is it is
    just, one, they are living so much on the edge. And one little
    thing goes wrong. They lose their apartment or their marriage
    goes through a crisis or their childcare goes away, and their
    entire academic life falls apart when really all they need is
    just--it could be sometimes just a couple of hundred extra
    dollars for a couple of months in order to keep it all
    together.
        Could you just talk a little bit about that and help us
    understand how we might consider those kinds of needs as we
    also try to simplify and make this all work better?
        Dr. Lowery-Hart. Well, in looking at our data in student
    success, I think the misnomer is dropping out or failing out is
    often as a result of poor academic preparation when the data
    that I have collected on my students is exactly as you
    describe. It is the loss of childcare, or their car breaks
    down. It is one--because they are living on the edge
    financially, they need everything to go perfectly in order to
    finish their degree. And as we know, life isn't perfect. So we
    have to have resources that allow us to meet those emergency
    needs when they come up.
        Now for us at Amarillo College, that is a partnership with
    our Amarillo College Foundation and people in the community,
    where if there is a repair that needs to be made on a car, we
    have people at the college that are calling specific dealers
    that can fix the car, or we are cutting a check to that
    student. That is a daily effort on our part----
        Senator Smith. Thank you.
        Dr. Lowery-Hart ----and it can't drown in bureaucracy to
    get there.
        Senator Smith. Thank you very much. Thank you, Mr.
    Chairman.
        The Chairman. Thank you, Senator Smith.
        Senator Scott.
        Senator Scott. Thank you, Mr. Chairman.
        Before I start with my comments and thoughts with the
    panel, I wanted to welcome to the Committee our new colleagues,
    Senators Tina Smith and Doug Jones. I look forward to working
    with you on this Committee.
        To the folks on the panel, I had an interesting experience
    about 2 weekends ago in Charleston, South Carolina, where a
    young student who works at the gym where I work out is applying
    for colleges. This is an incredibly bright young lady. She is
    third in her class. She is a student government president for
    the student body, and she is absolutely overwhelmed with this
    application process, deciding how much she may need to borrow
    depending on which college she goes to.
        So the entire process, even for the brightest of our
    students and their parents, is so cumbersome and so difficult
    to navigate that, really, I wonder how in the world 58 percent
    of our seniors complete their FAFSA. That number seems low, but
    when I finished my conversation, that number seems kind of
    high. It takes so much effort, so much commitment and
    assistance to get to a place where you are in a position not
    only to apply to college, but to understand and appreciate what
    loans are available, what scholarships are available, and what,
    pray tell, you are going to have to do to repay all of these
    obligations and responsibilities is a very different
    responsibility.
        I think I understand that there are--when you graduate and
    finish, there are more than 30 variations and combinations of
    repayment plans. One of the reasons why in 2015 I sponsored
    legislation to develop best practices by universities around
    financial literacy so that students would have an understanding
    and appreciation for what it means to be the borrower and how
    to understand how to navigate that process when you are
    leaving.
        We need to empower both parents and students well before
    the student reaches the senior year in high school with
    financial aid and workforce information to ensure they can make
    well-informed decisions on their educational and vocational
    careers. That entails getting applicants thinking about the
    cost, the true cost of college, the best education path, and
    their career objectives earlier than we currently are seeing.
        Ms. Keane, how do we inform students and parents earlier
    about the financial aid resources, the career options available
    to them, and the responsibilities that will be incurred through
    taking on the student loan debt?
        Ms. Keane. You are absolutely right. That is an
    overwhelming experience for students and for families early on.
    I believe that it is also important to think about
    communication strategies for once they become borrowers. So--
    excuse me. Specifically, entrance and exit loan counseling are
    the only things required right now by the Federal Government,
    and we see that is insufficient and not enough. We really truly
    believe that annual loan counseling for students is critical.
    We do this work with postsecondary students ourselves.
        We have a student, Miranda, that has worked with a uAspire-
    trained practitioner in New Mexico, who didn't know that she
    could have options to deal with her loans and so was too scared
    to look. So rather than go into the national student loan data
    base to find out what her loans were, she just stayed away.
    Once she had someone to help her, she realized there were plans
    to help, and she moved very quickly and got re-enrolled in
    school. This needs to happen for more students.
        Senator Scott. Thank you. Anyone else want to dive into the
    topic?
        Dr. Dynarski. I would agree that the complexity is
    challenging for students at both ends. In terms of coming into
    college, we have got evidence that radically simplifying the
    aid process increases enrollment and persistence. So it appears
    this actually matters.
        On the other end, when it comes to paying off loans, people
    who are having a financial meltdown at least temporarily are
    probably those who are least equipped to navigate a bureaucracy
    in order to get the assistance that they need.
        The evidence we see right now, in fact, is that the people
    who are most likely to be enrolled in IDR are those with the
    highest debts and the highest capacity, actually, to pay. So it
    is people who are financially savvy and who can handle the
    process who are currently enrolling in the income-driven
    programs. The fact that we still have a high default rate is
    prima facie evidence that we are not getting at the people who
    really need it the most.
        Senator Scott. Thank you.
        Ms. Darcus.
        Ms. Darcus. I would only add that if as we consider the
    role that automatic withholding might play in the scheme, we
    should also think about the most vulnerable borrowers and the
    extent to which a scheme like that would serve them. If they
    don't have taxable income, if they are working in the gig
    economy, if they have uneven cash-flow, then they might not be
    well served by a system of automatic withholding.
        We have seen that with our clients who experience
    administrative wage garnishment. They already--are already
    subject to that process, and we would be shifting from relying
    on servicers to deliver benefits to borrowers to relying on
    employers to do that. I don't know if small businesses can
    withstand that burden, but that is something that we should
    also keep in mind.
        Senator Scott. Thank you, ma'am.
        Mr. Chingos.
        Dr. Chingos. Just going to add second your concern about
    people understanding what they are getting into on the front
    end. You know, I worked on a study a few years ago using
    Federal data. We knew who had Federal loans, but they were also
    asked, ``Do you have Federal loans? How much do you have?''
    Most people were way off.
        Twenty-eight percent of people who we know have a Federal
    loan said, ``I don't have a Federal loan.'' Fourteen percent
    said, ``I don't have any loan.'' This is national
    representative data on first-year students. So there is a real
    problem that people don't understand what they are getting
    into.
        Senator Scott. Thank you.
        The Chairman. Thank you, Senator Scott.
        We have a vote at 12:15 p.m. We have several Senators--
    several Senators left.
        Senator Baldwin.
        Senator Baldwin. Thank you. I want to thank the Chairman
    and Ranking Member for holding this important hearing on Higher
    Education Act reauthorization.
        I certainly believe that strengthening and improving our
    financial aid system will be critical to making higher
    education more accessible and more affordable for more
    Americans. I also believe that simplification must not result
    in paring back our support for students.
        I want to join Ranking Member Murray in urging the
    Committee to look at HEA reauthorization in a holistic manner.
    We cannot truly improve this law without addressing the
    numerous interconnected issues involving the entire life cycle
    of higher education and its many stakeholders. I look forward,
    Mr. Chairman and Ranking Member, to that broader conversation.
        I want to direct this to Ms. Keane because I think it is
    critically important that our Federal financial aid system
    include a way for institutions to identify and support students
    that are most in need. Sometimes a very small amount of money
    can make the difference between completing a semester or
    dropping out. It is one of the main reasons why I have been
    such a strong advocate for the Perkins Loan Program, which,
    unfortunately, was allowed to lapse last fall by Congress'
    inaction.
        This program has bipartisan support in both chambers, and
    it includes strong leadership of my colleagues on this
    Committee. I believe Senator Collins asked questions, a
    question related to Perkins Loan earlier in this hearing, and I
    believe that we have to get to the task of reauthorizing it
    without further delay.
        Institutions in my home State of Wisconsin and across the
    country value this loan program because it provides flexibility
    to target low-cost loans to students in need, including in
    cases of emergencies. Institutions are in a position to do that
    in a way that the Federal Government cannot from a distance.
        While we can and should look at ways to improve and better
    target aid through Perkins and other campus-based loan
    programs, I believe these unique programs must continue to be a
    part of a robust Federal financial aid system. Ms. Keane, do
    you agree that--I would like to actually hear you elaborate on
    both Perkins, specifically, but also the value of campus-based
    programs and the role that they play in our financial aid
    system.
        Ms. Keane. Thank you for your question.
        Absolutely. As school counselors advocate for students in
    K-12, financial aid administrators do an incredible job of
    advocating for students on higher ed campuses. We have been
    both impressed and grateful by the incredible efforts they make
    to direct campus-based aid toward students who need it most. We
    see it play out in many of our postsecondary students that we
    advise.
        Specifically, for example, of the award letters that we
    collect--so this is per letters, which comes--this dataset is
    coming from the class of 2016. We saw that for zero EFC
    students, 59 percent of them included an SEOG grant for over
    $1,000. That $1,000, per other comments made by other
    testimony, can make the biggest difference in the world to keep
    a student enrolled and persisting.
        Senator Baldwin. Thank you.
        I am also pleased that we have Dr. Lowery-Hart with us, as
    I believe community colleges play an incredibly critical role
    in providing accessible, affordable, and quality postsecondary
    opportunities in a manner that is responsive to local and
    regional needs. However, as you note in your testimony,
    students at community colleges, including many minority and
    first-generation students they serve, still struggle to afford
    the full costs of college.
        As we look at ways to make our Federal financial aid system
    work better for students and families, I believe that the
    Federal Government can and should do more to support these
    institutions, and that is why I will soon reintroduce
    legislation, the America's College Promise Act, which invests
    in communities--community and technical colleges in partnership
    with state governments while helping those schools strengthen
    their programs to best serve students. Do you agree that this
    sort of investment would help more American students obtain
    postsecondary credentials or degrees with less or, hopefully,
    no debt?
        Dr. Lowery-Hart. I agree and appreciate your advocacy of
    community colleges in the higher education ecosystem. What most
    people don't understand is that community colleges educate the
    majority of our higher education students in the country. And
    our economy is based on community colleges' ability to train
    workers for our employers, and your support of that is
    appreciated.
        The Chairman. Thank you, Senator Baldwin. I am going to ask
    that we keep the back and forth at 5 minutes so we can all ask
    questions before the vote at 12:15 p.m.
        Dr. Dynarski, Dr. Chingos, you have suggested that the
    United States take our nine loan repayment programs, which
    everyone seems to agree is very confusing, and replace it with
    a loan repayment system that is similar to Australia, Germany,
    Sweden, and the United Kingdom, where students would
    automatically have an amount of money deducted from their
    paycheck, except for those students who are suddenly finding
    themselves making very little money. There would be a level
    below which Ms. Darcus raised the point about what about lower
    income people or people who have suddenly find themselves
    without much income.
        May I ask you this, what happens--what would servicers have
    to do if we had a system like that? Dr. Dynarski, what would
    there be left for them to do?
        Dr. Dynarski. Well, if we simplify things and we have less
    bureaucracy, there is less bureaucracy to be taken care of. So
    not as much. This would really need to run through the
    Government just as payroll taxes do, and a lot of the
    challenges that were described in terms of having multiple
    jobs, gig economy come up when it comes to paying Social
    Security and FICA and so forth and taxes, the reconciliation
    that happens with those would be a model for what we need to
    do.
        The Chairman. So once the decision were made, either
    automatically for everybody or an option for everybody, there
    would be nothing--I mean, that would be the way it would be
    until a loan was paid off, and there wouldn't need to be annual
    verification or annual financial filings. It would just relate
    to the paycheck.
        Now if McDonald's were about to introduce a new gravy, it
    wouldn't introduce it in all 14,000 of its stores, or however
    many they have. They would do a pilot program in Philadelphia
    and one in Dallas and one in Nashville. So we have these nine
    programs. One of them is pay your loan off in 10 years, like a
    mortgage, plus these eight others that are hard to figure out.
        If you were the queen or the king of the system and could
    do just what you want to do and would take a prudent step in
    the direction you recommended, what would you do?
        Dr. Dynarski. I think piloting in a couple of states,
    couple of university systems would be a terrific idea.
        The Chairman. What would you do about the existing nine
    programs?
        Dr. Dynarski. In terms of the piloting? I think----
        The Chairman. Well, would you get rid of them?
        Dr. Dynarski. Yes. Narrow it down to one straightforward
    mortgage payment plan, if people, indeed, would like to have
    that option. But make the default--poor word--but the automatic
    option be an income-based repayment program.
        The Chairman. What if--so what if you had narrowed it down
    to two programs, one would be, say, the 10-year mortgage type
    program, two would be the income-based program, and three would
    be piloting your automatic program. Dr. Chingos, what do you
    think of that?
        Dr. Chingos. Yes, I mean, one place to start if you didn't
    feel comfortable doing this automatically for everybody right
    away would be to make it available for people, the automatic
    option. You could put them in there, then they could have to do
    paperwork to get out. Or you could put them in the 10-year and
    have them do paperwork to get in. But once you got in, you
    could see how it works.
        The Chairman. Well, wouldn't you want to pilot it first to
    see if it did work?
        Dr. Chingos. Well, I mean, I think we know that payroll
    withholding for Social Security taxes works in some sense. So I
    think we know this can work. I mean, so would you want to limit
    the number of people initially? I mean, perhaps, but I think
    there is uncertainty about the implementation. There is
    uncertainty about the specific parameters of the policy design.
    But I think the basic idea, we know it works because Dr.
    Dynarski told us about how it works in Australia and England
    and Sweden and Germany.
        The Chairman. Some Senators and some witnesses have
    expressed concern that if we simplify, we want to make sure we
    don't take money away from students. Dr. Chingos, if, in
    simplifying the loan repayment program the way we do, we save
    money, where would you put it? I gather from your testimony,
    you would put it--you would have a larger Pell Grant at the
    beginning?
        Dr. Chingos. That is exactly right.
        The Chairman. You think rather than have benefits at the
    end, like forgiveness at the end, you would take the money
    saved if you didn't have the forgiveness and create more Pell
    Grants or larger Pell Grants?
        Dr. Chingos. That is right. In general, when there are big
    windfall subsidies, I think those are better spent to help low-
    income students pay college costs upfront, and any benefits on
    the back end should be incidental to people who got unlucky,
    who had a low income for a long period of time. Yes, they are
    going to get some forgiveness at the very end. But I don't
    think we should be writing big forgiveness benefits, say, after
    only 10 years when we know that there are struggling folks who
    don't have enough to pay for college, to pay for childcare, to
    pay for food.
        The Chairman. Thank you, Dr. Chingos.
        Senator Hassan.
        Senator Hassan. Well, thank you, Mr. Chair and Ranking
    Member, for holding this hearing. Thank you to all of our
    witnesses for being here today and for the work that you all
    do.
        I wanted to start with a question to Dr. Russell Lowery-
    Hart. First of all, thank you again, sir, for being here.
        While college enrollment for some students has been on the
    rise, college completion rates continue to lag. More than a
    quarter of low-income students are dropping out before
    obtaining a credential. We know that 80 percent of all jobs
    require some form of postsecondary education or training,
    meaning a large number of those non-completers will find it
    difficult to find a job and, in turn, not be able to pay back
    their student debt.
        We see that, in fact, 60 percent of student loan defaults
    are by individuals who owe less than $10,000. And those
    students want to make a difference for themselves and their
    families, they run into countless barriers along the way. I
    know you all have talked about that today. So it is clear that
    our financial aid system isn't meeting the needs of today's
    students, and again, I thank you for outlining some of those
    cases.
        Doctor, I know you have already talked about some of the
    ways that we need to support students who are working to
    complete a degree. But is there anything you haven't mentioned
    in terms of helping these students who were talked about by
    these statistics that you would like us to think about?
        Dr. Lowery-Hart. The one thing that I would want to add
    that gives me great hope is over the last 3 years at Amarillo
    College, we have built a social services system that connects
    students to food pantries, clothing closets, childcare, and
    community resources that already exist. Since we have
    implemented an intensive social services system on a case
    management process, our completion rates have gone from 19
    percent in 3 years to 45 percent in 3 years. When you remove a
    barrier, you help a student complete, and then you solve long-
    term issues and open up opportunities that student might not
    have otherwise.
        Senator Hassan. Well, thank you for that. That is
    consistent with some experiences we have had in New Hampshire,
    too, and I am very grateful for your work.
        Dr. Dynarski, I wanted to talk a little bit about graduate
    student loans. Our graduate students are often saddled with
    very high levels of loan debt, but they are also, as I
    understand it, the least likely to default on student loans.
    The current Graduate PLUS Loan was created so that graduate
    students can borrow up to their cost of attendance and have the
    protections of a direct loan rather than be forced to borrow in
    the much more selective private loan market subject--which is
    subject to underwriting criteria that are based fundamentally
    on whether you are already financially well-off.
        Under the House Republicans' proposal for the Higher
    Education Act, the amount graduate students can borrow would be
    capped at $28,500, far below what many graduate and
    professional programs actually cost. Supporters of this
    proposal say colleges will be forced to reduce their
    programmatic prices, but there is really no evidence to suggest
    that is actually going to happen.
        Capping what a graduate may--a graduate student may borrow
    will not automatically reduce their cost of attendance, and
    once again, graduate students will be forced into the private
    market, where interest rates could be well over 13 percent.
    This could further widen inequality in who is able to access a
    graduate-level degree. Those who pursue and need graduate-level
    degrees include teachers, nurses, social workers, and a lot of
    fields where we should be attracting more students, not putting
    up more barriers.
        How do you think the capping graduate school loans
    provision would impact low-income students who pursue a
    graduate degree? And do you believe caps would, in fact, drive
    down programmatic college costs or graduate program costs?
        Dr. Dynarski. Well, historically in our loan program we did
    have caps on graduate loans. So it is a fairly new innovation
    that the caps were taken off and borrowing took off as well. So
    it is, indeed, true that grad students have some of the lowest
    default rates. So in terms of actual defaults, we are looking
    at maybe 6 percent.
        There are problems concentrated in the for-profit sector.
    My concern is that people are being allowed to borrow too much
    for an education that is not doing them much good, all right?
    And caps serve as a crude way to indirectly protect people from
    ending up with more debt than they can handle, given what they
    have acquired in education.
        Senator Hassan. I guess my follow-up there would be--and I
    am just about out of time. So my follow-up there would be, but
    capping it at an artificially low place makes them incur debt
    in the private market, which is also harmful.
        Dr. Dynarski. The private market needs better regulation.
    So in particular, I think that private student loans should be
    able to be escaped through bankruptcy.
        Senator Hassan. Thank you very much. Thank you, Mr. Chair.
        The Chairman. Thank you, Senator Hassan.
        Senator Kaine.
        Senator Kaine. I want to ask a question, a couple of
    questions, and I am going to begin with a question for Dr.
    Lowery-Hart, and it is about Pell Grants and the expanded Pell
    Grant accessibility for short-term programs. On this Committee,
    my passion, one of my couple of passions, I guess, is career
    and technical education. I think we sort of perpetrated a myth
    that post-high school has to be college, when what we know--I'm
    the son of an ironworker and welder--is what we know is that
    there are all kinds of career and technical programs where
    there is significant need in the workforce. And yet the
    availability of financial aid for some of those programs is
    dramatically different. Pell Grants, for example, if you income
    qualify, but you--the course that is being offered is not the
    length of a college semester, you can't get a Pell Grant for
    that kind of a course.
        Senator Portman and I have a bill in that we hope to
    include as we have the Higher Ed Act discussion that would make
    Pell Grants available for shorter-term courses so long as they
    are highly rigorous and verified, and we believe that would be
    a real accessibility accelerator for students. I wonder what
    you might think about that.
        Dr. Lowery-Hart. Local businesses in Amarillo would agree
    with you 100 percent. The biggest jobs in my community--diesel
    mechanics, aviation mechanics, truck driving, and
    transportation logistics--those are all accelerated programs
    for us. Truck driving started out as a continued program
    ineligible for any financial aid. Those lead to jobs in our
    community from $60,000 to $100,000 a year with an investment of
    6 weeks to 6 months. Yet students can't afford without Federal
    aid and support to enter into those programs. So they enter in
    a program that takes longer or may not meet the economic needs
    of our community. And any aid that would allow students to
    enter those high-demand fields and give colleges the
    flexibility to accelerate their learning meets an economic need
    in my community.
        Senator Kaine. Appreciate that. Any other panelist have
    thoughts on that particular point?
        Ms. Keane. I would just echo that the importance of having
    some flexibility in terms of the Pell Grant to the reality of
    today's students is very critical.
        Senator Kaine. Thank you, thank you.
        Dr. Chingos, were you going to say something?
        Dr. Chingos. Yes, I was just going to add that I think--I
    mean, I agree with you completely. I think the challenge is how
    do you let in the good programs but not open up the flood gates
    so that we are here 10 years from now talking about all of
    these people who were claiming to do CTE and left people in
    debt with no good jobs.
        Senator Kaine. I think that is a real important point.
        Ms. Darcus, I have a question for you about public service
    loan forgiveness, if I could direct it your way. This program
    was created by Congress during the Bush administration, and it
    allows public servants to have loans forgiven. We have had a
    little bit of testimony about it. There might have been some
    when I was at an earlier hearing.
        For 10 years of qualifying monthly payments, the first set
    of borrowers has become eligible for loan forgiveness within
    the last few months, and there have been some stories about
    glitches that have been difficult. The New York Times
    highlighted a common technicality preventing some public
    service employees from qualifying for the program because they
    unknowingly were in the wrong repayment plan.
        How do we deal with that issue, and are there other
    barriers that prevent students from receiving anticipated
    forgiveness that we should look to clear up as we engage in a
    higher ed rewrite?
        Ms. Darcus. Forgiveness programs like public service loan
    forgiveness are incredibly vital. They support our economy.
    Public interest lawyers like myself, many folks who are
    delivering services to low-income borrowers rely on public
    service loan forgiveness so that they can afford their own
    livelihood. So we should certainly hold servicers accountable
    for doing their jobs, and this is just another window into the
    very, very common problems folks have during repayment. So
    enforcement, public enforcement and private enforcement to
    ensure that students and borrowers are able to access critical
    benefits like forgiveness is incredibly essential.
        Senator Kaine. Other comments on loan forgiveness?
        Yes, Ms. Keane and then Dr. Chingos.
        Ms. Keane. Yes. I will just add that we see for many of our
    students who are low income that they want to give back to
    their communities, absolutely. And losing the option of loan
    forgiveness is going to change what they can choose to do in
    the communities that they want to serve. This is the very thing
    we want to be having available in our country to lift America
    up.
        Senator Kaine. Thank you.
        Dr. Chingos.
        Dr. Chingos. I am the Grinch who thinks we ought to get rid
    of the Public Service Loan Forgiveness Program. And the reason
    I think that is because I think it provides arbitrary benefits,
    benefits that can be unfair.
        I think if you want to support public interest lawyers, you
    ought to create a grant program for public interest lawyers.
    Maybe for public interest lawyers from low-income families,
    folks you want to help get into certain fields, or you to want
    to provide wage subsidies for people in certain fields, you
    ought to do that directly. But to do it through a loan
    forgiveness program, I think, is not the most efficient way to
    do it, not the most effective way to do it. And it is outside
    the core mission of income-driven repayment, which is really to
    provide insurance for people against payments they can't
    afford.
        Senator Kaine. Thank you. I yield my time. Thank you.
        The Chairman. Thank you, Senator Kaine.
        Senator Murphy.
        Senator Murphy. Thank you very much, Mr. Chairman. This is
    a fantastic and interesting hearing.
        When I talk to my constituents about the complexity of
    student loans and our efforts to try to make that process
    easier, you get a lot of head nods. But then when you very
    quickly shift the conversation to the cost of higher education
    and the effort that we could undergo to try to reduce the
    sticker price, the heads start bouncing up and down. I just
    want to use my soapbox for a moment to express my hope and
    desire that as much focus as we put into this question of
    simplifying student loans, that we put double the effort into
    efforts to improve the cost and the quality of the degree
    itself.
        We are talking about complexity of student loans here
    today, but the Chairman has very rightfully pointed out a
    number of times that we also have just an unjustifiable degree
    of complexity when it comes to the regulation of college. And
    we have all sorts of innovative ways that colleges are
    discovering to lower the cost of college, partner with
    industry, and get kids to degree faster. And yet we have three
    regulators that are spending an awful lot of time forcing
    colleges to think about everything except for affordability and
    outcome after you graduate. I think there is a real interesting
    bipartisan conversation to be had about reducing the regulatory
    framework for colleges, but then making them think more about
    the cost and the outcome.
        I love Senator Cassidy's line of questioning because I also
    agree that we need to really think about putting students in
    the driver seat when it comes to understanding the value of the
    degree that they are getting. Students spend an awful lot time
    trying to manage through this process of student loan and
    student aid, and that takes up space that they should be using
    in order to think about what the actual value of the degree is
    going to be. That is complicated by the fact that we don't give
    them the information we actually have in our statute today, a
    ban on the Federal Government collecting information about how
    students do after college--the one thing that would be most
    interesting to students as they are deciding to select a
    program.
        So that is my soapbox for a second. I just hope we are
    laser-like focused on cost and quality in addition to doing
    this work, which I think is important, but not as important.
        Here is my question to the panel. I will sort of direct it
    to Ms. Keane and Dr. Chingos, and that will probably be my
    time. I just want to talk about the private student loan
    industry. The worry is that for many of us, that simplification
    ultimately leads to just a lower amount of money being
    available to students. And then you also have some proposals in
    the House, in particular the PROSPER Act, which would set an
    overall limit on the amount of Federal student loan
    indebtedness that a student could take on.
        I just want to ask what would happen if some of our efforts
    was to limit the amount of Federal indebtedness that a student
    could take on, either just by having less money available or by
    something like the PROSPER Act passing? What would the private
    student loan industry do, and why wouldn't we believe that they
    would simply fill that gap and that colleges would continue to
    raise cost and just push more of their students to ultimately
    take a private student loan that doesn't have--has worse
    repayment terms, higher rates, and none of the consumer
    protections? So that is my question.
        Ms. Keane. Yes. We are not financial advisers at uAspire.
    We are college affordability experts and advising students. So
    we are very careful in having our advisers give too much detail
    about different private loan options because we can't keep up
    with understanding different servicers and what is best for
    students.
        That said, the way that we counsel our students is to use
    the Federal loan options first. Second, pending their
    situation, they can consider the PLUS loan, knowing it is not
    guaranteed and that it involves family members to participate.
    And then we caution them about going to the private industry
    and really think about their option instead of taking on more
    debt.
        Senator Murphy. The idea behind the PROSPER Act and some of
    these, some of this line of thought, Dr. Chingos, is that if
    you just limit the Federal student loan indebtedness, they will
    be less likely to take a chance. And my question is why
    wouldn't they just pile on private debt, not changing their
    calculus about risk and about degree cost?
        Dr. Chingos. So my understanding of the PROSPER proposal is
    that it would impose--reimpose limits for graduate students. So
    I think that is what we are really talking about here, and I
    think we would see one of two things or a combination. One is
    that people go into programs where they could not get financing
    in the private market, wouldn't go to those programs. And in
    some cases maybe that is a good thing. Maybe those are low
    value, often for-profit programs that aren't very good. But
    maybe there are some people that we would want to be able to go
    who then couldn't go. Or they would turn to the private market,
    and I think we ought to be concerned about the private market.
        You know, I agree with what Dr. Dynarski has said and
    written about this, which is that the private loan should be
    dischargeable in bankruptcy. And maybe we shouldn't even allow
    people to market a private loan as a student loan, when really
    it is not really a student loan, it is unsecured consumer
    credit.
        Senator Murphy. Right.
        Dr. Chingos. Then a Senator earlier asked about income
    share agreements. I think that could be an innovation worth
    experimenting with, especially on the graduate side. Not as an
    alternative to Federal loans, but as an alternative to private
    student loans because of the protections for borrowers that
    they offer over a private loan.
        Senator Murphy. Thank you, Mr. Chairman.
        The Chairman. Thank you, Senator Murphy.
        Senator Murray, do you have any other comments?
        Senator Murray. I just want to thank this panel for a very
    thoughtful discussion, and really good participation today from
    our Committee Members.
        Mr. Chairman, I just want to mention one more time that I
    hope we can work with the Department of Education to fully
    implement the ESSA law as Congress intended in order for us to
    have the confidence as we negotiate the Higher Education Act
    that the administration will implement it as we negotiate in a
    bipartisan way. I just--that is, I think, an important marker
    as we move forward. So I just wanted you to know I am concerned
    about that.
        The Chairman. Well----
        Senator Murray. But again, thank you to all of you for
    being here.
        The Chairman. If you are concerned, I am concerned. That is
    the way we normally do things. And as stated, of course, I
    agree with you. I want the Department to implement the law as
    we wrote it. So we will talk about that. I appreciate your
    bringing that up.
        Let me thank the witnesses. This has been a very good range
    of opinions, and you all know what you are talking about, and
    you have given us some interesting options to consider. I think
    you can tell from the reaction from Senators that there are
    some ideas that we hadn't thought as much about. Perhaps we
    understand them a little better.
        If you have additional ideas or you wish you had said
    something that you didn't, or you said something you wish you
    hadn't----
        [Laughter.]
        The Chairman ----we would welcome any further comment you
    would like to give us in writing. We hope to--this is such an
    interesting set of issues that we could talk about them for
    years, as we actually have. But we are coming to the point
    where we need to bring our thoughts together and come to a
    conclusion in the next few weeks, and we are going to work to
    do that.
        As I listened to the talk about mentoring, I think about my
    home State of Tennessee, which has free tuition for 2-year
    schools, technical institutes as well as community colleges. It
    is also the state with the highest completion rate for the
    FAFSA, and it is a state program that requires lots of
    mentoring in connection with the FAFSA. But of course, they
    spend all of their time not advising about what college to
    choose or what the professional course of study ought to be.
    All the mentoring time, almost all of it, is spent on how to
    fill out the FAFSA. And if we are able to simplify that--as I
    think we have pretty well agreed on a way to do that, we just
    haven't voted on it--that will make a big difference.
        Now we can do the same with loan repayment, that will be a
    significant step forward. And we will keep in mind all the
    counsel we have got about simplification doesn't equal cut
    money for students. We don't want to do that. We want to have a
    student-focused reauthorization that helps students in terms,
    and I thought Senator Murphy's words--``cost, quality, and
    simplification''--are all three good words for us to talk
    about.
        The hearing record will remain open for 10 business days.
    Members may submit additional information and questions to our
    witnesses for the record within that time, if they would like.
        [Additional Material follows:]

                              ADDITIONAL MATERIAL

                      [testimony addendum of laura keane]
        This brief follow-up testimony is based on two themes that emerged
    in the Q&A segment:

              how to simplify Federal financial aid without
            reducing it for the students it is designed to help; and
              Senators' inquiry and exploration of the value of
            campus-based aid.
       Simplify the Bookends; Address Equity & Transparency in the Middle
        Based on years of advising students, the most pronounced
    complications for students occur in the beginning and end of students'
    experience with Federal financial aid. FAFSA and verification, as well
    as repayment, are the biggest obstacles for students and create
    inefficiencies for other stakeholders. A shorter FAFSA, coupled with
    streamlined verification (either by Federal data alignment and/or by
    FSA serving as single clearinghouse of documentation), is student-
    centered and will increase access. Reducing the number of repayment
    options and adopting new systems of collection will help our students
    manage debt more successfully. Decreased delinquency and default is a
    win for both students and taxpayers--especially when public service
    loan forgiveness remains an incentive for completion, service, and
    reduced debt burden.
        By comparison, simplifying aid in the middle of the students'
    financial aid life cycle does not offer reform that matters most for
    students. Eliminating both campus-based aid and/or subsidized loans
    (estimated to cost students $23.4 billion over 10 years) \1\--will
    decrease likelihood for persistence and continue to leave students
    stuck facing financial obstacles that can lead to stopping out.
    ---------------------------------------------------------------------------
        \1\  ``Proposals for Education--CBO's Estimate of the President's
    Fiscal Year 2018 Budget.'' Congressional Budget Office. https://
    www.cbo.gov/system/files/115th-congress-2017-2018/
    dataandtechnicalinformation/52891-education.pdf.
    ---------------------------------------------------------------------------
                   The Need for and Value of Campus-Based Aid
        Today, Pell covers fewer than 30 percent of a 4-year public
    education, and it is only getting worse. Securing the Pell Program to
    mandatory funding and tying it to inflation is critical. National
    College Access Network (NCAN) research notes: ``Without a regular and
    planned increase, by 2024 the Pell Grant will cover only 23 percent of
    a 4-year public education.'' \2\ Given these gaps are real and
    widening; there is an ever-increasing demand to target dollars for
    students who need it most.
    ---------------------------------------------------------------------------
        \2\  ``Protect the Promise of the Pell Grant Program.'' National
    College Access Network. http://www.collegeaccess.org/PromiseOfPell.
    ---------------------------------------------------------------------------
        We see via our practice that campus-based aid addresses this gap
    and delivers much needed support to students. Our data from the Class
    of 2017 included over 5,800 letters with some form of campus-based aid
    awarded to Pell-eligible students:

              50 percent of Pell-eligible students received SEOG
            for an average of $1,040;
              61 percent of Pell-eligible students received FWS for
            an average amount of $2,582;
              24 percent of Pell-eligible students received a
            Perkins loan for an average of $1,727.

        Students who receive campus-based aid desperately need it. Other
    students do, too--particularly those at community colleges. Students we
    advise make decisions with SEOG offers in mind. FWS also adds
    tremendous value to close the gap while incentivizing student behaviors
    research we know increases GPA and persistence. Institutions are
    closest to the students and have the best line of sight to assess
    circumstances and direct supplemental aid. This is especially so for
    returning students trying to persist in college. uAspire concurs with
    the NCAN recommendation that the campus-based aid formula needs to be
    redesigned to focus on institutions serving low-income students, not
    institutions that have been in the program the longest. That said
    realignment is not elimination. Too many grant and work opportunities
    are not complexities that hold students back, instead they increase
    students' ability to complete their degrees.
                                     ______

      A Court Recorder's Response to the HELP Hearing on Financial Aid \1\
    ---------------------------------------------------------------------------
        \1\  Based on conversation with Laura Keane after the HELP Hearing
    on January 18, 2018 and interview with Ali Caccavella on January
    24,2018.

        Roxanne Green was the court reporter during the Senate HELP
    Committee hearing on Financial Aid Transparency & Simplification on
    Thursday, January 18th, 2018. As she explained to us, ``No one knows my
    name. No one ever speaks to me. No one interacts with the court
    reporter. Our goal isn't to be on the record.'' But when Roxanne heard
    the issues of financial aid being discussed in the course of her
    reporting that day, she felt compelled to come forward and share her
    ---------------------------------------------------------------------------
    perspective.

        ``I listened to everyone and how (the testimonies) moved from
    filling out the form to paying back the loans. I remember thinking,
    `Where does it end?' (uAspire) struck me because you want people to
    understand how financial aid is going to work for them.'' Roxanne
    recounted her personal experience with financial aid, and how
    cumbersome and confusing it was. ``My parents didn't go to college.
    This was a totally new thing for them. My mom didn't know what to do.''
    She explained that, though many people attempted to help her through
    the process, everyone gave her different information. ``It was like
    throwing things up in the air and hoping it landed.''

        More recently, Roxanne saw her nephew struggle through the
    financial aid process. ``I first did this 30 years ago, and it seems
    nothing much has changed. It's like an ever-revolving door.'' Roxanne
    is currently in deferment for loans she took to pay for court reporting
    school, and she described how she still struggles to keep up with the
    payments while also housing and feeding her family. ``I want and plan
    to pay off my loans, but I don't make enough--I'm just surviving--
    living expenses are cut to the bone.'' She was tenacious and able to
    get Federal benefits, but explained how it can be difficult to get
    services as a college student, and with a family. ``I had to prove that
    my college was legitimate, and that I was a mother.'' Roxanne heard
    elements of her story resonated at the hearing. ``Ms. Keane, Dr.
    Lowery-Hart, and Ms. Darcus spoke of experiences I can relate to as a
    single-mother and person of color struggling to pay back my loans.''

        Now Roxanne faces the prospect of her eighth-grade son entering the
    higher education financial aid life-cycle. ``I am a member of the
    public that happened to have a front-row seat for this hearing. My son
    will be a senior in 2022. I really hope the policymakers vote to make
    this process less cumbersome--that would be awesome.'' But in the
    meantime, Roxanne expressed her gratitude for organizations like
    uAspire. ``If the colleges are not on board to make the financial aid
    more clear and direct, I'm glad uAspire is around to help people
    understand.'' She explained her desire to learn more about our work
    because uAspire ``wants to help people all the way around financial
    aid.'' We assured Roxanne that she can reach out to us as needed when
    the time comes for her son to start the process, and shared optimism
    and hope that the system will be simpler, clearer, and easier to
    navigate by then.
                                     ______

                                       January 17, 2018
    Hon. Lamar Alexander, Chairman
    Hon. Patty Murray, Ranking Member
    U.S. Senate Committee on Health, Education, Labor, and Pensions,
    Washington, DC.

        Dear Chairman Alexander and Ranking Member Murray: On behalf of the
    Higher Education Loan Coalition (HELC), a grassroots organization of
    practicing financial aid administrators dedicated to the continuous
    improvement and strengthening of student loan programs, I wanted to
    share our feedback and recommendations regarding Higher Education Act
    (HEA) reauthorization legislation. In response to the House Education
    and the Workforce Committee's passage of the PROSPER Act, I want to
    express what we see as its strengths and where we believe there is
    opportunity to improve the legislation. Finally, there are higher
    education issues that are not addressed in the PROSPER Act, and we
    would like to bring these forward as the HELP Committee works on its
    reauthorization measure. We support several provisions and aspects of
    the PROSPER Act, such as:

              the elimination of origination fees;
              the overall direction the bill takes in simplifying
            and streamlining the financial aid process from application to
            repayment, including:

                 FAFSA simplification;
                 the consolidation of student loan programs into
            ONE Loan; and
                 the consolidation of multiple repayment plans into
            two options: a standard and an income-based repayment plan.

        We express strong concern, however, about provisions in the PROSPER
    Act that would increase the student loan burden and administrative
    burden for institutions. As the Senate crafts legislation, we would
    strongly urge you to reconsider the following aspects of the PROSPER
    Act:

              The elimination of the undergraduate in-school
            interest subsidy adds to borrowers' student loan debt and takes
            away one of the last need-based aid benefits available to
            middle-class families.

              The annual and aggregate loan limits are too low. If
            these loan limits become law, many students would be forced to
            apply for additional private loans that do not provide the same
            flexibility and protections as Federal loans and are often
            based on credit history. This could radically reduce access to
            higher education for many students from disadvantaged economic
            backgrounds.

              The effort to assist students in better managing
            their Title IV funds through weekly or monthly disbursements of
            aid (Sections 401 and 465) would cause major cash flow issues
            at institutions. Furthermore, some students may not have enough
            money to meet critical living expenses such as rent and food
            early on in the semester. For example, some landlords in
            college towns require up front payment for rent.

              The requirement for annual Pell Grant counseling
            would place an unnecessary administrative burden on financial
            aid administrators and would be an ineffective use of both the
            student and administrator's time. Such counseling could easily
            be integrated into the FAFSA process, which improves the timing
            and alleviates unnecessary delays in aid delivery. We believe
            this requirement should shift to the Department of Education.

        Finally, we urge you to consider incorporating the following
    recommendations in the Senate's HEA reauthorization legislation:

              Create a Student Loan Line of Credit for
            Undergraduate Students. Students in the first half of their
            program of study would have an annual loan limit to protect
            against over borrowing and defaults and have the ability to
            bank unused eligibility for future use after completing 50
            percent of the program. Access to line of credit should
            increase with progress towards credential or degree completion.
            The ultimate goal is to greatly reduce the reliance on PLUS
            loans, as well as private loans, which have higher interest
            rates and less favorable repayment terms.

              Ensure Fair Interest Rates. Interest rates should
            continue to be based on the market while reflecting the
            government cost of borrowing plus an additional fixed margin to
            cover the costs of administering the student loan program. The
            interest rate for students enrolled at least half-time should
            reflect only the government's cost of borrowing, and
            undergraduate students with a low expected family contribution
            should not accrue interest while in school.

              Simplify Repayment Plan Enrollment and Payments.
            Allowing borrowers to easily enroll in income- based repayment
            for multiple years via IRS data match would simplify the
            repayment process. Repayment plans also should allow borrowers
            to add payments that automatically apply to principal first and
            provide an option for borrowers to repay their loans via
            payroll deduction if they so choose.

              Support Public Service Loan Forgiveness. Allow for
            the continuance of the PSLF program, albeit with necessary
            updates in place, to allow for the program to thrive as it was
            intended.

              Ensure Loan Servicing Uniformity. The identity of the
            loan servicer should be invisible to the student, and all
            borrowers should have a single point of contact for all loan
            repayment activities. All service levels, loan terms, and
            borrower benefits should be uniform and equitable across all
            servicers.

        HELC would welcome the opportunity to discuss these issues with
    you. We have additional information about all of our recommendations in
    our Reinventing Student Loans white paper. Please do not hesitate to
    reach out if we can be of any assistance as the Senate undertakes this
    legislation that is so critical to the success of our nation's
    students.

                Sincerely,
                                                     Jean Rash,
                                                                 Chair.

                        Higher Education Loan Coalition
                       Executive University Director of
                                 Financial Aid Rutgers,
                             The State University of New Jersey
                                     ______

     Award Letter Checklist: Critical Terms, Calculations, and Formatting
                    Practices for Every Financial Aid Offer
        1. Require federally set, student-friendly explanations of nine key
    terms--uAspire recommendations bolded with uAspire recommended
    definitions below though consumer-testing recommended

        2. Breakdown full cost of attendance:

              Line items for direct costs and indirect expenses
              Residency, enrollment, and housing assumptions listed

        3. List gift aid separately under its own heading with subtotal

        4. List loans separately under its own heading with subtotal

              Direct loans titled consistently ``Federal Direct
            Subsidized Loan'' and ``Federal Direct Unsubsidized Loan''
        5. Calculate important cost information for the students:

              Net costs (Cost of attendance minus gift aid)
              Estimated bill (Direct costs minus gift aid minus
            loans)
              Work-study and PLUS Loan are not included in any
            calculations as money is not guaranteed

        6. List additional options to cover costs separately: may include
    work-study, tuition payment plan, PLUS Loan

        7. Identify critical next steps including:

              Any additional documentation required
              Decision deadline and/or deposit amount (if
            applicable)
              Instructions for how to communicate decision to
            accept, decline, or reduce aid

        Cost of attendance: Total estimated price for 1 year of college
    before financial aid is applied: tuition and fees, housing, food, and
    other additional personal and educational expenses.

        Direct costs: Billable expenses; money paid directly to college:
    tuition/fees and housing/meal plan, when applicable.

        Indirect expenses: Estimated additional personal and educational
    expenses needed throughout the academic year: books; transportation;
    living expenses, such as rent and food, if living off campus.

        Gift aid: Grants and scholarships that you do not need to pay back.
    Each grant and scholarship may have specific requirements to maintain
    eligibility/renew.

        Loans: Borrowed money that must be paid back, with interest. You
    can choose to reduce or decline amount offered.

        Net costs: Remaining costs for 1 year of college, after grants and
    scholarships are applied. Includes: any loans you borrow; money you pay
    directly to the college; and additional personal and educational
    expenses throughout the year.

        Estimated bill: The anticipated amount you will need to pay
    directly to the college to enroll; additional personal and educational
    expenses are not included.

        Work-study: You are eligible to earn up to $X after securing a
    work-study job through your college. The money earned is not typically
    available to pay your college bill; you will be paid directly via a
    paycheck for the hours worked.

        PLUS Loan: A Federal loan your parent may apply for that requires
    credit approval; if approved, your parent could be eligible to borrow
    the amount of your remaining costs.
                                     ______

        The next scheduled hearing before this Committee will be next
    Tuesday, January 23, 10 a.m., on 21st Century Public Health Threats:
    Our Nation's Preparedness and Response Capabilities.
                                     ______

        Thank you for being here today. The Committee will stand
    adjourned.
        [Whereupon, at 12:13 p.m. the hearing was adjourned.]