[House Hearing, 119 Congress]
[From the U.S. Government Publishing Office]
NO MORE SURPRISES: REFORMING COLLEGE
PRICING FOR STUDENTS AND FAMILIES
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HEARING
BEFORE THE
SUBCOMMITTEE ON HIGHER EDUCATION
AND WORKFORCE DEVELOPMENT
OF THE
COMMITTEE ON EDUCATION AND WORKFORCE
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED NINETEENTH CONGRESS
FIRST SESSION
__________
HEARING HELD IN WASHINGTON, DC, SEPTEMBER 16, 2025
__________
Serial No. 119-28
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Printed for the use of the Committee on Education and Workforce
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Available via: edworkforce.house.gov or www.govinfo.gov
__________
U.S. GOVERNMENT PUBLISHING OFFICE
63-858 PDF WASHINGTON : 2026
=======================================================================
COMMITTEE ON EDUCATION AND WORKFORCE
TIM WALBERG, Michigan, Chairman
JOE WILSON, South Carolina ROBERT C. ``BOBBY'' SCOTT,
VIRGINIA FOXX, North Carolina Virginia,
GLENN THOMPSON, Pennsylvania Ranking Member
GLENN GROTHMAN, Wisconsin JOE COURTNEY, Connecticut
ELISE M. STEFANIK, New York FREDERICA S. WILSON, Florida
RICK W. ALLEN, Georgia SUZANNE BONAMICI, Oregon
JAMES COMER, Kentucky MARK TAKANO, California
BURGESS OWENS, Utah ALMA S. ADAMS, North Carolina
LISA C. McCLAIN, Michigan MARK DeSAULNIER, California
MARY E. MILLER, Illinois DONALD NORCROSS, New Jersey
JULIA LETLOW, Louisiana LUCY McBATH, Georgia
KEVIN KILEY, California JAHANA HAYES, Connecticut
MICHAEL A. RULLI, Ohio ILHAN OMAR, Minnesota
JAMES C. MOYLAN, Guam HALEY M. STEVENS, Michigan
ROBERT F. ONDER, Jr., Missouri GREG CASAR, Texas
RYAN MACKENZIE, Pennsylvania SUMMER L. LEE, Pennsylvania
MICHAEL BAUMGARTNER, Washington JOHN W. MANNION, New York
MARK HARRIS, North Carolina YASSAMIN ANSARI, Arizona
MARK B. MESSMER, Indiana
RANDY FINE, Florida
R.J. Laukitis, Staff Director
Veronique Pluviose, Minority Staff Director
------
SUBCOMMITTEE ON HIGHER EDUCATION AND WORKFORCE DEVELOPMENT
BURGESS, OWENS, Utah, Chairman
MICHAEL BAUMGARTNER, Washington ALMA ADAMS, North Carolina,
JOE WILSON, South Carolina Ranking Member
GLENN THOMPSON, Pennsylvania FREDERICA WILSON, Florida
GLENN GROTHMAN, Wisconsin MARK TAKANO, California
ELISE M. STEFANIK, New York LUCY McBATH, Georgia
LISA C. McCLAIN, Michigan DONALD NORCROSS, New Jersey
KEVIN KILEY, California JOE COURTNEY, Connecticut
JAMES C. MOYLAN, Guam SUZANNE BONAMICI, Oregon
ROBERT F. ONDER, Jr., Missouri MARK DeSAULNIER, California
MARK HARRIS, North Carolina ILHAN OMAR, Minnesota
RANDY FINE, Florida YASSAMIN ANSARI, Arizona
C O N T E N T S
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Page
Hearing held on September 16, 2025............................... 1
OPENING STATEMENTS
Owens, Hon. Burgess, Chairman, Subcommittee on Higher
Education and Workforce Development........................ 1
Prepared statement of.................................... 4
Adams, Hon. Alma, Ranking Member, Subcommittee on Higher
Education and Workforce Development........................ 6
Prepared statement of.................................... 8
WITNESSES
Draeger, Justin, Senior Vice President, Affordability, Strada
Education Foundation....................................... 10
Prepared statement of.................................... 12
Wishing, Lee S., III, Vice President for Student Recruitment
and Chief Marketing Officer, Grove City College............ 28
Prepared statement of.................................... 29
Laitinen, Amy, Senior Director of Higher Education, New
America.................................................... 40
Prepared statement of.................................... 42
Gillen, Dr. Andrew, Research Fellow, CATO Institute.......... 57
Prepared statement of.................................... 59
QUESTIONS FOR THE RECORD
Responses to questions submitted for the record by:
Mr. Justin Draeger....................................... 94
Dr. Andrew Gillen........................................ 99
Ms. Amy Laitinen......................................... 104
Mr. Lee S. Wishing III................................... 109
NO MORE SURPRISES: REFORMING COLLEGE
PRICING FOR STUDENTS AND FAMILIES
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Tuesday, September 16, 2025
House of Representatives,
Subcommittee on Higher Education and Workforce
Development,
Committee on Education and The Workforce,
Washington, DC.
The Subcommittee met, pursuant to notice, at 10:16 a.m., in
Room 2175, Rayburn House Office Building, Hon. Burgess Owens
(Chairman of the Subcommittee) presiding.
Present: Representatives Owens, Grothman, Stefanik, Kiley,
Moylan, Onder, Harris, Fine, Walberg, Adams, Takano, McBath,
Norcross, Courtney, Bonamici, DeSaulnier, and Scott.
Staff present: Vlad Cerga, Director of Information
Technology; Solomon Chen, Professional Staff Member; Maren
Emmerson, Staff Assistant; Cabell Fleet, Intern; Amy Raaf
Jones, Director of Education and Human Services Policy; Libby
Kearns, Press Assistant; Isaiah Knox, Legislative Assistant;
Kyle Kuhlers, AEI Fellow; Campbell Ladd, Clerk; R.J. Laukitis,
Staff Director; Danny Marca, Director of Information
Technology; R.J. Martin, Professional Staff Member; Audra
McGeorge, Communications Director; Eli Mitchell, Legislative
Assistant; Ethan Pann, Deputy Press Secretary and Digital
Director; Sara Robertson, Press Secretary; Russell Chance,
Economist and Policy Advisor; Domenico Sassano, Intern; Brad
Thomas, Deputy Director of Education and Human Services Policy;
Ann Vogel, Director of Operations; James Whittaker, General
Counsel; Amaris Benavidez, Minority Professional Staff; Rashage
Green, Minority Director of Education Policy & Counsel; Lilo
Goodmanson, Minority Intern; Natalie Glezen, Minority Running
Start Fellow; Christian Haines, Minority General Counsel; Sarah
Holehouse, Minority Intern; Emanual Kimble, Minority
Professional Staff; Maxine Jones, Minority Intern; Alexandra
Pernie, Minority Intern; Stephanie Lalle, Minority
Communications Director; Raiyana Malone, Minority Press
Secretary; Marie McGrew, Minority Press Assistant; Eleazar
Padilla, Minority Staff Assistant; Veronique Pluviose, Minority
Staff Director; Banyon Vassar, Minority Director of IT.
Chairman Owens. The Subcommittee on Higher Education and
Workforce Development will come to order. I note that a quorum
is present, and without objection, the Chair will recognize to
call a recess at any time. Good morning, and welcome to today's
hearing of the Subcommittee on Higher Education and Workforce
Development.
I want to thank our witnesses for joining us to shine the
light on how students and families navigate one of the most
important and confusing financial decisions they will ever
face, choosing and paying for college. The process of
determining the true cost of college is clouded in mystery.
Colleges and universities routinely advertise prices that
bear little resemblance to what families ultimately will pay.
Too often, aid packages are filled with unclear or deceptive
figures. This is not how major financial decisions are made in
other parts of our economy. When you buy a home, Federal law
requires clear disclosure, so you know exactly what you will
owe.
When you purchase a car consumer protections guard against
deceptive pricing, yet when it comes to college degrees, an
investment that can rival or exceed the cost of a home,
students are left in the dark. The consequences of this lack of
transparency are serious. Studies show that unexpected costs
are the leading reasons for students dropping out.
Families who believe they are making a sound investment are
blindsided by hidden expenses. Many borrowers are left in the
dark without a degree or credential. Taxpayers also suffer.
When students borrow too much, they risk default, leaving
taxpayers to foot the bill. We also that institutional
practices such as tuition discounting, and aid displacement
makes systems even more opaque.
Colleges use sophisticated algorithms to decide who gets a
discount, often based not on merit or need, but how likely a
student is to enroll. One student may pay tens of thousands
more than his classmate, with similar qualifications simply
because the way the student's FAFSA was processed. That is not
fair to students or families.
The good news is that solutions are within reach. This
Committee has previously advanced bipartisan proposals to bring
some light to college pricing. Republicans have proposed
legislation that would establish standardized financial aid
offers to ensure students and families can accurately compare
college costs.
We have also proposed improvements to make net price
calculators more accountable, accessible, and user friendly. We
are exploring the concept of maximum price guarantees so
families know from day one the most they will ever pay for a
degree. These reforms are rooted in a simple idea; students and
families deserve honesty and transparency.
They should have access to information they need to budget,
plan, and make college choices that are best for them without a
lawyer or accountant.
Today we will hear from experts, including leading
economists, and a seasoned college administrator. Their
testimoneys will help us recognize where transparency is
working and where it is not and what colleges can do to ensure
that no student or family faces sticker shock that is often way
too late.
I look forward to a strong discussion and working with my
colleagues to make college pricing transparent, eliminating the
guess work, and empowering of students, enhancing
accountability and safeguarding taxpayers.
Before I yield to the Ranking Member for a statement, I
want to take a moment to acknowledge today that Chance
Russell's last day is today on the Committee.
For the last 6 years, first under the leadership of
Chairman Foxx, and now under the leadership of Chairman
Walberg, Chance has been a trusted colleague, and a true expert
in higher education policies across the House, Senate, and
Education Committee he has earned deep respect for his insight
and leadership.
Most recently, Chance poured countless hours into crafting
proposals that became law through reconciliation. Work that
will leave a lasting mark on the families and students
nationwide. Chance, your creativity, dedication, and hard work
have made this team stronger every single day.
On behalf of all of us, thank you for everything you have
done, and you have given, and we wish you the very best. I
would like to take a few minutes to yield to our Full Committee
Chair, Chairman Walberg.
Mr. Walberg. Thank you so much. That is kind of Mr.
Chairman. Chance, we will miss you. We will hold it against you
for a while that you are leaving us, but to come in as a new
Chairman of this Committee into reconciliation, into student
loan, debt, payoff, all the financial things, and know that I
had someone who Chairman Foxx said make sure you keep him on,
had that stamp of approval.
Then to find out, as we sat and talked with college
Presidents, financial aid officers, and others that I could
always turn to you, who had the answer, whether they wanted to
hear it or not. A lot of times it was the true answer, but also
willingness to say we will look even further as we get better,
better numbers, and make sure it all works.
That was immensely helpful to me, and I will never forget
that. To know that you were very capable of working with our
friends across the aisle to do it in, if it possible,
bipartisan way to take suggestions to take concerns and move
them forward. That was immensely helpful as well.
Then finally to know that you scheduled your wedding around
all of this work, and the sacrifice that that meant. I want you
to thank your wife also. I wish you both the best in the
future, and we know that you will be around where we will have
a chance to work with you, but God bless you, Chance, thank
you.
Mr. Scott. Mr. Chairman, will the gentleman yield?
Chairman Owens. Yes, yes.
Mr. Scott. Thank you. I just wanted to add in a statement
when they said he works with the Democrats. We have had some
very contentious issues in this Committee. We sometimes agree,
sometimes do not, but being able to communicate and work
together has been extremely important.
I understand that Chance is going to the Department of
Education, so we will have somebody there that we can work
with, and look forward to that relationship, so thank you very
much Chance, for your years of service.
Chairman Owens. Okay. We are going to miss you buddy, for
sure. With that I yield to the Ranking Member.
[The prepared statement of Chairman Owens follows:]
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Ms. Adams. Thank you, Mr. Chair, and certainly I want to
congratulate the gentleman, and thank him for his work as well.
Thank you to our witnesses today for being here. I want to
first acknowledge the horrific events that occurred last week.
Former Representative Gabby Giffords said it best,
``Democratic societies will always have political
disagreements, but we must never allow America to become a
country that confronts those disagreements with violence.''
This summer, America has seen multiple political motivated
attacks because dangerous people turn to guns to express their
disagreement. Both parties have been targeted, and both parties
share moral and patriotic duty to take meaningful action.
Now, onto the topic at hand. Attending a reputable college
or university remains one of the most critical pathways to
economic success and financial freedom that people have access
to.
The cost of higher education is getting higher and higher
every year, to the point where getting a degree has become
financially unattainable for many Americans. Our higher
education system must be an engine of economic mobility for all
students, not an instrument for preserving the elite status of
wealthy families.
As the costs of college continues to rise, students and
families also struggle to understand the true cost of
attendance, and how they must--how they can expect to spend out
of pocket on higher education. Too often families are left to
navigate a complex and confusing system of fees and tuition
rates, and financial aid options without clear guidance.
This can lead to sticker shock, as families grapple with
the total cost of a college education. I spent 40 years on a
college campus, and I understand what students and families go
through.
In my home State of North Carolina, the North Carolina
College Connect Program removes barriers and provides direct
pathways for high school students to apply for and attend
college.
Programs like North Carolina College Connect cut through
much of the bureaucratic red tape that comes with applying for
college and helps students and families understand the process.
There is much more to be done. Greater price transparency is
essential to ensuring that students and families can make
informed decisions about their future.
Institutions of higher education can and must do more to be
more transparent with students and their families about the
costs of attendance, and about their student aid options. That
being said, more transparency will not address many of the root
causes of the rising cost of college.
Right now, our country is facing a college affordability
crisis that has been made exponentially worse by the Trump
administration and congressional republicans.
The Big Ugly Bill raises costs for current and future
borrowers by forcing student loan borrowers into unaffordable
repayment plans, eliminating resources to help struggling
borrowers, and pushing students toward the predatory private
loan market by eliminating Graduate Plus loans, capping Parent
Plus Loans, and limiting access to Pell Grants.
To make it worse, in March the Trump administration ordered
sweeping reductions, enforced grifts at the Department of
Education, laying off over half of the staff at the Office of
Federal Student Aid. We have seen reports of calls going
unanswered, glitches going unfixed, and disruptions in
colleges' abilities to calculate their own financial aid
offers.
How can we expect colleges to deliver transparency if they
themselves do not have the necessary information? At the end of
the day, transparency and college costs is a wonderful goal,
but increased transparency is not going to help families afford
the costs of college once they understand the total cost.
Addressing transparency is a tiny drop in the bucket, compared
to the larger issues that students are dealing with.
I hope that we can have a productive discussion today about
transparency, but we must also keep in mind that the way to
achieve affordable education is not just by making the net
price easier to find on the school website.
Democrats are committed to ensuring that students have
access to safe and affordable higher education that works for
everyone, not just the privileged few.
Mr. Chairman, I look forward to our discussion today. I
thank you, and I yield back the balance of my time.
[The prepared statement of Ranking Member Adams follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Chairman Owens. Thank you. Pursuant to Committee Rule 8(c),
all members who wish to insert written statements into the
record may do so by submitting them to the Committee Clerk
electronically in Microsoft Word format by 5 p.m., 14 days
after this hearing.
Without objection, the hearing records will remain open for
14 days to allow such statements and such material noted during
the hearing to be submitted for the official hearing record. I
know that some of our colleges that are not permanent members
of the Subcommittee may be joining us for this hearing today.
I now would like to turn to the introduction of our four
distinguished witnesses. Our first witness is Dr. Andrew
Gillen, a Research Fellow at the Cato Institution here in
Washington, DC. The second witness is Mr. Lee S. Wishing III,
the Vice President of Student Recruitment and Chief Marketing
Officer for Grove City College in Grove City, Pennsylvania.
The third witness is Amy Laitinen, okay, thank you, thank
you, Amy, Senior Director of Higher Education for New America
in Washington, DC. Thank you, Amy. Justin Draeger, the Senior
Vice President for Affordability at the Strada Education
Foundation in Washington, DC.
We thank the witnesses for being here today, and we look
forward to your testimony. Pursuant to Committee Rules, I would
ask each of you to limit your oral presentation to a 3-minute
summary of your written statement, as Committee members have
many questions for you.
The clock will count down from 3 minutes. However, pursuant
to Committee Rule 8(d), Committee practice, we will not cut you
off--cut off your testimony until you reach the 5-minute mark.
I would also like to remind the witnesses to be aware of your
responsibilities to provide accurate information to the
Subcommittee.
I would like to first recognize Mr. Draeger for your
testimony.
STATEMENT OF MR. JUSTIN DRAEGER, SENIOR VICE PRESIDENT,
AFFORDABILITY, STRADA EDUCATION FOUNDATION, WASHINGTON, D.C.
Mr. Dreager. Thank you, Mr. Chairman, Chairman Owens,
Ranking Member Adams, and members of the Subcommittee. Thank
you for the invitation to testify today. I am Justin Draeger,
Senior Vice President for Affordability at Strada Education
Foundation.
At Strade, we are focused on connecting education with
opportunity for more Americans, particularly those with the
most standing in their way. Price transparency is a
foundational part of affordability because it helps families
make informed choices, budget realistically, and trust the
system. Without it we lose not only dollars, but dreams, and
talent, and opportunity.
Sadly, according to our research, most people have no idea
what it actually costs to attend a community college, or a 4-
year in State public university. In fact, again, with our
research, most are over-estimating that cost, and at the same
time, most Americans, nearly four out of five believe college
is unaffordable.
Here is the kicker, the net price, and this is the price
that families actually pay, has been flat or even declining in
inflation adjusted dollars for several years. Nobody would
believe it because all they see are rising sticker prices,
scary headlines, confusing jargon, and enrollment tactics that
too often leave them in a fog of confusion.
That confusion has real consequences. First, cost
perceptions and cost realities are the No. 1 reason people do
not attend post-secondary education or they drop out. Two,
price confusion and enrollment tactics erode public trust in
post-secondary ed.
Solving this problem will require more than messaging. If
all we do is tell families that college is unaffordable, excuse
me, that college is affordable, they will not believe us unless
we also change the practices and the system that is undermining
that trust. What do families say they actually want?
Well, according to our research, and across every group
that we have interviewed in the last year, this includes high
school students, college students, adult learners, and parents,
three things rose to the top. They want one clear all-in number
as early as possible, no surprise fees.
Two, they want guarantees within reason that their price
will not change while they are enrolled. Three, they want one
clear sense of return on their investment. They want to know
whether the degree or credential that they are receiving will
pay off in the end, and they want minimal amounts of loan debt.
Colleges, for their part, they want the same thing, but
they feel stuck in models that have been embedded in enrollment
management for decades. Rising sticker prices to signal
quality, or balance ledgers, or fill classrooms, and discounts
to then recruit students. Some of that may make sense on paper,
but it erodes public trust in the system.
We can fix this if we prioritize clear numbers early,
standardize plain language, all in pricing, and fix incentives
focused on simplification at every level of enrollment and
financial aid. Students and families are not asking for
miracles, they are asking all of us to work together at the
Federal, State, and institutional level focused on honesty,
predictability, and clarity, not complexity.
Thank you for this opportunity and I look forward to
today's conversation.
[The prepared statement of Mr. Draeger follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Chairman Owens. Thank you. I would now like to recognize
Mr. Wishing for your testimony.
STATEMENT OF MR. LEE S. WISHING III, VICE PRESIDENT FOR STUDENT
RECRUITMENT AND CHIEF MARKETING OFFICER, GROVE CITY COLLEGE,
GROVE CITY, PENNSYLVANIA
Mr. Wishing. Okay. Chairman Owens, Ranking Member Adams,
and distinguished members of the Committee, thank you for the
opportunity to testify about unfunded discounting, a misleading
tuition pricing practice widely used by colleges and
universities.
My name is Lee Wishing, and I am Vice President for Student
Recruitment at Grove City College in Western Pennsylvania. Most
universities without large endowments, set their tuition
sticker prices well above their actual costs, their break-even
costs.
This is done for three main reasons. First, a high sticker
price can create an inflated perception of value. Second, it
allows the school to offer large, impressive looking
scholarships to every student, making them feel valued and
desired. Finally, and most importantly, this scheme dupes some
students into unwittingly funding their classmate's
scholarships.
Let us use a simple example. A university sets its sticker
price at $65,000, but its actual break even cost to educate a
student is only $35,000. Therefore, it can give every student a
$30,000 scholarship without losing any money. What happens to
the student who receives just a $20,000 scholarship?
They will pay $45,000, which is $10,000 more than the
school's break-even cost. This extra $10,000 can then be used
to give a more desired student, perhaps one with a high SAT
score, a special talent a larger scholarship, say $40,000.
Essentially, students who receive smaller scholarships are
unknowingly subsidizing those who get larger ones in such a
scheme.
This practice puts students and families at a risk of
overpayment and excessive debt. They may take out loans to pay
for a portion of their classmate's education and could be
burdened with that debt for years after graduation.
Furthermore, many schools have a minimum GPA requirement to
maintain these scholarships.
If a student loses their scholarship they may be faced to
pay the full inflated sticker price, or drop out of college
altogether, sometimes with a large debt burden. My college,
Grove City College, competes in the higher education
marketplace without practicing unfunded discounting.
We charge our break-even price of $35,290. Our scholarships
are fully funded by our endowment, alumni, and friends. No
student pays for another. We see firsthand how this practice is
a sophisticated marketing scheme with an entire industry built
around it, including third-party vendors who develop data
models to determine scholarship awards.
In summary, unfunded discounting is a marketing scheme that
inflates tuition prices, distorts perception of value, and
causes some students to unknowingly subsidize other students,
often at great personal expense and debt that will take years
to pay off. Thank you for your time and consideration of this
important matter.
[The prepared statement of Mr. Wishing follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Chairman Owens. Thank you. I would like to now recognize
Ms. Laitinen, please excuse.
Ms. Laitinen. Laitinen.
Chairman Owens. Okay. Thank you, okay, thank you. Yes.
Thank you.
STATEMENT OF MS. AMY LAITINEN, SENIOR DIRECTOR OF HIGHER
EDUCATION, NEW AMERICA, WASHINGTON, D.C.
Ms. Laitinen. Good morning, Chairman Owens, Ranking Member
Adams, and distinguished members of the Committee. My name is
Amy Laitinen, and I am the Director of the Higher Education
Program at New America, which is a non-partisan think tank.
Bring my mic here? All right. How is this? Wonderful.
Thank you for inviting me today to discuss what is at stake
in ensuring that millions of students and their families have
the information and support they need when making one of the
most consequential, expensive, and as Mr. Owens said, confusing
decisions of their lives, whether and where to go to college.
The first thing that families need to make that decision is
pretty simple, clear, comparable, honest information about what
college will really cost. Right now, too many colleges are
hiding the ball. Our research found that a third of financial
aid offers, which are supposed to show students what college
will cost and how to pay for it, did not include cost
information.
Colleges used 136 different terms for the exact same
Federal loan, and 24 of them did not even use the word
``loan.'' When buying a car or a home, consumers get
standardized disclosures. Students and families deserve the
same for college, which is why Congress should support and pass
the bipartisan, bicameral, Understanding the True Cost of
College Act.
Price transparency alone is not enough, even when
colleges--when students know the college's price, too many
still cannot afford it. Rising costs have pushed too many to
take on unmanageable debt, leave college, or never go in the
first place. Pell Grants now cover only about a quarter of the
cost of the full cost of attending a public university, which
is the lowest share in decades.
Some colleges are making it worse, as we heard before, more
and more they are using their institutional aid, not to support
low-income students, but to attract wealthier high scoring
students who will boost their rankings and their revenue. Our
research found that between 2001 and 2017, selected public 4-
year universities spent 32 billion dollars on students with no
financial need.
32 billion dollars that could have gone to help low-and
moderate-income students. That is unconscionable. Colleges need
to stop doing that. This behavior undermines the Pell Grant
program and leaves the students who Congress has prioritized
with bigger affordability gaps and more debt.
In addition to stopping that behavior, we need more
investments to restore the Pell Grants purchasing power,
reforms to ensure that states and institutional aid goes to
students who need it the most, and a meaningful Federal State
partnership to stabilize costs and keep them low.
Even when students can pay for college, affordability is
not enough because it does not mean much if programs leave them
drowning in debt, or stuck in low wage jobs, and that is why
passing the bipartisan College Transparency Act, and
maintaining the Department of Education's Financial Value
Transparency Rule is critical, so that students can see which
programs pay off, and which do not, before they enroll.
Transparency is essential, but it is not a substitute for
protection. Students and taxpayers need meaningful
accountability, and Congress took a major step forward during
reconciliation, including a Do No Harm Standard to ensure that
colleges do not leave students worse off than if they had not
enrolled at all.
Congress needs to go further. It needs to include the risky
undergraduate certificate programs and protect students from
programs with unaffordable debt. It needs to support the
Department as it implements and enforces both these new
protections and existing protections like the Gainful
Employment Rule.
Laws do not protect students on their own. They require
people and resources, and right now the Department needs both.
The Federal Government spends over 130 billion dollars a year
in student aid. Students and taxpayers deserve a system that
makes college costs clear, keeps education affordable, and
holds institutions accountable for value.
Thank you for including me in this really important
conversation, and I look forward to your questions.
[The prepared statement of Ms. Laitinen follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Chairman Owens. Thank you so much. We appreciated that. My
last witness, Dr. Gillen.
STATEMENT OF DR. ANDREW GILLEN, RESEARCH FELLOW, CATO
INSTITUTE, WASHINGTON, D.C.
Mr. Gillen. Chairman Owens, Ranking Member Adams, and
esteemed members of the Committee. Thank you for giving me the
opportunity to testify on these important matters. My name is
Andrew Gillen. I am a Research Fellow at the Cato Institute,
and I have been studying higher education for longer than I
care to confess to.
Today's topic on price transparency in higher education is
an excellent one, and higher education institutions have both
high and uncertain pricing, which is a particularly brutal
combination for students and parents. One promising policy that
could help address these problems is price transparency.
There has been momentum around three different price
transparency initiatives in higher education. The first, which
Amy alluded to, was eliminating confusing financial aid
terminology, so making sure we are using the same words to
describe Pell Grants, student loans is very hanging fruit we
should definitely do.
No. 2, net price transparency, which this body has already
done some work on in mandating net price calculators. I think
more work remains to be done. The third is really a State level
initiative at this point, and these are what we refer to as
price guarantees that lock in a maximum price for a
predetermined number of years, typically the length of the
program. Two years for an associate degree, and 4 years for a
bachelor's degree.
States like Ohio and North Carolina are already
implementing some of these. In terms of the overall pros and
cons of price transparency, my written testimony has a complete
list, but I want to highlight a couple of the big ones in my
limited time here.
As an economist, I am going to focus a bit on the economic
rationales of price transparency, which include increases in
market efficiency, more informed decisionmaking on the part of
students and parents, reduced transactions costs, and a better
competitive pressure on institutions, not only because the
students and parents are more informed, but also because we
would anticipate seeing less things like price discrimination
and scholarship displacement with more transparent pricing.
I am a trained economist, so I do tend to emphasize the
economic reasons, but I actually think the strongest argument
for price transparency is the moral one, which is eliminating
surprise bills. It really shocks the conscious when this
happens in the healthcare setting, and we need to make sure it
is not happening in the higher education setting as well.
What can we learn about transparency from other industries?
My written testimony has some good information on both
healthcare and the cement industry, probably enough. I would
encourage you to take a look at that if you are interested. In
terms of the overall recommendations, my main conclusion is
that the benefits of transparency almost certainly outweigh the
costs of implementing it, and we should pass new legislation to
do that.
That legislation should standardize financial aid
terminology, supplement the existing net price calculators with
a universal one that facilitates comparisons across colleges,
require a price guarantee for the typical length of the
program, make compliance with these price transparencies a
condition of Title IV participation, and then for big things
like price controls that could muddy the waters.
I would also advocate maybe considering making this an add-
on for states that do not already implement their own, so a
State like Ohio or North Carolina, that is already doing this,
perhaps allow them to continue doing their version, but do
require standardize terminology and formats, so it is machine
readable and comparable.
Thank you for giving me the opportunity to testify, and I
look forward to answering any questions you have.
[The prepared statement of Mr. Gillen follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Chairman Owens. Thank you so much. Under Rule, Committee
Rule 9, we will now begin questioning under the 5-minute rule.
I will recognize myself for the first 5 minutes. Mr. Wishing,
first of all, very enlightening opening statement, and I just
wanted to--in your testimony you described tuition discounting
as ``best kept open secret.'' I
Is there anything you can add to what you've already kind
of exposed or talked about so far? Again, for many of us this
might be the first time we are hearing these type of terms, so
anything you want to add to your opening statement?
Mr. Wishing. Sure. The best kept open secret, it really is
from my perspective, the seat that I sit in at a place that
does not practice this. It is just remarkable to see how the
whole industry knows this is happening, everybody knows it.
Marketing firms that create the data models. I have been in
conversations with college Presidents, colleagues who have gone
off to other institutions.
In summary, sir, everybody knows, everybody knows, the
associations that colleges belong to, everybody knows, but the
students and the parents, and we have a heck of a time cutting
through that morass of misinformation to help students
understand what is going on.
Chairman Owens. Thank you. Thank you so much. Mr. Draeger,
in your testimony, indicated that the impact of current college
pricing systems are not shared equally among students. Which
students and families are hurt the most when colleges are not
transparent, and how does lack of transparency impact
enrollment, persistence, and completion?
Mr. Draeger. Three groups stand out when we looked at the
numbers of students that suffer the most when they do not have
a clear idea of what college is going to cost. First are low-
income and first-generation students. They are the least likely
to have family experience that helps them navigate a really
complex system.
The second are adult learners. They are debt adverse. They
want to understand the ROI the most, and when they cannot
decipher what the degree or credential will help them, and how
it will pay off in the end, they are reluctant to enroll. Third
are middle income families who earn too much to qualify for the
maximum need-based aid, but they do not make enough money to
pay the sticker price.
When they confuse sticker and net, they do not have clarity
and will delay, or potentially not enroll. In terms of
persistence, the numbers we have almost show that 9 out of 10
students who do not persist or who drop out of higher education
cite perceptions of cost, or real cost as the reason why.
If you look at all of the other reasons that they come up
with, nearly every other reason is indirectly related to
perceptions of cost or cost. I would say the bottom line is
when students do not understand the price, the most vulnerable
ones are the ones who pay the highest cost, not just in dollars
but in lost opportunity.
Chairman Owens. Thank you. First of all, this is an
extremely important conversation, and for many of us to
understand so much of what is happening behind the curtains
essentially is very, very enlightening to say the least, so I
would like to now recognize my colleague from California, Mr.
Takano.
Mr. Takano. Thank you, Mr. Chairman. Ms. Laitinen, you
State in your testimony that transparency is the minimum
protection that families need before committing to one of the
most expensive decisions of a lifetime, and I could not agree
more with that assertion. Ms. Laitinen, you also describe how
the current gainful employment and the financial value
transparency rules--well, can you describe how the current,
Gainful Employment and Financial Value Transparency Rules
protect students?
Ms. Laitinen. Absolutely, thanks for the question. Just to
underscore, transparency is not a substitute for protection,
and I will say both of these rules, the Gainful Employment
Rule, and the Financial Value Transparency Rule go as far as
the Department of Education can go without congressional
action.
I really applaud the Department for going as far as it has
gone. H.R. 1 did do an accountability measure, but it really
lacked some holes that the Gainful Employment Rule keeps in
place. One of them is what I mentioned earlier, which is these
really risky certificates that where we see a lot of
concentrated terrible outcomes for students, and then we see a
lot of programs where you have--students are drowning in debt
that they cannot pay back.
H.R. 1 took a good step, and it has a mandatory earnings
provision, but it does not include that debt piece, and it has
this whole entire loophole for these certificates. Gainful
Employment is the backstop to that because it will protect
students against those programs. The problem is it is a rule,
and we all know regulations come and regulations go, and I
think it would be better if this were codified in law, but
until and unless it is, it needs to stay.
I think that Congress needs to use its congressional
oversight authority to make sure that the rule is enforced,
that the rule is being implemented, and that the data that are
coming out of the rule are shared with the public. The same
thing is happening with the Financial Value Transparency Rule,
which is--we are talking about transparency, transparency of
price.
We need transparency of price for particular programs. We
need transparency of outcomes, and this is called FVT,
financial value transparency. It is--I think it is the most
impressive step the Department of Education--the Federal
Government has taken so far in terms of transparency.
I would also encourage the Department--not the Department.
I would encourage Congress to encourage the Department to both
implement the Financial Value Transparency Rule, and make sure
that those data come out because right now, sorry to get a
little bit wonky, the Department has just finished two rounds
of collecting the data, so we could publish those now, and have
information that students could use today, or as soon as they
publish it, to make these decisions.
I will say that the Gainful Employment Rule is on the
docket right now. The Department of Education is reconsidering
it during an upcoming negotiated rulemaking session, and
colleges are already lining up and writing in their comments
saying, ooh, let us weaken that rule, let us get rid of that
rule.
What that is going to mean is it is not just going to hurt
the students who are in those programs today, the certificate
programs, or the unmanageable debt. The certificate programs
that I talked about. It means there is going to be an incentive
for colleges to create more and more and more of those programs
because they are not subject to that accountability, and that
is really dangerous for students.
Mr. Takano. To summarize, transparency is important. It is
a minimum basis I think we as republicans and democrats can
agree on that point, but I think we do not necessarily see eye
to eye on the gainful--the equal, or if not more importance
placed on Gainful Employment and the Financial Value
Transparency Rules-.
I think we--I would hope that the two sides can come
together and see how all of these can work together to protect
both the taxpayer and the student. Now, I agree with my
colleagues that transparency in college pricing is a serious
issue, but there are a number of factors that make the costs of
college rise. The republican reconciliation package massively
cut foundational Federal healthcare, and nutrition programs,
and have strapped states for resources as they scramble to
cover those costs.
They have pushed these costs onto the states. How will the
reduction in Medicaid and SNAP impact the cost of public
education and the funding for State financial aid?
-Ms. Laitinen. It is going to be huge. I mean the first
thing that states do when they are facing budget cuts is they
cut higher education. They cut higher education because they
can raise money for it, but the raising money for it is raising
tuition, which means it is being the budgets are being balanced
on the backs of students, often in the forms of debt.
These are going to be massive holes in State budgets, with
the cuts to Medicaid and staff, and it is going to have a
really big impact on student affordability.
Mr. Takano. Thank you so much for that, thank you. I yield
back.
Chairman Owens. Thank you. I would like to now recognize
the Chairman of the Full Committee, Chairman Walberg.
Mr. Walberg. Thank you, Mr. Chairman, and thanks to the
panel for being here. I am delighted in my conversations with
the Secretary of Education that some of this is actually going
to be happening, including in FAFSA, which will be rolling out
on time. Thank you for being here.
Mr. Wishing, your school, like Hillsdale College in my
district, has made a concerted effort and decision to
underwrite its own college costs, and not take Federal funding.
It is interesting to have you here speaking about this issue
and talking about the transparency that you show to your
incoming students.
In your testimony, you mentioned that, and I quote, and it
is a shocking quote, ``The very first transaction a student has
with most Christian colleges is based on deception.'' Could you
elaborate on this point, including whether this deception is
exclusive to private faith-based institutions, or applicable
more broadly to public and other types of institutions?
Mr. Wishing. Thank you for the question, sir. In some ways
I feel like apologizing for using the word ``deception,''
because it is a very strong word, but----
Mr. Walberg. We like transparency.
Mr. Wishing. Yes. I cannot think of a better word. It is
deceptive. Students--it is deceptive in that like so, Grove
City, Hillsdale, we compete for pretty high achieving students,
and these students are the big winners in this game at the
expense of maybe the lower achieving students.
The high achieving students think that they are getting a
huge, wonderful scholarship. What I have seen a $30,000
scholarship, an institution will have maybe 10 percent money in
that, so it is greatly over--the actual value is greatly
overstated, so it is creating this perception, grandiose
perception that the student is greatly desired.
The students that score lower or achieve at a lower rate,
they too get a scholarship. It is like everybody gets a trophy.
Some students get a big trophy, and the students that get a
smaller trophy, they end up paying for the bigger trophies. It
is staggering. Everybody does it.
I should not say everybody does it, not everybody, but it
is widely practiced.
Mr. Walberg. It is across the board?
Mr. Wishing. Excuse me?
Mr. Walberg. It is across the board?
Mr. Wishing. I see it every day of my working life, yes.
Mr. Walberg. Okay. Thank you. Dr. Gillen, an eye-opening
expose by the Wall Street Journal in 2023 found that the public
flagship universities have and I quote, ``Been on an unfettered
spending spree and have passed the bill along to students.''
Oftentimes, public institutions are one of the loudest voices
against post-secondary education reform, arguing that State
funding fluctuations make transparency with students
impossible, while ignoring their institutional spending habits.
Do you agree with the premise that State funding has
declined? Does the fact that an institution receives State
funding mean that it cannot be honest with students and
families?
Mr. Gillen. I do disagree with the premise that State
funding has been on a long, downward trajectory. This is often
called State disinvestment. A couple months ago, we actually
put out a report that documented the last four and a half
decades of State funding for higher education. When you look at
the trend line, it is actually up, so states have been
increasing funding over time by about $56 per student per year.
Now, during recessions, there is a downward trend, but then
it quickly increases later. I actually counted up last night,
we have now had 12 years of higher State funding than the year
before in a row, for 12 years now. That kind of realization has
not soaked through to the conventionalism yet.
Mr. Walberg. Thank you. Quickly, in my final seconds here.
Mr. Draeger, you indicate schools set high sticker prices to
signal high-quality and prestige. In Strada's research, how do
students and families react when they learn these scholarships
are nothing more than a marketing ploy?
Mr. Draeger. Initially, they react with delight that they
are receiving a scholarship. Ultimately, down the line, it
works against the school's interest. I might just frame this
slightly differently. I do not think schools are engaging in
deceptive practices. I think they are engaging in practices
that ultimately students and families come to see as deceptive.
I think there is an important distinction. Ultimately, I
think there are many schools that would like off ramps to these
practices. Collectively, I think we can get there.
Mr. Walberg. Thank you. I yield my time.
Chairman Owens. Thank you. I would like now to recognize my
colleague from New Jersey, Mr. Norcross.
Mr. Norcross. Thank you, Chairman, very much for yielding,
and especially for holding this hearing, and to Chairman
Walberg, this is an incredibly important question to virtually
every family in the United States. The first question is what
do you want to do when you grow up? Which turns into, whether
it is 9th, 10th, 11th grade, are you going to college?
With the assumption is that is the first and best and only
answer in so many ways. Do you want to go to college? Well, the
fact of the matter is, you know, for every parent having that
discussion with their child is, do you want to go to college?
Do you want to serve your Nation, and go into the military, or
do you want to go to a trade school?
At the end of the day, whether it is college, military, it
is what is your career? What is going to be your job? Student
loans, I say it all the time, is one of the greatest things we
have ever done and one of the worst things we have ever done
because for parents who care so much about their children, they
want to do what's right by them.
To pay $80,000 to go to college for 1 year. First of all,
let us back-up. We talk about like every child knows I want to
go to college, and this is what I want to do. I would love to
see the statistics of asking that child what job or career that
they are going for, and where do they end up.
If we hit 50/50 I would be surprised. This is--the reason I
am bringing this up is having that discussion with the parents
and the child of what the true costs are is incredibly
important. Nobody has mentioned community college. Is this what
I want to do? That is most affordable and accessible for any
child.
Then move into a 4-year and go on, but the idea that so
often they want to chase that picture that they see, it is a
great sports team, and listen, we just came off a great weekend
of watching sports for college football, and how many children
pick those schools simply because of the academic program, or
the sports program.
True cost is such a relevant issue. Earlier in your
testimony, you talked about the net cost. When you just talked
about the funding for higher education you said it went up. Of
course it does. Everybody raises it. What is the true cost
against inflation? That would absolutely change it. A, having
the right information, calling it the right thing, that
terminology is so important.
We can do this, and I am very much focused on that. The
terminology, and the basic costs for a college. You talked
about repeatedly, there are--you can buy the Chevy, or you can
buy the Cadillac, and we need to address those issues to go
through the school. The idea of saying there should be a cost
guarantee if it is a 2-year college, your costs there.
We are having a great discussion for something that ends up
being the biggest decision in many people's life, other than
getting married and having children. This is so important that
we consider what takes place at the time of these decisions
because it impacts the parents, who might have to help the
child, and it certainly is going to impact that child making
that decision.
Transparency. Ms. Laitinen, talk to me about when this
child and this parent are making the decision, what goes into
making that decision that impacts? Are they actually looking at
like, ``Gee, to go to there, it's going to cost me a half a
million dollars to send you there for something that you may or
may not do.''
When we are talking about transparency and the terminology,
also the decisionmaking, what goes into that in the studies
that you have been part of? How do the parents and child
actually make that decision?
Ms. Laitinen. Ideally, they should be making that decision
with really good information, and really good, complete and
honest data. Right now they are not, and just to be a little
bit crude about it, it's garbage in and garbage out, in terms
of if you have really misleading information that is on these
financial aid offers. In our research we have found, in
addition to some of the issues that I mentioned at the top,
there are colleges that will list loans, like Parent Plus Loan,
and put them as if they are gifts, as if they are awards that
they do not have to pay back.
One of my favorite and horrible examples is there is a
college--there was a letter that at the very bottom of it, it
had all of the grants and loans and things. At the very bottom
of it, it said your out of pocket cost is zero, which is
amazing, that is great. I do not have to pay anything to go to
college. In that letter, Parent Plus Loans of $27,000 were
listed.
Student loans were listed, but they were like P Plus. Who
knows what P Plus is? Do you know what--you know what P Plus
is, everybody on this Committee knows what P Plus is, but most
people do not know what that is. That is because the
information is--I will disagree with my colleague, Justin here
a little bit, about whether or not its intentionally deceptive.
I think for some colleges it is not, and I think for some
colleges it is because if this tool is both helping students
try to understand the cost of college, but it is a marketing
tool for schools to recruit students.
Mr. Norcross. I yield back. Thank you, Chairman.
Chairman Owens. Thank you. Thank you so much. I would now
like to recognize my colleague from North Carolina, Mr. Harris.
Mr. Harris. Thank you, Mr., Chairman, and thank you to all
on the panel. This is an extremely eye-opening hearing, and I
am very grateful for all of your expertise and what you are
sharing. Mr. Wishing, I am concerned that Federal policies over
the past several decades have really helped to drive up college
costs, and I think you can tell by the questioning that in your
testimony many were captivated as you discussed the concept of
unfunded discounting, where colleges offer scholarships to
students based on artificially high fake price.
The scholarship makes it seem like the student is getting a
huge discount, but really it is a discount off a number much
higher than it needed to be. How does the Federal loan system
perpetuate the idea of unfunded discounting?
Mr. Wishing. Well, I may not be the best person to answer
that because we do not take Federal loans, but for my
competitive perspective what I see is, you know, money is
fungible. If you think about a school that may get let us say
it seems like Pell Grants, or if a school gets 5 million
dollars a year worth of Pell Grants, that is worth 100 million
dollars in an endowment coming out of Washington, DC.
That is like we have to compete against that, so Grove City
would have to have 100 million dollars of its endowment just to
compete with the Pell Grant stream. Anyway, it puts a lot of
money into the system that can kind of slosh around, be used to
award for this, award for that, but it kind of gives a base of
funding to schools.
If that were taken away, boom. You know, I think you would
see a lot more pencil sharpening at schools. I think they would
offer a better value. I hope that is a good answer, but again,
we do not participate in any of that, so I may not be the best
person to answer.
Mr. Harris. Well, but I think you offer a great perspective
from the outside looking in at how that system could perpetuate
the whole idea. In fact, I will followup that with a question
as well for you. What type of student benefits from the
unfunded discounting system, and what type of student is taken
advantage of in that?
Mr. Wishing. Well, as I said earlier, I think the student
that benefits is the high achieving student. That student
unwittingly in the unfunded discounting scheme is getting a
scholarship being funded most likely by a classmate, maybe his
or her roommate. The loser in this is the roommate that may be
a B student, and she does not know that she is paying for her
maybe $10,000 a year, $15,000 a year for her roommate's
scholarship.
She may be borrowing that money, racking up 40, $50,000 or
more in debt, in graduating with that, and then having to spend
the next 10, 15, 20 years paying off her roommate's scholarship
that she unwittingly paid for. Sadly, you know, the big winners
in all of this, not just the high achieving student, but the
institution.
Students are funding institutional scholarship programs.
They are the big winners.
Mr. Harris. Well, in the Working Families Tax Cut Bill that
was just signed into law by President Trump, republicans set
limits on the amount that students can borrow. How would you
think loan limits play a role in reducing college costs?
Mr. Wishing. Well, I do think--I do think that would help.
I think it would--the way that it would help, it would force
the consumer to think more about the value of what the parents
are paying for the students they are paying for. I think it
would force more thinking about the value of what they are
doing.
Mr. Harris. Okay. I will ask you something else. In your
testimony, Mr. Wishing, you noted that challenging the industry
is difficult when it comes to reforms that would benefit
students and families, and you also indicate that the interest
groups representing colleges and universities play a
significant role in perpetuating the current dysfunctional
pricing system.
I would really love for you just to take a moment in the
last 20 seconds to discuss these challenges, including the
opposition you faced from the industry when pushing reforms
that would improve transparency in college shopping?
Mr. Wishing. I do think associations could help. Some of
the associations that schools belong to require transparency,
or an ethnical sign-off on an ethical statement to be
transparent with students about such things. I challenged one
organization about that. I encouraged them--well, I will not go
too deep into that, but it was a pretty lengthy back and forth
process.
In the end the board of that organization said they really
could not change because it would be detrimental to their
recruitment philosophies and detrimental to their enrollment
efforts of their members.
Mr. Harris. Thank you, sir. Mr. Chairman, I yield back.
Chairman Owens. Thank you so much, appreciate that. I would
now like to recognize Ranking Member from North Carolina, Ms.
Adams.
Ms. Adams. Thank you, Mr., Chairman, and thank again the
witnesses for being here. When students sign up for college,
they should not be left guessing. Guessing how much aid they
will get, guessing whether tuition will jump from 1 year to the
next, guessing if they will be able to stay enrolled at all.
The biggest challenge I think for students is covering the
gap between the money, the aid that they receive from the
institutions, and what they are able to pay. I spent 40 years
teaching as a college professor, and so I do understand some of
this. I know that that kind of uncertainty pushes students to
the breaking point.
Some take on loans that they cannot repay, others drop out,
not because they could not do the work, but because they could
not make the math work. Now, let us put the numbers in
perspective. The maximum Pell Grant today is $7,395.00. In most
states, including North Carolina, with tuition and fees at a
community college average just about $2,300, that is more than
enough to cover tuition.
What that tells us is simple. Community colleges are doing
a lot with very little. They are providing a rigorous post-
secondary education at a fraction of the cost of 4-year
institutions, but they need more Federal support to keep doing
more while staying affordable.
Despite these low tuition costs, about 12 percent of
community college students nationwide are still taking out
student loans, and that tells us affordability is not just
about tuition, it is about housing, it is about food and
transportation, it is about childcare and the full cost of
attendance.
While today's hearing is about transparency, we cannot stop
there. Students do not just need price tags, they need
predictability, they need affordability, and they need Congress
to stand up for them, and not pull the rug out with cuts to
Pell and Federal aid. Let me just turn to our witnesses.
Ms. Laitinen, many students are concerned that during their
time in college their aid, and therefore their costs of
attendance can change dramatically. You have written about
price guarantees versus affordability guarantees. Could you
answer what is a price guarantee? Why is it different from an
affordability guarantee? What consideration should Congress
keep in mind if we explore an affordability guarantee?
Ms. Laitinen. Thank you so much for the question. I think
price guarantees are trying to get at this question that you
talked about, which is predictability. Higher ed is a super
weird product, in that you buy it multiple times. It is not
like you just buy it once, and you are paying, and you can put
it on layaway, and you are paying the same price over time.
The costs can dramatically change from year to year, and we
need to stop that, we need to make sure that those prices are
predictable, and I think that is what the price guarantee is
trying to do. I understand that. I think it is absolutely worth
exploring. I think there is some caution in what we have seen
in certain states so far, which has in some cases states have
frozen the tuition for a certain group of students, only to
really raise tuition for the other students, or including out-
of-State students.
It is not just raising tuition for them; it is recruiting
more of them so the schools can get more money. We have to make
sure as we are designing a program like that, that we are not
shifting costs onto students. Either way, that is not an
affordability guarantee, and students need to make sure that
they can afford to go to college.
Ms. Adams. Thank you. In July, Congress passed H.R. 1,
which cut Federal student aid and safety net programs, and
students tell me that they need more aid, not less. While
transparency is important, what good is transparency if we are
just telling students they cannot afford their dream?
Ms. Laitinen, as these student aid cuts take affect in
2026, what should students and families be aware of when making
decisions about how to pay for college, from tuition to
indirect costs, and what should we know about how H.R. 1 will
affect colleges' abilities to address rising costs?
Ms. Laitinen. I mean I think they need to know that it is
probably going to be more expensive for some students, and that
it is going to be harder for low-income students to achieve
some of the things that they have been wanting to achieve. I
think we are going to see in certain places, like for medical
education for example, I think it is going to be harder for
students who do not come from wealthy families to be able to
afford to go to medical school and become doctors.
Ms. Adams. Thank you. Let me move on quickly. Given the
tuition at community colleges is often below the maximum Pell,
but students are still borrowing at significant rates, so how
should Congress better support community colleges, so that they
can continue offering affordable, high-quality education, while
addressing the full cost of attendance? I have got about 3
seconds.
Ms. Laitinen. Investment.
Ms. Adams. Okay. All right. Thank you. I am investing as a
grandmother with two granddaughters in college right now. Thank
you very much. Mr. Chair, I yield back.
Chairman Owens. Now, that was an impressive answer. Thank
you so much. I would like to recognize my colleague from
Florida, Mr. Fine.
Mr. Fine. Thank you, Mr. Chairman. I approach this hearing
today with a heavy heart. I chaired higher education in Florida
for 2 years when I was in the legislature, and frankly, given
what we have seen over the last week, I believe that higher
education is fundamentally broken. When I hear professors
making the kinds of comments that have been made from
departments that I do not even know why they exist, like queer
studies, I wonder frankly, if we should not be having this
debate at all because the Federal Government should be exiting
the higher education system, and say you guys are on your own,
good luck, make it work, but it is time for the taxpayer to
exit the system altogether.
That is something that I will be thinking about myself in
the coming days. I do not know that the system is too
irreparably broken for us to fix it. You know, before I was in
politics, I actually worked in the hospitality business and
helped pioneer the idea of yield management, which is getting
different people to pay different amounts for the same product,
particularly think of hotel rates.
How do you manage hotel prices and airline prices? Not
necessarily to discriminate against two identical customers,
but based on different times and different demand cycles, and
the purchasing process, and it is horrifying to me frankly, to
hear that what hotels use to decide what they are going to
price your vacation at, or your airplane ticket it is being
used to decide whether kids can go to college or not.
That is incredibly disturbing. My question is for Mr.
Wishing. In your testimony, you described the enrollment
management industry, which involves schools hiring consultants,
frankly like what I used to do. I had no idea that universities
did this, who use sophisticated data modeling to pinpoint the
exact price that an institution needs to charge to an
individual student.
How prevalent are these consultants in higher education?
How much money are these people getting paid to do this? How do
they influence the prices that are charged to students and
their families?
Mr. Wishing. Well, they are out there. They are big-name
companies in the higher ed space.
Mr. Fine. Is that all they do? Like, this is their
business?
Mr. Wishing. Well----
Mr. Fine. Yield management?
Mr. Wishing. Well, they could be a big component of the
business. The ones that I am aware of it is a big component on
their business. I have been to a--I was at a summit, so to
speak, here in D.C., and saw one of these companies demonstrate
the model. The ethical implications of these things to see them
demonstrated are jaw dropping.
To be in a room when this happens and other members of the
industry there, like on my side of the table, see it happen,
unaffected by what we just saw is staggering. I think the
reason that people are unaffected by this is that it is just
the air that higher ed breathes.
Of course, everybody does this, like on your in the private
world, everybody does it in the hotel world. I think a big
program frankly is the nonprofit status, and everybody might be
horrified that I am saying this, but the nonprofit status that
higher institutions of education have because we are supposed
to serve the public good, and families and students assume that
is what we are doing.
Behind the curtain, there are people pulling all kind of
levers that do not work for the public good.
Mr. Fine. I appreciate that. Look, one of the biggest
public policy problems we have today is the whole idea of
nonprofit. It is a branding issue. People hear something is
nonprofit, they assume like struggling people that are, you
know, starving to death that are working for the nobility of
the enterprise because it is a nonprofit enterprise.
All a nonprofit institution means is that there are no
profits distributed to shareholders. They get distributed in
the form of salaries and look at what some of these people
actually get paid. Do any of you have any examples of these
firms, and what they charge, like specific just for the benefit
of the Committee? You know, you need not name names, but you
know, you are aware of a university charging group X?
I will let anybody answer, I am just--I am sort of
horrified that this business even exists.
Mr. Gillen. Oddly enough, a couple years ago I was on a
plane with a university President, and she was talking about
their enrollment management company, and they were talking
about saving $300,000, so that was not like the total cost.
That was just the----
Mr. Fine. They cutoff their contract.
Mr. Gillen. Yes, so if they switched to a different group,
they would be paying $300,000, much higher.
Mr. Fine. In closing--I got it, 10 second left. Imagine how
competitive some of our college institutions are right now.
Imagine if they get into the world where they are basically
auctioning off slots to those who can pay the highest price.
That is where this ends up, and it is not a good thing for
anybody, and with that I yield back.
Chairman Owens. Thank you. I would like to now recognize my
colleague from Oregon, Ms. Bonamici.
Ms. Bonamici. Thank you, Mr. Chairman and Ranking Member.
Thank you to the witnesses. This is an important conversation,
and something I have cared about since I joined this Committee
years ago. In large part because of my personal experience that
informed my understanding that not everybody is on the same
path.
I did not go to college after high school. I was working,
that is what worked for me at the time. Years later I started
first community college, then college, then law school, and I
did that all on my own with a combination of grants, loans,
work study. Now, higher education was a lot less expensive at
the time, but if--had I not had that support, I did not know
what--I did not have a dorm or a meal plan, housing costs,
those all factored into the decision.
Then also, as a parent of two children who are highly
educated, I went through the process as a parent, and saw the
frenzy of the college admissions' cycle, and how that became
commercialized, and how the very misleading rankings oftentimes
put into students' minds that they have to go to one of these
big named colleges to be successful, not understanding that
there are plenty of other colleges, that either might be less
affordable, and then also not getting accurate information
about some of the schools and their need blind admissions
policy.
There is a lot of misinformation out there that I think
distorts the college admissions process in general, but it has
been a priority of mine to open the doors of opportunity for
anyone who chooses college. I want to start with you, Ms.
Laitinen.
In your testimony you talked about the urgency of a Federal
data system, so we have those more complete--that complete
information about outcomes across colleges. I want to insert
that I have said for years on this Committee, and in education
discussions that I think it is wrong to gauge students and
graduates based on their income.
If someone graduates and goes into public service, or
starts a nonprofit, or is an entrepreneur, they might not have
a high salary. That does not mean they did not get a good
education. Tell me a little bit about what the bipartisan
College Transparency Act would do. Why is it important
legislation for students and prospective students?
Ms. Laitinen. Well, thank you for the question. Thank you
for being a sponsor of that legislation, and we got it through
the House in 2022.
Ms. Bonamici. Right, we did.
Ms. Laitinen. I hope we can get the ball over the finish
line.
Ms. Bonamici. Very bipartisan.
Ms. Laitinen. Soon, because right now there are a lot of
questions about is college worth it, right? I mean that is a
lot of what we are talking about. There is both like can you
pay for it, can you afford it, and then what are you going to
get out of it? Right now students and families are making a lot
of these decisions without being able to answer that question,
and we know that on average college is absolutely worth it.
Students do not go to average colleges, they go to
particular colleges, and particular programs, and they pay
particular prices, but right now they are really in the dark
when they are trying to figure out how is a student like me
going to succeed----
Ms. Bonamici. Right.
Ms. Laitinen [continuing]. Or not succeed in a school like
this or a program like this? The College Transparency Act would
really fill in some important gaps in our information system,
so that we can tell students not just those who get Federal
financial aid, but those who get GI Bill benefits, those who
get tax credits, those who want to see themselves in the
transparency tools that the Department of Education uses,
including the college scorecard, which I do not remember if we
have talked about it, but it is certainly in the written
testimony.
Ms. Bonamici. It is pretty important to have that
standardized information. Ms. Laitinen, the National Center for
Education Statistics, NCES, they play a pretty essential role
in getting data about college outcomes collected, analyzed,
disseminated. What is at stake with that data if the Trump
administration continues to defund NCES, and other educational
research like the IES, Institute of Education Sciences?
Ms. Laitinen. I mean there is a really big disconnect
between the conversation we are having today about the need for
transparency, the need to make sure that things are
standardized, the need to have better information that is
presented honestly to students, and the Department of Education
has been decimated, and particularly the Institute for
Education Sciences and National Center for Education
Statistics.
We are talking about the college scorecard. Who does the
college scorecard?
Ms. Bonamici. Exactly.
Ms. Laitinen. People at NCES.
Ms. Bonamici. Exactly.
Ms. Laitinen. They are gone.
Ms. Bonamici. Well, and you mentioned the cuts to staff
across the Department, the Office of Federal Student Aid for
example, it is going to significantly disrupt the ability of
students to access financial aid, and the information they
need. The what I call it the Big Ugly Bill, because I do not
think it is beautiful at all, that cuts billions of dollars in
Federal funding for student financial aid.
As many of you mentioned, the transparency alone is not
enough to solve the problem. Mr. Draeger, you mentioned first
generation students. Programs like TRIO and Gear Up, which the
administration proposed eliminating. It looks like we are going
to at least save some of that. Those are really critical,
critical programs to get information to students.
I have talked to a high school student who did not know he
could go to college until he talked to somebody from TRIO, so
even if students have a clear understanding, we need to invest
and have those programs, like work study, Pell Grants. Work
study is a great program. Why are not we boosting that funding
to make college open up those doors of opportunity, so everyone
who chooses college can get through and complete their degree
without a tremendous amount of debt?
I am out of time, and I yield back. Thank you, Mr.
Chairman.
Chairman Owens. Thank you. I would like to now recognize my
colleague from California, Mr. Kiley.
Mr. Kiley. Thank you, Mr. Chair. I am looking at a chart
from the Bureau of Labor Statistics that shows that since 2000
the cost of basic consumer goods, a lot of them anyway, has
significantly declined. The cost of TVs has gone down 97.9
percent. The cost of software is down 72.4 percent. The cost of
toys is down 73.5 percent. Then you look at the cost of college
tuition, and it is an entirely different story, up 184.7
percent, and relatedly, the cost of college textbooks is up
154.1 percent.
Dr. Gillen, how do we explain this divergence where we see
some costs with it comes to consumer goods coming down because
of innovation and the like, but then the cost of college
continues to soar?
Mr. Gillen. Yes. That is a great question, and that has
been a topic of intense study for a lot of people for a lot of
time. The best explanation I can give you right now is that it
has a difference between what we call search goods, experienced
goods and credence goods.
Search goods are things like cereal or clothing, like you
know what you are getting before you even make the purchase.
Experienced goods is something like a restaurant meal, where
you do not know if it is going to be good before you eat it,
but after you eat it you can tell if it was good. A credence
good is different.
Like even after you purchased it, you do not know if it was
a good purchase or not, and so, credence goods tend to have a
couple characteristics. One, no great measures of quality, like
we do not know what distinguishes a good college from a bad
college. There is no secondary market, and you do not know the
value for it until long after you have made the purchase.
That is a--those three characteristics all credence goods
have, but then you combine a couple other characteristics of
higher education. Most students will typically only interact
with a couple colleges over their lifetime, so they do not--
they cannot even compare different colleges to different
colleges.
Then the students also participate in the provision of the
good. If you as a student show up to campus and you just do not
do anything, you are not going to learn anything. These things
make higher education even among the most difficult category of
goods for normal economics to work its magic, make it really
difficult.
What we end up with is an unfortunate--what we call the
Bowings Revenue Theory of Cost, which is basically the college,
since you cannot observe quality, they compete to be the
highest procedure, the highest reputation. There are all trying
to be the best they can, which sounds great, but to do that
they need a lot of money, and so they are going to raise as
much money as they can.
They are going to spend everything they raise, and when you
put all that together, you are going to see an ever-upward
trend of spending in higher education. That is fundamentally
what it is explaining, why that line for higher ed looks so
different than the line of something like TVs.
Mr. Kiley. Interesting. How does this compare for public
versus private institutions? Obviously, even private
institutions are reliant a lot on non-government subsidies, but
like in my State, California, since 2000 tuition in the CSU
system has gone up 350 percent.
Tuition in the University of California UC system has gone
up 400 percent, so even worse than the average across the
country. What explains that extraordinary, you know, rise in
college costs in the public sector?
Mr. Gillen. Yes, so the publics are an interesting case
because they are also subject to a lot of political pressure
from their State governments. State governments that are kind
of lenient will let them increase prices a lot more than other
states. A State like Florida does not let their colleges
increased prices that much. A State like California seems like
it is letting them do it.
Mr. Kiley. Interesting. I would invite you to weigh in on
this question as well, Ms. Laitinen, and if you would like to.
Either of those.
Ms. Laitinen. The college costs, the price going up?
Mr. Kiley. Yes, and if there is anything we can do
specifically when it comes to the public university system to
try to get the costs under control there.
Ms. Laitinen. Well, I think one of the things that we have
been talking about is that the line that you are talking about,
that is not actually what the students are going to pay, and so
it is really confusing. We see the tuition going up, but as we
talked about today, we have a lot of discounting.
Mr. Kiley. Right.
Ms. Laitinen. Where you have this high sticker price, but
students are not actually paying that price, and so we actually
really need much more transparency about what it is that
students are actually paying, not just this maximum sticker
price they are putting up there to try to see, to the
gentleman's point earlier around sort of predictive pricing.
How many students can you sort of squeeze as much money out
of to get them as close to the top as possible, but students
are falling down all the way on the continuum, and we just need
more transparency about what they are actually paying.
Mr. Kiley. Yes. I think that is a big, big part of the
solution. Thank you, Mr. Chair, for bringing us together for
this hearing. I yield back.
Mr. Owens. Thank you. I would like to recognize my
colleague from Georgia, Ms. McBath.
Mrs. McBath. Thank you, Chairman Owens and Ranking Member
Adams, and thank you to our witnesses today. I have read your
testimoneys. It is abundantly clear that our current higher
education system is not working for the American people the way
that it should be. That is the reason why we are having this
hearing.
It is not working for families who too often end up paying
more than they thought they would ever have to pay. It is not
working for the millions of students who are being forced to
take out loans at predatory interest rates and have no degree
or credentials to show for it at all.
It is also not working for our employers, who are in
desperate need of workers with the specific skills necessary to
fill the in-demand sectors of our economy. I am talking to
those employers all the time in my district. The status quo,
while it works well for some, but it leaves many people who are
meant to be supported by education, Americans who are trying to
get the skills that they need to provide a decent life for
themselves, and for their families, but they simply cannot
afford it.
Instead of opening doors to opportunity for all, we have a
system that puts far too many Americans in insurmountable debt
at a time when most good paying jobs in this country require a
degree, or some kind of credential. The reality for most
Americans is that the only way that they can afford that
credential or degree, is to rely on student aid, or take out a
loan.
People are told every day that one of the best ways that
they can ever get ahead is to get an education, get a good
college education. Instead of being rewarded with a better job,
and empowered with improved quality of life, too many are
sentenced to a lifetime of debt for following the path that was
laid out for them, obtaining the skills necessary to be
gainfully employed, and fill the workforce shortages that we
see in all of our districts, all of my colleagues.
We all agreed that the current system is too expensive, and
that it is not getting students where they need to and where
they want to go, but the recent actions that are taken by my
republican colleagues will only make a bad situation worse.
Cutting student aid for low-income students and families
without getting at the root cause of the drastic increase in
the cost of higher education will only further submit bad parts
of the system that we are all here today trying to see to
improve.
Prices continue to rise for students and families, and the
majority is only adding to that burden by cutting programs that
provide some level of protection from those increased prices.
From Pell to the work study, to the Federal Supplemental
Emergency Opportunity Grant, republicans and President Trump
are unfortunately making education more and more expensive for
working Americans, by weaking and defunding the programs that
they rely on to pay for schooling.
At a time when Americans feel like they are being taken
advantage of, and this is something that I hear every day from
my constituents, when there are so many people who have done
everything right, and have nothing to show for it. We should be
committing ourselves to doing more to help them afford the
skills that they need to be successful, not doing less.
Ms. Laitinen, in your testimony you did mention that
tuition and fees had nearly doubled in price over the last
three decades. Can you use what little time we have left to
talk about why that is, and what Congress can do not only to
help those families deal with the rising costs and prices, but
also to reign in the overall cost of higher education?
Ms. Laitinen. Thanks for the question. It is a complicated
one, and it really depends on which sector of education you are
talking about. If we are talking about public education for
example, State budgets are a really important part.
Mrs. McBath. Let us talk about public education.
Ms. Laitinen. Let us talk about public education. I am a
community college graduate. We see--we do not see as much
investment by the states and some of the colleges as we should,
but also I think the Federal Government has played a role in
making--in letting states off the hook, because states, as I
mentioned earlier, when they are facing budget cuts, they
decide ooh, you know what, instead of cutting K12 education,
let us cut higher ed education, because they can increase
tuition for students.
Then what pays for that increased tuition? Federal student
loans in the form of debt. We have, you know, the states
backing out and sort of shoveling out money, and the feds are
sort of shoveling the money in, but they are not--those are not
actually real investments in terms of debt. Those are still
things that people have to pay back.
We need to make sure that whatever Federal investments are
being made, are not then being used by states to sort of back
out. We need to have a Federal State partnership that helps to
stabilize those costs, and to make sure that both students have
what they need in terms of aid for tuition, and for living
costs, but also that schools have what they need to help get
students to and through college, so that they are succeeding.
Mrs. McBath. Well, thank you for that. What it sounds like
you are saying is a stronger collaboration really to help
undergird our students. I have spent a lot of time during our
recess going to all the Georgia institutions, talking with the
Presidents there, and I have heard pretty much the same thing,
and so thank you for your testimoneys, thank you for your
witness, and I yield.
Chairman Owens. Thank you. I would like now to recognize my
colleague from Wisconsin, Mr. Grothman.
Mr. Grothman. Thank you. I do not know whether you have
covered this already, but I will let each one of you just kind
of rattle off. What percentage of kids going to a 4-year
college should we have as opposed to the number who are going
there now? I want to start with Mr. Draeger and just work our
way across.
Mr. Draeger. I do not mean to skirt the issue, but as many
as want to.
Mr. Wishing. I think I do not know if that is--I think the
market could determine that, sir, frankly. I think if----
Mr. Grothman. Well, right now we are clearly subsidizing
the idea that more people should go to college, and we hire at
no small expense, guidance counselors to advise people what
they should do. Of all the people going to a 4-year college
right now, or say matriculating and they are hoping to get a
degree, what percent should be applying to a 4-year
institution, and what percent should be looking to do something
else?
Mr. Wishing. I have no idea. The market is so distorted. I
have no idea, sir.
Ms. Laitinen. I am just going to copy what my colleague
Justin Draeger said. I think as many as want to. As many people
who think that college is going to give them the opportunity,
and the economic mobility that they need when they go through--
--
Mr. Grothman. What if they are being lied to? That is what
I am asking you.
Ms. Laitinen. Well, absolutely. I mean I think that is part
of the whole point of this conversation is that we need to have
transparency, not just around costs, but about whether or not
it is completely off----
Mr. Grothman. Nobody will say. Why do not we ask the guy on
the end here?
Mr. Gillen. The Department of Labor does actually do
studies looking at the educational requirements for jobs, and
so if you look at that I want to say it is about 18 percentage
of jobs that would require bachelor's degree, between 5 and 10
percent would require a graduate degree.
You compare that with how many students actually have one,
I guess about 24 percent have a bachelor's degree, and about 14
percent have a graduate degree. Putting it all together, we
have got about 10 percent more people going to college than the
Department of Labor estimates actually need those----
Mr. Grothman. Oh, my goodness, that is kind of a sad State
of affairs.
Mr. Gillen. That is 10 percentage points, not 10 percent
more, sorry. I misspoke.
Mr. Grothman. Yes. Do you guys have off the top of your
heads, your know, can anyone tell me in certain occupations how
many people have a degree? Like we have to fly out here every
week. You look at the flight attendants, say what percentage of
flight attendants have a college degree?
The other night I was shopping late at the grocery store,
and the gal behind the counter checking me out had a master's
degree. She was freely saying she did not really get a lot of
value out of her master's degree. She was happy with her job.
Do you guys have any anecdotes of jobs that normally you do not
think you need a bachelor's degree for, and the percentage of
people doing them that have a bachelor's degree?
Mr. Draeger. Mr. Grothman, I have been in a couple hearings
with you, and I agree that one of the studies that we have done
at Strada Educational Foundation is the number of people who
have pursued a certain degree or credential that was not
required for the meaningful work that they ultimately pursued.
This does happen.
Mr. Grothman. It does happen. It happens all the time, it
is the norm, but go ahead.
Mr. Draeger. However, sir, I think where I was going is the
answer to this question probably is not from the supply side,
or the government trying to figure out exactly where the market
is headed from year to year, but more how do we provide
meaningful outcome data that is helpful to students early on?
From our research what we are seeing is besides price
clarity, what they want is very clear return on investment
information about where does this degree or credential lead,
what are the earnings, and what can I expect to receive on the
other side to help them make meaningful decisions?
Mr. Grothman. Okay. I am trying to think what the number I
toured Walmart warehouse the other day, and their truck
drivers, I cannot remember if they are making 110 or 140 grand
a year. I will have to call the lobbyist and find out, but, and
they do that when they are 21 years old.
What percentage of college graduates are making 110 grand a
year, 4-year graduates? Does anybody know?
Mr. Gillen. Very small.
Mr. Grothman. Very small. In other words, we just were
concerned about finances, the vast majority are better off, and
it is a tough job. I am not saying most people can do it but
would be better off driving truck at Walmart, probably in most
cases something more useful to society as well. I will give you
one more quick question on my way out here.
Chairman Owens. Your time is----
Mr. Grothman. Okay. We will leave that be.
Chairman Owens. Your time is expired. Thank you so much.
Now, I would like to recognize my friend, my colleague from
California, Mr. DeSaulnier.
Mr. DeSaulnier. Thank you, Mr. Chairman. Thank you for
having this hearing. It is really important, and thank you for
all the witnesses. Yesterday there was a national story in the
New York Times, and I think the title was, ``Long Term
Unemployed Biggest Cohort Now is College Graduates.'' It just
reminded me of, it was not that long ago, as a member from
California, when I was in the legislature.
Everybody was talking about the knowledge-based economy,
and everybody needed to not only have a bachelor's degree but a
graduate degree. I remember having a conversation when I was
the Chair of the Labor Committee in the State Senate with the
Chair of the Higher Education Committee.
We were looking at how what used to be in the 50's and 60's
in California, one of the great career tech infrastructure
programs with the community colleges and with the Department of
Corrections, but it had been neglected for years, and we
focused on more to higher education.
This conversation I think is really important. The things
that Mr. Norcross said just remembering how we had to rebuild
career tech and going to lots of high schools and community
colleges in California. We get carried away sometimes with the
marketing, and particularly for disadvantaged communities it is
a challenge.
Ms. Laitinen, I want to talk about Pell Grants. I have
spent a lot of time on Pell Grants here trying to make them
based on merit and considering the demands on all of the people
who should be in higher education, who choose it and have a
career path, but for disadvantaged people sitting at places
like Stanford, the University of California the system, and
kids cannot get enough to eat or could not get housing.
We tried to make Pell Grants based on merit, but also based
on need, so that the public would get the benefit of having
really talented people get their degrees. Could you talk a
little bit about how some of the changes we have made in the
last few months make it more difficult to get people of merit
who do have potential for really beneficial careers with an
undergraduate degree or a graduate degree.
How much more difficult have we made it for those folks,
and particularly based on merit, less about anything else and
need?
Ms. Laitinen. I am sorry, could you clarify what you mean
in terms of the changes that you are seeing right now?
Mr. DeSaulnier. In the big bill, I will just say
agnostically.
Ms. Laitinen. Yes, yes.
Mr. DeSaulnier. It made it a little more difficult from my
looking at--for this cohort of people, for a variety of
reasons. Just analytically trying to make sure the best and the
brightest actually get access and where Federal grants and
loans come into play in that regard.
Ms. Laitinen. I mean I think the truth is it is going to
make it less affordable for low-income students, in terms of I
think we have seen at least with some of the loan changes, we
have seen a streamlining of some of the repayment plans, but I
do think there is a system in which now low-income students are
going to pay more, and so, I do not know enough in the data to
sort of see, you know, the sort of talent distribution amongst
those individuals.
I think we have to assume, and we have to believe that I
think to Justin's point earlier anybody who wants to go to
college and complete college and succeed should be able to go,
and it should be affordable, and I think the Federal Government
has a really important role in that.
I was a Pell Grant student. I went to a community college,
and then I transferred to a 4-year. In fact, it was--I think
Ms. Bonamici is gone, but the combination of Federal aid, grant
aid, work study, along with lower costs at the State level, and
some additional funding allowed me to get out with very little
debt, and students do not have that option now.
They did not. It was harder a few months ago. It is going
to be even harder going forward with the implementation of this
law.
Mr. DeSaulnier. Yes. Again, in California the community
college system getting an AA, and then going on and get a
bachelor's degree was Pat Brown's vision, has really worked out
well for the public. How about the disabled community? I spent
a lot of time with the disabled community. They have a harder
time getting through and getting jobs. How might that community
be impacted by some of the changes, or just in general?
Ms. Laitinen. My work has not focused specifically on
students with disabilities, but I think that we know that when
information is not clear, or when support is cut, when there is
less investment, it always harms the students who have the most
barriers.
I think students with disabilities face additional
barriers, so I think the same reforms that will help students,
like clear information, stronger Pell Grants, affordability
guarantees, are especially important for people with
disabilities.
Mr. DeSaulnier. Just a brief observation. When we were
having problems with some colleges, particularly for profits,
and my predecessor whose portrait is up here, and we worked
together, both in California and here, to make sure that the
marketing was accurate, so that they would not get State loans
in California if you were advertising an 85 percent opportunity
to get a chef's job or something, and it worked.
We got a lot of those people who are abusing the Federal
and State loans out of the business, so with that I yield back.
Thank you, Mr. Chairman.
Chairman Owens. Thank you. I would now like to recognize my
colleague from Missouri, Mr. Onder.
Mr. Onder. Thank you Mr. Chairman, and thank you to all the
witnesses to coming before the Subcommittee today. Most
parents' No. 1 savings priority is college tuition, yet three
of out of ten parents say they are unsure of what the final
sticker price of college would be. I imagine it is actually
higher than that.
In recent years, parents have been taking out more loans
and even dipping into retirement savings to send their kids to
college, but unfortunately, there is little incentive for
institutions to provide a good faith net cost estimate because
they fear that doing so will drive families to a more
affordable school.
Institutions are under significant pressure to do whatever
they can to generate more revenue and often resort to unethical
tactics described by our witnesses today. According to the GAO,
only 9 percent of institutions provide accurate net cost
estimates in their financial aid offers.
In 2008, Congress tried to address this price transparency
problem by requiring all institutions to post a net price
calculator on their website. Dr. Gillen, when the law was
passed, it seemed like the net price calculator requirement was
an important step toward transparency, but it has clearly been
insufficient in this dysfunctional pricing system.
What other reforms could help here?
Mr. Gillen. Yes. Absolutely. I think the initial law was
good. There was a lot wait time; I think it was about 3 years
from when the law was passed to when the schools had to comply.
Then when we saw what they did, they were all using different
formulas, so they were all calculating. Some were including
loans, some were not, like, and so, these are basically not
comparable across institutions for the most part.
They were also tended to be pretty difficult to find, and
so I think addressing that, making that more standardized and
more easily usable, I think would go a long way to fixing it. I
do not want to put a one size fits all solution on this.
I think we should have a universal methodology one, but I
think we should also allow the colleges to say okay, but this
is what is unique about Grove City, or this is what is unique
about my institution, that this universal methodology does not
fix. Here is what we think the real number is.
They have to report the kind of comparable one, and then
they can make their case for why that does not fit for their
particular institution.
Mr. Onder. You know, I found your testimony about the three
different types of goods, you said search goods are like
buying, you know, lightbulbs at Walmart. Is it experience goods
like restaurants?
Mr. Gillen. Yes.
Mr. Onder. Then credence goods. What is a credence good?
Mr. Gillen. Credence good is basically you do not know,
even after you purchased it, what you got.
Mr. Onder. Yes, yes.
Mr. Gillen. Realistically, like I do not know my college
education paid off until I am like retired. You know, again I
am sitting on my porch drinking iced tea, and like I am like
you know what? That was a good idea. I am glad I did that.
Like, but----
Mr. Onder. It really is like that.
Mr. Gillen. Yes, yes.
Mr. Onder. It really is like that, yes.
Mr. Gillen. And so----
Mr. Onder. Lifetime earnings.
Mr. Gillen. That is what is different.
Mr. Onder. There is an engineer versus a poly sci major,
okay, got it. You know, and I just cannot help but to think,
especially in this day and age, how many parents sent their
kids off to school, and those kids got radicalized, sometimes
the university, the college is contributing to that
radicalization, and sometimes they even cutoff their parents,
no longer wanted to talk to people like them, usually meaning a
MAGA republican or some such thing.
I just think we place a lot of trust in institutions of
higher education, and we get very little good faith back in
return in the financial aspect, or in the, if you will, and
intellectual development aspect.
Mr. Wishing, yes Grove City, we only have a minute left, I
mean Grove City College it sounds like is doing exactly what we
would want a college to do, give an actual price, and then
produce outstanding outcomes, 96 percent of your graduates
employed, or enrolled in a graduate student within 6 months.
What do you attribute this success to?
Mr. Wishing. Well, No. 1, we are upfront about your price.
I think people understand the value when they come in. We do
not pull any punches about the rigor of Grove City. You have
got to work hard to get a degree at Grove City. Employers know
that. They--we generally attract families with--students of
families that have good values.
They have got a good work ethic. They have to work hard at
Grove City. They have learned a lot. They are well prepared.
When they graduate, they do not leave those values on the
graduation stage, that is all the companies are looking for.
People are going to put in a hard day's work. They are prepared
to do the job, and that is what we graduate.
Mr. Onder. Well, thank you. I yield back Mr. Chairman.
Chairman Owens. Thank you so much. I would like to now
recognize my colleague from Connecticut, Mr. Courtney.
Mr. Courtney. Thank you, Mr., Chairman, and thank you to
the witnesses. Again, your testimony was really interesting,
good reading, and obviously this is an important topic. The
topic of the hearing, which is No More Surprises, you know,
when you talk about higher education there are lots of
surprises, and in fact one of them happened while we were on
recess where on August 1st the Department of Education
announced that student loans that are in forbearance are now
going to have interest accrual reinstated, which again, there
was no heads up, no warning from Secretary McMahon.
There was an article which AP and News Nation actually
reported that student loan payment pauses have doubled since
last year. Again, we are talking about a universe of student
loan borrowers in this country, 43 million Americans. That
number, in terms of people who are now in deferment, jumped
from about 2.5 million last year to over 10 million as we sit
here in this hearing room.
That is a big surprise, and it is having a ripple effect on
our economy. I mean there is just no question that, you know,
adding debt, and having the interest recapitalizing, and
accruing, which you know, say what you will about the last
administration, they actually at least stopped that sort of
cancer that happens to people's student loan balances because
the way the system again, had just sort of been neglected for
so long in terms of policymakers that really need to get into
this problem.
You know, clearly having accurate pricing and real pricing
for families is a very laudable goal, and I think, you know,
there is way too many students who are starting off in college
with really not good awareness in terms of employability, et
cetera.
Again, they are also starting off this year with interest
rates on their Stafford loans of 6 and 1/2 percent, Parent Plus
are back up in the 9 percent range, again, we went through a
low-interest rate environment for a while. That is now a thing
of the past. Honestly, this Subcommittee should be looking at
this problem, which the Department of Education just worsened
with their latest announcement, in terms of you know the
impact.
Maybe there are people who want to defend that policy, but
there is no question that, you know, the out of pocket costs
that people are going to experience because now interest is
going to accrue again, on the tens of millions of student loans
that are out there, that are again, now just cascading back
into deferral because of really, the I think botched job of the
One Big Beautiful Bill.
I mean it is nice to say we are going to cap the amount of
loans people can borrow, but if you are a medical student, you
know, I mean having a cap on student--on Stafford loans, in
terms of trying to get a specialty degree, is no solution. It
is just going to shove you into the private market, where if
you do not have any collateral to put down on the loan
application, you are going to be in stratospheric interest
levels.
In any case, you know, another issue that is happening over
at the Department of Education is that the National Center for
Education Sciences, which again, is the arm of the Department
of Education that actually has the eyes on higher education.
The staff has been gutted.
Ms. Laitinen, maybe you can just sort of talk about the
fact that you know if we are really serious about trying to get
to the bottom of transparency, you know, we need to have
headlights out there to see where we are going.
Ms. Laitinen. Yes, I agree with you. I think we absolutely
do. You know, I think I do not know if it is an ideal world or
not, but we do not live in a world in which you can do these
things without people, and you need people who have real deep
expertise, not just contractors, or people who you can sub in,
and people who are doing five jobs.
I will say I used to work at the Department of Education
and the career staff there worked incredibly hard. They have
incredibly deep expertise and knowledge, and they were
understaffed before the rift started happening. They were
understaffed and doing, I think too much, before all of the new
requirements for H.R. 1, and if we are talking about trying to
understand the impacts of some of the changes that you are
talking about in terms of the bill, like are students going to
be pushed into the private market?
We need to know that. We need to have the data to be able
to understand that. Maybe they will not. Maybe it will lower
the cost of college. Maybe it will be beautiful, but maybe it
will not, and we need to find out, and in order to do that you
need data, and you do not just need random people who are doing
the data, you need the deep, deep expertise that we have--have
had in the National Center for Education Statistics, the chief
data officer, and all of those offices are just shells at this
point.
Mr. Courtney. Great, thank you, I yield back.
Chairman Owens. Thank you. I would now like to recognize my
colleague from Guam, Mr. Moylan.
Mr. Moylan. Thank you, Mr. Chairman and Ranking Member,
thank you panel for being here today. Price transparency is
perhaps one of the most meaningful ways we can protect American
students. Surprise costs, under stated related expenses and
hidden fees endanger students, financial stability and the
likelihood that they decide to graduate.
Price transparency is also incredibly important for
students from the islands, like Guam, where it is cost
prohibitive. If I wanted to visit a campus and cities ahead of
time, and decisions to go to school can be made without seeing
those schools first. I could not do that.
Students in remote areas, like my district, Guam, are
relying on clear, transparent pricing to make informed
decisions about their future. I went to Hawaii for school for a
couple of years just because my high school buddies were over
there. I thought I could afford it.
My parents gave me a couple hundred dollars, that is what I
had to rely on. When I got to Hawaii, well, I could not make
it, but I found a lot of pennies on the ground. I also did well
with green stamps at the groceries stories when buying canned
food. Then I joined the Army, and the rest is history after
that.
I am still glad I graduated. I eventually got a 4-year
degree. It is credence goods, that is how you said it, Doc?
Okay. My first question is for you, Dr. Gillen. You argued in
your testimony that higher education does not function like an
ordinary competitive market, and colleges often compete for
prestige in their fields. What effect does subsidy and prestige
driven spending have on students like I guess from Guam, or the
rural areas, and who may be navigating to the college market
for the first time?
Mr. Gillen. Yes, that is a great question because we
actually see a very different effect with subsidies in higher
education than we do in other industries. If you guys decide to
subsidize like bread or something, we would not expect for the
price of bread to just increase.
There is pretty strong evidence that said that is what we
do see in higher education, is that the availability of these
financial aid programs actually lead the schools to charge
more. It is because we are stuck in that credence good model,
that we are seeing that impact.
I do not want to oversell. It is not a one for one thing,
so if you provide one more dollar of aid, it is not like they
raised tuition by a dollar, but it is not zero either. There is
a bunch of scholarly studies that tend to find that somewhere
between like 40 and 70 cents is the increase in aid.
Every once in a while, you do see one that does see a full
dollar increase, but yes, and that is very bizarre, that we do
not see in other industries. It is entirely because we are in
this strange, bizarre competitive environment in higher
education that subsidies work differently in this industry than
they do in others.
Thank you. Another question for you, you also talked about
price discrimination, and just give me a little bit more about
disproportionate impacts for again, the lower middle class
income communities?
Mr. Gillen. Yes, yes, absolutely. One of the great and bad
things about higher education institutions is that they think
they are doing really good work, and if they are a Christian
college, they think they are doing the Lord's work. They don't
exactly feel bad about abstracting more resources from students
and parents.
As long as they can convince themselves that what they are
going to do with that money is worthwhile and good and
beneficial, it reduces their hesitation to do so. Then, so then
when you look at some of the practices that have occurred, so
one of the things that students do when they go to college,
they fill out the FASFA government form.
The government actually shares those results with the
colleges. Not only do that they share like the headline
numbers, but they also share, you know, parent income, parent
assets, like these colleges know more about the students and
the parents' finances than the IRS does.
Not only that, they also on the FAFSA form you also list
the colleges that you want to share the results with, and
colleges will look at the order you rank them in that list, on
the assumption that you are going to rank your top school
first. They will adjust their financial aid offers based on
where they show on that list.
They are like okay, if you applied to Duke and I am the
University of North Carolina, but you ranked Duke Number 1, I
might adjust the financial aid I offer you to either entice you
to enroll, or basically say oh, you are a lost cause because
you going to get into Duke and go there.
The level of detail that the colleges at the top end.
Community colleges are not doing this. Open access institutions
are not doing this, but at the top and the level of detail of
price discrimination that they engage in is shocking.
Mr. Moylan. Thank you for your answers. Thank you, panel.
Thank you, Mr. Chairman, I yield back.
Chairman Owens. Thank you. I would like to now recognize
the Ranking Member for the Full Committee, my colleague from
Virginia, Mr. Scott.
Mr. Scott. Thank you. Thank you, Mr. Chairman. Ms.
Laitinen, you mentioned that the gentleman from California who
talked about inflation of the sticker price. You said there is
a lower price. Can you say what the lower price inflation, to
what people actually pay, inflation has been? Has that been
closer to regular inflation?
Ms. Laitinen. I do not actually remember off the top of my
head. It certainly has been increasing at a much lower rate
than the sticker price.
Mr. Scott. Okay.
Ms. Laitinen. I am looking at Andrew to see if you
remember, sorry.
Mr. Gillen. I think you are talking about net price versus
sticker price?
Mr. Scott. Right.
Mr. Gillen. You can adjust both of those for inflation, but
yes, so net price will always be lower than sticker price. Like
at community colleges right now the average tuition sticker
price is $4,000, but the average net price is actually minus
700 because students get Pell Grants, and they use some of it
for housing, so like there is differences like that.
Mr. Scott. Thank you. Ms. Laitinen, you mentioned a couple
of times about medical schools are more difficult because of
the Big Ugly Bill, why is it difficult--specifically why is it
difficult to go to medical school?
Ms. Laitinen. Well, medical school is expensive, and it is
really expensive, and now with the new loan limits, you used to
be able to have unlimited borrowing for graduate programs of
all kinds, and we can talk about whether or not--we used to
have unlimited graduate borrowing. That includes medical
schools.
Now, under the new law you have this limit for professional
schools, which includes medical schools. In many cases it is
not going to cover the cost of medical schools.
Mr. Scott. Unless you can cover the costs, you cannot go?
Ms. Laitinen. Correct, and so you are either going to--you
need to have family money that is going to pay for it, or you
are going to need to go to the private market, and that is
going to really I think change who can become doctors in this
country, which is probably, at least from my perspective, not
an ideal policy outcome.
Mr. Scott. Thank you. Those that are taking out those
massive loans, actually because they became physicians, can
actually pay them back. Is that right?
Ms. Laitinen. Absolutely, and I think that is a really
important distinction with the medical--in the medical fields.
They will earn enough to pay it back, so they should be able to
borrow enough to be able to go and earn those dollars and
provide that service to the community.
Mr. Scott. Thank you. Mr. Wishing, you mentioned several of
the schemes, students subsidizing other students, for example.
How do any of the pending transparency legislative proposals
deal with any of those schemes?
Mr. Wishing. I am not familiar with those proposals, sir.
My recommendation, I appreciate--I think, well, let me say
this. The one proposal that I am aware of is like the price
guarantee for 4 years. I do think the marketplace would respond
well to that.
Mr. Scott. Well, the marketplace would respond well. Well,
how do colleges know what the costs are going to be 3 years
from now? I mean.
Mr. Wishing. Well, that is a good point. Yes, so that is a
good point, inflation is particularly difficult, and I think
you would have to have an asterisk with that depending on----
Mr. Scott. Okay. You would have that safety valve in case
you have 8 percent inflation like we had during COVID. You
would not stick them with a previous suggestion that the price
would not go up?
Mr. Wishing. Frankly, I would think it would be--it could
get schools in a bind if you saw a sudden spike
Mr. Scott. Okay.
Mr. Wishing. In inflation, sir. My recommendation would be
to consider that. I think that would be helpful for families. I
do think there is a pretty easy solution here. The costs of
attendance--just have schools, and I think you guys have a lot
of this information by the way, but just have schools report
their break-even cost.
Mr. Scott. Well, that is not. I am not sure that is part of
a legislative proposal.
Mr. Wishing. Okay.
Mr. Scott. Let me ask you another, and we have a habit
around here of having a proposal, and then coming up with the
complaints, and never showing how the proposal actually deals
with the complaints. If a college decided to admit students on
a merit, need blind basis, and guaranteed that everybody who
got admitted would be able to afford to go because they would
make it affordable, some colleges for example say if you make
less than $60,000 you can get in.
How could you avoid that kind of scheme you have talked
about?
Mr. Wishing. I am not sure if I understand the question,
sir.
Mr. Scott. Well, if the college is admitting people need
blind.
Mr. Wishing. Well, yes. I think that is an interesting
question. I do think in the case of Grove City, sir, we do want
to know what students need is, and we are very clear about
trying to help students fund that need.
Mr. Scott. Well, Mr. Draeger, do you want to?
Mr. Wishing. We can help students if we know what their
need is, but we do not want to bamboozle some students to help
others.
Mr. Scott. Mr. Draeger, do you want to comment very
quickly?
Mr. Draeger. Yes, very quickly, Mr. Scott. I think you are
hitting on a very important point, which is schools are looking
for ways that they can under some safety net or umbrella,
collaborate together to be much more transparent, meet student
need, but they are very afraid of talking to one another for
fear of violating anti-trust, or being accused of violating
some anti-trust provisions.
We have to find some ground to allow them to not control
prices, but find some ways to meet full need, or affordability
guarantees and still collaborate on best practices to do that.
Mr. Scott. Thank you, Mr. Chairman.
Chairman Owens. Thank you. I would like to recognize Mr.
Grothman for a statement.
Mr. Grothman. I am sorry. I misled the Committee before. I
now talked to someone. I misled him as to what a beginning
Walmart truck driver is making. It is about 135 grand a year. I
did not want to overState it before, so now I have confirmed
it. You know, if you are advising anybody and they are up in
the air whether to go to college, make sure they only take the
best.
Now, other companies do not pay that much, but it is 135
grand a year, and that is before the 6 percent, you know, 401K
match and all the wonderful bonuses you might get, but just you
know, kind of surprising, not just in little old Wisconsin, who
knows what they make in New York.
Chairman Owens. Thank you, Mr. Grothman, appreciate that.
Okay. We are going to now look at closing, do our closing
remarks, and I would like to recognize Ms. Adams for her
closing remarks.
Ms. Adams. Thank you Mr. Chairman, and thank you once again
to our witnesses for speaking with us today. Since President
Trump took office and congressional republicans lined up to do
his bidding, college has gotten less accessible and more
expensive. As the costs of college continues to rise, citizen
families need adequate transparency and meaningful support from
institutions of higher education.
Paying for college should not require families to jump
through hoops and navigate opaque, confusing systems without
help. That is why resources like the Office of Federal Student
Aid are critical to student success, yet the Trump
administration has ripped away those resources, slashed grants
for students, and overall made college more expensive with
provisions in the Big Ugly Law.
It is true that colleges and universities must work toward
greater price transparency for students and families, but let
me be clear. If we truly want to deliver on our promises to
students, then we must take a comprehensive look, not only
transparency, but the broader issues facing higher education
today, including high tuition costs, crushing loan debt and
campus safety.
You know I mentioned in my earlier comments about the gaps
that students face, and that families face. We have got to
figure out a way how families fill those gaps with aid and
scholarship that they do not have to pay back. I can tell you
that is a problem for--one size does not fit all.
I know that closing these gaps for first generation college
students, as I was, those are very challenging, especially
students who attend our HBCUs. While I appreciate the
discussion today in this hearing, it is time that we face
reality. College affordability will not be magically solved by
bullying institutions into providing transparency while leaving
institutions on their own with no help from the Department due
to recent riffs.
We must fight back against the Trump administration's
unfettered attacks on higher education, and we have got to work
with institutions to prioritize affordability and success for
all students, not just the wealthy and well-connected. Thank
you, Mr. Chairman, thank you to our witnesses today. I yield
back.
Chairman Owens. Thank you. This has been a very
enlightening hearing, and I want to thank everyone sitting
here. You know, I think about growing up, and what the concept
of college what it meant. I think we have lost our way along
the way.
It used to be where higher education was a legacy, and I am
part of that legacy by the way. My grandfather was a third-
grade dropout. My dad went to war, and through the GI Bill went
to Ohio State, and got his Ph.D. in agronomy, was 40 years in
college professor, very successful entrepreneur.
His legacy is me sitting here going to the University of
Miami, and now here in Congress. That is the way it has always
been in the past. Education was supposed to be our gateway.
HBCUs during the days of segregation, during the time I grew
up, their mission very simply was to produce the greatest minds
ever to go out and represent their communities, to command
respect because that is what the goal was.
At that time black communities, HBCUs graduated more a
higher percent of black men than any other race out there. From
that point to where we are now means that we have lost the
mission. It is time for us to bring back some of that ethical,
the idea of the product should be our kids, not the
institution.
Not to bloat our bureaucracy with a lot of people making a
lot of good income. It should be what is the mission to make
our country the greatest in the history of mankind. I am so
thankful we are finally having this conversation because
obviously this has been going on for quite a while to where it
is muscle memory.
You just do it, and sitting, and in some instances people
thing of all kind of unethical ways of doing things that they
see no wrong with it. That is not who we are. I am excited by
the fact that first of all you are here to educate us all. I
now know what credence goods are. I will never forget that.
To my last day I will say was it really worth it? It is
about loss. It is about return on investment. We have to be as
innovative in this industry as we are in everything else we do.
What is it we can do to tweak innovation to make sure our kids
are coming out smarter, better, more hopeful. Never thinking it
was a waste of time.
What is the right niche? We are going to start doing that.
I am so thankful we have a panel here on both sides of the
aisle. We are realizing we need to address this issue. We are
going to lean in very hard. I think if I could just make one
last ask, I think we have a very innovative legislative body
now, House, Senate and the President. We want to get this
right.
Our big ask is as legislators, innovative legislators, we
need to hear from you. We need to know what does that mean?
What does it mean to tweak this so that it is truly the best
experience for the kids coming in, for the parents thinking it
was a great choice for them.
We are going to ask you guys to do that. I would say be
more proactive than you ever have been. Think outside the box
more than you ever have been. Know that we are willing to hear
this, and we are willing to work with you. We have to be as
innovative. I say we take this special window we have now to
have these conversations and make that happen.
I want to than you seriously for this particular hearing. I
have learned a lot, things I had never known about, and now I
know, and we now know we have to get moving to get things
accomplished. I would like to thank the witnesses again for
taking the time to testify before the Subcommittee today.
Without objection, there being no further business, the
Subcommittee stands adjourned. Thank you so much.
[Whereupon, at 12:17 p.m., the Subcommittee was adjourned.]
[Questions and responses submitted for the record by Mr.
Justin Draeger follows:]
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[Questions and responses submitted for the record by Dr.
Andrew Gillen follows:]
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[Questions and responses submitted for the record by Ms.
Amy Laitinen follows:]
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[Questions and responses submitted for the record by Mr.
Lee S. Wishing III follows:]
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