[Congressional Record Volume 161, Number 88 (Wednesday, June 3, 2015)]
[Senate]
[Pages S3667-S3669]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
THE COST OF HIGHER EDUCATION
Mr. ALEXANDER. Mr. President, I thank the managers of the bill for
allowing me a few minutes to report on a very interesting hearing we
had this morning before our Senate education committee. It is a
different subject than the one on the floor right now, but it is one
that both Senator Reed and Senator McCain have been interested in over
time. It has to do with whether 22 million undergraduate students in
America can afford to go to college and whether millions more high
school students can look forward to going to college, and then we have
millions more in graduate school who are continuing their education.
This affects our country as vitally as any subject, and I thought I
would report to the full Senate and to the American people on the
excellent, bipartisan hearing we had. This was the fourth hearing we
have had in Congress on the reauthorization of the Higher Education
Act. Our committee has already come to an agreement on a bill to fix No
Child Left Behind that includes continuing important measurements of
how we measure the progress of students in schools in America and then
restore to States the responsibility for figuring out what to do about
that.
We have 22 members on our committee, and we represent as much
diversity of opinion in the Senate as exists, which is a lot of
diversity of opinion. Yet, our work on fixing No Child Left Behind was
unanimous.
Our next step will be to reauthorize the Higher Education Act that
affects more than 6,000 colleges and universities in America. I am
working with Senator Murray, the Senator from Washington, who is the
ranking Democrat on the committee, and we hope to have that bill ready
for the committee's consideration in early September.
The question before us this morning was, Can you afford to pay for
college? I believe the answer for most Americans is yes, and for
millions of Americans 2 years of college is free. It is never easy to
pay for college, but it is easier than many think, and it is unfair and
untrue to make students think they can't afford college. We should stop
telling students they can't afford college.
Four weeks ago, I spoke at the graduation of 800 students from
Walters State Community College in Morristown, TN. Half of those
students were low income. Their 2 years of college was free or mostly
free because taxpayers provided them a Federal Pell grant of up to
$5,700 for low-income students and the average community college
tuition in the country is about $3,300. So for the nearly 4 out of 10
undergraduate students in our country who attend roughly 1,000 2-year
institutions, college is affordable. That is especially true in
Tennessee, where our State has made community college free for every
student who graduates from high school.
In addition to that 40 percent of students who attend the 2-year
colleges, another 38 percent of undergraduate students go to public 4-
year colleges and universities where the average tuition is about
$9,000. For example, at the University of Tennessee, Knoxville,
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one-third of the students have a Federal Pell grant to help pay for
their tuition, and 98 percent--virtually all--of the instate freshmen
have a State HOPE Scholarship, which provides up to $3,500 annually for
freshmen and sophomores and up to $4,500 for juniors and seniors. So
for most students, 4 years at a public university is affordable, and
these include some of the best colleges and universities in the world.
What about the 15 percent of students who go to private universities
where the average tuition is $31,000? Well, I will give an example of
one of those universities. I had dinner this week with Jack DeGioia,
the president of Georgetown University. He told me that the cost at
Georgetown is about $60,000 annually. Here is how they deal with that.
He said: First, we determine what a family can afford to pay. Then we
ask students to borrow $17,000 over 4 years from the Federal
Government, to which they are entitled. Then we ask the student to work
for 10 to 15 hours under our work-study program.
President DeGioia said: Then we pay the rest of the $60,000, which
costs Georgetown University about $100 million a year.
He said that 21 other private universities that work together on
financial aid policies have about a similar policy. He also said that
Harvard, Yale, Stanford, and Princeton are even more generous. So even
these so-called elite universities may be affordable for students in
America.
Finally, another 9 percent of students will go to for-profit colleges
where tuition averages about $15,000 a year.
Despite all of this, let's say your family is still short on money to
pay for college. Well, taxpayers will loan you money on generous terms.
We hear a lot about student loans. These are some of the questions
being asked: Are taxpayers being generous enough? Some Senators say we
need to be more generous. Is borrowing for college a good investment?
Are students borrowing too much? One way to answer these questions is
to compare student loans to automobile loans.
When I was 25 years old, I bought my first car. It was a Ford
Mustang. The bank made my father cosign the loan because I had no
assets and no credit rating. It made me mad, but I had to do it. I had
to put up the car's collateral and I had to pay off the loan in 3
years.
Compare that to your opportunity if you are an undergraduate student
today. You are entitled to borrow $5,000 or $6,000 from the taxpayers
each year. It doesn't matter what your credit rating is, you don't need
collateral, and the fixed interest rate for your loan is 4.29 percent
this year.
It gets better. When you pay your loan back, you don't have to pay
more than 10 percent of your disposable income each year, and if that
rate of payoff doesn't pay it off in 20 years, the loan is forgiven.
The next question I hear is, Is your student loan a better investment
than your car loan? Well, cars depreciate the minute you drive them off
the lot. The College Board estimates that a 4-year degree will increase
your earnings by $1 million on average over your lifetime.
A third question I hear is, Is there too much student borrowing? The
average debt of a graduate from a 4-year institution is about $27,000
or about the same amount as the average new car loan. About 8 million
undergraduate students will borrow about $100 billion in Federal loans
next year. The total amount of outstanding student loans is $1.2
trillion. That is a lot of money, but the total amount of outstanding
auto loan debt in the United States is $950 billion. I don't hear
anyone complaining that the economy is about to crash because we have
nearly $1 trillion worth of auto loans, nor do I hear that taxpayers
should do more to help borrowers pay off their auto loans.
You might ask: What about all of those students with over $100,000 in
student loan debt we hear about? The answer is that student loan debt
of over $100,000 make up only 4 percent of student loans, and 90
percent of those are doctors, lawyers, business men and women, and
others who have earned graduate degrees.
Nevertheless, it is true that college costs have been rising and that
a growing number of students are having trouble paying back their
debts. According to the U.S. Department of Education, about 7 million
or 17 percent of Federal student loan borrowers are in default, meaning
they have not made a payment in at least 9 months. The total amount of
loans currently in default is $106 billion or about 9 percent of the
total outstanding balance of Federal student loans. The Department says
that most of these loans get paid back to the taxpayer one way or
another.
The purpose of our hearing this morning was to find ways to keep the
cost of college affordable and to discourage students from borrowing
more than they can pay back. Here are five steps the Federal Government
can take to accomplish that:
No. 1, stop discouraging colleges from counseling students about how
much they should borrow. The Federal law and regulations actually
prevent colleges from requiring financial counseling for students, even
those clearly at risk for default who may be overborrowing.
At a March 2014 hearing before our committee, we heard from two
financial aid directors who said that there was no good reason for
this. One said:
Institutions are not allowed to require additional
counseling for disbursement. We can offer it, but we're not
allowed to require it. And without the ability to require it,
there's no teeth in it.
No. 2, help students save money by graduating sooner--for example,
our bipartisan FAST Act that Senators Isakson, Burr, and I on this side
of the aisle and Senators Bennet, Cory Booker, and Angus King on that
side of the aisle have sponsored, would make Pell grants available
year-round to students so they can complete their degrees more quickly
and start earning money more rapidly with their increased knowledge and
skills.
No. 3, make it simpler to pay off student loans. There are nine
different ways to pay off student loans. The Federal Government offers
very generous repayment options. One allows you to pay 10 percent of
your disposable income every year, and if that doesn't pay it off after
20 years, the loan is forgiven. Last week, I met a college president
from Tennessee who said he spent 9 months trying to help his daughter
pay off her student loan, and he needed the help of a financial aid
officer.
We have legislation introduced by Senator Burr and Senator King and
sponsored by others, as well as those of us I just mentioned, to
simplify the application and the repayment options for Federal student
loans.
No. 4, allow colleges to share in the risk of lending to students. If
colleges have skin in the game--a concept that Senator Reed of Rhode
Island and I with others have suggested should be seriously explored--
it could provide an incentive to colleges to keep costs down and ensure
students borrow no more than they can pay back. Senator Durbin and
Senator Warren have also worked with Senator Reed on introducing
legislation on this subject.
No. 5, point the finger at ourselves. Congress is the culprit for the
high cost of tuition across this country more than many Members of
Congress would like to admit. The main reason State aid to public
universities is down is the imposition of Washington Medicaid mandates
and a requirement that States maintain their level of spending on
Medicaid.
For example, in the 1980s when I was the Governor of Tennessee,
Medicaid was 8 percent of our State budget and the State was paying 70
percent of the cost to go to the University of Tennessee. Today,
Medicaid is 30 percent of Tennessee's State budget and the State is
paying roughly 30 percent of the cost to go to the University of
Tennessee.
It is pretty simple. Lower State support has caused higher tuitions,
and the decrease in State support, in my opinion, is mainly because the
Federal Government's Medicaid mandates have made the Medicaid Program
so expensive while tying the hands of States so much that Governors
have to take money from higher education and direct it toward Medicaid;
therefore, tuition is up.
That isn't the only thing the Federal Government does to cause the
cost of college to go up. A couple of years ago, four of us on the
education committee--Senators Mikulski and Bennet, Democrats; and
Senator Burr and I, Republicans--invited a group of distinguished
educators to do a study of
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the cost of Federal regulations on the over 6,000 higher education
institutions. The group did an excellent job and came back with 59
specific recommendations about how to simplify the Federal regulation
of colleges and universities, saving money, saving time. Time and money
that would be better spent on education.
Chancellor Zeppos of Vanderbilt University and Chancellor Kirwan of
the University System of Maryland were the two leading this project.
Chancellor Zeppos described the Federal regulation of higher education
as having ensnared colleges in a jungle of red tape.
Chancellor Zeppos took another step: He hired the Boston Consulting
Group to tell Vanderbilt University how much Federal regulation of
colleges and universities cost Vanderbilt during the year 2014. The
answer was $150 million in order to comply with well-intentioned rules
and regulations from the Federal Government.
What does that have to do with tuition? Well, spread that out among
Vanderbilt students, and it equates to $11,000 in additional tuition
for each of Vanderbilt's students. Mr. President, $11,000 per student
is $2,000 more than the average tuition at State universities across
this country. That is the average tuition for institutions like the
University of Georgia, the University of Tennessee, and the University
of Florida. So the Federal Government, through its Medicaid mandates
and excessive regulation of colleges and universities, is driving up
tuition and increasing college costs and discouraging students from
going to college.
We should take steps to make college more affordable, but we should
also cancel the rhetoric that is misleading and causes many students
and families to believe they cannot afford college. It is untrue and
unfair to say this. It is untrue because if you are a low-income
community college student, your education may be free or nearly free
thanks to a Federal Pell grant. And 38 percent of our college students
attend those 2-year schools.
If you are an in-state low-income student at the University of
Tennessee, Knoxville, between a Pell grant and a HOPE Scholarship, you
have already covered 75 percent of your tuition and fees. That is the
opportunity for another 40 percent of our students who attend public
universities.
Even at elite, private universities, if you are willing to borrow
$4,500 a year and work 10 to 15 hours a week, many of these
universities will help pay the amount your family isn't able to pay, so
you can afford what would appear to be an insurmountable sticker price
of $50,000 or $60,000.
If you still need to borrow money in order to help pay for a 4-year
degree, your average debt is going to be roughly equal to an average,
new car loan, and your college loan is a better investment than your
car loan. Student loans are also a better investment for our country.
As Dr. Anthony Carnevale of Georgetown University says, without major
changes, the American economy will fall short of 5 million workers with
postsecondary degrees by 2020.
So I urge my colleagues to follow the Senate education committee. The
Committee is well on our way to preparing legislation that we hope to
have ready for the full Senate early in the fall to reauthorize the
higher education system in America.
We hope to simplify college regulations. We hope to make it simpler
to apply for a Federal grant or loan to pay for college. We hope to
make it simpler for students to pay off their loans. We hope to instill
year-round Pell grants so students can go through college more rapidly
and get into the workforce. We hope to allow students to be able to
apply for student aid in their junior year of high school rather than
their senior year, which will permit them to shop around and make it
easier to obtain the information they need. We will also take a look at
accrediting, and we will try to understand better ways to accommodate
the tremendous amount of innovation that is coming our way because of
the Internet in terms of new ways of learning.
Mr. President, I ask unanimous consent to have printed in the Record
a 1-page summary of the FAST Act, which was introduced by Senator
Bennet and myself, along with Senators Booker, King, Burr, and Isakson,
to simplify and reform the Federal student aid process.
There being no objection, the material was ordered to be printed in
the Record, as follows:
Financial Aid Simplification and Transparency (FAST) Act
Eliminates the Free Application for Financial Student Aid,
or FAFSA by reducing the 10-page form to a postcard that
would ask just two questions: 1--What is your family size?
And, 2--What was your household income two years ago?
Tells families early in the process what the federal
government will provide them in a grant and loan by using
earlier tax data and creating a simple look-up table to allow
students in their junior year of high school to see how much
in federal aid they are eligible for as they start to look at
colleges.
Streamlines the federal grant and loan programs by
combining two federal grant programs into one Pell grant
program and reducing the six different federal loan programs
into three: one undergraduate loan program, one graduate loan
program, and one parent loan program, resulting in more
access to college for more students.
Enable students to use Pell grants in a manner that works
for them by restoring year-round Pell grant availability and
providing flexibility so students can study at their own
pace. Both provisions would enable them to complete college
sooner.
Discourages over-borrowing by limiting the amount a student
is able to borrow based on enrollment. For example, a part-
time student would be able to take out a part time loan only.
Simplifies repayment options by streamlining complicated
repayment programs and creating two simple plans, an income
based plan and a 10-year repayment plan.
Mr. ALEXANDER. I yield the floor, and I suggest the absence of a
quorum.
The PRESIDING OFFICER (Mr. Perdue). The clerk will call the roll.
The legislative clerk proceeded to call the roll.
Ms. STABENOW. Mr. President, I ask unanimous consent that the order
for the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
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