[Congressional Record (Bound Edition), Volume 161 (2015), Part 6]
[Senate]
[Pages 8432-8434]
[From the U.S. 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

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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, 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

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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 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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