SEARCH TODAY'S NEWS ARCHIVES

Senate HELP Committee Examines College Affordability

Correction: a previous version of this article stated that the hearing summarized below was held on July 22, 2015, but it actually took place on June 3, 2015.

By Joan Berkes, Policy & Federal Relations Staff

The Senate Committee on Health, Education, Labor and Pensions (HELP) held a hearing on June 3 on the Reauthorization of the Higher Education Act, centered on the question of college affordability. Committee Chair Sen. Lamar Alexander (R-TN) posed the question: Can you afford to pay for college?

A number of familiar themes emerged from the panelist testimony and from the questions posed to panelists by the HELP Committee members:

  • Dismay over the reduction in state support of education was a recurring theme, although senators disagreed over the root causes.
  • Income inequality in higher education attainment is increasing.
  • Participants in the panel cited lack of early and accurate information about college affordability as a significant problem, as is the complexity of the application process.
  • Simplification could result in better use of resources for early outreach and improved counseling, to enable better choices by students.
  • The need for better data, through a student unit record, also came up in more than one exchange as senators and panelists discussed the need of families, policymakers, and researchers for more relevant and complete information.
  • Both senators and panelists called for reinstatement of year-round Pell Grants.
  • The use of prior-prior year income was also mentioned.

In his opening remarks, Alexander said that while many students do not believe they can afford college, higher education is in fact affordable for most, and misleading rhetoric must be canceled. The senator suggested five steps that the federal government can take to improve affordability and lower borrowing:

  • Stop discouraging colleges from conducting additional loan counseling;
  • Help students graduate sooner, including summer attendance with year-round Pell Grants;
  • Make it simpler to pay off student loans;
  • Allow schools to share in the risk of lending to students; and
  • “Point the finger at ourselves”—congress—in reducing state aid because of funding mandates such as Medicaid.

Ranking Democrat Sen. Patty Murray’s (D-WA) opening remarks pointed to higher education as a ticket to the middle class. She emphasized the importance of an educated workforce for the economy. However, Murray stated that skyrocketing costs can be a major barrier to attending and persisting in college. Many students cannot even imagine being able to go to college. High cost can be an insurmountable roadblock, and high sticker price can discourage students from even applying to college. She noted that nothing forces states to make the choice of Medicaid over education. The senator called for protection of need-based aid, along with simple clear information, to allow informed decisions.

Panelist Dr. Judith Scott-Clayton, assistant professor of economics and education at Teachers College, Columbia University, believes that the affordability crisis is real, but that it may be different from current perceptions. “The true crisis,” she testified, “is that low- and moderate-income students are being left behind, either because they fail to enroll or because they enroll in under-resourced institutions that do not serve them well.”

College access is increasingly unequal by income, but too many students do not apply for aid or leave school because they think they cannot afford it. She pointed out that student loan debt is actually lower than statistics centering on averages imply, and that generally, higher student loan debt occurs with higher attainment (graduate degrees). Default often occurs on relatively small debts.

Her suggestions include using prior-prior year income and automatic use of income-contingent repayment. She advocates for simplifying the process in order to redirect the “armies of high school counselors, aid administrators, college advisors, and volunteers nationwide that are currently devoted to helping students fill out FAFSAs and navigate the student loan system” to help students make better choices.

Panelist Dr. Elizabeth Akers, a fellow at the Brown Center on Education Policy of the Brookings Institution, said that facts related to affordability—large sums spent on college by families and the nation, high borrowing, and more households with student debt than ever before—tells us that college is expensive, but not whether it’s affordable. Looking at a month-to-month assessment (the transient burden) of debt to income shows a different picture.

In her written testimony, Akers cautions that, “The long run financial return is an important indicator of affordability, but it could potentially obscure more transient challenges faced by households. For example, an increase in debt may be affordable in the long run but impose monthly payments that squeeze borrowers in the short run, especially early in their careers when earnings are low. However, month-to-month affordability of student debt does not seem to have declined in recent history. The ratio of monthly payments to monthly income has been flat over the last two decades.” She concludes that “By this measure, the transitory burden of loan repayment is no greater for today’s young workers than it was for young workers two decades ago. If anything, the monthly repayment burden has lessened.”

Warren challenged this statement, saying that it contradicts conclusions drawn by the Federal Reserve. The senator cited a 17 percent rise in income as compared to a 150 percent rise in debt, asking how families could be no worse off now than 20 years ago. With repayment stretched out over a longer period of time, borrowers are still repaying their own student loans at times when they should be helping their children pay for college or preparing for their own retirement, Warren said, insisting that rising debt is hurting families and the economy.

Akers’ written testimony explains her conclusions more fully. 

Panelist Dr. F. King Alexander, president and chancellor of Louisiana State University, expressed deep concern over the decline in state funding for higher education, since 1981. He pointed out the need for better apportionment of campus-based funds, which is now skewed towards high cost rather than service to low-income students. He called for renewed federal/state partnerships that leverage federal resources through such means as state matching and maintenance of effort. He stressed the effectiveness of such measures in the past, such as the stimulus packages, and cited examples of state funding being cut when federal leveraging stopped. He urged senators to make sure that states stay in the game.

Dr. Alexander recommended incentivizing schools to enroll Pell-eligible students and keep track of their success in doing so. He recommended rewarding schools that keep costs low and students out of debt, and ensuring that schools to make data relating to success available.

Sen. Alexander disagreed with mandates on state spending, again citing a relationship between increased Medicaid expenditures and decreased higher education funding. Other senators spoke to the need states have for balancing their expenditures and problems with lower revenues. Dr. Alexander countered that maintenance of effort requirements have been shown to be effective. 

Panelist Michael Mitchell, a policy analyst at the Center on Budget and Policy Priorities, examined the adverse effects of cuts in state funding and increased costs at public institutions. Despite a small restoration of funding, state spending is $13.3 billion less than it was in 2008, a 20 percent decline for students, even though state revenues have returned to pre-recession levels. Students drop out of school because they do not have enough information about the return investing in college can bring. Thus students have debt without the diploma.

Cuts in state funding resulted from sharp falls in tax revenues, but limited revenues must support higher numbers of students, particularly at community colleges. High school graduates chose college over “dim employment prospects” while older workers sought to retool and gain new skills.

In his written testimony, Mitchell explains that, “During and immediately following recessions, state and local funding for higher education has tended to plummet, while tuition has tended to spike. During periods of economic growth, funding has tended to recover somewhat while tuition has stabilized at a higher level as a share of total higher educational funding. This trend has meant that over time, students have assumed much greater responsibility for paying for public higher education. In 1988, public colleges and universities received 3.2 times as much in revenue from state and local governments as they did from students. They now receive about 1.1 times as much from states and localities as from students.”

The impact from this shift, Mitchell concluded, is that tuition costs are likely deterring some students from enrolling, particularly low-income students, and higher tuition may be pushing lower-income students toward less-selective schools, reducing their future earnings. Pell Grants partially offset higher costs, helping students to enroll and graduate. Mitchell cites research showing Pell Grant recipients who graduate do so faster than other students.

Panelist James Kennedy, associate vice president for university student services and systems at Indiana University, described initiatives at Indiana for managing student debt and placing high priority on counseling.

Comprehensive financial literacy education helps to lower borrowing substantially. Counseling is performed via a variety of methods: one-on-one, class setting, online modules, podcasts, peer mentoring. Indiana also sends annual debt letters to borrowers, with projections on all sources of debt and repayment. These letters are in response to a discovery that students were unaware of their cumulative debt. A plan is in place to expand debt letters and additional counseling to transfer students. Sen. Murkowski praised the letter, saying cuts at schools too often come from support services.  

The school has also established earlier intervention when students run into satisfactory progress issues. Indiana has instituted a “15 to completion” initiative, emphasizing the need for taking 15 per term to graduate in four years. The initiatives include counseling about the impact of withdrawal.

In response to a question from Sen. Al Franken (D-MN) concerning confusing financial aid award letters, Kennedy recommended use of focus groups with students to determine where the confusion lies. Indiana found that aid types needed to be better separated on award letters. 

The next Senate HELP Committee reauthorization hearing is scheduled for July 29, and will focus on combatting campus sexual assault.

 

Publication Date: 7/23/2015


You must be logged in to comment on this page.

Comments Disclaimer: NASFAA welcomes and encourages readers to comment and engage in respectful conversation about the content posted here. We value thoughtful, polite, and concise comments that reflect a variety of views. Comments are not moderated by NASFAA but are reviewed periodically by staff. Users should not expect real-time responses from NASFAA. To learn more, please view NASFAA’s complete Comments Policy.

Related Content

Higher Education Act Reauthorization News

MORE | ADD TO FAVORITES

NASFAA Shares Feedback on College Cost Reduction Act with House Education and Workforce Committee Leadership

MORE | ADD TO FAVORITES

VIEW ALL
View Desktop Version