First House Education Committee Hearing Focuses on Deregulation, Innovation, Cost

By Allie Bidwell, Communications Staff

The House Committee on Education and the Workforce renewed its work toward laying the groundwork to reauthorize the Higher Education Act during its first hearing Tuesday morning, focusing on issues around deregulation, student loan debt and repayment, educational quality, and the cost of college.

Under the leadership of Rep. Virginia Foxx (R-NC), the new chairwoman who replaced now-retired Rep. John Kline (R-MN), the committee appears to be taking particular interest in reducing regulatory burden for colleges and universities and limiting the federal role in higher education. Foxx laid out the four principles she plans to focus on for a reauthorization bill: empowering students and families to make informed decisions; simplifying and improving student aid; promoting access, innovation, and completion; and providing strong accountability and a limited federal role.

“We need to repeal unnecessary reporting requirements and address many of the harmful and misguided regulations imposed by the former administration. However, we should do so while also delivering strong, commonsense accountability in federal programs,” Foxx said in her opening statement. “It’s clear that we have our work cut out for us, but inaction is not an option. Today marks the beginning of the next phase in our effort to strengthen America’s higher education system for students, parents, institutions, and taxpayers. I look forward to the important work that lies ahead. Let’s get to work.”

Ranking member Rep. Bobby Scott (D-VA), however, warned that “deregulation for the sake of deregulation doesn’t make any sense” and that many regulations protect students and taxpayers. Scott said he is hopeful for more bipartisan collaboration within the committee during the reauthorization process.

The committee called on four witnesses (full written testimony below) to discuss the various challenges facing the nation’s higher education system and to make suggestions for improvement:

During her testimony, Akers made several recommendations related to federal financial aid, such as eliminating the Parent PLUS Loan and Public Service Loan Forgiveness programs, eliminating subsidies in the tax code and creating a single grant program, creating a single, default income-driven repayment plan with paycheck withholding for payments, and supporting an infrastructure for other financial products, such as income-share agreements.

During the questioning period, Rep. Frederica Wilson (D-FL) asked whether eliminating Parent PLUS loans could negatively impact students of color, and Akers said that it would.

“Any sort of introduction of underwriting in the student loan market would likely have implications for access,” Akers said. “Certain groups of disadvantaged students would be impacted more severely.” She then added that using direct subsidies through grants, rather than loans, would be the avenue to address that issue. Akers said that student loans are “the wrong instrument” for closing racial gaps in access to higher education.

Akers also said that while introducing market competition into the federal student lending system, returning to the Federal Family Education Loan (FFEL) program would be “a step in the wrong direction.”

“FFEL did not operate like a market,” Akers said in her written testimony. “Interest rates were set by legislation, and lenders had no discretion over who could borrow or how much to lend. Further, the contracts with lenders were poorly designed such that they were overcompensated and incented to participate in perverse business practices. There are better ways inject more market discipline into federal student lending than returning to a failed policy that created more problems than it solved.”

Rather, she said, scaling back or limiting federal borrowing to undergraduate students would create an opening for private lenders.

Akers also said the federal student aid system could be simplified by doing away with the FAFSA, and relying on IRS data to determine eligibility for financial aid.

“Information on aid benefits could be mailed directly to potential students and their families,
perhaps being triggered by checking a box on the 1040 form. Using tax data to allocate aid
would not be able to achieve the same targeting of benefits as the FAFSA because the IRS
does not have all the same information on household finances, but research has shown that the
loss in precision is extremely small,” Akers said. “This cost is more than outweighed by the benefit of enrolling more low-income students.”

Still another primary challenge in higher education, Akers said, is the students who enroll in college, take out student loans, and do not complete their programs – therefore never seeing a return on their investment.

Kirwan focused in his testimony on how scaling back some federal regulations could potentially have an impact on the cost of college. Kirwan said during the hearing that over-burdensome regulations can contribute to higher costs in the form of higher tuition for students or a reduction in services. He said that while the move to using prior-prior year (PPY) income data has eased the burden of verification regulations, there is still more work to be done.

Kirwan went on to say that some regulations can “unnecessarily stifle innovations in distance education,” that there is an “inordinate amount of information and data” that colleges and universities are required to collect (not all of which is beneficial to students), and that some regulations – such as the Selective Service registration – have nothing to do with the mission of higher education.

During his testimony, Cruz brought up a need to renew the federal-state partnership to “rectify the inequitable state of affairs in higher education,” improve student success and reduce time to graduation. Cruz added that policymakers should build on the move to PPY to further simplify the FAFSA.

“We must do more to ensure that eligible students have the resources they are entitled to in order to succeed,” Cruz said. He added that policymakers should consider implementing an early notification system for middle or high school students, and aligning the Expected Family Contribution formula with other federal means-tested benefits.

Cruz also made recommendations for ways institutions can work to improve student success, such as “increasing the number of teachers who look like the kids they teach,” supporting programs that focus on mentorship and one-on-one counseling, and implementing programs that focus on adult learners or encourage students to “transfer back” credits for additional credentials.

“I believe that we can and must do a better job of translating our democratic ideals into policies and practices at all levels that sustain, rather than erode, opportunity,” Cruz said. “I believe that we can make it not only possible, but probable that more low-income students and students of color can rise to the middle class, paving the way for less inequality, more social mobility, and better overall prosperity in America. And I believe that the best way to do this is by applying an equity-lens to the policies and practices that shape the work of higher education institutions across our nation and targeting resources to those 2-year and 4-year public institutions that have demonstrated the capacity to transform lives and communities.”

Gilligan in his testimony explained Capella University’s success using its “FlexPath” direct assessment program. Gilligan said the university now offers eight degree programs under this competency-based education model, which can be beneficial for older students or working professionals who need an educational model that works with their lifestyles and schedules.

Gilligan said that students in the FlexPath program also tended to pay less for their bachelor’s degrees than their peers in traditional programs, and borrowed 40 percent less in federal loans.

“Competency-based direct assessment programs like FlexPath are a powerful example of how seemingly minor changes to policy can create the space for innovation to help eliminate a barrier to access while providing the potential for significant cost savings to the student and the federal government,” Gilligan said. “But there is work to do to make sure this model is available to students in a way that allows for innovation without lowering the bar on quality or creating the conditions for a race to the bottom.”


Publication Date: 2/8/2017

Jesse M | 2/8/2017 2:32:31 PM

David, I completely agree with you on the uncertainty of PSLF. Students come to me on the regular asking about PSLF and I must always be sure to start me answers with, "Well, Currently...." It's concerning for many students, particularly because it takes so long to qualify and many students are scared that by the time they do qualify the option for PSLF will no longer be there. While yes it is likely that borrows will be grandfathered in as PSLF is written into promissory notes, that doesn't make it concrete. While the feds have never retroactively taken away a promised future benefit (SSA is a good example), that doesn't mean it won't happen. Many things are out of the ordinary with the current administration and that makes it particularly disconcerting.

David S | 2/8/2017 11:49:35 AM

Very disappointed to hear testimony supporting the discontinuation of PSLF before it even starts. Of course, Dr. Akers is not the first one to suggest this, but I'm sure the other policy wonks who have been preaching this for a while now are giddy by now. And the result will be fewer people seeking graduate degrees in fields such as education, social work, the arts, and few qualified people pursuing careers in areas such as public interest law, doctors and nurses for non-profit agencies...a complete lose-lose.

Many of us have heard unofficial legal opinions that PSLF would legally be required to be grandfathered in if it were in place while the borrower took out the loan. But even when we do hear that from an attorney, the "but that's just my opinion" disclaimer is quickly added. And now I suppose we won't really know until we see a Reauthorization bill. Let's hope that when Rep Foxx talks about access, she really means it.

Scary stuff...but then again, we see scary stuff every day now.

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