[House Hearing, 108 Congress]
[From the U.S. Government Publishing Office]
THE COLLEGE COST CRISIS REPORT: ARE INSTITUTIONS ACCOUNTABLE ENOUGH TO
STUDENTS AND PARENTS?
=======================================================================
HEARING
before the
SUBCOMMITTEE ON 21st CENTURY COMPETITIVENESS
of the
COMMITTEE ON EDUCATION
AND THE WORKFORCE
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED EIGHTH CONGRESS
FIRST SESSION
__________
September 23, 2003
__________
Serial No. 108-33
__________
Printed for the use of the Committee on Education and the Workforce
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house
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COMMITTEE ON EDUCATION AND THE WORKFORCE
JOHN A. BOEHNER, Ohio, Chairman
Thomas E. Petri, Wisconsin, Vice George Miller, California
Chairman Dale E. Kildee, Michigan
Cass Ballenger, North Carolina Major R. Owens, New York
Peter Hoekstra, Michigan Donald M. Payne, New Jersey
Howard P. ``Buck'' McKeon, Robert E. Andrews, New Jersey
California Lynn C. Woolsey, California
Michael N. Castle, Delaware Ruben Hinojosa, Texas
Sam Johnson, Texas Carolyn McCarthy, New York
James C. Greenwood, Pennsylvania John F. Tierney, Massachusetts
Charlie Norwood, Georgia Ron Kind, Wisconsin
Fred Upton, Michigan Dennis J. Kucinich, Ohio
Vernon J. Ehlers, Michigan David Wu, Oregon
Jim DeMint, South Carolina Rush D. Holt, New Jersey
Johnny Isakson, Georgia Susan A. Davis, California
Judy Biggert, Illinois Betty McCollum, Minnesota
Todd Russell Platts, Pennsylvania Danny K. Davis, Illinois
Patrick J. Tiberi, Ohio Ed Case, Hawaii
Ric Keller, Florida Raul M. Grijalva, Arizona
Tom Osborne, Nebraska Denise L. Majette, Georgia
Joe Wilson, South Carolina Chris Van Hollen, Maryland
Tom Cole, Oklahoma Tim Ryan, Ohio
Jon C. Porter, Nevada Timothy H. Bishop, New York
John Kline, Minnesota
John R. Carter, Texas
Marilyn N. Musgrave, Colorado
Marsha Blackburn, Tennessee
Phil Gingrey, Georgia
Max Burns, Georgia
Paula Nowakowski, Staff Director
John Lawrence, Minority Staff Director
------
SUBCOMMITTEE ON 21st CENTURY COMPETITIVENESS
HOWARD P. ``BUCK'' McKEON, California, Chairman
Johnny Isakson, Georgia, Vice Dale E. Kildee, Michigan
Chairman John F. Tierney, Massachusetts
John A. Boehner, Ohio Ron Kind, Wisconsin
Thomas E. Petri, Wisconsin David Wu, Oregon
Michael N. Castle, Delaware Rush D. Holt, New Jersey
Sam Johnson, Texas Betty McCollum, Minnesota
Fred Upton, Michigan Carolyn McCarthy, New York
Vernon J. Ehlers, Michigan Chris Van Hollen, Maryland
Patrick J. Tiberi, Ohio Tim Ryan, Ohio
Ric Keller, Florida Major R. Owens, New York
Tom Osborne, Nebraska Donald M. Payne, New Jersey
Tom Cole, Oklahoma Robert E. Andrews, New Jersey
Jon C. Porter, Nevada Ruben Hinojosa, Texas
John R. Carter, Texas George Miller, California, ex
Phil Gingrey, Georgia officio
Max Burns, Georgia
------
C O N T E N T S
----------
Page
Hearing held on September 23, 2003............................... 1
Statement of Members:
Kildee, Hon. Dale E., a Representative in Congress from the
State of Michigan.......................................... 6
McKeon, Hon. Howard P. ``Buck'', a Representative in Congress
from the State of California............................... 2
Prepared statement of.................................... 4
Statement of Witnesses:
Alexander, Dr. F. King, President, Murray State University... 14
Prepared statement of.................................... 17
Hanson, Jessica, Student, Florida State University........... 28
Prepared statement of.................................... 29
Lewis, Dr. Valerie F., President, State Higher Education
Executive Officers......................................... 9
Prepared statement of.................................... 11
Merisotis, Jamie P., President, Institute for Higher
Education Policy........................................... 22
Prepared statement of.................................... 24
THE COLLEGE COST CRISIS REPORT: ARE INSTITUTIONS ACCOUNTABLE ENOUGH TO
STUDENTS AND PARENTS?
----------
Tuesday, September 23, 2003
U.S. House of Representatives
Subcommittee on 21st Century Competitiveness
Committee on Education and the Workforce
Washington, DC
----------
The Subcommittee met, pursuant to notice, at 2:05 p.m., in
room 2175, Rayburn House Office Building, Hon. Howard P.
``Buck'' McKeon [Chairman of the Subcommittee] presiding.
Present: Representatives McKeon, Petri, Castle, Tiberi,
Keller, Porter, Gingrey, Burns, Kildee, Tierney, Wu, Holt,
McCarthy, Van Hollen, Owens, Andrews, and Hinojosa.
Also present: Representative Bishop of New York.
Staff present: Kevin Frank, Professional Staff Member;
Alexa Marrero, Press Secretary; Susan Oglinsky, Coalitions
Advisor; Alison Ream, Professional Staff Member; Deborah L.
Samantar, Committee Clerk/Intern Coordinator; Kathleen Smith,
Professional Staff Member; Liz Wheel, Legislative Assistant;
Ellynne Bannon, Minority Legislative Associate/Labor; Ricardo
Martinez, Minority Legislative Associate/Education; Alex Nock,
Minority Legislative Associate/Education; and Joe Novotny,
Minority Legislative Assistant/Education.
Chairman McKeon. A quorum being present, the Subcommittee
on 21st Century Competitiveness of the Committee on Education
and the Workforce will come to order.
We're holding this hearing today to hear testimony on ``The
College Cost Crisis Report: Are Institutions Accountable Enough
to Students and Parents?''
Under Committee Rule 12 (b), opening statements are limited
to the Chairman and the Ranking Member of the Committee.
Therefore, if other members have statements, they will be
included in the hearing record.
With that, I ask unanimous consent for the hearing record
to remain open 14 days to allow member statements and other
extraneous material referenced during the hearing to be
submitted in the official hearing record.
Without objection, so ordered.
STATEMENT OF HON. HOWARD P. ``BUCK'' McKEON, CHAIRMAN,
SUBCOMMITTEE ON 21st CENTURY COMPETITIVENESS
Chairman McKeon. Good afternoon. I want to thank you for
joining us to discuss this important topic.
We're here today to continue our efforts to explore the
issue of affordability in higher education, an issue I've been
personally concerned with for quite some time.
A few weeks ago, Chairman Boehner and I released a report
called The College Cost Crisis, which declared that the
nation's higher education system is in crisis as a result of
exploding cost increases that threaten to put college out of
reach for low-and-middle-income students and families. The
report concluded that decades of cost increases, in both good
economic times and bad, have caused America's higher education
system to reach a crisis point.
It also concluded that students and parents are losing
patience with higher education sticker shock and that
institutions of higher learning are not accountable enough to
parents, students, and taxpayers--the consumers of higher
education.
The report also found that the amount of information
available to consumers about tuition increases is inadequate,
inhibiting the ability of consumers to comparison shop and hold
institutions accountable for tuition hikes, and while
significant increases are the norm, they are not unavoidable.
This afternoon, witnesses will testify, perhaps about the
findings in the report, but more importantly, I'm hoping to
hear a discussion of the broad issue of affordability in higher
education, as well as solutions on how to best address the
problem.
This is not a new problem. In fact, a decade ago, when
Congress was considering reauthorization of the Higher
Education Act, much as we are today, Senator Frank Lautenberg
of New Jersey expressed concerns about the staggering growth of
tuition over the past decade, and noted how the increases were
outpacing the Consumer Price Index by two to three times. It
sounds familiar, doesn't it?
My concern over this issue is not new, either, nor are my
efforts to work toward solutions. That's why, in 1997, we
created the National Commission on the Cost of Higher Education
to study the problems of increasing tuition and rising
administrative costs, and to make policy recommendations on how
to hold down these increases.
The following statistic is one I've repeated many times,
and I will continue to repeat it until we can find a solution
and interested parties start taking this issue seriously: The
fact, is, according to the Advisory Committee on Student
Financial Assistance, cost factors prevent 48 percent of all
college-qualified low-income high-school graduates from
attending a 4-year college, and 22 percent from pursuing any
college at all. The statistics are similarly bleak for moderate
income families.
At the rate we're going, by the end of the decade, more
than 2 million college-qualified students will miss out on the
opportunity to go to college.
Over the past year, my colleagues and I have been working
hard to reauthorize the Higher Education Act. Since 1965, the
Higher Education Act has made the dream of college a reality
for millions of students, providing billions of dollars in
financial assistance for students and families in need.
We should all be proud of this accomplishment. After all,
helping students reach their educational goals not only
encourages success for the students, but it also provides great
benefits to our society.
One of the statistics that I've seen indicates that a
college degree, Bachelor's Degree, will result in about $1.9
million of income for that student over his productive life.
That means that he'll also pay about--he or she--$179,000
in additional taxes to benefit all of society. These are
important things to remain aware of.
Yet, over the past few decades, the tens of billions of
dollars we invest in higher education each year has begun to
lose its tremendous power for expanding access to higher
education. The cost of college has gone up rapidly, and our
investment in Federal student aid simply cannot keep pace.
That is not to say that we aren't doing our share. In fact,
we're pumping back billions of dollars into student aid through
grants, federally backed loans, work-study opportunities, and
numerous other financial aid programs.
Over the 10-year period ending in 1992, inflation was about
30 percent. Yet Federal student aid increased by 161 percent.
We're dramatically boosting Federal support for higher
education, yet we still cannot keep pace with tuition
increases.
The higher cost of education is daunting to many students
and their families. Even with grants and scholarships, the
average student is graduating with about $16,000 in higher
education debt.
There are many causes for increases in the cost of higher
education. I hope the witnesses today will help to explain some
of those reasons.
However, the fact is, the consumers of higher education,
students and parents, are losing patience. Parents are scared
that they may not be able to send their children to college.
Students dread the day when their student loans will come due.
That frustration extends beyond simply the sticker price of
tuition. As the price of college increases, and their
pocketbooks squeezed, students are beginning to question how
those tuition increases are being spent.
Recently a letter appeared in the student newspaper at the
University of South Carolina that explained some of this
frustration. There was a statement in that letter that in
particular caught my attention, which I would like to share
with you.
This student discussed the contrast between numerous new,
state-of-the-art facilities on campus available, even though
many students cannot even register for classes. She said this:
``Attending a university is not about how nice the dining
facilities are or having as many different chic eating places
as possible; it is about learning and preparing for our
careers. It is very disheartening when students' educational
needs are sacrificed for capitalistic modernity.'' That's a
nice word.
I agree that there are likely many causes for the rapid
increases in the cost of higher education, not the least of
which over the past few years are the state budgets which have
led, in some cases, to cuts in higher education funding.
However, it paints an incomplete picture to blame state budgets
alone.
For months, and in fact years, I have been looking for
answers to the question of why tuition has perpetually
increased faster than students and families can afford to pay.
Indeed, I hope witnesses can help us to understand what is
causing the college cost crisis, so that we may propose
effective solutions.
I believe that when a student believes her educational
opportunities are being hindered by investments in the campus
facade, and when institutions consider spending money and
increasing tuition in order to increase their ranking, rather
than increase opportunities for their students, our higher
education system is facing a very real problem.
Earlier this year, I put forth a proposal to closely
monitor tuition and fee increases by developing a college
affordability index that will serve as a standard measure for
institutions of higher education to measure increases in
tuition and fees.
This will also provide a tool by which students and
families can understand those increases in relation to the
Consumer Price Index.
The proposal would also create college affordability
demonstration programs for those colleges and universities that
want to try new, innovative approaches to improving higher
education while reining in skyrocketing cost increases.
While the bill will soon be released, I want to be the
first to make it clear that this bill is not about price
controls. I have never supported such a thing and will never do
so.
What I do support is empowering the consumers of higher
education by giving them the information they need to exercise
freedom in the marketplace.
Over the past few months, I've sat on the sidelines and
have let various people degrade this proposal, choosing to wait
until the bill is actually introduced before talking about the
specifics, but no more.
I will not sit idly by and listen to the detractors who
want to continue the status quo, hoping that this issue will go
away. We all can do a better job of making college more
affordable and more accessible.
We're working hard to revitalize our higher education
system through the reauthorization of the Higher Education Act
and ensure that every student who strives for post-secondary
education has the opportunity to achieve it.
As we work toward that goal, we will continue to seek
solutions to the college cost crisis. I hope some of those
solutions will come to light today.
The future of our higher education system, and in fact the
future of our nation, will depend on our ability to address
this crisis and keep college within reach for students and
families in America.
[The prepared statement of Mr. McKeon follows:]
Statement of Hon. Howard P. ``Buck'' McKeon, a Representative in
Congress from the State of California
Good afternoon and thank you for joining us to discuss this
important topic. We're here today to continue our efforts to explore
the issue of affordability in higher education, an issue I've been
personally concerned about for quite some time.
A few weeks ago Chairman Boehner and I released a report called
``The College Cost Crisis,'' which declared that the nation's higher
education system is in crisis as a result of exploding cost increases
that threaten to put college out of reach for low and middle income
students and families.--The report concluded that decades of cost
increases, in both good economic times and bad, have caused America's
higher education system to reach a crisis point. It also concluded that
students and parents are losing patience with higher education
``sticker shock'' and that institutions of higher learning are not
accountable enough to parents, students and taxpayers--the consumers of
higher education.
The report also found that the amount of information available to
consumers about tuition increases is inadequate, inhibiting the ability
of consumers to ``comparison shop'' and hold institutions accountable
for tuition hikes and, while significant tuition increases are the
norm, they are not unavoidable.
This afternoon witnesses will testify perhaps about the findings in
the report, but more importantly, I'm hoping to hear a discussion of
the broad issue of affordability in higher education, as well as
solutions on how best to address the problem. This is not a new
problem. In fact, a decade ago when Congress was considering
reauthorization of the Higher Education Act much as we are today,
Senator Frank Lautenberg of New Jersey expressed concerns about the
staggering growth of tuition over the past decade, and noted how the
increases were outpacing the Consumer Price Index by two to three
times. It sounds familiar, doesn't it?
My concern over this issue is not new either, nor are my efforts to
work toward solutions. That's why, in 1997, I created the ``National
Commission on the Cost of Higher Education'' to study the problems of
increasing tuition and rising administrative costs and to make policy
recommendations on how to hold down these increases.
The following statistic is one I've repeated many times, and I will
continue to repeat it until we can find a solution and interested
parties start taking this issue seriously. The fact is, according to
the Advisory Committee on Student Financial Assistance, cost factors
prevent 48 percent of all college-qualified, low-income high-school
graduates from attending a four-year college and 22 percent from
pursuing any college at all. The statistics are similarly bleak for
moderate income families. At the rate we are going, by the end of the
decade, more than two million college-qualified students will miss out
on the opportunity to go to college.
Over the past year, my colleagues and I have been working hard to
reauthorize the Higher Education Act. Since 1965, the Higher Education
Act has made the dream of college a reality for millions of students,
providing billions of dollars in financial assistance for students and
families in need. We should all be proud of this accomplishment--after
all, helping students reach their educational goals not only encourages
success for the students, but it also provides great benefits to our
society.
Yet over the past few decades, the tens of billions of dollars we
invest in higher education each year has begun to lose its tremendous
power for expanding access to higher education. The cost of college has
gone up rapidly, and our investment in federal student aid simply
cannot keep pace. That is not to say that we aren't doing our share--in
fact, we're pumping billions of dollars into student aid through
grants, federally-backed loans, work-study opportunities, and numerous
other financial aid programs. Over the ten year period ending in 2002,
inflation was about 30 percent, yet federal student aid increased by
161 percent. We're dramatically boosting federal support for higher
education, yet we still cannot keep pace with tuition increases.
The cost of higher education is daunting to many students and their
families--even with grants and scholarships, the average student is
graduating with about $16,000 in higher education debt. There are many
causes for increases in the cost of higher education; I hope the
witnesses today will help to explain some of those reasons. However,
the fact is, the consumers of higher education--students and parents--
are losing patience. Parents are scared that they may not be able to
send their children to college. Students dread the day when their
student loans will come due. And that frustration extends beyond simply
the sticker price of tuition.
As the price of college increases and their pocketbooks are
squeezed, students are beginning to question how those tuition
increases are being spent. Recently, a letter appeared in the student
newspaper at the University of South Carolina that explained some of
this frustration.
There was a statement in that letter that particularly caught my
attention which I would like to share with you. This student discussed
the contrast between numerous new, state of the art facilities on
campus available even though many students cannot even register for
classes. She said this; ``Attending a university is not about how nice
the dining facilities are or having as many different chic eating
places as possible; it is about learning and preparing for our careers.
It is very disheartening when students'' educational needs are
sacrificed for capitalistic modernity.
I agree that there are likely many causes for the rapid increases
in the cost of higher education, not the least of which over the past
few years are the state budgets which have led in some cases to cuts in
higher education funding. However, it paints an incomplete picture to
blame state budgets alone. For months, and in fact years, I have been
looking for answers to the question of why tuition has perpetually
increased faster than students and families can afford to pay. Indeed,
I hope witnesses can help us to understand what is causing the college
cost crisis so that we may propose effective solutions.
I believe that when a student believes her educational
opportunities are being hindered by investments in the campus facade,
and when institutions consider spending money and increasing tuition in
order to increase their ranking rather than increase opportunities for
their students, our higher education system is facing a very real
problem.
Earlier this year, I put forth a proposal to closely monitor
tuition and fee increases by developing a college affordability index
that will serve as a standard measure for institutions of higher
education to measure increases in tuition and fees. This will also
provide a tool by which students and families can understand those
increases in relation to the Consumer Price Index (CPI). The proposal
would also create College Affordability Demonstration Programs for
those colleges and universities that want to try new innovative
approaches to improving higher education while reining in skyrocketing
cost increases.
While the bill will soon be introduced, I want to be the first to
make it clear that this bill is not about price controls. I have never
supported such a thing and will never do so. What I do support is
empowering the consumers of higher education by giving them the
information they need to exercise freedom in the marketplace.
Over the last few months, I have sat on the sidelines and have let
various people degrade this proposal, choosing to wait until the bill
is actually introduced before talking about the specifics. But no more.
I will not sit idly by and listen to the detractors who want to
continue the status quo, hoping that this issue will go away. We all
can do a better job of making college more affordable and more
accessible.
We are working hard to revitalize our higher education system
through the reauthorization of the Higher Education Act and ensure that
every student who strives for postsecondary education has the
opportunity to achieve it. As we work toward that goal, we will
continue to seek solutions to the college cost crisis. I hope some of
those solutions will come to light today. The future of our higher
education system, and in fact the future of our nation, will depend on
our ability to address this crisis and keep college within reach for
students and families in America.
With that, I would yield to my colleague, Mr. Kildee, for any
opening statement that he might have.
______
Chairman McKeon. With that, I now yield to my college, Mr.
Kildee, for his opening statement.
STATEMENT OF HON. DALE E. KILDEE, RANKING MEMBER, SUBCOMMITTEE
ON 21st CENTURY COMPETITIVENESS
Mr. Kildee. Thank you, Mr. Chairman.
I'm pleased to join Chairman McKeon at today's hearing on
the recently released college cost report. I know that both of
us are looking forward to the testimony of today's witnesses on
this very important topic. However, I'm concerned about the
direction this Subcommittee may be headed on this issue.
First, let me say that I share Chairman McKeon's concern
over the rising sticker price of a college education. The cost
of college is certainly a concern for today's students and
their families.
This Subcommittee has heard testimony on the increase in
college costs over the past decade. The college board has
reported that tuition has risen by 38 percent over the past 10
years after accounting for inflation. We certainly do not want
the cost of college to deny even one student access to a good
post-secondary education.
Contrary to the conclusion of the Chairman's report, the
downturn in the economy and dramatic increases in state
Medicaid costs have carved out funding for higher education.
That is certainly true in my state of Michigan, and I know many
other states, if not all of them.
While state appropriations for higher education generally
increase during good economic times--and I used to serve on the
Appropriations Committee for the Michigan legislature during
some of those times--recessions bring about sharp decreases of
legislative support.
After these sharp decreases in spending, the level of
spending on higher education typically does not return to its
previous levels.
I respectfully must disagree with Chairman McKeon as to the
proper approach to controlling college costs from the Federal
level.
Much attention initially has been given to his proposal to
place Federal price controls on tuition at our colleges and
universities, but Mr. McKeon has obviously been very flexible,
and that seems to be feeding into the sun on that, and I hope
that's where it will fade.
This proposal would bar universities who have seen their
budgets cut due to the sour economy from receiving Federal
funds to improve teacher quality or provide work-study
opportunities for needy students.
Worse yet, historically black colleges and Hispanic-serving
institutions would be barred from receiving institutional and
other aid. This loss of aid would hamper the mission of these
institutions to provide post-secondary education opportunities
to some of our neediest students.
This proposal would also have serious unintended
consequences.
Colleges that are forced to reduce their tuition increases
will simply decrease the amount of need-based grant aid. This
could result in students experiencing lower tuition levels, but
higher out-of-pocket costs.
In addition, as labor and health care costs increase,
institutions will be forced to sacrifice quality. This will be
done through the hiring of adjunct professors rather than
maintaining a seasoned, tenured faculty.
Is this the cost control measures we want our universities
to implement?
Rather than creating new problems to solve an existing one,
this Subcommittee should be considering what is the appropriate
response to rising tuition. We should provide incentives to
colleges and universities to hold down costs.
The current Federal system of higher education financing
does not incentivize schools to hold down the level of tuition
increases.
The Higher Education Act should not punish students or
institutions through heavy-handed Federal price controls.
Rather, institutions that hold down tuition costs while
increasing need-based grant aid should be rewarded.
In addition, states should be encouraged to maintain their
level of effort on higher education spending. In years in which
Congress increases student aid, those increases should benefit
students, not be gobbled up by the need to balance state
budgets. We should certainly try to encourage a certain
maintenance of effort on the part of the states.
Also, we must remember that increasingly, financial aid
comes in the form of a loan rather than a grant.
The answer here is not to simply raise loan limits.
Instead, we should reverse this trend, increase the buying
power of Pell Grants and other forms of Federal, state, and
institutional grant aid.
In closing, I want to stress again that the focus of this
Subcommittee on what assistance we can provide to students
facing rising college costs is a sound emphasis and focus.
However, we should not be instituting proposals that would
actually shrink resources and access for our most disadvantaged
students.
Mr. McKeon and I have walked through kind of this
evolution, and we're still evolving, and hopefully, at the end
of this process, with your expertise, we will reach a point
where we can find some agreement without having price controls.
I yield back the balance of my time, Mr. Chairman.
Chairman McKeon. Thank you.
I'd like to now introduce our witnesses that we have before
us here today.
First will be Dr. Valerie F. Lewis. Dr. Lewis is currently
the president of the State Higher Education Executive Officers.
Additionally, she is the Commissioner of the Connecticut State
Department of Education. In her role as commissioner, Dr. Lewis
is responsible for implementing the policies and directives of
the Board of Governors for Higher Education and directing the
Department of Higher Education.
Throughout her career, she has served in various public and
independent college administrative positions, including those
in admissions and financial aid, academic administration, and
finance.
Next will be Dr. King Alexander. Dr. Alexander is currently
the president of Murray State University in Murray, Kentucky,
where he has served since 2001. Previously, Dr. Alexander was a
faculty member and director of the higher education program at
the University of Illinois at Urbana, Champagne.
He is also the co-editor of two recent books entitled
Maximizing Revenues: Universities, Public Policy, and Revenue
Production and the University: International Expectations.
Then we'll hear from Mr. Jamie Merisotis. Mr. Merisotis is
the founding president of the Institute for Higher Education
Policy. Prior to his current position, he served as executive
director for the National Commission on Responsibilities for
Financing Post-Secondary Education, where he authored the
commission's final report, entitled Making College Affordable
Again.
Additionally, he is the author or co-editor of various
books, as well as a frequent contributor to newspapers,
scholarly journals, and other publications.
Mr. Merisotis also serves as a board member and advisor for
several organizations, including the Consortium for the
Advancement of Private Higher Education, Scholarship America,
and the Council for Higher Education Accreditation's
International Commission.
Our final witness will be Ms. Jessica Hanson. Ms. Hanson is
a senior at Florida State University in Tallahassee, Florida,
where she is pursuing a degree in political science. Throughout
her college career, she has been involved in student
government, and is currently serving as the director of
legislative affairs for the Student Government Association.
Additionally, Ms. Hanson is the director of community
affairs for the Florida State University Pan-Hellenic
Association.
Upon graduation, she plans to attend law school. That's
good. We need more attorneys.
[Laughter.]
Chairman McKeon. Other than here in Congress.
Before the witnesses begin your testimony, I'd like to
explain to you how the light system down there works. You have
5 minutes to summarize your testimony. Your full written
testimony is included in the record. When you have 1 minute
left, the yellow light comes on, and then the red light comes
on just before you fall through the trap door in the bottom.
Then, as you conclude, the same lights will work for the
members as they ask you questions.
We'll hear first now from Dr. Lewis.
STATEMENT OF VALERIE F. LEWIS, COMMISSIONER OF HIGHER
EDUCATION, STATE OF CONNECTICUT AND PRESIDENT, STATE HIGHER
EDUCATION EXECUTIVE OFFICERS
Dr. Lewis. Thank you and good afternoon, Mr. Chairman and
members of the Committee.
I am Valerie Lewis, and I'm from Connecticut, where I
shepherd 47 public and private colleges, and all of them are
known as high-quality institutions and high-cost. Only our
public community colleges are really considered low-cost.
So I am here today to say I am glad that you are addressing
this topic seriously. We need voices raised to look at the long
issues ahead of us in fashioning policies, state by state and
across our nation, that will support the students who are ready
to come to us and profit from their stay in higher education.
I am currently also serving as the president of SHEEO, as
you know, and the folks who lead the coordinating and governing
boards across our country at the moment are focused almost
every day on what researcher Jane Wellman has called the
``double whammy'' of the fiscal and demographic crises that are
simultaneously bombarding the academy at this point.
In my applause, I want to say, too, that I share your
growing concern over the price of admission to college, because
the Nation badly needs to maintain the vision that qualified
students of all ages and backgrounds who are prepared to
benefit get to us.
That takes sufficient resources. Sufficient resources are
always a contested item, and contested in definition.
Generally today, however, my state and practically every
state in the Nation is being told to do more with less.
Enroll more students; respond to critical workforce needs
with more expanded programs; partner with industry in research
and technology transfer; stem the brain drain; build the
pipeline of students prepared to succeed; make better teachers;
embrace technology across the curriculum; retain students to
graduation in greater numbers--all of these are advocated by
you, by higher education's various publics, and by academe
itself.
But the notion of doing all these while simultaneously
reducing budgets is at best a dream, and at worst a nightmare.
As a commissioner, mind you, I believe we can do more with
the resources even now in our hands, but I am aware that there
are many forces propelling the academy in the direction of
increased costs, and I do want to outline those for you today,
as you've asked.
A recent SHEEO report said there are four factors that are
hitting in higher education that are of great consequence: the
relative decline of state support; the growth in competition
for best students, leading to tuition discounting at both
public and private; higher education demand and some
consequence reduction in market restraint on price; and
institutional spending to enhance quality, add programs and
services, and keep pace with technology as we take in more and
more students.
Each of these trends spawns reassessment of what we come in
my state, at least, to talk about as the three-legged stool of
higher education finance.
Some people only want to talk about two legs: what the
state pays, what the student pays. I think it's three legs,
because the third part is what the colleges can do to contain
costs and to gain in productivity.
What should students have to pay? What should states have
to pay? Let's look at state support first.
Dramatic changes in this area have catapulted the
discussion of costs to consumer to the crisis stage, as you
have said. The current economic climate has left many states
with few choices but to reduce higher education, which is
always the discretionary object when compared to the
entitlements and fast-rising pieces of the budget like health
care costs.
In my state, it means that, for instance, the proportion of
spending on higher education has dropped from 6.6 percent 3
years ago to 4.3 percent at this juncture.
While I would agree with the point made in the College Cost
Crisis paper, that the economy is only one of several factors
in cost growth, it is a major factor, and one unlikely to turn
around, given these same kinds of pressures I've just talked
about.
Actually, in my own state this year, every effort was made
to maintain funding in higher education because we had
widespread understanding that we were trying to serve more
people. Eighty percent of the kids in our high schools want to
go to college and do go somewhere for post-secondary education,
and we're terribly glad of that.
In doing that, however, we came up against the fact that,
after all that work by all parties concerned, we are still
looking at a budget that's 2.2 percent down from real
expenditure last year in general institutional support, and 8.4
percent down on our financial aid programs, which similarly had
a reduction last year of 13.9 percent, exactly the wrong
combination, because obviously, in taking away from
institutional budgets, there was a recognition that the
institutions could go out and raise their tuition funds, but
simultaneously, the state was closing its door in respect to
financial aid for students.
We were helped, in fact, in the problems of these
reductions of budgets, by our own faculties and staff, who have
taken a 1-year wage freeze in recognition of the problems of
keeping our classrooms full and keeping instruction going.
Other states, as you know, are facing double-digit
decreases in state support, and this fact has resulted in sharp
tuition increases rather than the rates of the 1990's that
generally--generally--paralleled rising costs for labor.
We are extraordinarily intensive labor organizations.
Seventy to 80 percent of our budgets are in labor, and it's
white-collar, highly educated labor that we have to employ.
In fact, they cost us a lot. In Connecticut, we pay the
highest salaries in the Nation for our faculty, for instance.
But they are also, that faculty is also the reason for our
success, and we compete with industry for these folks.
The residual question, in other words, when one looks at
these changes in budgets, is what can we expect colleges to do?
Do we expect them to reflexively increase tuitions in part
or full to the consumer? Are there other things they can do?
Yes, but time is against us.
Budgets traditionally end up in June. This year, my state
ended up in August, and the kids came back to school in
September.
So the thoughtful responses of reallocation, the thoughtful
responses of program elimination or collaborations with other
institutions, the notions of trying to look at the ties that
bind us around collective bargaining, faculty role, and
definition and tenure issues, time to degree issues for
students, which are ever lengthening and growing the cost for
both student and state and nation in that regard, all of these
take effort.
Chairman McKeon. Dr. Lewis, are you about wrapping up?
Dr. Lewis. I'm almost done.
Chairman McKeon. OK.
Dr. Lewis. What I'm going to say next is what you can do,
and there are several things.
I am pushing you to think about driving accountability back
to the states, and I would like you to do it with incentives.
We've never tried that. It would be great to try it, as a
matter of fact, and the huge work being done in higher
education in my state is on accountability, performance
measurement, and empowering students and families with
information. We need your help.
We also need you to retain your efforts for multi-faceted
work in respect to getting students to college, helping us
prepare students for college, leveraging the financial aid
dollars.
I love the LEAP program. We are able to match it with state
funds in that maintenance effort that you talked about, Mr.
Kildee.
Finally, I would say continue to exhort us to stick to the
public good, that we must, as higher education leaders, hear
your call to remember what we do and for what it is. It is to
improve lives.
And if we cannot do that, you have every right to take
money away. If we're doing it, then help us do it better.
[The prepared statement of Dr. Lewis follows:]
Statement of Valerie F. Lewis
Thank you for the invitation to address the issue of college costs
and, specifically, Rep. Boehner's and McKeon's paper on ``The College
Costs Crisis''. My name is Valerie F. Lewis and I am commissioner of
higher education in Connecticut, a state that is known for its high
quality and high cost postsecondary education. Only our community
colleges are considered low cost, so access and affordability are
issues at the forefront of my concerns and those of my citizen board. I
also am serving this year as president of the State Higher Education
Executive Officers (SHEEO) whom I represent here today. The jobs of
SHEEOs nationwide, whether with statewide coordinating or governing
boards, are focused almost everywhere these days on what researcher
Jane Wellman has called the ``double whammy'' of the fiscal and
demographic crises, the latter caused by the waves of new students
knocking on our doors. So, first, I applaud your intense interest in
the subject of college costs. It is only when our states and nation
focus on this subject long enough to recognize its complexity that we
stand a chance of developing stable policies that will support the
academy and our students into the long future.
I share your concern over the growing price of admission to college
and to the level of education that is fast becoming basic to success in
the workplace and in life. The nation badly needs to maintain the
vision that qualified students of all ages and backgrounds should be
encouraged to reach their maximum potential regardless of ability to
pay. Students should not, by default, have to attend the cheapest
institution or to make the choice not to attend college at all. But
such a vision needs to be grounded in a reality of sufficient resources
to meet the sharply growing and increasingly diverse set of learners
who bring to colleges and universities increasingly different
educational needs, interests and goals.
The definition of ``sufficient resources'' is always difficult and
contested. But, generally today, higher education in my state and in
most others is being told to do more with less. Enroll more students,
respond to critical workforce needs with new or expanded programs,
partner with industry in research and technology transfer, stem the
brain drain, build the pipeline of students prepared to succeed, make
better teachers, embrace technology across the curriculum, retain
students to graduation in greater numbers--all of these are advocated
by higher education's various publics and by academe itself. But the
notion of doing all these while simultaneously reducing budgets is at
best a dream and at worst a nightmare. While, as a commissioner, I
believe that we can do far more with our state resources, I am aware
that many forces have propelled expansion of both higher education
services and cost.
In fact, a recent SHEEO report noted four parallel trends impacting
higher education simultaneously:
The relative decline of state support
The growth in competition for ``best students'' leading
to tuition discounting
Higher enrollment demand and some consequent reduction in
market restraint on price, and
Institutional spending to enhance quality, add programs
and services, and keep pace with technology
Each of these trends spawns reassessments of the proverbial three-
legged stool-questions about resources:
How much should an institution spend to provide its
services to students?
Of that cost, what is a reasonable expectation for state
and federal support?
(This question is particularly important when talking about
public institutions which are supported primarily through
state appropriations and for students whose financial aid
comes primarily through federal appropriations.)
What should we ask students and families to pay?
Let me talk about state support first, because dramatic changes in
this area have catapulted the discussion of costs to consumer to the
crisis stage. The current economic climate has left many states with
few choices but to reduce support for higher education, even in
knowledge that state support is proportionately the largest funding
source for the public college enterprise . While I would agree with the
point made in ``The College Cost Crisis'' paper that the economy is
only one of several factors in cost growth, it is a major factor and
one unlikely to turn around, given the competition for state funds by
entitlement programs and especially by spiraling health care budgets.
Actually, in my own state, every effort was made this session to keep
harm to higher education to a minimum because of widespread
understanding that our colleges and universities must serve increasing
numbers of students. But the budgets of our public institutions still
are down 2.2 percent from expenditures last year, with state financial
aid programs down more than 8 percent, and we would be deeper in the
hole if it were not for the fact that our faculty and staff agreed to a
year's salary freeze. Other states, as you know, are facing double
digit decreases in state support and it is this fact that has resulted
in sharp tuition increases rather than the rates of the 90's that
generally paralleled rising costs for labor. With labor costs our
biggest budget expense--ranging from 70 to 80 percent--what we pay our
highly educated workforce is an integral factor in budgets, but also an
integral factor in our success. In this arena, we parallel the needs of
business to compete for and to keep talent, so the focus of our
greatest efforts must be on how to make the most of our workforce's
time and creativity in making productivity gains.
The residual question when state budgets for higher education
decline therefore is: can or should we expect colleges to be able to
react to these reductions without passing on costs--in part or full--to
the consumer, especially when consumer demand is high? Budgets
typically are passed as students are packing their bags to go, or go
back to college, without enough time devoted to thoughtful reduction
scenarios like reallocation, program elimination, or collaborations
that limit institutional responsibility. Nor are there quick and simple
solutions to untying the binds of collective bargaining, faculty role,
responsibility and tenure definitions, and student time-to-degree
processes, all of which have great impact on costs to the consumer, to
the state and to the nation.
No one, least of all SHEEOs like me, would suggest that higher
education does not need to engage in serious work to address cost
containment and greater productivity. I would be the first to admit
that there are instances of institutions and systems that are spending
beyond average, but, in general, boards of trustees are trying hard to
find balance in the three-legged stool of finance. There is widespread
worry, however, that states and, perhaps the nation, are moving toward
a privatization model for higher education without a clear
understanding or full discussion of the potential consequences of such
change.
It is this array of complex issues that have been a focus of my
state and four others that are this year engaged in a Lumina Foundation
-supported study of how best to integrate tuition, fee and financial
aid policies and how to find the appropriate balance of individual
versus societal responsibility for cost. Connecticut actually is one of
thirty states that place responsibility for public college tuition and
fee policy with its coordinating or governing board. Many, like my
state, have decentralized actual tuition setting to campus or system
boards, but within a frame of state policy. In Connecticut that means
that in any year no public college student may have tuition increased
by more than 15 percent and institutions must set aside 15 percent of
collected tuitions for need-based financial aid as a means to maintain
access. While our maximum change factor is certainly higher than
inflation, we have weighed the fact that affordability without
availability is an empty promise.
So what can the federal government do, given its reasonable concern
for keeping college affordable and simultaneously keeping American
higher education the most sought after in the world for its quality and
diversity? To my mind, there is no question that the federal
government, as a pivotal finance partner, must join with states in
seeking return on investment by:
calling for accountability on the investment and
providing incentives to states to strengthen initiatives that focus on
improvements in access, quality services, student success, and
efficient use of resources Such accountability systems at the state
level should ensure minimal standards of quality, provide data to
inform all our customers, including you at the federal level, of our
progress or lack thereof, and measure and improve performance. I argue,
therefore, for driving accountability back to the states, and through
them to institutions, using federal incentives.
assisting all higher education entities in expanding
college awareness and readiness, through programs like TRIO and Gear
UP, since inadequate preparation is the most difficult to overcome of
all barriers to access and success in higher education. Until most
students are better prepared, postsecondary education will need to
concentrate resources on instruction to help make up for deficiencies,
both for the sake of individuals and their goals and in recognition of
the national need for a high quality workforce.
ensuring adequate grant support for the neediest
students, because no matter how low our tuition and fee increases,
there are students who cannot pay public or private costs. A
significant second piece of the provision of such aid is to make the
process for obtaining it simpler, and, in fact, concentrating on making
all rules, including tax provisions, understandable by those who need
to use them. It would be counterproductive to sanction institutions or
states with reductions in student financial aid because it will be
students who are hurt first and last in such a scenario.
leveraging state and institutional investment in need-
based aid through programs like LEAP and additional institutional
incentives to focus their financial aid funds on needy students.
using its powers of the bully pulpit to encourage and
exhort higher education leadership to keep its shoulder to the wheel of
the public interest and needs. Colleges are fierce competitors vying
for the best students, faculty, facilities and resources--sometimes to
the peril of both the government and the private patron's pocketbook
but to the notice of the media and of those families able to pay.
Precisely because the breadth and nature of the student population is
much different than ever before in the history of higher education,
higher education institutions need to design and adopt less costly and
more focused delivery approaches and stop trying to be all things to
all people. Niche institutions are likely to be more cost effective in
the future and collaborative program development will be a necessity as
we attempt to maintain diverse program choice for our customers.
As a nation, we need for all of higher education, but particularly
for our public colleges and universities, to continually recognize that
they are servants of the public good. As many have said, our mission is
to improve lives. If we fail at this, there is every reason to reduce
public investment. Conversely, if we succeed, both the individual and
our society flourish, so let's emphasize again what can be done: use
incentives, not regulation, to drive improvement in accountability and
moderate cost; use a multi-faceted approach to increasing strong
preparation for college; use financial aid as a tool for expanding
opportunity; use the bully pulpit to keep all of us in higher education
on task.
Thank you very much for the opportunity to speak with you today. I
would welcome your questions.
______
Chairman McKeon. Thank you very much.
Dr. King Alexander.
STATEMENT OF F. KING ALEXANDER, PRESIDENT, MURRAY STATE
UNIVERSITY, MURRAY, KENTUCKY
Dr. Alexander. Thank you, Mr. Chairman and members of the
Committee.
I am president of Murray State University, which is a
rurally located public university with an enrollment of about
10,000 students. We primarily serve a large geographic region
that includes western Kentucky, and a good percentage of
southern areas such as Illinois, Tennessee, Indiana, and
Missouri.
The majority of families in our service region do, indeed,
live below the national average in per capita income and
educational attainment, and have lower levels of educational
attainment.
This is one reason why we remain committed to low costs. In
fact, our average student tuition and fees are about 24 percent
below the national average.
Despite these unique characteristics, our university in
many ways is much like hundreds of public universities
throughout the United States, serving a significant number of
students from middle-and-lower-income families.
My testimony today on the issue of rising college costs
reflects my concerns from three distinct perspectives:
One, as a public university president that is challenged
each year to meet these increasing societal and student demands
being placed on higher education during poor economic times;
Two, as a researcher that has spent a significant portion
of the last decade analyzing national and international trends
in state funding and institutional tuition strategies, while
being a part of three public universities;
And third, as an individual who is still paying back his
student loan debts--
[Laughter.]
Dr. Alexander [continuing]. Who just so happens to be a
college president.
In responding to the issue of rising costs, I must say
that, based on my professional experience and at numerous
public universities, and research in this field, I'm well aware
of the great need for a new policy debate in this area,
particularly at the Federal level, in examining and supporting
higher education.
This inquiry is long overdue, in view of the fact that the
last major policy debate regarding the important role of the
Federal Government in supporting higher education access and
affordability occurred over 30 years ago. Many other OECD
nations have had two and three debates of this nature since
then.
From the public perspective on the tuition realities, in
addressing the issue of college and university tuition and
expenditure growth, it should also be recognized that the
problem of higher education costs and tuition does not affect
all parents, students, and institutions the same.
This fact is evidenced in numerous congressionally mandated
studies on college costs and prices, showing drastic variations
in annual tuition fee growth between public and private
universities during the last two decades.
Instead, public perceptions of rising tuition costs are
shaped by a number of reasons, including geographic location
and the media, which is indeed heavily influenced by high- cost
institutions in the northeast region of the U.S.
More importantly, however, public perceptions and concerns
are also determined by an overall lack of information in the
academic marketplace that prevents students and parents from
really distinguishing costs, actual costs, from sticker prices.
For example, students and families, as an example of this
misinformation, students and families pay college tuition in
dollars, not percentages. Yet the vast majority of public
discourse from policymakers and media sources on college costs
increasingly is simply based on percentage growth.
In fact, if you analyze actual tuition and fee dollar
increases instead of simply tuition and fee percentage growth,
you'll quickly discover that many of the public universities
with the largest percentage increases over the last couple of
years are the very institutions that are the most affordable
and accessible throughout the nation.
A small dollar increase may well be reflected in a
relatively large percentage increase. Herein lies one of the
misleading aspects of the key findings listed in the recently
released report, The College Cost Crisis.
For example, if one were to use percentages instead of real
dollars, as the report says in their findings, you would
discover that public universities in such states as Hawaii,
Arkansas, Idaho, Texas, Tennessee, Wyoming, North Carolina,
Montana, Texas, and Kentucky have all had the most significant
percentage increases in tuition. Yet, these are the states
where public universities are indeed the lowest- cost in the
nation.
These low-cost states remain low-cost in an effort to
ensure widespread access and affordability. Also, these same
states are among the lowest-cost states and the lowest in the
Nation in average student loan debt per graduate.
This emphasis on percentage tuition growth therefore
constitutes an inaccurate measure in establishing the proposed
remedy which Federal policymakers can use to address this
issue.
To place a cap on tuition increases that is based on
percentage ignores the fact that vast disparities in tuition
rates currently exist among institutions and among states.
For example, if a fixed cap were indexed as tied to the
fluctuation in the Consumer Price Index, it would
disproportionately harm all the states that have universities
and colleges who have worked diligently to keep their costs
low, and tuition costs low, and even sticker prices low.
Public colleges and universities that would be negatively
impacted disproportionately from such a policy would include
the lower-cost institutions in the states that they are located
in, such as Hawaii, Kentucky, Florida, North Carolina, Texas,
Arkansas, Idaho, Wyoming, and so on.
An indexed cap that is based on percentage growth in
tuition also would detrimentally impact private colleges and
universities that have also maintained low tuition strategies,
such as Rice and Berea College.
In addition to the basic problem associated with using
percentages instead of dollars, I can also recognize that the
report points out that state governments do not play a
significant role in college cost increases.
From my perspective, at ground zero, this is indeed the
most important issue impacting tuition growth at my university.
We delayed our tuition-setting policies nearly 8 months for the
last 2 years.
We normally set them in September. We set them in June,
because we didn't know what the state budget was going to be,
and the state budget crisis persisted much longer than anybody
would ever recognize in the past.
This has also coincided with the fact that we have been
taking part in massive cuts throughout our institution. Our
university has grown by 25 percent since 1994, nearly 2,500
students. We've also grown by 10 percent in the last 2 years,
during budget cuts.
These cuts and these enrollment increases have
significantly impacted the quality of what we produce at our
institution, and I'd like to move on, because it's listed in
the testimony, but our institution today, when you take
advantage of the institutional aid, the Federal aid, and the
direct student aid programs that are available, a student today
at our university actually is still paying below, on average,
below what they did in 1996.
As indicated earlier, the marketplace for education cannot
function efficiently without adequate information.
Unfortunately for public and other lower-cost universities,
misleading information can perversely shape public perceptions
about college costs. This fact is evidenced when the public
discussions focus on percentages instead of tuition.
Sticker prices--there's a danger in using sticker prices.
Sticker prices distort and create a flow of misinformation
to consumers and students, and shape Federal policy which we've
been using for the last three decades in how we allocate direct
student aid resources.
If there's any final statement on this, we need to be
concerned about how Federal policy shapes institutional
practices.
Institutions that are working hard to keep sticker prices
and tuition low are indeed disadvantaged by Federal policies
that reward institutions for having higher sticker prices.
We are indeed such an institution, many AASCU institutions
are indeed such institutions, and the American Association of
Community Colleges would certainly agree with this statement.
I appreciate this opportunity to present these views from a
low-cost public institution that continually strives to provide
access and affordable educational opportunities despite some of
the initiatives that have been adopted at the Federal level to
discourage us from having higher sticker prices.
Thank you very much.
[The prepared statement of Dr. Alexander follows:]
Statement of F. King Alexander, Ph.D, President of Murray State
University and Member, American Association for State Colleges and
Universities
Thank you Mr. Chairman and members of the Committee. I am president
of Murray State University which is a rural public university with an
enrollment of approximately 10,000 students. We primarily serve a large
geographic region that includes much of western Kentucky, and a good
percentage of students from the neighboring states, including Illinois,
Tennessee, Indiana, and Missouri. The majority of families in our
service region live below the national average in per capita income and
educational attainment. Our university has many attractive attributes
such as our consistently high national rankings by Kiplinger, Kaplan,
and US News and World Report for providing high quality educational
opportunities at affordable costs. In fact, our average annual student
tuition and fees are 24% less than the national public university
average. Despite these unique characteristics, our university in many
ways is very much like hundreds of other public universities in the
United States serving a significant number of students from middle and
low-income families.
My testimony today, on the issue of rising college costs, reflects
my concerns from three distinct perspectives. First, as a president of
a public university that is challenged each year to meet the increasing
societal and student demands placed on public higher education during
poor economic times. Second, as a researcher that has spent a
significant portion of the last decade analyzing national and
international trends in state funding and institutional tuition
strategies while also working to establish tuition policies at two
public research universities and one public comprehensive university.
Third, as an individual that is still paying back his student loan
debts, who just so happens to be a university president.
In responding to the issue of rising college costs, I must say that
based on my professional experiences at numerous public universities
and by virtue of my own research regarding the trends in university
costs since the mid-1960s, I am well aware of the great need for new
policy debate and examination regarding the role of the federal
government in supporting higher education, particularly its role in
supporting lower cost colleges and universities. This inquiry is long
overdue in view of the fact that the last major policy debate regarding
the important role of the federal government in supporting higher
education access and affordability occurred over thirty years ago. For
the purposes of this hearing it is important to briefly review the two
primary premises of the last great federal government debate on higher
education which occurred in the 1960s and early 1970s and resulted in
the development of many of our existing federal policies. The first
premise was that a significant federal government role was required to
assist in ensuring widespread postsecondary education access to lower-
income and other disadvantaged student populations. The second premise
was that a significant federal government role was necessary to address
increasing concerns from the private college and university sector
regarding its future financial viability and competitiveness.
After nearly four decades of federal policy development and
augmentation, the issue of providing affordable postsecondary education
access to all socio-economic student populations still remains an
important question as evidenced by this hearing and the concerns that
led to the federally commissioned report on the cost of higher
education five years ago. 1 However, since the last federal
government policies were implemented, private colleges and universities
have made significant gains in the higher education marketplace when
compared to public universities over the last three decades. This fact
is best evidenced in the recent Brookings Institution working paper by
Kane and Orszag and other studies in the late 1990s showing that public
university per student expenditures have declined from 70% of private
per student expenditures in 1977 to 58% in 1996. 2 Their
data and conclusions are further confirmed by other studies that have
compared faculty salary disparities between public and private
institutions during the same period indicating that the annual salary
differential of full professors at private research universities over
public research universities has increased in adjusted dollars from
$1,300 in 1980 to $22,200 in 2002. 3
---------------------------------------------------------------------------
\1\ The Report of the National Commission on the Cost of Higher
Education and the American Council on Education, Straight talk about
College costs & prices. Phoenix, Arizona: Oryx Press (1998).
\2\ Thomas J. Kane & Peter R. Orszag, Funding Restrictions at
Public Universities: Effects and Policy Implication, Brookings
Institution Working Paper, Washington D.C. (1998).
\3\ F. King Alexander, The Silent Crisis: The Relative Fiscal
Capacity of Public Universities to Compete for Faculty, 24 The Journal
of the Association for the Study of Higher Education 1, 113-129 (2001).
Also see The Economist, The Gap Widens, April 22, 2000.
---------------------------------------------------------------------------
Public Perception and Tuition Realities
In addressing the issue of college and university tuition and
expenditure growth, it should also be recognized that the problem of
higher education costs and tuition does not affect all parents,
students and institutions the same. This fact is evidenced in numerous
congressionally -mandated studies of college costs and prices, showing
drastic variations in average tuition and fee growth between private
and public universities during the last two decades. 4
Instead, public perception of rising tuition costs are shaped by a
number of reasons including geographic location and the media which is
heavily influenced by high cost institutions in the northeastern region
of the U.S. where even lower cost public institutions are significantly
more expensive than their peers in other regions. More importantly,
however, public perception and concerns also are determined by an
overall lack of information in the academic marketplace that prevents
students and parents from distinguishing real net costs from ``sticker
prices.'' According to Stiglitz ``asymmetries of information result in
imperfections and inefficiencies in the marketplace'' (p. XI).
5 Such asymmetries are readily apparent in higher education.
For example, students and families pay college tuition in dollars, not
percentages, yet the vast majority of public discourse by policy-makers
and media sources on college cost increases is simply based on
percentage growth. In fact, ``if you analyze actual tuition and fee
dollar increases, instead of simply tuition and fee percentage growth,
you will discover that many of the public universities with the largest
percentage increases over the last couple of years are the very
institutions that are the most affordable and accessible throughout the
nation. A small dollar increase may well be reflected in a relatively
large percentage increase at lower tuition institutions. Herein lies
one of the misleading aspects of the ``Key Findings'' listed in the
recently released report ``The College Cost Crisis.'' For example, if
one were to use percentages instead of real dollars as does the ``The
College Cost Crisis'' report in their findings, you would discover that
public universities in such states as Hawaii, Arkansas, Idaho, Texas,
Tennessee, Wyoming, North Carolina, Montana, and Kentucky have had the
most significant percentage increases in tuition, yet, these are the
states where public universities have the lowest tuition costs in the
nation. These low tuition states remain low cost in an effort to ensure
widespread access and affordability. Also, these same states are among
the lowest in the nation in average student loan debt per graduate. To
further illustrate this point, Murray State University increased
tuition and fees by 15% last year, which was much higher than previous
years, however, this increase amounted to only a $398 increase last
year. At Vanderbilt University, a private institution with which we
compete for many top students in our region, its tuition and fees
increased by 6% last year which amounted to an increase in actual
dollars of approximately $1,753. Obviously, therefore, percentages are
not only misleading to parents and students, but they are deceptive
when vast differences in tuition and fees exist by state and
institution.
---------------------------------------------------------------------------
\4\ Trends in College Pricing, National Center for Education
Statistics, U.S. Department of Education (2002).
\5\ Joseph E. Stiglitz, Globalization and Its Discontents, W.W.
Norton & Company: New York (2002).
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The emphasis on percentage tuition growth, therefore, constitutes
an inadequate measure in establishing a proposed remedy by which
federal policy-makers can address rising tuition. To place a cap on
tuition increases that is based on a given percentage ignores the fact
that vast disparities in tuition rates currently exist among states and
types of institutions. For example, a fixed cap or index that is tied
to fluctuations in the Consumer Price Index would be disproportionately
harmful to all state colleges and universities that have worked
diligently to keep their tuition rates and ``sticker prices'' low.
Public colleges and universities that would be negatively impacted
disproportionately from such a policy would include the lowest cost
institutions that are located in the most affordable and accessible in
states such as Hawaii, Kentucky, Florida, North Carolina, Texas,
Arkansas, Mississippi, Idaho, Wyoming, Montana, Georgia, Wisconsin, and
Iowa. An indexed cap that is based on percentage growth in tuition also
would detrimentally impact many private colleges and universities that
have also maintained low tuition policies such as Rice University and
Berea College. A policy based on an indexed percentage tuition growth
would simply give high tuition, high expenditure, and more inefficient
colleges and universities a perpetual economic advantage over the
institutions that have done a better job at controlling student tuition
costs and per student expenditures.
As is the case in my own institution, many of the nation's lower
tuition colleges and universities have had the autonomy to set their
own tuition rates and remain more affordable and accessible than other
institutions. In these lower expenditure institutions, there has been a
conscious effort to keep college costs much lower than many other
institutions. These public institutions, like Murray State University,
disproportionately suffer in the face of current federal aid policy
because lower cost institutions that have kept college tuition and fees
low are denied a proportionate benefit of federal subsidies that derive
from federal direct student aid programs. For example, data from the
National Postsecondary Student Aid Study (NPSAS) in 1996 and 2000
clearly indicate that when holding constant the income of the student
aid recipients that students who enroll at higher tuition or higher
``sticker priced'' colleges and universities receive larger federal
student aid grants, work-study, and subsidized loan assistance than do
students enrolling in lower cost institutions. Not only will students
from similar economic backgrounds receive more funding for enrolling at
higher ``priced'' institutions, but a larger percentage of students
enrolling in higher priced institutions receive more federal aid than
do students enrolling at comparable low tuition institutions.
Ironically, federal programs in totality give incentive for
institutions to increase tuition and to set high sticker prices.
In addition to the basic problem associated with using percentages
instead of dollars that would generalize for all higher education, the
``College Cost Crisis'' report significantly underestimates the role of
state governments in setting tuition policy at public colleges and
universities. Over the last decade a plethora of higher education
economic and finance studies have highlighted the instability of state
appropriations and the effects of such policy on public institutional
tuition changes. According to Hauptman:
Regardless of the role of state and institutional officials in
setting tuition and fees or the retention of these funds by
institutions, in virtually all states there is a direct
relationship among the level of public sector tuition and fees,
the amount of state funding, and the cost of providing
education. The more a state provides, the lower is the tuition
for any given level of costs per student. Put another way,
state and local taxpayer support allows public institutions to
charge tuitions and fees far below the actual cost to educate
(p. 68). 6
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\6\ Arthur M. Hauptman, Reforming the Ways in Which States Finance
Higher Education, in D. E. Heller (ed.) The States and Public Higher
Education Policy, Baltimore: Johns Hopkins University Press (2001).
---------------------------------------------------------------------------
The conclusion advanced by Hauptman is one of the more commonly
accepted findings by higher education economists and finance experts
regarding the influential role of state appropriations on public
college and university tuition rates. In a recent report by the State
Higher Education Executive Officers, it was stated that ``[s]tate
general fund appropriations was by far the most significant factor'' in
determining public college and university resident tuition rates (p.
12). 7
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\7\ Christopher J. Rasmussen, State Tuition, Fees, and Financial
Assistance Policies, State Higher Education Executive Officers, (2003).
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Murray State University: State Appropriations, Expenditures, Fixed
Costs & Net Tuition
In the case of my own institution, Murray State University,
Kentucky's state general fund appropriations have been and will
continue to be the most significant factor in influencing resident and
non-resident tuition rates. During the last two years Murray State
University has postponed setting tuition and fee rates for the
following year by nearly 8 months each year in deference to state
budgeting schedules in establishing levels of appropriations. During
the last academic year the uncertainty of the potential budget cuts
that we anticipated, and the extended duration of the legislative
process, combined to require our Board of Regents to pass tuition and
fee ranges to compensate for the potential budgetary cuts that had been
rumored but not acted upon.
In lower tuition states where institutions like ours charge much
less than the national average, state appropriations generally account
for a much higher percentage of educational costs than do student
tuition and fees. Therefore, in order to offset losses in state
appropriations, student tuition rates must be raised at much higher
rates to replace a portion of lost state allocations. The impact of
this shift from state appropriations to student tuition and fees is
apparent when reviewing changes in our general fund budgeted revenues
over last three years. In 2001/02 state appropriations to Murray State
University accounted for 64.5% while student tuition and fees accounted
for 29.8% of all general fund budgeted revenues. In 2003-04, state
appropriations declined to 58.4% of all general fund budgeted revenues
forcing student tuition and fees to increase to 36%, representing a 6%
shift from Kentucky's taxpayers to students.
To more effectively manage and address these state budgetary
constraints over the past three years, Murray State University, much
like the majority of public universities throughout the nation, has
taken many steps to reduce its educational expenditures and to
implement cost saving measures. We have made these expenditure
reductions while expanding our student enrollment by approximately 10%
during the same period. Expenditure reductions and cost saving measures
that have taken place include:
Elimination of over 10 budgeted faculty positions.
Elimination of over 15 administrative, professional, and
support staff positions.
Elimination of 29 graduate assistantships.
Freezing of 15 faculty positions and three librarian
positions that remain unfilled.
Cutting of operational budget throughout the University.
Closure of University-operated television station.
Reductions in class/course offerings.
Reductions in distance education course offerings.
Reductions in professional support and development
program.
Halting of heating and cooling equipment upgrades
connecting the campus system to the central plant heating and cooling
system.
Dramatic reductions in professional travel expenses.
Restricting overtime payments to employees to
extraordinary events, or priority projects with short timelines.
Despite these ongoing expenditure reductions and cost saving
measures that we have undertaken during the last several years,
externally driven fixed costs have continued to drastically impact our
overall university budget. First, health insurance and other medical
related costs continue to consume a much larger share of our
institutional budget. During the last two years alone we have been
compelled to expend an additional $1 million to simply maintain our
institution's commitment to providing our employees with affordable
health insurance. Currently, Murray State University allocates nearly
6% or $6 million of its operational budget to subsidize the health
insurance costs of our employees whose premiums have also increased by
over 60% during the last three years. Second, energy related costs have
continually increased negatively impacting the heating and cooling
costs of every campus facility. Third, campus and federally mandated
security costs have significantly increased due to national and state
safety concerns. During the last three years our university has
increased its security-related expenditures by nearly $500,000. Fourth,
technology and technology-related costs continue to increase at rates
that far exceed the consumer price index.
However, not all of the increases in institutional costs have been
externally imposed. The primary self-imposed expenditure that has
required a significant amount of resources has been internal
institutional student aid. Due to our commitment to maintaining
affordable and accessible educational opportunities, our institutional
expenditures in aid to students through scholarships, graduate
assistantships and fellowships has increased from $1,058 per full-time
equivalent student in 2001 to $1,391 per full-time equivalent student
in 2003. This represents a 31% increase in institutional aid to all
students and resulting in a budgetary impact of 2.6 million in
additional institutional expenditures since 2001.
Yet, Murray State University has not allowed the poor economic
conditions to force it to place enrollment caps on student access. Nor
have we opted to dramatically shift the educational costs away from the
state and to the federal government indirectly through the student by
inflating tuition like many higher cost states and institutions have
done over the last two decades. Instead, we have remained committed to
providing affordable and accessible high quality educational
opportunities as have many other relatively low tuition universities,
without indirectly transferring the costs to the federal government or
overburdening our students with student loans.
Due to widespread public concern about increases in college and
university tuition rates and the lack of information regarding the
difference between college ``sticker prices'' and real tuition costs,
we have implemented a strategy to better inform students, parents, and
the public at-large about what our students actually pay to attend
Murray State University and the multiple ways to acquire increasing
amounts of tuition-based government assistance. Table 1 shows how MSU
students have been impacted by various federal and state direct student
aid programs as well as how recently adopted federal tax credits have
impacted each student. The figures in Table 1 are not based on actual
awards but instead are averaged throughout the campus by full-time
equivalent students.
Each of the categories in Table 1 indicates increases in the amount
of total funding per FTE student at Murray State University over the
last eight years. The table shows that despite an overall gross student
tuition and fee increase per FTE student of $1,861 or 62%, federal
grant increases per FTE student of $266 or 47%, Kentucky merit and
need-based grant increases per FTE student of $411 or 354%, and federal
tax credit increases per FTE student of $926, have all combined to
negate most of the gross tuition and fee increases during the eight
year period. In fact, when adjusting for the various forms of tuition-
based assistance programs that have been increased during the eight-
year period, the net tuition and fee increase per FTE student at Murray
State University was only $258 or 11%. This equates to approximately
1.6% per year during this period. When increases in room and board
costs for students are factored into the increases, MSU's costs only
increased by $585 per FTE student or 2.4% per year during this period.
Finally, when factoring in institutional aid and scholarship
increases into the benefits that Murray State students have received
during the eight-year period, an average MSU student today is still
paying less than he or she did for tuition, fees, room and board in
1996. Murray State institutional and scholarship aid increased by $672
or 93% from 1996-2003 and has played a important role in keeping actual
``net costs'' low for students.
[GRAPHIC] [TIFF OMITTED] T0138.001
As Table 1 clearly indicates, Murray State University students are
receiving a great deal more tuition-based assistance from a variety of
sources. The largest contributor to these increases has been the
government through tuition-based assistance programs. These federal and
state programs have contributed an average of $1,603 or 230% more in
federal and state tuition-based assistance for each Murray State
University student than they did eight years ago. However, despite the
influx of this important student assistance, more students attending
higher cost institutions or institutions with higher ``sticker prices''
actually receive larger amounts of federal and state direct student aid
than do our Murray State students.
By making available this type of actual or net cost information to
students, parents, and taxpayers, institutions can play an essential
role in ensuring that the higher education marketplace functions more
effectively and efficiently. The federal government should seek to
clarify tuition-based policies to assist students and families in
making the better decisions about their educational investments.
Concluding Remarks
As indicated earlier, the marketplace for education cannot function
efficiently without adequate information. Unfortunately for public and
other lower cost colleges and universities, misleading information can
perversely shape public perceptions about college costs. This fact is
evidenced when the public discussion focuses on percentage increases in
tuition instead of real dollar increases. The dangers associated with
the lack of information also are evidenced in the increasing
institutional and governmental use of ``sticker prices'' instead of
actual costs to allocate public funds in student aid programs. Sticker
prices do not reflect actual cost of higher education. Using ``sticker
prices'' distorts and creates a flow of misinformation to consumers and
students further confusing the economic realities of college attendance
and investment. If the federal government is to help improve the
efficiency of the marketplace of higher education it can contribute
materially by collecting, calculating, and distributing actual program
cost information by types of institutions, and, then, use such
information as a more viable basis for its allocation of federal
subsidies. Such an initiative would simplify federal policies while not
penalizing states that continue to commonly finance their higher
education systems and institutions that have kept actual costs down.
______
Chairman McKeon. Thank you.
Mr. Merisotis.
STATEMENT OF JAMIE P. MERISOTIS, PRESIDENT, INSTITUTE FOR
HIGHER EDUCATION POLICY
Mr. Merisotis. Thank you very much, Mr. Chairman and
members of the Subcommittee. I appreciate the opportunity to
appear before you.
I'm Jamie Merisotis, and as president of the Institute for
Higher Education Policy for the last decade, I've had the great
opportunity to devote a considerable amount of time and
analytic resources to the questions that confront this
Subcommittee with regard to the rising price of college.
It's my hope that our independent, nonpartisan perspective
will be helpful to you as you sort through the thicket of
issues and perspectives regarding college prices.
Let me summarize what my written testimony says in three
brief points.
First, rising college prices are a legitimate concern for
students and families. The College Cost Crisis Report, and
numerous prior studies, point out that rising prices are a
major worry for students and families, especially those from
low-income family backgrounds.
Average 4-year public college tuition is increasing much
more rapidly as a proportion of income for the poorest quintile
of families compared to other income groups. This means that
the lowest-income students and families are confronted with the
greatest sticker shock compared to those from other income
levels.
The congressionally mandated 2001 study of college costs
and prices, which we authored under subcontract with the
National Center for Education Statistics, demonstrates that the
factors contributing to tuition increases are complex and vary
by type of institution.
The single most important factor associated with changes in
tuition at public 4-year institutions is reductions in state
spending to support institutional operating costs.
For private institutions at the 4-year level, the equation
is more complex and includes both internal institutional budget
constraints, such as higher costs for institutional aid and
faculty compensation, and external factors, such as the
availability of institutional aid, the price of attending a
public institution in the state, and per capita income in the
state.
Another important contributor to escalating tuitions is
that the market allows it. Tuitions have now increased faster
than the rate of inflation for more than 20 years, even as
enrollments have continued to ratchet upwards. The students
keep paying, so tuitions keep rising.
State and institutional planning and budgeting processes
don't help. Most institutions build their budgets by using the
baseline of the prior year and simply adding to it. Few develop
academic plans with any serious consideration of the likely
sources and amounts of revenue needed to support those plans.
The second point that I try to make in my written testimony
is that while it's important to tackle these root causes head
on, it's clear that no one-size-fits-all solution will work
across the nation.
This is one reason why I'm concerned about the discussion
that preceded the introduction of the Chairman's bill.
If the bill simply requires greater transparency of
information about college pricing and decisionmaking, I have no
objections, but if the legislation does in fact include
penalties for institutions to meet a Federal standard, this is,
in fact, price control, which I believe would be unwise and
potentially destabilizing.
In my view, Federal price controls represent an
unprecedented attempt to control the prices of a competitive
market. I'm particularly concerned about the discussion to
uniformly limit the price of college based on inflation for
reasons similarly outlined by Dr. Alexander.
The fact that the average tuition increases are above the
CPI doesn't mean that all institutions are at or above that
level. In fact, many are below it. So any attempt to link
prices to the CPI strikes me as an anti-competitive move.
Moreover, one potential unintended negative effect of this
is that it could result in a substantial increase in tuitions
at institutions that are below the average. If the standard is
set so that Federal law would limit tuition increases to a
level above the rate of inflation, the effect could, in fact,
be a significant spike in tuitions at many relatively
affordable schools.
It's also clear that the complexity of higher education
would require a fairly large bureaucratic machinery to regulate
the pricing behaviors of institutions.
I don't like the idea of Federal bureaucrats overriding the
decisionmaking of publicly accountable boards and elected
officials, and I don't think more Federal bureaucrats are the
solution to keeping college affordable. I would also note that
the Federal Government's track record at controlling prices in
other industries has been poor.
Now, moving beyond the Federal arena, I also don't think
that the solution to dramatic tuition increases in public
colleges and universities lies in what I've called short-term
marketing gimmicks. The decision in Illinois earlier this year
that allows public institutions to guarantee a fixed rate of
tuition over 4 years of college is one example of this.
While these unique efforts may create a modest market
advantage for an institution or a system in a short period of
time, they will do little to slow the troubling long-term trend
of unpredictable swings in college prices.
The third and final issue covered in my testimony addresses
what all of the participants in the financing system--the
Federal Government, states, and institutions--can and should do
to collectively tackle the college pricing dilemma.
Briefly, I believe that we must invest in need-based
financial aid as the best and most important contribution that
the Federal Government can make to keeping the dream of a
college education a reality for all students.
I believe we need to create incentives for institutional
innovation in budgeting, cost containment, and new pricing
structures through the development of a modest competitive
grant program at the Federal level to support institutional
innovation.
I believe that states and institutions need to link
institutional strategic planning and academic planning with
financial planning, developing different revenue scenarios
first and then matching those with the different strategic
goals for the institution.
I believe we need to change the way institutional budgets
are built so that institutions or states set parameters for
tuition increases first and then determine other revenue needs.
And I believe we need to make public institution tuition
increases predictable, within an appropriate range, not at the
Federal level, for the reasons I've already described, but
rather, at the state level, since states are in a much better
position to test efforts at controlling prices.
So in summary, I believe that all of these players need to
take a different approach to setting tuitions, one that
emphasizes predictability for consumers and does not get
buffeted by the fierce winds of economic boom and bust.
A more strategic and long-term approach to tuition and
budgeting policies would go a long way toward improving student
access to higher education and fulfilling the American dream of
a college education.
Thank you very much for this opportunity.
[The prepared statement of Mr. Merisotis follows:]
Statement of Jamie P. Merisotis, President, Institute for Higher
Education Policy
Thank you for this opportunity to testify before the Subcommittee
about the increasing price of college and the possible steps that might
be taken to make college more affordable for students and families.
At previous hearings before this Subcommittee, several witnesses--
most prominent among them being Dr. Sandy Baum--have done an excellent
job of outlining the dilemma of rising college prices and the challenge
of addressing rising tuitions from a federal perspective. I will not
repeat those observations, but instead will focus on three central
issues. First, I will briefly discuss why rising college prices are a
legitimate concern for students and families, and why college pricing
is such a complex area of analysis. Second, I will discuss why, despite
these important concerns, federal price controls like those that have
been discussed over the last several months are not the solution to the
rising price of college. And third, I will discuss what all of the
participants in the financing system--especially the federal
government, states, and institutions--can and should do to collectively
tackle the college pricing dilemma.
I would like to begin with a brief introduction to the Institute
for Higher Education Policy and our role in the policy process.
Established in 1993, the Institute is a non-profit, non-partisan
research and policy organization whose mission is to foster access and
success in postsecondary education through public policy research and
other activities that inform and influence the policymaking process.
The Institute's work addresses an array of issues in higher education,
ranging from technology-based learning to quality assurance to
minority-serving institutions. However, the Institute is probably best
known for its studies and reports concerning higher education financing
at all levels. Our studies and reports address topics ranging from
federal and state student financial aid to state funding formulas to
trends in institutional expenditures and revenues. We even have worked
on higher education financing issues in the context of other nations,
especially in southern Africa and Eurasia.
The Institute's independent voice on these issues is well-known.
Our primary funding is derived from major foundations that are
interested in supporting independent higher education research and
analysis. We also have conducted a fair amount of analytic work at the
behest of state governing and coordinating boards for higher education,
and national governments outside the U.S. The Institute is involved in
very little federally funded research, with one exception. Since 1998
we have served as a subcontractor under the National Center for
Education Statistics' Postsecondary Education Descriptive Analysis
Reports series. I mention that in this context because we were the
principal author of the 2001 Study of College Costs and Prices: 1988-89
to 1997-98, which was mandated under the 1998 Higher Education
Amendments.
The 2001 Study of College Costs and Prices is but one of a series
of federally-supported initiatives over the last decade or more
designed to gain a better understanding of the college affordability
issue and to inform federal policymaking. As ``The College Cost
Crisis'' report issued by Chairman Boehner and Chairman McKeon points
out, a prior study was conducted by the Congressionally authorized
National Commission on the Cost of Higher Education, which issued a
report in 1998 called ``Straight Talk About College Costs and Prices.''
Earlier in the 1990s, a bipartisan federal commission called the
National Commission on Responsibilities for Financing Postsecondary
Education, for which I served as Executive Director, issued a widely-
circulated report called ``Making College Affordable Again.'' Numerous
other, privately conducted studies also have taken place just in the
last decade.
While each of these studies and reports uses various techniques and
approaches, they all agree on many key issues. Perhaps the most
important is that the concern about rising prices is a legitimate one
for students and families, especially those from low income
backgrounds. Average four-year public college tuition is increasing
much more rapidly as a proportion of income for the poorest quintile of
families compared to other income groups. This means that the lowest
income students and families are confronted with the greatest ``sticker
shock'' compared to those from other income levels. So I don't think it
is sufficient to explain away these concerns as simple hand-wringing
among consumers.
The factors that contribute to tuition increases are complex and
vary by type of institution. The single most important factor
associated with changes in tuition at public four-year institutions is
reductions in state spending to support institutional operating costs.
As my colleagues and I at the Institute pointed out in the 2001 Study
of College Costs and Prices, this trend actually emerged as a critical
issue earlier in the 1990s, before the double hit of an economic bust
and reductions in federal support that have had such a draconian impact
on state budgets.
For private institutions, the equation is more complex. While there
is no single overriding factor as strongly related to tuition as state
appropriations revenue is in the public sector, there are both internal
institutional budget constraints and external market conditions that
contribute. The internal factors include higher costs for institutional
aid and faculty compensation. The external factors include things such
as the availability of institutional aid, the price of attending a
public institution in the same state, and per capita income in the
state.
Another important contributor to escalating tuitions is that the
market allows it. Public sector tuitions have now increased faster than
the rate of inflation for more than 20 years--longer than many
traditional-aged college students have been alive--even as enrollments
have continued to ratchet upwards. Simply put, the students keep
paying, so tuitions keep rising.
State and institutional planning and budgeting processes don't help
either. While some institutions have evolved, most still build their
budgets by using the baseline of the prior year and simply adding to
it, all in the name of increasing academic quality, improving student
access, and enhancing overall institutional prestige. Few develop
academic plans with any serious consideration of the likely sources and
amounts of revenue needed to support those plans. State planning for
higher education also tends to be limited in scope, usually linked to a
state's annual or biennial budget process.
In short, while it's important to tackle these root causes head-on,
no one one-size-fits-all solution will work across the nation. This is
one reason why I believe that a federal foray into controlling the
prices charged by institutions would be unwise and potentially
destabilizing. Higher education functions in a very complex and
competitive marketplace, one where the price charged for the good being
sold can vary from less than $1,000 to more than $30,000 at the
undergraduate level. That is an astonishingly diverse pricing system.
One important reason for this diversity is that there are many
different actors involved in tuition setting, including state governing
and coordinating boards, legislatures, independent boards of trustees,
and institutional leaders. Each brings a different set of priorities
and perspectives to the tuition setting process.
In my view, federal price controls therefore would represent an
enormous federal attempt to control the prices of a competitive market.
I am particularly concerned about the proposal to uniformly limited the
price of college based on inflation. As you know, inflation as measured
by the Consumer Price Index is a reflection of a market basket of goods
and services. Some are above the CPI, and some are below. The fact that
the average tuition increases are above the CPI doesn't mean that all
institutions are at or above that level in fact, many are below it. So
any attempt to control the price by linking it to the CPI strikes me as
a severely anti-competitive move on the part of the federal government.
Moreover, one potential unintended negative effect of federal price
controls linked to inflation is that it could result in a dramatic
increase in tuitions at those institutions that are below the average.
If the standard is set so that federal law would limit tuition
increases to, say, twice the rate of inflation, the effect could be a
significant spike in tuitions at many relatively affordable schools.
Further, the complexity of higher education would require a fairly
large and complex bureaucratic machinery to regulate the pricing
behavior of institutions. I don't like the idea of federal bureaucrats
overriding the decisionmaking of publicly accountable boards and
elected officials, and I don't think more federal bureaucrats are the
solution to keeping college affordable.
I also would urge you to consider the history of the federal
government's efforts to control prices in other industries. Previous
federal efforts at cost containment in other policy areas where the
government has attempted to act on behalf of consumers' interest in the
face of rising prices have often created more problems than would have
necessarily occurred if the market had been left alone. For example, in
1973 the federal government passed the Emergency Petroleum Allocation
Act in response to the OPEC oil embargo, which disrupted petroleum
supplies and escalated prices. In passing this legislation, the U.S.
sought to shield the economy from the effects of the price hikes.
Instead, the regulation had an adverse effect. It discouraged domestic
oil exploration because of controls placed on domestic oil. As a
result, American crude oil production declined, and instead of
remaining one of the leading exporters of oil, the U.S. became a
leading importer. Regulation caused the undervaluing of American oil,
and made it cheaper and more profitable to import crude oil, rather
than produce it. Prices remained higher than they would have under
normal market conditions.
Prior to the 1973 regulation of the oil industry, the government
was involved in regulating the airline industry. The Civil Aeronautics
Board established in 1938 exercised regulatory control over almost
every aspect of the airline industry. In regulating the airline
industry, the government restricted fares to first class and coach and
all but eliminated price competition which subsequently caused higher
airfares than those that would have occurred under free market
conditions. The regulated ticket prices were 20 to 95 percent higher
than the unregulated prices. With fares on short routes unprofitable
and simply too high on long routes, the airlines were unable to attract
passengers. Deregulation in 1978 provided airlines with greater
flexibility in setting prices and fare classes, which in turn induced
more travel and revenues than had been or could be produced if all the
customers were charged the same.
Moving beyond the federal arena, I also do not believe that the
solution to dramatic tuition increases in public colleges and
universities lies in the recent trend of promoting short-term marketing
gimmicks. The decision in Illinois earlier this year that allows public
institutions to guarantee a fixed rate of tuition over four years of
college is one example of this drive to stand apart. While these unique
efforts may create a modest market advantage for an institution or
system in the short-term, they will do little to slow the troubling
long-term trend of unpredictable swings in college prices.
So what can be done to address the dilemma of rising prices? Here
are some simple yet effective ways for these various system actors to
work together to address the rising price of college:
Invest in need-based financial aid. While I realize that the
current budgetary climate is an unfavorable one for new spending, I
nevertheless continue to believe that investment in need-based
financial aid is the best and most important contribution that the
federal government can make to keeping the dream of a college education
a reality for all Americans. The declining purchasing power of federal
aid continues to be a critical barrier to access to higher education,
and must be part of any holistic attempt to tackle the college pricing
problem.
Create incentives for institutional innovation in budgeting, cost
containment, and new pricing structures. One important new federal
contribution to solving the college pricing dilemma would be to create
a modest competitive grant program to support institutional innovation.
A FIPSE-type program funded at $20 or $30 million could be targeted on
developing, refining, and disseminating new ideas for more effective
budgeting and cost control, while continuing to support and enhance
institutional quality. In fact, this program might also include an
effort to attract corporate and foundation support, extending the
partnership to other key players in the system.
Link institutional strategic and academic planning with financial
planning. While many institutions now conduct sophisticated enrollment
projections to match overall plans for program development and
improvement, few take the next step and link such planning to the
likely financial conditions they will face. It may make more sense for
a school to develop different revenue scenarios first, and then match
those with the different strategic goals for the institution. This
would be particularly useful for states to encourage among public
institutions.
Change the way institutional budgets are built. This step requires
that institutions or states set parameters for tuition increases first,
and then determine other revenue needs. Clearly some flexibility would
need to be built in to take into account the fluctuations in state
budgets and revenue scenarios, but it still would be easier to handle
if the tuition level was set at an earlier point in the process. It
also would be useful for institutions to engage in multi-year budgeting
so that year-to-year spikes can be softened.
Make public institution tuition increases predictable, within an
appropriate range. The solution proposed at the federal level for price
controls might actually make more sense at the state level; that is,
linking tuition increases to an indicator of overall state economic
capacity, such as per capita incomes or the state's consumer price
index. This may be worth piloting in a few states to see if it is
viable, and to gauge the possible unintended effects of such a
strategy. However, freezing tuitions for four years or more probably
goes too far: it limits the flexibility of the institution or state to
make modest adjustments up or down as economic conditions fluctuate.
Allow greater price differentiation by level of instruction and
program of study. In particular, allowing higher tuitions at the
graduate level, and in some professional programs, would ensure that
subsidies for undergraduate education are protected.
These are just some beginning points for discussion about how the
various actors in the higher education financing system can act to
address the rising price of college. I believe that all of these
players need to take a different approach to setting tuitions, one that
emphasizes predictability for consumers and does not get buffeted by
the fierce winds of economic boom and bust. A more strategic and long-
term approach to tuition and budgeting policies would go a long way
toward improving student access to higher education and fulfilling the
American dream of a college education.
Thank you again for this opportunity to appear before the
Subcommittee on this vital issue. I would be pleased to answer any
questions you may have.
______
Chairman McKeon. Thank you.
Ms. Hanson.
STATEMENT OF JESSICA HANSON, STUDENT, FLORIDA STATE UNIVERSITY
Ms. Hanson. Chairman McKeon and Committee Members, first
and foremost, I would like to again thank you for giving me the
opportunity to address this Committee. In such discussions, I
think it is so essential for a student's voice to be heard, as
we are the population that is directly affected.
My name, again, is Jessica Hanson, and I am a senior
political science major at the Florida State University in
Tallahassee, Florida.
In my leadership positions on campus, one of my primary
roles is to serve as the liaison between the students of FSU
and the legislature. It is in this capacity that I see, on a
daily basis, the growing problem in our education system, the
astronomical tuition increases that college students face every
single year.
Therefore, I would like to provide you with a perspective
directly from the halls of the university today.
As a high school senior choosing what university to attend,
I was very fortunate to have a wide array of choices, but when
making my final decision, I chose to attend college in Florida
specifically because of the Bright Future Scholarship program.
In Florida, this is a merit-based scholarship that is
fueled through lottery dollars, and had it not been for this
program, I may very well have been saturated with student loan
debt like so many of the students that I work with and live
with.
During Florida's most recent legislative session, the
Florida legislature called for an 8.5 percent across-the-board
tuition increase for in-state undergraduate students. The
legislature also allotted for an additional 6.5 percent
flexibility for local boards of trustees to set graduate
tuition as well as non-resident tuition. Most of the local
boards of trustees invoked the additional 6.5 percent increase,
thus continuing this tuition increase.
In its nationwide report on public 4-year post-secondary
institutions with the largest tuition increases, research noted
that the top 10 nationwide increases were all set on the local
level.
Further, in a report released by the nonprofit College
Board in 2002, it showed that tuition and fees at 4-year public
institutions now average over $4,000. This was a rise of
approximately 9.6 percent.
Tuition and fees at 4-year private colleges increased an
average of 5.8 percent, reaching an average cost of over
$18,000.
This information directly correlates with the committee's
College Cost Crisis Report.
Many people seem to desire to blame the economy for a rise
in college costs. However, if you were to look at college
costs, they were increasing even in what would be considered
better economic times.
Universities need to be more conservative in how their
money is spent. No longer will students and parents accept the
fact that universities are paying some professors more than
$200,000 per year when professors do not even teach classes at
the universities.
I meet with students every day, and many of which have to
work two jobs in order to pay for their education. Many of
these students work these jobs on top of any financial aid they
receive, and when they seek help, the only answer is, ``Do more
loans.''
If we continue this trend, we will be sending our students
into the workforce with unmanageable student loan debt.
As a student, I also have been very fortunate to have the
experience to work with several clubs and organizations on my
campus. Through these opportunities, I have gained some of my
greatest and most rewarding educational experiences.
I've learned countless lessons in leadership and
management, and these are undoubtedly the most important
lessons I will take with me into the workforce.
One of the great things about college is that education
also takes place outside the classroom. However, these are the
students that I encounter that will not have the opportunity to
experience this important part of education, those that are
absolutely indebted.
These students want to be involved. However, the rising
cost of overall college cost has caused them to work these two,
three jobs, and consequently not affording them the time
necessary to commit to these extracurricular activities.
As the cost of college steadily increases, we are denying
more and more students the educational opportunities outside of
the classroom.
If you look at the core of these tuition increases, they're
nothing more than huge tax increases in disguise. These are
increased taxes on students.
We must hold our university administrations accountable and
ensure that they do not engage in wasteful spending. We must
ensure that it is no longer an option to balance their budgets
on the back of students.
As a student at Florida State University, I've received an
outstanding education both inside and outside the classroom,
and I sit here today in front of this committee asking you to
ensure that the future of our country, the students of
tomorrow, have the same opportunities.
Thank you.
[The prepared statement of Ms. Hanson follows:]
Statement of Jessica Hanson, Student, Florida State University
Chairman McKeon and Committee members, first and foremost I would
like to thank you for giving me the opportunity to address this
committee.
My name is Jessica Hanson, and I am a senior Political Science
major at the Florida State University in Tallahassee, Florida. I also
serve as the Director of Legislative Affairs for the Florida State
University Student Government Association. In this position, one of my
primary roles is to serve as the liaison between the students of FSU
and the legislature. It is in this capacity that I see on a daily basis
the growing problem in our education system, the astronomical tuition
increases that college students face every single year.
As a high school senior choosing what University to attend, I was
very fortunate to have a wide array of choices. When making my final
decision, I chose to attend college in Florida specifically because of
the Bright Futures Scholarship Program. This is a program in Florida
where the state uses lottery dollars to help pay for college for
students who achieve high marks in high school. Had it not been for
this program, I may very well have been saturated with student loan
debt like so many of the students I work with on a daily basis.
During Florida's most recent legislative session, the Florida
Legislature called for an 8.5% across the board tuition increase for in
state undergraduate students. The Legislature also allotted for an
additional 6.5% of flexibility for local boards of trustees to set
graduate tuition as well as non-resident tuition. Most of the Local
Boards of Trustees invoked the additional 6.5% increase, thus
continuing the trend of astronomical tuition increases. In its
nationwide report on public 4-year postsecondary institutions with the
largest tuition increases, research noted that the top ten nationwide
increases were all set on the local level albeit a state or local
board.
Further in a report released by the nonprofit College Board,
released in 2002, it showed that tuition and fees at four year public
institutions now average $4,081. This was a rise of approximately 9.6%.
Tuition and fees at four year private colleges increased an average of
5.8% reaching an average cost of $18,273.
This information directly correlates with the committee's College
Cost Crisis Report. Many people seem to desire to blame the economy for
a rise in college cost, however if you were to look at college costs,
they were increasing even in what would be considered ``better economic
times.'' Universities need to be more conservative in how their money
is spent. No longer will students and parents accept the fact that
Universities are paying some professors more than $200,000 per year,
when the professor does not teach class at the University.
I meet with students on a daily basis, many of which have to work
two jobs in order to pay for their education. Many of these students
work these jobs on top of any financial aid they receive, and when they
go ask for help, the only answer they get from the Administration is,
``well you can take another loan.'' If we continue this trend we will
be sending our students into the workforce with unmanageable student
loan debt.
As a student, I have been fortunate to have the experience to work
with several clubs and organizations on campus. Through these
opportunities, I have gained some of my greatest and most rewarding
educational experiences. I have learned countless lessons in leadership
and management, and these are undoubtedly lessons I will take with me
into the workforce. One of the great things about college is that
education also takes place outside the classroom. However, so many
students I encounter don't have the opportunity to experience this
important part of education. These students want to be involved,
however the rising cost of overall college cost has caused them to have
to work two and three jobs, and consequently not affording them the
time necessary to commit to these extracurricular activities. As the
cost of college steadily increases, we are denying more and more
students the educational opportunities outside of the classroom.
If you were to poll the citizens of this country, most would tell
you that they do not want any new taxes, or even an increase in current
taxes, a principal that I would agree with, however, if you look to the
core of these astronomical tuition increases, they are nothing more
than huge tax increases in disguise. We must hold our university
administrations accountable and ensure that they do not engage in
wasteful spending; we must ensure that it is no longer an option to
balance their budgets on the backs of students. As a student at Florida
State University, I have received an outstanding education both inside
and outside the classroom. I sit here today in front of this committee
asking you to ensure that the future of our country, the students of
tomorrow have the same opportunities. Thank You.
______
Chairman McKeon. Thank you very much.
Well, I've appreciated your testimony, and again, each time
we've talked about this, as I've visited schools around the
country, I've seen lots of different ideas.
The thing that has concerned me is, from the time we've
been talking about this, many institutions have not wanted to
say anything about what we can do to really address this. They
just said, ``We're doing a good job, leave us alone, just send
more money.''
If you look at what the Federal Government has put up or
guaranteed in the way of student loans, they're right now
paying about 33 percent of higher education, and if you add the
research money, it gets up to about 50 percent, about $90
billion a year, and I think that's sizable, and we've been
increasing it at a rapid rate.
I heard somebody the other day say we had cut Pell Grants.
In the time that I've been Chairman of this Subcommittee in
the last 8 years, we have just about doubled the money going
into Pell Grants, and we've almost doubled the maximum Pell
Grant, and this year we put another almost $1 billion into Pell
Grants.
So I think we have, at the Federal level, been doing a lot.
At the state, they've been cutting and the schools have
been increasing their tuition, and we are getting young people
and not-so-young people that are not able to continue their
education; so I really appreciate the opportunity to talk about
these things.
Dr. Alexander, you talk about the percentage, and we have a
percentage in our bill, and that's been a big concern of mine.
I know that's not the answer, but it's a starting point,
because we need to talk.
If you have a school that's charging $2,000 and they raise
their tuition 10 percent--$200. If you talk about a school
that's charging $40,000 and they raise their tuition 10
percent, it's $4,000.
I know we have to work on that, and we have to come up with
some kind of a way to address that.
Dr. Lewis, do you think institutions overall are being told
to do more with less, or are they really being asked simply to
do a better job with what they have?
Dr. Lewis. Both. I think the response in my state, at
least, and from what I hear from other SHEEOs, is that indeed
there is an expectation in my state that the resources that
will come to higher education from the state are not likely to
grow into the future.
And our legislators are well aware that we have a costly
enterprise, not only is it complex, in trying to serve many
different types of students at different points in their
education, but that we have an expensive proposition because it
is so labor-intensive, and they are saying, yes, ``Do more with
less.''
They are simultaneously, however, saying, ``We want you to
do better in a whole lot of areas,'' and this is a conundrum
for institutions, obviously, to try to meet both of these kinds
of conditions as we go forward.
The fact is that we have to change the way we do business
in order to be able to do both, and that's a hard thing for
higher education. Our whole norms for the way in which we
provide the delivery of services are very ingrained in our
culture and traditions of a long past, and these are not easy
things to change.
We need to find new ways of delivering programs. We need
far more cooperation across our institutions, because
institutions cannot be all things to all people anymore.
We must begin to develop niche strength programs in
institutions, we must find a differentiation of mission,
because there are not infinite resources.
Chairman McKeon. Exactly. Thank you.
Dr. Alexander, you made it clear in your testimony that the
public needs more accurate and clear information as to the
tuition fees charged by an institution.
I have a set of books sitting on my desk that's about this
high that schools have to fill out now.
Would you support a simpler reporting method, one that
would be--that we could let parents and students go onto a web
and be able to compare apples to apples in making their
choices?
Dr. Alexander. I would actually more than support it, I
would welcome it.
I think right now parents and students know more about the
cars they buy than the colleges they invest in, and any attempt
that we could--any information that we can help provide the
students, we welcome this information, because right now the
market is being driven by sticker prices.
Even Federal policy, sticker prices play a major role in
who actually gets--which institutions get aid, which students
get aid, and how much they get.
We're actually encouraged to use misinformation to maximize
Federal programs, but we choose not to, by inflating sticker
prices, that we choose not to do.
We welcome any information, because we want our parents to
know. We love comparisons, and we welcome this movement to talk
more about what is the actual cost, because I think that's what
the Federal Government needs to discuss more, what is indeed
the actual cost, not rewarding institutions for inflating
sticker prices or having higher inefficiencies.
Chairman McKeon. My time is up, but could you just briefly
define sticker price?
Dr. Alexander. Sticker price is the price that institutions
say that they charge--their cost of attendance that they submit
to the Federal Government, the price that you see on a web
site, charge of the institution, the institution uses as a
sticker price, and that's very different than the actual cost,
or the actual net costs that virtually all students would pay.
Chairman McKeon. Kind of like if you went on the web to get
an airline ticket and they said, ``The ticket is $2,000,'' and
yet when you get on the plane, you find that everybody in there
is paying a different rate?
Dr. Alexander. Very much so, with the exception that the
Federal Government subsidizes the higher rate to institutions
that say they have the higher rate.
Chairman McKeon. We'll try to take care of that.
Mr. Kildee had to leave. He has a bill on the floor, and in
his place now is Mr. Tierney. I'll turn the time to him now.
Mr. Tierney. Thank you very much.
Just let me follow up on that point for a second to all of
the witnesses.
I would ask that if you have concrete suggestions as to how
we might provide parents and students with information on the
difference between the discounted price and the sticker price,
that you would submit those to the Committee in time for our
record, and I think that would be extraordinarily helpful--and
I am encouraged to hear the Chairman say that that interests
him also--and then ways, you know, things that we might do to
amend the Act as we move forward that would discourage
institutions from maneuvering their sticker price in order to
benefit from it. That would be of great help.
Mr. Merisotis, before we had this hearing and before we
started to get testimony, several people on this Committee had
been talking about a counterpoint to the approach that the
Chairman had in good faith put forward in limiting costs, and
that had been the concept of having the Department of Education
identify good practices, or identify proven-to-be-successful
instances of cost containment and cost cutting in institutions
and in systems, and then, instead of having some system of
reward for those institutions that did that, and maybe, without
being overly punitive, not increasing, having future increases
for those institutions that didn't show any inclination to even
try.
But we were looking at what the rewards might be, and in
the terms of your testimony, it seemed to me that, would it be
fair to say that a reward might be the increase in student aid
for that particular institution, or would there be others that
you could recommend?
Mr. Merisotis. Congressman Tierney, I don't think that a
linkage to student aid would be helpful. I would be concerned
about the potential unintended negative effects of linking it
to student aid, either in terms of rewards or penalties.
There are cases where rewards at the student level are
beneficial. For example, I've been a proponent for a long time
of giving students a Pell Grant bonus, for example, for
persisting at a normal rate--that is, for not dropping out or
stopping out, staying in school--providing some sort of bonus
in that sense.
But I'm very concerned about penalties as they relate to
student aid, for the simple fact that if we apply penalties, we
are therefore hurting the very students we're trying to help,
and I don't think that penalties are the solution to this
issue.
My proposal actually deals with creating a competitive
grant program that institutions could compete for to develop
the kind of innovative ideas that I think the Chairman is
talking about in terms of cost containment and new pricing
structures.
Mr. Tierney. The difficulty I have with that is you're
giving them money and it may or may not end up that they do
something about it.
My thought was more about having an identification of
institutions that are already successful in those areas, and
then rewarding them for moving down that path, and having the
Department of Education disseminate information on existing
good practices.
Do you see any fruits in that path?
Mr. Merisotis. It depends on what the rewards are and--
Mr. Tierney. Well, that was my question to you. What
rewards might motivate people?
Mr. Merisotis. A reward linked to net price, for example,
as Dr. Alexander has discussed, might be an interesting idea.
A reward linked to sticker price would not be a good idea,
because the sticker price is not what's charged to the vast
majority of students. The vast majority of students pay the
discounted price.
And so something that might be linked to the net price and
a reward basis I think would be helpful, but I re-emphasize
that penalties would have a significant negative effect.
Mr. Tierney. I agree with that, and that's why I went to
the rewards side.
But now I need to ask you to explain more clearly, when you
say a reward linked to the actual price, what would the reward,
in fact, be?
Mr. Merisotis. For example, a Pell Grant bonus would be an
excellent way to do that, something on the grant side of the
equation, which would cost more money, but something on the
grant side of the equation, I think, would be helpful, and
could be done at a fairly modest level.
Mr. Tierney. You think a modest amount would encourage
institutions to move in that direction?
Mr. Merisotis. I think it would encourage students to do
the right thing, and I think that's my point.
My point is that I want students to take the right steps to
get through college quickly and efficiently, get out and get
into the world of work.
I don't know that those kind of incentives linked to
institutional performance are going to be the right kinds of
rewards that would lead to the kinds of behaviors that you're
talking about, no.
Mr. Tierney. Well, then, in my remaining time, I don't want
to be obtuse, but tell me how linking it to the actual price,
then, relates back to the students and how the reward gets to
the students on that.
Mr. Merisotis. The reward gets to the students because if
there's--if the net price charged is at a certain level, then
the students at that institution who are eligible for, say, a
Pell Grant, who are the needy students, and who therefore
behave in the right ways--in other words, persist to the normal
degree--they would get that reward.
So it's a two-step process. The institution would have to
meet a certain standard, and the students who qualify therefore
would get the reward.
Mr. Tierney. OK. Thank you.
Dr. Lewis. Mr. Tierney, is it possible to add to that?
Would you be willing?
Mr. Tierney. At the expense of Ms. Hanson's time, go ahead.
Dr. Lewis. Oh, my apologies.
Mr. Tierney. No, go ahead.
Dr. Lewis. Just briefly to say, many states like mine are
involved in accountability measures where we are literally
setting progress goals for institutions across the state--mine,
for instance, in retention and graduation.
If we manage to increase the retention of students and
bring them to graduation in a shorter timeframe and with more
success, we have saved everybody money in that process, and in
that sense, if we can validate the kind of work that's going on
on performance measuring, on the accountability for outcomes in
institutions at the state level, you hit all of the public
institutions and in my case, we invite our private partners to
the table to do the same.
You have the possibility there to incite a system to change
as well as institutions, and on parameters that they set
themselves with us for progress.
Mr. Tierney. Thank you.
Chairman McKeon. Mr. Gingrey.
Mr. Gingrey. Thank you, Mr. Chairman.
I want to make one comment in regard to, I think Dr. Lewis
talked about the three-legged stool of cost, and certainly one
of those legs is what the states are able to give to the
institution of higher education.
In my state of Georgia and probably 49 other states, these
are tough economic times, and there's a lot of red ink, and of
course there have been mandates, if you will, to the different
departments of state government--``You're going to cut your
budget. You're going to cut your budget 2.5 percent this year,
you're going to cut your budget 5 percent next year, whatever
it is to balance that budget.''
These departments really have no choice. They don't have
any other source of revenue, other than what is allocated to
them out of the general fund from the state.
They really have no choice, whereas the colleges and
universities have another source of revenue, and that indeed is
the tuition that they charge the students, so while they may
sustain a fairly significant cut in their revenue that they
receive from the state, they can offset that by raising the
tuition, and we really have no control over that.
So I want to ask, and I think I'll address this question to
Mr. Merisotis, you provide one of the solutions to address the
cost problem should be increasing need-based financial aid.
Congress, as the Chairman pointed out, has more than
doubled funding for Pell Grants in the last 7 years and
increased the maximum award by 73 percent. Other aid programs
have seen increases or steady authorization, as well.
How long do we continue to add funding without institutions
stepping up to the plate and instead of simply saying, ``There
isn't enough aid,'' join the solution on the cost side of the
equation?
Mr. Merisotis. Thank you for your question.
First of all, I do think institutions do need to step up to
the plate, and I think that states and their coordinating and
governing boards, the institutions themselves, independent
boards of trustees all have a responsibility here.
The question is whether or not the Federal Government
should attempt to regulate the price side of the equation, and
for the reasons I articulated in my testimony, I think that
would be very, very troubling.
The question of whether or not we are investing enough in
need-based financial aid maybe requires some perspective.
It is true, and we appreciate the fact that spending on
financial aid has increased substantially in the last few
years.
However, from a historical perspective, the purchasing
power of need-based financial aid from the Federal Government
is far from what it was, say, in the early 1980's.
The maximum Pell Grant pays for about half of what it paid
for in a public 4-year institution compared to today; so the
lost purchasing power of the Pell Grant is something that I
think is important.
Spending more money on Pell Grants isn't necessarily the
solution. It's getting the maximum Pell Grant up and targeting
it at the students that have the greatest need that's
important.
One of the reasons we're spending more money on Pell Grants
is that more students are eligible for those grants because we
have more and more poor students. In addition, one of the
reasons that that spending has increased is that more students
are going to college overall.
So those factors have combined to, in effect, capture some
of the increased spending that's gone into the Pell Grant
program, and that's why we need more investment in the Pell
Grant.
Mr. Gingrey. Well, with all due respect, my father once
told me that when you ask a very wealthy rich man how much more
money it would take to make him happy, the answer is, ``Well,
just a little bit more.''
Let me ask the student, Ms. Hanson, what do you think about
that question?
Ms. Hanson. I think my initial response, as with every
student, probably, across the nation, is that it's really scary
that the option of raising tuition is such a natural answer
when we're faced with such issues.
I believe, as well as all students believe, that it should
be one of the last options considered, because when you start
raising tuition and fees, it has a potential to force students
to leave school, or it will prolong students' graduation, and
this really presents a multi-faceted problem, then, past just
the budget issues, because then you have the amount of debt is
increased through, you know, the initial raises of tuition, and
then they are so much as doubled, tripled, when students are
faced with the prospect of paying for extra terms because
they're having to go ahead and accommodate for that extra debt
that they're putting on their table.
So it's really--again, coming from the student
perspective--it is a very, very scary, scary issue when the
thought of raising tuition is just a natural response, and that
is given so much precedence over all of the other options that
we're faced with.
I mean, students would rather have tuition dealt with, and
they would not like tuition raised, as opposed to building a
new facility on campus.
You know, that is going to be their primary focus, is
tuition, because that is what affects them directly every
single day of their lives, starting from when they start
university to when they graduate and for the rest of their
lives.
Mr. Gingrey. Thank you. Thank you, Mr. Chairman.
Chairman McKeon. Thank you. Mr. Andrews.
Mr. Andrews. Thank you, Mr. Chairman.
One of the things I hear about most frequently from the
people I represent is their worry about it costing so much to
get a higher education, and they're particularly worried about
how much money they have to borrow, or their sons or daughters
or spouses have to borrow; so I think the Committee's focus on
the rising cost of an education is entirely appropriate.
I support greater transparency in the fiscal affairs of
colleges and universities, public and private. I think it will
help people vote with their feet, and I think that's a good
thing.
I categorically object, though, to the approach that the
Chairman is taking, with all due respect, on this matter,
because I think it identifies a very real problem but comes up
with an ineffective, and indeed harmful solution to that
problem.
Dr. Alexander, I want to ask you a couple of questions that
I think relate to that.
In your testimony, you indicate that tuition at your
institution went up about 15 percent this year. How much did it
go up the year before that, percentagewise?
Dr. Alexander. It went up about 9 percent.
Mr. Andrews. So it's 24 percent in 2 years?
Dr. Alexander. Mm-hmm.
Mr. Andrews. What does it cost to educate a student at
Murray State, not what the tuition is, but what does it cost to
educate a student at Murray State?
Dr. Alexander. Cost, our per-student expenditure is about
roughly about $12,000 per student. Our tuition is 3.
Mr. Andrews. So tuition has gone up by something on the
order of magnitude of $750 in the aggregate, in 2 years.
It's my understanding that state support from the Kentucky
State Legislature has dropped by about 6 percent, from 64
percent of your budget to 58.
Dr. Alexander. Mm-hmm.
Mr. Andrews. You just told me that the cost of educating a
student is $12,000, give or take?
Dr. Alexander. Correct.
Mr. Andrews. If my math is correct--and I did not score
well on the SAT math portion--6 percent of $12,000 is about
$720, so I think what you just told us is that the tuition is
$750 higher per student over 2 years, but the state support is
about $720 lower over 2 years, which would seem to me that your
tuition increase paid by the student is actually lower than the
rate of inflation.
Is that a fair conclusion?
Dr. Alexander. It is, and this doesn't certainly take into
account that we've had to put $1 million into health insurance
over those last, just in the last 2 years alone, and while
premiums have also increased for everybody on campus by 60
percent, in addition to technology costs, technology costs pay
no attention to Consumer Price Index growth.
Mr. Andrews. As I think we all know, I know the rejoinder
to that would be, ``Well, that's public institutions.'' What
about private institutions that are not at least directly
subsidized by state governments?
I think the record would show this, that--well, let me ask
you this question.
When the leader of an institution is faced with rising
costs and decreasing grant aid from government, and wants to
minimize what students have to borrow to go to school, what
does he or she do?
Any of you that are--Dr. Lewis, what would the leader of an
institution do under those circumstances?
Dr. Lewis. Do that one more time?
Mr. Andrews. If you're faced with rising costs to meet your
budget, and diminishing scholarship aid from public sources,
and you want to minimize what your students have to borrow to
go to school, what's your other option? What do you do?
Dr. Lewis. You have to consider what you can cut,
obviously, at that juncture.
Mr. Andrews. And after you've done that, what do you do?
Dr. Lewis. After you've done that, you begin to think about
how many students you can educate--
Mr. Andrews. Well, don't you also raise institutional aid?
Don't you, in effect--
Dr. Lewis. Well, of course. In fact--
Mr. Andrews. --take from some students and--
Dr. Lewis. --that's the largest change factor--
Mr. Andrews. I think what the record will show at non-
public institutions is that the share of institutional aid over
a 10-year period went up by 52 percent, that in 1985, compared
to 1995, there was a 52 percent increase in money that
institutions were taking and shifting over to institutional aid
at the same time there was an increase of 38 percent in
tuition.
Now, I'm not suggesting that the entire tuition increase is
explainable by increases in institutional aid, but I think that
a significant portion of it is explainable by that.
If the Federal Pell Grant program were funded at the same
level of purchasing power that it was 10 years ago, would that
increase in institutional aid be necessary?
Dr. Lewis. Not to that level at all.
Mr. Andrews. I don't think that it would be, either.
So I really believe that the data here show that the
driving force in this is a lack of state budget support in the
public institutions and a diminution in value of the Pell Grant
and other scholarship resources at the Federal level, which is
driving up institutional financial aid in that way.
If anybody disagrees with that, I'd welcome their comments.
Dr. Lewis. I don't disagree.
I would say that one of the things the Federal Government
can continue to do incentive-wise, as Jamie Merisotis said
earlier, is to emphasize the necessity to meet need-based aid
first in respect to the utilization of aid, and that's where
the Federal Government can put on pressure to insist that, as
aid is matched as institutions move on the aid issues, that
they hit the need-based issues first.
Chairman McKeon. Mr. Castle.
Mr. Castle. Thank you, Mr. Chairman.
This is a problem we visited about six or 7 years ago, and
frankly, we didn't do a lot about it in Congress, and I think
that was wrong then and I think it's wrong now, to be very
candid.
My sense is that Jessica Hanson is the one who's got it
right in this room, based on what I've heard, and that is
tuition increases should be last, not first, not ever if they
can be avoided, based on what young people in this country are
going through with their loans and other costs of college at
this point.
There's been a lot of discussion about college prices. I'd
like to focus on the costs of the college. The price will
follow thereafter.
As I look at these charts, and I think you all have this in
front of you, but you look at the chart that shows the
inflation, you will see that inflation is rampant, it's
tremendous in our colleges.
If you look at Page 11 of those charts, and I know the
audience probably doesn't have it, if you look at Page 11,
you'll see some of the increases in costs for 1 year for the
colleges, and the per capita income in the states, which is in
almost every case less than the costs of the two or 4-year
institution, and the change in state appropriation, which I
counted, 32 are increased and four are unchanged, which puts
the lie a little bit to the whole business of reduction as far
as colleges are concerned.
If you turn to the next page, you see some of that over 10
years, and you'll see what's happening to the costs of college,
and we can't afford it.
I happen to Chair another Subcommittee that deals with
kindergarten through 12th grade, and we are trying our very
best, particularly in No Child Left Behind, to make sure that a
lot of our lower-income and minority students in this country
have an equal opportunity.
That, to me, includes equal opportunity to be able to go to
college, and to be able to go to college means being able to
afford to go to college, perhaps Murray State, but there's got
to be a lot of other colleges which these kids can go to; and
frankly, I think the time has come for us to start looking at
these colleges.
I don't believe in price controls. I do have a problem with
that. I just think it's too complicated and would be very hard
to enforce.
On the other hand, I don't think the Federal Government can
bail out every college increase that presidents and boards want
to put in with Pell Grants. I don't think that's the proper
solution, either.
I think the time has absolutely come in America for us to
look at the costs of college and what we are doing, and when
you ask people that, about 87 percent say they're wasting
money.
Well, they don't know really what the answer is. Some of
you might know what the answer is. I just jotted down some
things.
I just heard this morning a high official in the Department
of Education talking about full professors, reminding me of
something.
When is the last time you saw a full professor teach a
freshman class of 50 kids versus a seminar of four, or take a
full caseload in terms of what they are teaching?
How about the athletic programs that we have in the various
colleges across this country, particularly the major 4-year
colleges in this country? What are they paying for the costs of
all of that?
What are we paying in terms of salaries today? I don't see
a lot about that.
College presidents, anybody, all you way from the
professors down to the administration--what about
administration in general? Everyone tells me there's a lot more
administration than there used to be.
What about the mission of these colleges? There are
incredible numbers of courses that are being taught out there.
Can we really afford to teach all those courses? Should
there be a more focused and limited mission as far as maybe
even some of our major universities are concerned?
What about overseas?
For example, I heard today that in public institutions,
that only 30 percent are graduating in 4 years. Is there an
economic reason for that? I assume it's true.
Is there an economic reason for that? Is it that you keep
kids in college longer, therefore you can make more money from
them over a longer period of time?
The whole business of the sticker prices, which Dr.
Alexander talked about, concerns me.
By God, if we're seeing false prices here at the Federal
Government in order to get more money somewhere or another, I
have a problem with that. That's up there with the mutual fund
industry and some of the other problems that I see out there in
this country right now.
I'm not at all sure, and I went to college a long time
ago--a lot longer ago than Jessica, say--but it seems to me
that we went to college for a longer period of time than they
do now.
I read recently that students are all upset about having to
go to class on Friday. Now, that really bothers me.
I mean, I didn't like going to class on Saturday a whole
heck of a lot, and I cut a few of them, as matter of fact, but
I didn't even think about Friday off, and now these students
are talking about not going to, or not wanting to go to class
on Fridays. I'm sure in a lot of cases, they still go to class
on Friday.
But my sense is that colleges are, frankly, not in session
as long as they were before.
The responsibility we have as a country is to remain, which
I think we still are, the best educational entity in the world,
and we stay in that capacity, but if we don't let our low-
income kids do this, if indeed we start to price out our Ivy
League schools and our top private and public schools so the
kids, the best students can't afford to go there and they have
to make lesser choices because of costs, frankly, that's
hurting America. That's hurting our economy, our way of life,
just a whole lot of things, and I think we need to address it.
I feel very strongly about that. Obviously, I feel very
strongly about it.
So I don't really have a lot of questions, in fact, there's
not a lot of time left, except if you have anything to add
about addressing costs, I'd like to hear it. I don't want to
hear any excuses or whatever. How can we address cost and drive
it down?
I'm sorry. The red light is on. I'll let the Chairman rule
on this one.
Dr. Alexander. One way, certainly, is to pay closer
attention to actual costs, the net costs of institutions.
If you're going to reward institutions, reward institutions
that have done a good job at keeping costs low and having high
efficiencies. Currently, we do almost the opposite at the
Federal level.
The more we encourage institutions to be efficient, the
more we encourage institutions to have moderately increased
just net costs instead of much higher expenditure rates--all
you have to do is follow per-student expenditures over the last
20 years.
That will tell you by sector, that will tell you which
institutions have actually increased their per-student
expenditures by exorbitant rates.
Follow per-student expenditures. They'll tell you a good
story about who is being efficient, who is charging little, who
is doing a good job at remaining affordable and accessible
based on the type of economies of scale that they are committed
to.
Dr. Lewis. Mr. Castle, I love your passion, and that
passion is something we all should feel about finding a future
for higher education. in my state, I need help. I need help on
the issues of pushing performance measures, or pushing
accountability, of pushing the possibilities that individuals
and families and policymakers everywhere will have the
information they need to make decisions.
The reason why we are working on these issues is the same
as yours. We want to make the best use of every dollar we get
and we want all the kids in Connecticut, all the adults in
Connecticut who need more lifelong learning to be able to come
in our doors.
That is going to require tremendous effort. It is going to
require our colleges to do business differently. And at the
state level, we need help from the Federal Government to keep
these issues on the table and to reward us as we make progress
in these regards.
The truthful response to your question of what to do is to
do a lot.
We have many opportunities to engage the issue of cost and
many opportunities to engage the issue of greater
participation, particularly in regard to setting state policy
and to set state performance measures. We need them, just as
you decided you needed them, for K-12, and there is a great
deal of work going on in the states in these regards. You could
help us.
Chairman McKeon. Thank you.
Mrs. McCarthy.
Mrs. McCarthy. Thank you, Mr. Chairman, and I thank you all
for the testimony.
As I sat here listening to the questions, and certainly the
answers, many things started going through my mind, and I was
thinking about when I sent my son to college, and I'm going,
``My God, it's a lot of money.''
But I also said, ``How come you're home so much?'' You
know, ``What do you mean you had one class?'' And I'm saying,
``What do you mean, 17 credits and you only have to go to
school 8 hours a week?''
That part I never understood, but being that everybody told
me he'd never go to college, I was thrilled he was in, and I'm
glad that he graduated.
But on the other side of it, too, when you first mentioned
about health care costs, I mean, I'm looking at those costs,
too, because it's still a business any way you want to look at
it, and I'm also looking at what students want out of their
colleges.
The days of just having a dorm, now they want more into the
dorms. The days of, OK, let's face it, the food was always
terrible in the cafeteria. Now, they have gourmet meals.
So somebody has to make sacrifices, too. You're there for a
good education and you should get a good education, but the
colleges, because they're competing now for the students, and
for the adult students, they are throwing in a lot of-- like
hospitals, valet parking at a hospital. Hello? You know, we
don't need it. So there are other issues in there.
But the bottom line is, I'm working on a program in my
district, I have a 23 percent minority district, and we have
started a program called Gear Up, which means we're working
with children from kindergarten all the way through high school
and we're getting the financial private sector to make sure
that these kids can go to college when they want.
This will be a $6,000 scholarship. We have 80 kids that are
starting this year in that program.
What I'm nervous about is that's the only money they have.
These are the poorest of the poor. Their parents work. And are
they going to be able to go to college somewhere for $6,000 if
the Pell Grants don't go to the right person?
Now, my problem is, I'm from New York, and what it costs to
go to school anywhere in New York, whether it's Nassau
Community College, which is a great college, they have to pay
higher salaries to the professors and to the teachers,
hopefully not 200,000.
I would love to know what that college, whoever it's paying
200,000. I tend to think it's probably a research grant of some
sort, but I don't know.
But I mean, in all fairness, most of the costs, whether
it's heating, electricity, the physical plant, you know, they
have to be taken in account, too.
I don't think the board of trustees actually sits down
every single year like, ``How are we going to raise costs?''
They're not in it for the money. They're usually putting it
into the plant, you know, the physical plant, of making that a
better college.
I don't have the answers, and it's curious, because as
we're trying to keep the costs down, we certainly have to be
able to see the transparency of where the money is being spent,
but I haven't heard any solid answers except the ones I
certainly like, on making sure that we have more scholarship
money for those students that need it the most.
And again, I'll come back to it, because New York, if the
average income is 50,000, a lot of people might not be
qualified for that Pell Grant, but if you live on Long Island,
50,000, believe me--most people would say that's a damn good
salary--you're not getting by, and you're really not.
So it's going to be curious as we go. I don't like price
controls, and I'm curious that we're even bringing them up
here, because we were trying to do it with the pharmaceutical
industry, and we knocked that one out, so I don't know whether
we should be doing it with the colleges, either.
But I would like your response, if you have any other clear
points on where we can cut down costs, even with Ms. Hanson.
I'd love to know who gets $200,000 for a professorship.
Ms. Hanson. Maybe we can talk about that after this, but it
is a real--that is a real issue.
And again, we talk about it, and unfortunately, when we
look at universities, a lot of the time we do see the building
on campus, and we see the gourmet food services and so on that
universities and students are trying to push for when the money
is there.
But when it comes down to it, and when the universities are
strapped, in situations like this, the No. 1 issue for students
is going to be tuition.
I mean, just as you said, no matter what, regardless, if
they can't afford to go to university, they're not going to
university, and so when it comes down to it, again, the biggest
issue for students is affordability.
Mrs. McCarthy. Thank you.
Dr. Lewis. You asked for an example. Let me give you one.
In Connecticut, we are buying on-line library materials
together, in volume discounts, for both our public and private
institutions.
We're actually doing this with a statewide grant, and
that's an unusual way to approach the notion of moving to on-
line libraries, but in fact, those separate costs, if borne by
institutions and therefore by students, would be $30 million
more than what we are paying in concert.
We need to explore all of these kinds of options. We are,
for instance, looking at the fact that we run 3,400 programs
across our 47 institutions, largely because of demand, because
students, employers, customers want very specialized kinds of
education, and that's very expensive. Meanwhile, our language
programs are dying.
So we are looking again at the potentials of collaboration
for providing language programs so that we will not lose the
one program, for instance, we have in Portuguese, because of
too few students and too little money to support it.
It is this kind of work that is very consequential to the
issue of price, and it is not the frivolity that we think of,
you know, when we think about that new track out there. It is
how can we keep instructional services of a level of quality
and simultaneously reduce cost?
Chairman McKeon. Thank you.
Mrs. McCarthy. Thank you.
Chairman McKeon. Mr. Burns.
Mr. Burns. Thank you, Mr. Chairman.
I appreciate the panel's input and their candid responses
to the questions.
I'd like to first respond to Mr. Castle. I was one of those
professors who taught 250 students in a freshman-level course,
and no, I did not make 200,000, so we're clear on that.
I think the challenge is cost containment, and cost
awareness, and I think the first question I have is, at what
level in the administration is this issue addressed, and is it
addressed consistently and with vigor?
Dr. Alexander. Back to ground zero.
I can tell you that we meet virtually at least every other
day on budget, and since I've been in this presidency, I've had
nothing but a budget crisis.
Mr. Burns. Budget has two sides, revenues and expenditures.
Dr. Alexander. Exactly. But the bulk of my time is spent on
the expenditure side, and the real challenge is, this bad
economy is different from the last bad economy for this reason
alone, that the demands are universal, and that we're the only
OECD country in the world looking at expanding high school
graduation rates in the next 10 years, and we're feeling these
students come into the institution.
How do you provide expanded access, not just stable access,
and utilize that through cuts that you're making on faculty
positions, cuts in staff positions?
We're doing a lot of shifting, a lot of shifting to
provide--for instance, we've cut out a lot of graduate program
courses to handle a massive influx of freshmen, the biggest
freshman class we've had in our history, this year--shifting,
reallocating resources to lower-level courses because the
demands are indeed so great right now.
Mr. Burns. Dr. Lewis? Dr. Lewis, do you have a response as
far as Connecticut is concerned, as far as your level of focus
on cost management, cost containment?
Is there a disconnect? I think the real issue is, do we
have a disconnect between those who provide the service, those
who receive the service, and then the collection of bodies that
indeed pay for the service.
Dr. Lewis. I think we have a disconnect in terms of
expectations, in all honesty.
I think we have allowed students to expect a great deal
from our institutions, and we have responded to a lot of
requests for service over time, as I've said. Just look at the
fact that we're delivering 3,400 different kinds of programs in
Connecticut. Ten years ago, that number--
Mr. Burns. Is that appropriate?
Dr. Lewis. --would have been half of that.
Mr. Burns. Is that appropriate?
Dr. Lewis. That's a good question. It's a public policy
question, and indeed, as we look at college costs, it is all
those kinds of embedded questions that together we have to
answer, at the Federal level, at the state level, at the
institutional level.
What is desirable? What do we need to provide to ensure
that we are educating our populace to the level of their
success in our society and in the workplace?
That's a deep and difficult question that's not going to be
answered overnight, but it needs to stay center stage.
Mr. Burns. Is there a certain prestige with a high sticker
price? Do some institutions have a price point that says, ``I'm
better, so it's going to cost you more''? Is there a certain
level of prestige associated with sticker shock?
Mr. Merisotis. There is some evidence that--it's been
called in the past the Chivas Regal effect, and that is that--
Mr. Burns. That will go a long way.
Mr. Merisotis [continuing]. People pay more for the higher-
priced good because it's perceived as having a higher value.
However, I'm not certain that that is as true today as it's
been in the past, in part because one of the things that we've
seen is a diminishment in the relative price of 4-year
education between public and private institutions.
That is, public institutions are actually increasing
faster, prices are increasing faster than the prices of private
institutions, and so some of the bloom has come off the rose of
the Chivas Regal effect, because in a lot of cases, the price
seems high to students and families.
Mr. Burns. Is it true that, in a 4-year curriculum, if it
takes a student 5 years or more to complete their education,
the cost goes up, so that as we are unable to meet expected
graduation rates, our overall costs to the Federal Government,
to the state government, to the institution, and to the student
continue to rise, but the student pays only a fraction, I think
you said about what, Dr. Alexander, about a fourth, 25 percent?
Dr. Alexander. Exactly.
Mr. Burns. I want to give you a quick scenario. I inherited
a young man not too many years ago who came to me as an
advisee, are you ready? Accounting 2. F, F, F, F, B. B? What
happened to C or D?
The answer is, that man took that course five times, sat in
five seats, got five levels of support from my state and from
my Federal Government, and finally got serious.
Now, we can't continue to offer a course to a student five
times, because frankly, I can't afford it, and neither can you,
and neither can the American taxpayer.
Dr. Alexander. Students are a lot smarter than people
think, and in fact, many students are staying in college today
because they understand the nature of this bad economy.
Four years ago, they wanted to get out and hit it, and they
had a lot of job opportunities. Today, you'll see them going
onto graduate school, you'll see them stretching out their
senior years.
And one impact of state budget cuts that nobody seems to
take into account is that these budget cuts, when they hit
institutions such as ours, they cause us to either drastically
increase the class sizes at the lower level or cut class sizes,
which we've had to do both.
When you cut class sizes, you slow the pipeline down. You
cut class options, you indeed slow the pipeline down, so you
actually, in many ways, these state budgets have a bad effect
on the type of economy of scale that you're trying to reach,
but also on graduation rates, because students will stay
longer, because they don't happen to have the same courses when
they want to take them, offered as frequently as they're used
to.
Mr. Burns. Thank you, Mr. Chairman.
Chairman McKeon. If you have a class with 35 chairs in it
and 30 students in it, and you put five more students in there,
how does that increase your costs?
Dr. Alexander. Well, we really don't know the difference,
but I will say that I can honestly say that a history class at
Harvard doesn't cost any more than a history class with the
same amount of students at Murray State.
Harvard just chooses to spend a heck of a lot more on what
they do, and the question is, what role does the Federal
Government have in subsidizing the institutions that choose to
expend more?
Chairman McKeon. Thank you.
Mr. Kildee.
Mr. Kildee. Thank you, Mr. Chairman. Excuse me for
absenting myself. I had to go over to the House to defend a
bill on the floor of the House.
Dr. Lewis, if we were to put Federal price controls on
tuition, could institutions reduce the aid they provide their
students rather than raise tuition prices, and what would the
effect of that be?
Dr. Lewis. First, let's recognize what happens when Federal
price controls go on.
Institutions are going to make some choices about, then,
who they will serve. My land grant university, for instance,
has a high selectivity rate.
It could choose to take students who can pay, which is what
some institutions do.
It can choose to bring the money into its coffers, but it
will not fulfill its public mission if it does so.
So you need to understand that this is a very complex array
of dominoes. Where one goes down a lot of others go down at the
same time, and it's those unintended consequences that Jamie
talked about earlier today.
So I think when you think about price controls, you have to
understand that the behavior of institutions will not all be
the same. It will be quite different across the spectrum and
types of institutions, and the results may not be what you're
after.
Mr. Kildee. You might not have the universe of people that
you would like to have at a university.
Dr. Lewis. Absolutely, or that we need to be educated in
our society.
Mr. Kildee. Right now, you try to have kind of a cross-
section economically, fiscally in various ways, but you might
reduce that universe if you just took those who could afford
it.
Dr. Lewis. We're already at the point in some states where
institutions are setting caps on enrollment, and that will
allow them to operate with their resources in hand, those
sufficient resources, as we said before, but whether it serves
the state and the Nation in terms of bringing to the workplace
people with the right education and the right possibilities for
their future, another question entirely, when indeed, there's
more capacity in the institution--again, another balance point
in terms of policy.
Mr. Kildee. That's why I think, you know, Congress cannot
be the governing board of these institutions.
We certainly assist students a great deal, but when we
enter into the governance of institutions, that something we
should be very, very, very careful about.
Dr. Alexander, your testimony points out that the decline
in state appropriations in Kentucky has affected Murray State.
To what degree have those decreases in state appropriations
led to increases in your tuition? How big of a role does that
play?
Dr. Alexander. It plays--it is the major role. It is the
No. 1 role.
In fact, that's why we do postpone setting tuition rates to
almost the summer, because we didn't know what--we didn't have
a state budget for 16 months.
And what concerns me is, we're staring this in the face
this coming January, as well, and I've heard many--I've heard a
number of state legislatures simply tell me, ``Why should we
support you, even though you're increasing your enrollments,
when you can go to tuition?''
That is what we're looking at right now, because many state
legislatures are opting to handle their own political climate
by turning the bill on the students through tuition and turning
to institutions to actually handle this complicated challenge
that we face in our economies.
Tuition is our last resort, is indeed our last resort,
after cuts have been made, but the state appropriation cuts
that we have been dealing with are indeed the No. 1 issue in
how we set our next year's tuition rate.
Mr. Kildee. So if the appropriations from the state
legislature, where I used to serve, for 12 years, is the No. 1
factor, then the economy, in effect, is the No. 1 factor in the
tuition rates?
Dr. Alexander. Yes, sir, without a doubt, the economy, and
also, a bad economy also drives more students to universities.
Mr. Kildee. So any report that downplays the role of the
economy has a certain deficiency in it?
Dr. Alexander. It's the only report that I've ever seen, in
studying higher education research, that actually has stated
that the state appropriations have very little impact.
I think that throughout the country, and you'll look at
report after report, you'll find that indeed it is perhaps the
No. 1, or in some cases the No. 2 issue in setting public
university tuition policy.
Mr. Kildee. Thank you very much. Thank you.
Chairman McKeon. Mr. Hinojosa.
Mr. Hinojosa. Thank you, Mr. Chairman.
I'd like to direct my first question to Mr. Merisotis.
Hispanic-serving institutions and historically black
colleges, tribally controlled colleges and universities, are
typically lower cost institutions. They maintain these lower
costs despite the fact that most of their students need
significant financial assistance to attend college.
Could you please discuss the effects the Federal efforts to
control college costs would have on these institutions, and
would you please discuss how your recommendations, particularly
with respect to increasing need-based aid, would benefit
minority serving institutions?
Mr. Merisotis. Thank you very much for your question.
First, by way of background, I've had the honor of
facilitating dialog among those three communities that you've
just mentioned over the 4 years as part of a collaborative
entity called the Alliance for Equity in Higher Education,
which brings together the Hispanic Association of Colleges and
Universities, the National Association for Equal Opportunity in
Higher Education, and the American Indian Higher Education
Consortium, so I've spent a lot of time getting to understand
the issues in each of those communities individually and
collectively.
The kinds of price control discussions that have preceded
this hearing I think would be very damaging in all three
communities for the simple fact that the only major device this
Congress would have for controlling prices would be Federal
student aid, and if you were to go in that direction, you would
clearly be disproportionately harming students at those
institutions, because students at those institutions have a
higher average need level, are lower income than students in
other institutions.
So that's a significant concern that I would have with the
kind of discussion that preceded this hearing.
Now, my proposal to increase need-based student aid as part
of a package of ideas at the Federal Government, states, and
institutions I think would have a major impact on those
institutions, again in a disproportionate sense, because of the
communities that are served by those institutions.
But I want to make a point here, and it's a brief
historical point, about the decision that the Congress of the
United States made in the early 1970's.
In the early 1970's, Congress decided to invest in need-
based financial aid as the primary device for ensuring
opportunity, making college possible for students in this
country, and it's been a success.
It's been an enormous success. More students go to college
than ever before at all levels, and that's something that the
Congress of the United States should be very proud of.
Unfortunately, since we've made that decision, if we are
then going to try to control prices through devices in Federal
student aid, we are going to harm those populations.
Now, if the Congress decides to get out of need-based
student aid and votes to support institutions, which I would
not agree with, then you've got a device for encouraging cost
control, but absent that, cost control through the financial
aid programs would, unfortunately, negatively impact the
communities that you're talking about.
Mr. Hinojosa. If the GI Bill helped a lot of men--
particularly men, very few women--go to college after World War
II, what could we do to try to revive that type of program,
since we have so many men and women today, young people who are
serving our country, and be able to utilize something
comparable to the GI Bill?
Mr. Merisotis. You know, a GI Bill, a bill of rights for
college access and opportunity, I'm sure Ms. Hanson would
agree, would be an enormous opportunity for millions of college
students in this country.
It would be expensive. The GI Bill was, in effect, an
entitlement for those who were served by the program over the
years. That's difficult in this budget climate, and I
understand that, but that's the kind of goal, that's the kind
of bar I think we need to set.
I'm of the belief that a college education is the key not
only to individual benefit, to individual success, but also to
societal success.
Mr. Hinojosa. If we don't invest in it, as expensive as you
say it is, or will be, how come we don't complain about the
cost of building additional prisons?
We in our state probably have more people in prisons than
any other state, and we have a hell of a problem, and the
demand for space to go to college, a community college or 4-
year university, is tremendous, and we see it today.
Mr. Merisotis. There's an old line, Congressman, ``It's a
lot more expensive to go to the state pen than it is to go to
Penn State.'' And that's certainly true.
Mr. Hinojosa. My time has run out, Mr. Chairman. I yield
back.
Chairman McKeon. I guess we could eliminate prisons if we
could get people to obey the law.
Mr. Van Hollen.
Mr. Van Hollen. Thank you, Mr. Chairman.
I want to thank all the witnesses here today, as well.
You know, listening to my colleagues, it's clear that I
think everyone in the room probably shares the goal that every
student in the United States who works hard, does their best,
and wants to go on to get college and university degrees should
have that opportunity.
It's both the right thing to do, it's the thing we need to
do to make sure our economy continues to prosper, and the one
main barrier to that, of course, is the cost of tuition is the
barrier, and we need to find a way through that.
I agree entirely with the comments of Ms. Hanson that when
state legislatures, and in my view, when state legislatures
choose to dramatically cut back on public higher education, the
effect is really transferring a tax increase to students, and
I've made that point many times.
I'm a new Member of Congress. I came from the Maryland
State Legislature, and in the early 1990's, when times got
tough, state legislatures, Maryland like others, looked to
higher education, and more recently, they've done the same
thing.
We have seen, in Maryland, as a result of the economic
downturn, cost containment and cutbacks by the public
universities. They have cut costs, but they can't accommodate
the entire reduction through cost, and they have turned to
tuition increases.
We've seen as high as 21 percent tuition increases in some
of the University of Maryland entities, and that does mean that
many students cannot get the college education, especially when
you combine it with the fact that many of you cited, that we've
got more students wanting to go on to college and more students
from lower income families, which is overall a good thing, that
we've got more the more people wanting to go.
It explains why, although the total amount of Pell Grant
money is increasing, it's not able to really keep up with the
costs, either. I mean, we need more just to stand still in
terms of the purchasing power at our universities.
But my question is, when you're a state legislature, you're
facing all these demands on your budget, and you've got, for
example, the Medicaid program.
Under the Medicaid program, it's an entitlement, it should
be an entitlement. It's a cost-sharing program. States have to
come up with those funds.
At the end of the day, a lot of the Federal incentives mean
that the one area that there is no strong Federal incentive for
legislatures not to cut tuition is in the higher education.
Do you have any ideas on how we can provide positive
incentives--I don't want to have some penalty that has, you
know, unintended consequences--something we can do that has
some kind of positive incentives for states not to cut higher
education, or not to cut it disproportionately, during bad
economic times?
You know, it's a hard question, because as you point out,
we have Pell Grants, financially. We don't have direct aid to
colleges.
I will say that when Congress provided a $20 billion block
grant to the states recently as part of the relief package, it
actually had an impact on somewhat reducing, softening the
problem, but that's sort of a lump sum way of approaching it.
Do you have any more direct way that we, as the Federal
Government, can provide incentives to state legislatures not to
cut disproportionately in the area of higher education?
Dr. Alexander. I think you're asking the perfect question,
because right now, the incentives do the opposite. They reward
states for moving away from their responsibility to fund.
For instance, states that have high tax effort in support
of higher education and keep low costs are disproportionately
treated less than states that have higher tuition, through
Federal aid programs.
The question, the states that are disproportionately
treated in the current policies with the current programs are
the states that are low-income states, they're primarily in the
south and in the west. Those are the states that it primarily
impacts.
I think the question is how can the Federal Government help
stabilize, stabilize state appropriations so you don't get
these drastic fluctuations, and currently, the opposite is at
work.
Dr. Lewis. I might go back to just the issue of student
financial aid, because in fact you have one program, the LEAP
program, that requires maintenance of effort. Mr. Kildee spoke
of this earlier.
The issue of the state having to hold to its investment in
order to get the monies from the Federal Government is a very
important issue.
When I go to talk to my legislature, I can say, ``If you
take this money away, you're going to triple that amount of
money as it leaves our student financial aid system,'' and it's
a very persuasive way in which to keep my state on course in
respect to its commitment to that particular financial aid
program, which has not suffered reduction in these years of
state reduction.
Mr. Van Hollen. If you have any further ideas, we would
welcome them.
Chairman McKeon. Just to follow up on that, if you said
Work-Study, Pope program, TRIO, if you made all of those
programs have a maintenance of effort, you would support that?
Dr. Lewis. All of them at once might be a little difficult
for my state to take, but on the other hand, I think that the
notion of a matched investment is one that has great appeal in
respect to the state leveraging its dollar and simultaneously
requiring commitment from the state that receives it.
We have a Gear-Up grant, for instance, and we have battled
to get the scholarship that we need to match the state funds in
that regard, and it's been a very good education process for
our legislature to know what we can do with those financial aid
dollars and with outreach efforts to students and families when
they're in seventh and eighth grade.
There's a lot of education that goes with this process as
we begin to put new rules on the equation, and that's very
beneficial.
Chairman McKeon. Thank you.
Mr. Wu.
Mr. Wu. Thank you, Mr. Chairman.
I was going through the briefing materials, and I have to
say that you can't believe everything that you read. I hit this
one paragraph that said that there was not much cost increase
in the 1970's, and that's when I went to college, and I seem to
recall that my tuition went up 13.5 percent--not that I was
counting--in my freshman year, between freshman and sophomore
years.
But anecdotally, also, very briefly, two points.
There's been some discussion about dressing up health care,
dressing up college education, and some goldplating. I don't
know where that is, because based on my experience, I mean, we
used to eat stuff called Imperial Chicken, and it certainly was
not imperial, and I'm not sure that it was chicken, and I'm not
sure that food has gotten better at the places where I went to
school since then.
I realize that the states have been under tremendous
pressure, and that it's the public sector which has had more
cost increases in recent years than the overall average of
public and independent colleges.
But looking at inflation adjustments for costs, and also
for the benefit of a college education--and I think we do a
better job of sending more students to college than any other
country in the world.
When I travel in China, my recollection is that fewer than
1 percent, maybe .5 percent of students who graduate from high
school get a chance to go to college, and we do roughly 100
times better than that, but we need to increase access.
I want to follow up on my colleague from Maryland's
question. It was such a good question, I'm basically going to
re-ask it.
However, anecdotally, I was looking at the charts, I was
looking at some charts.
It looks like there has been a 38 percent adjusted increase
in the cost of college, but it looks to me like, off of those
charts, that the benefits of going to college have increased
even more than that 38 percent. That was a visual.
Is that correct?
And after that answer, I'd like to follow up on my
colleague's question.
Dr. Alexander. The benefits of not going to college but
graduating from college, and this is something we spent as long
a time talking about as access.
If you go to a college, not a college graduate, someone who
attends college and then drops out in one to 3 years, their
earning power for a lifetime is much closer to that of the high
school graduate. It's only about a $4,000 difference for a
lifetime.
But that of the graduate, there's something magical about a
piece of paper, whether you've learned anything or not. There's
something magical in the marketplace about a piece of paper.
That piece of paper is going to entitle you to significant
differences in earning power for the rest of your life.
So access, we focused on in the 1970's, but completion is
indeed the economic issue of today.
Mr. Wu. I'd like to just share with you that I was telling
my 6-year-old son last night that it's worth $1 million over
his lifetime to go to college. I'll change that to ``complete
college.''
And he said, ``When do they give you the $1 million?''
[Laughter.]
Mr. Wu. I will have to get better at the precise
description.
But I think Mr. Van Hollen's question was so good, that I'd
basically like to re-ask it and give you all a chance to take
another stab at it, which is, with all due respect to the
Chairman, I do have concerns about certain aspects of a cost
control approach to cost containment. We are always concerned
about cost and about access.
But if you could go further, to describe positive
incentive-based systems that might work--I mean, it's a
bedeviling question, many different tiers, problems with state
legislatures and so on--I just wanted to give you a chance, in
the time remaining, to readdress that issue.
Mr. Merisotis. One of the things that I addressed in my
testimony was creating incentives, creating a sort of
competitive grant program, not only for cost control, but for
some reform in terms of how budgeting works in colleges and
universities.
This is a pretty arcane process, but one of the problems
with the institutional budgeting process is that they sort of
start with what they spent last year, and then they try to
figure what they're going to spend next year based on that.
There's something fundamentally wrong with that, in an
environment where resources are declining.
It's difficult to get out of that mode, and I think
creating some incentives for developing, refining, and
disseminating those kinds of ideas might be useful.
That would be something that the Federal Government could
contribute positively, as an incentive to institutions, a small
amount of money on a competitive basis, and then, to then
disseminate those ideas so that institutions start adopting
some of those better strategies. There's got to be a way out of
this box.
Dr. Alexander. I would say that, and I know it would be
somewhat revolutionary, but you need to reward the institutions
that are indeed keeping costs low, and not pour money into
programs and systems that do the opposite. I think you'll find
a lot more institutions interested in keeping costs low.
Dr. Lewis. I understand what Dr. Alexander is saying, and
yet I know my land grant university would say though its cost
is high, it is meeting the need of every low-income student who
qualifies for admission. That's another paradigm, another way
to go at the issue of cost.
But having said all that, and back to your question
originally, I believe again that there are a couple of very
large issues that we need to address in higher education.
One is how we use time, how we use time for students and
how we use time for our faculty, because costs in higher
education will go up every time we have to pay someone more
money to teach or to work in our institutions, because that's
our biggest expenditure everywhere.
So we need productivity gains, and again, to identify best
practices, to hold institutions to progress, goals they set for
themselves in a very public setting is a way to go at it.
For example, remediation is a major cost for our
institutions. It will continue to be, especially as we work
with adult students. We hope that it will lessen for the
students coming as traditional students.
But there are good ways to do remediation. There are good
outcomes. There are ways to evaluate outcomes, and we all need
to know the best ways to do it and how to save money in the
process.
I believe every one of my presidents would like to do that.
Mr. Wu. Thank you for your indulgence, Mr. Chairman. I
appreciate the extra time.
Chairman McKeon. Mr. Bishop.
Mr. Bishop. Thank you, Mr. Chairman.
I should start by the story that Mr. Burns told about the
individual who failed accounting four times and then finally
passed.
It reminds me of the old joke of a kid who came home, and
after his first semester he had four Fs and a D. He was very
upset, and his father said: ``Don't worry about it, I know
exactly what you did wrong. You spent too much time on one
subject.''
[Laughter.]
Mr. Bishop. I was a college administrator for 29 years
before I came to the Congress, and I spent 17 of those years as
the chief executive of the college I was at, and I spent every
day just as you did, dealing with the budget.
One of the issues that I'm concerned about is that we're
dealing with the issue of pricing and college costs as if
colleges were monolithic, as if we were all the same, as if we
were all dealing with the same set of circumstances, and we're
not.
The college that I was at, 60 percent of its expenses were
salary and fringe, 20 percent were in unfunded student aid, 5
percent were in maintenance and operation of plant absent
personnel, and 5 percent were in debt service. Those are tough
to deal with without affecting either quality or access.
So I'm concerned about dealing with this issue from sort of
a macro point of view for all colleges, although I absolutely
agree that the issue of confronting rising costs as it relates
to access and affordability is precisely what we should be
doing.
We didn't have any gourmet meals, we didn't have any
$200,000-a-year professors. In fact, our highest-paid professor
was, after 37 years on the job, was making about $95,000, so
one would be hard-pressed to find areas of waste or fat in our
budget.
So I'll just put that out there as a caution, that we can't
look at us as all being the same.
A couple of--
Chairman McKeon. Will the gentleman yield?
Mr. Bishop. Certainly.
Chairman McKeon. You're an expert witness on this, so I
just have to ask you, what were your tuition increases?
Mr. Bishop. Our tuition increases were on the order of 4 to
5 percent a year.
Chairman McKeon. In the bill that I've talked about, the
schools that we would be looking at would be raising theirs
more than that.
And what was your tuition?
Mr. Bishop. I'm a little rusty now. I think the tuition
right now is about $19,000 a year. That's just tuition. This is
a private institution.
Chairman McKeon. OK.
Mr. Bishop. Total student cost is around 27 or 28,000 when
you add in room and board and books and supplies and so on.
Chairman McKeon. I apologize for using your time. I'll give
you extra time.
Mr. Bishop. I also will say, but thank you, not once did we
view--and I participated in making decisions with respect to
raising tuition for about 25 years--not once did we start with
the notion that we would raise tuition. We started with the
notion of what our fixed costs were, how they were going to
increase, and how we needed to maintain quality.
Nor did we once allow availability or lack thereof of
Federal or state financial aid to enter into our discussions
about how to raise tuition.
A couple of questions. Clearly, what we're interested in
here, all of us, is access and affordability. A specific
example. U-Mass this year reduced the size of its entering
class by 1,000 students in response to a reduction in the state
appropriation.
I think it's fair to suggest that that may be happening
more frequently if we have a dynamic in which state
appropriations are declining and we are capping tuition.
My question is, how likely is it that we're going to see
more institutions cap the size of their freshman class and thus
reduce access, which would be the opposite effect of what it is
we're trying to achieve?
So I'll put that to any member of the panel.
Ms. Hanson. Mr. Chairman, Mr. Bishop, I would like to first
clarify my statement in regards to professors making $200,000.
This was an example of a point that I was trying to make
about a situation we have in the state of Florida where, in
this past legislative session, we just in fact had to pass a
bill to cap Presidential salaries that were continuing to rise
and rise and rise, and I just wanted to clarify that.
Please go on.
Mr. Bishop. Thank you.
Dr. Alexander. I'm trying to clarify the question.
I guess the point is, how damaging would it be?
Mr. Bishop. Yeah, how damaging to access?
Dr. Alexander. Well, if we stay on percentages, it will
substantially hurt access and it will penalize all the
institutions that have been the most accessible and the most
affordable, if you keep this on a percentage, because we're the
ones that will have higher percentages but small dollar
increases, and that damages everybody in every institution,
particularly community colleges, AASCU institutions, and other
private institutions that have fought so hard to keep costs
low.
We would put not only enrollment caps on, but we would have
to do all kinds--it would put us in a perpetual spiral
downward, compared with other institutions in other states, for
simply the reason that we have done a good job, I think, in
keeping our tuition lower than most other peers.
Mr. Bishop. Let me ask a related question.
For independent or private institutions, most of the costs
that they deal with are either fixed or semi-fixed.
To what extent do you think a mandate to cap tuition
increases will have the effect of reducing unfunded student
aid?
Mr. Merisotis. I think it would have a substantial impact.
We know in the last decade or more that it's been one of
the fastest-growing areas of investment on the part of
independent institutions, so creating a cap, I think, would
naturally reduce that investment. That is, a significant
portion of the increase in tuitions in fact is going back into
institutional aid to support needy students.
So I think that would have a negative effect.
Mr. Bishop. So again, we would have the counter--I mean,
instead of increasing access, we would be in fact perhaps
reducing access?
Mr. Merisotis. That would be my concern.
Mr. Bishop. I have one more question, Mr. Chairman.
This is for Ms. Hanson.
You said that you've had a first-rate experience at FSU,
and I commend you for saying that and I'm sure the president is
delighted to hear that.
You also said that you think that there are examples of
wasteful spending at FSU. Leaving aside the lucky professor who
makes $200,000, can you cite any examples of what you would
consider to be wasteful spending that, if they were reduced or
eliminated, that would not impact on the quality of the
experience that you've had?
Ms. Hanson. Kind of what I had mentioned earlier,
previously, is that when we say that, for students, tuition is
our No. 1 concern, we really mean it, and as I said before, a
new building, renovating a building on campus, is going to be a
lot less important to a student than a 2, 5 percent increase in
tuition, to whereas they might not be--they might have to take
two, three more semesters to graduate, taking on another
course.
So really and truly, I can think of a long list of examples
of university spending that is not going to affect a student's
productivity as much as issues of tuition.
I also think it's important to mention the Pell Grant
issue. We talk about that a lot. We talk about that as a way to
maybe try to solve the problems that we've having with students
and with rising tuition.
But as Dr. Alexander had said a couple questions ago, you
know, he had used the word ``stability,'' and I think that that
really is such a strong point, and that we're looking for a
stable answer, and unfortunately, when students are faced with
such high tuition increases, throwing more Pell Grants out
there is kind of like throwing money into the wind, because if
we can't control the tuition, the grants are going to prove to
be ineffective.
Mr. Bishop. OK. Thank you, Mr. Chairman, and thank you to
the panel.
Chairman McKeon. Thank you.
Well, this has been an interesting year so far. We talked
about, early this year, coming up with a way to control college
costs, because this is the second time I've gone through this
reauthorization.
I've studied it, and as has Senator Lautenberg, and before
him we had Pat Schroeder, who used to be on this Committee, and
I think 20 years ago that she was concerned about the same
issue.
We can come together and we can talk and we can talk and we
can talk, and I have found, the last time we set up a
commission to look at college costs, and, you know, they did a
lot of good work, came up with a nice book--tuition keeps going
up.
I think that the time has not come that we quit talking. I
think this hearing has been good, because a lot of good things
have come from it, and I know that the bill that we're going to
issue will undergo some change, and before anything is finally
passed, there will be more change.
I know that out of the 6,000 university schools across this
country that are participating in Federal financial aid
programs, some of them are doing a fantastic job, and are
really carrying out their mission. They're keeping their costs,
they're affordable. But I know that some of them can do a
better job.
We've talked about incentives. Well, that's more money, and
as I said earlier, the Federal contribution is already $90
billion, which is about half of the cost, and I know a lot of
institutions are really concerned and they don't want Federal
involvement, but they sure want the Federal money, and I think
that some way we need to come together and sit down and talk
about this.
Just sitting out in some building and lobbing bombs at it
is not going to work. We need to come together to address this
issue.
Now, we're going to introduce this bill in the next week or
two, and we've already made changes from it.
At first, we were talking about including all financial
aid. We have excluded now Pell Grants and student loans from
many sanctions, and we've changed--you know, we need to change
the interest part, because I know that's not adequate and I
know there will be other changes.
And just sitting here, talking to Mr. Tierney and earlier
with Mr. Kildee, there are lots of good ideas, but we need to
come together and we need to work on this.
Early on, I said, this is a national problem. The stage
governments, the Federal Government, the students, the parents,
the schools, the lenders, we all have to come together, because
if we go through all this process and say, well, gee, it's too
hard to make change, we're going to just have to tinker around
the edges and maybe hope that everybody just does a better job,
and we retire, and 5 years later somebody reauthorizes this
again, and they'll say, gee, cost is a problem. Yeah. Well,
let's talk about it. Let's set up a commission. Five years
later, let's reauthorize this. Let's talk about it. It's a real
problem.
And instead of 22 percent of our young people not being
able to go to any college, and those are high school graduates
in college preparatory courses, that number is up to 30 or up
to 40 or up to 50, and we have a split society, and what does
that do to our country?
We really need to sit down. And I appreciate you witnesses
being here today. I appreciate the members of the Committee
that came, and their questions, and their adding to the debate.
We really need to come together on this.
Thank you for it. I hope you'll stick with us and work with
us as we go through this process and we need to come to you for
questions and answers. I appreciate it.
If there's no further business for this Committee now, this
Committee stands adjourned.
[Whereupon, at 4:31 p.m., the Subcommittee was adjourned.]