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KEEPING COLLEGE WITHIN REACH: Alliance for Excellent Education Higher Education Expert Testifies Before House Education and the Workforce Committee on Fixing Federal Student Aid

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“Given this significant investment, it is troubling to learn students struggle to navigate the various federal student aid programs available to help them pay for college,” Kline said.
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Federal student aid spending increased to nearly $237 billion this year, but students entering college find the system obtuse and financial support difficult to obtain. This summer, federal student loan interest rates will be up for debate again, and will rise, if Congress does not act. These two issues were the primary focuses of a March 13 U.S. House Education and the Workforce Committee hearing on improving the federal student aid system.

The hearing, entitled, “Keeping College Within Reach: Examining Opportunities to Strengthen Federal Student Loan Programs,” explored ways to simplify and strengthen the federal student aid system. The committee listened to testimony from and asked questions of a distinguished group of witnesses, including Charmaine Mercer, vice president of federal policy at the Alliance for Excellent Education. Mercer helped pen the Alliance’s report, Repairing a Broken System: Fixing Federal Student Aid, which outlined a number of ways the federal government can fix the student aid system to focus on program access and completion.

In his opening statement, Committee Chairman John Kline (R-MN) noted that the federal government provided $174 billion of the $237 billion in financial aid in the 2011–12 school year and asked how such a massive government investment can be shrouded in confusion.

“Given this significant investment, it is troubling to learn students struggle to navigate the various federal student aid programs available to help them pay for college,” Kline said. “More work must be done to help our students and families understand the federal student aid system and make informed choices about their higher education options. Congress has a responsibility to explore ways we can strengthen and streamline federal student aid programs, making the process simpler for students, institutions, and families.”

Kline spoke of the scheduled Stafford Loan interest rate increase halted last summer that are due for another debate in the coming summer months. “When Congress approved legislation to temporarily stave off the Stafford Loan interest rate increase, my colleagues and I lent our support with the promise that we would use this time to work toward a long-term solution that better aligns interest rates with the free market,” he said.

In his opening statement, Ranking Member George Miller (D-CA) discussed the challenges of a federal loan system that leaves students with an average of $26,000 of debt upon undergraduate graduation. To combat the growing debt crisis, Miller recommended a short-term focus of ensuring that student interest rates do not double this summer and a long-term goal of recalculating interest rates for federal student loans.

“As we consider various solutions, we must not lose sight of the fact that these borrowers are the nation’s future,” Miller said. “If they are shackled by unmanageable debt, our economy will invariably suffer. We have a moral and economic obligation to ensure that all qualified students who want to attend college can afford to go.”

After the opening statements, Kline turned the room over to the expert panel. Mercer opened her remarks by noting that the current federal student aid system was originally intended to increase access to college. “Given the twenty-first-century needs of our economy—more students with higher degrees and skills—the federal government needs to carefully and thoughtfully reauthorize the Higher Education Act to reflect an emphasis on college completion,” she said.

Mercer laid out four specific recommendations for the committee to consider: (1) create student support systems, such as counseling, and an accountability system for all colleges and universities; (2) simplify the Free Application for Federal Student Aid (FAFSA) into three questions based on adjusted gross income, family size, and dependency status; (3) focus aid on the highest need students; and (4) provide support for middle class families.

“What our nation needs now is a thoughtful and purposeful consideration of postsecondary education policies,” Mercer said. “Students must continue to have access to postsecondary education and be provided with the necessary incentives to complete higher education, achieve individual prosperity, and become an integral part of the nation’s economy.”

Deborah J. Lucas, a Sloan Distinguished Professor of Finance at Massachusetts Institute of Technology, proposed a four-point plan to “increase the stability and transparency of budgetary costs” that included supporting income-based repayment plans for graduated students with debt owed to the federal government, and basing student loan interest rates on the market index.

Two additional experts offered their recommendations. Jason Delisle, director of the Federal Education Budget Project, argued for a simplified student loan repayment plan. Justin Draeger, president and chief executive officer of the National Association of Student Financial Aid Administrators, stated that his primary goal is to see the recalculation of the student loan interest rate changed to one that aligns more closely with the private market.

Testimonies and archived video from the hearing are available at http://edworkforce.house.gov/calendar/eventsingle.aspx?EventID=322265.

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