Testimony of
Luke Swarthout, Higher
Education Advocate
United States Public
Interest Research Group
(U.S.
PIRG)
Subcommittee on Higher
Education,
Lifelong Learning and
Competitiveness
April 30th, 2007
U.S.
PIRG is the federation of state Public Interest Research Groups--a national
network of state based non-partisan, non-profit public interest advocacy
organizations based inn 30 states. We
work with students on more than 100 college campuses across the country. For more than a decade, our Higher Education
Project has represented hundreds of thousands of college student members at the
federal level by working to increase access to an affordable college
education. On behalf of our members I want
to thank you for convening this hearing and offering us the opportunity to
testify.
In
my testimony I will focus on the issues and challenges that students and their
families face as they apply to college and as students move through
college. In particular, I will focus on
places where federal policy affects students and their choices or on places
where federal policy could help students and their families manage this
process.
I
would like to highlight some of the principle challenges facing high school
students as they apply to college: the lack of financial aid, an overly
complicated process, and the need for additional information.
Grant Aid
Our financial aid
system is designed to ensure that academically qualified students are able to
attend college regardless of their financial situation. The federal government
plays a critical role in guaranteeing access to college for millions of low-
and middle-income students through programs like the Pell Grant and
Supplemental Education Opportunity Grants. Unfortunately recent studies suggest
hundreds of thousands of students are unable to progress from high school to
college because of a lack of financial aid.
Students face real
challenges paying for higher education.
Rising college costs and stagnant need-based grant aid has put college out
of reach for many students and families.
For other students, cost has forced them to change how they progress
through college, starting at a 2-year institution rather than a 4-year college
or extending their college career to limit loan debt or to simply come up with
sufficient funds to pay their tuition bill.
The
Advisory Committee on Student Financial Assistance estimates that over the past
decade between one million and 1.6 million qualified high school graduates did
not attend college largely due to lack of financial aid. Their recent report, Mortgaging Our Future, estimates that between 1.4 and 2.4 million
students will be similarly limited from attending college during the next
decade for the same reasons. These
estimates do not include the students who will choose to attend 2-year
institutions rather than 4-year colleges due to cost. We concur with one of the key conclusions of
their report: we must increase need-based aid from all sources-- federal, state,
institutional and private.
Congress
should take steps to increase funding for the Pell Grant in the FY08
budget. In real dollars, the maximum
Pell Grant award is worth less than it was worth thirty years ago. Over the past five years the value of the
maximum grant award has declined relative to inflation and the cost of
college. The 2007 budget passed this
February increased the maximum grant award by $260 and marked the first
increase in 4 years. Last fall Secretary
of Education’s Commission on the Future of Higher Education called for an
increase in the maximum Pell Grant to 70% of the average 4-year college
tuition. According to a recent analysis
by the American Council on Education that would set the maximum grant award at
$6,200. The Commission report provides a
useful measure in thinking about where the maximum Pell Grant level should be
set to ensure access to college for all students.
Admissions and Financial Aid Process
As
a college degree becomes more critical, the process for applying to college and
for financial aid has become more complicated.
As teenagers, students and their families are faced with a series of
meaningful and difficult choices -- from what institution to attend to how to
finance their education. Three choices
in particular stand out: what school to apply to, how to fill out the FAFSA
form and how to interpret the financial aid package.
College Choice: Even as millions of new
students apply to college and universities every year, there is a clear absence
of centrally catalogued consumer information to assist families in their choice
of college. This information, including cost of attendance, net price, and
financial aid at the institution, would help students assess comparable
institutions and provide common points of comparison between institutions.
Adding more clarity to the cost of college on a user-friendly website would
help immensely as students and families navigate the college admissions
process. Clear information would also help current students understand
and track changes in cost over their college experience.
The
COOL (College Opportunities Online Locator) website seems a likely place to
hold such information. However our interest is ensuring students have
access to this information regardless of the location.
FAFSA.
The Free Application for Federal Student Aid is the federal form that
students fill out to determine their eligibility for financial aid. The complexity of this form has led it to be
compared unfavorably to federal tax returns.
The consequence of this overly complicated form and application process
is the underutilization of federal student aid.
Approximately 1.5 million Pell Grant eligible students did not fill out
the FAFSA form in 2004.
There are many
ways we can simplify this process. We
support a recent proposal by Chairman Miller and Representative Emmanuel to use
IRS data to pre-populate the FAFSA form with information taken from tax
returns. According to The Institute for
College Access and Success, nearly two-thirds of the asset or income related
questions on the form could be filled out through such a process.
Financial Literacy. The third procedural challenge facing
students as they prepare to attend college involves understanding the various
components of their financial aid package.
As more students and families borrow to pay for college and as those
loans increase in size, financial literacy has become more critical. With average student debt nearing $20,000 and
a significant percentage of borrowers owing in excess of $40,000, the interest
rates, terms and conditions of those loans will have a greater effect on the
choices of graduates after they college.
The distinction between federal student loans and alternative or
“private” loans or whether a parent should take out a PLUS loan or a second
mortgage are increasingly meaningful questions for American families. As we ask students and their families to
shoulder a larger share of the burden of college finance we must ensure that
they are prepared for this responsibility.
Textbooks
For families who have budgeted for
the cost of college, high textbook costs can be an unexpected shock once a
student reaches campus. While textbook costs are rarely, if ever,
factored into tuition, a recent PIRG study found that students pay an average
of $900 a year for college textbooks and that increased costs have been driven
by such publisher practices as issuing frequent unnecessary new editions and
bundling books with unnecessary additional materials. Such practices have
driven the cost of textbooks to rise far faster than inflation and have
undercut the capacity of students to resell their textbooks. For students at
some community colleges, textbooks cost can represent up to 40% of the cost of
college. As a result of rising prices, some students wind up sharing
books or going without textbooks. At the
instruction of Ranking Member McKeon and Representative Wu, the Advisory
Committee on Student Financial Assistance is undertaking a study of potential
textbook reforms. I would encourage the Committee to consider textbooks
as a real financial challenge facing students and encourage them to take
several steps to help students including mandating publishers disclose textbook
prices when they market on campus.
Financing College: Work and Loans
Rising
college costs and lack of financial aid have caused students to work more and
borrow more to pay for college. The
former is undermining the college experience for millions of students while the
latter is increasingly dictating what students can do after they graduate.
Working
during the semester and over the summer has long been a part of how students
pay for college. Indeed the federal work
study program is founded on the belief that some work may even be beneficial to
a student’s college experience. Unfortunately
full-time students increasingly also work full-time jobs that undermine their
studies and their college experience.
Whereas work was once one piece of the balanced college experience, it
is increasingly a burden particularly for students from low-income families.
According
U.S. PIRG’s report At What Cost?, 74%
of full-time students graduating in 2000 worked while attending school. Of these students, nearly half worked more
than 25 hours a week. These students
reported needing to work to pay for college.
In addition, they reported that their work schedules had a negative
experience on their grades, limited their class schedules and the number of
courses that they could take and their extra-curricular experience. Increased reliance on work undermines the
college experience for millions of students.
In addition, it encourages students to take fewer classes in a semester
and to extend college beyond 4 years.
Students working full-time are significantly more likely to interrupt
their college careers than those working only part-time.
The
challenge of balancing work and school weighs heaviest on low-income students
who can expect less financial assistance from their families. As a result, they bear a larger share of the
cost of college and need to work longer hours than their peers from wealthier
backgrounds. In addition, students from
low-income families are more likely to describe their work as necessary to
paying for their education than students from upper-income families. Congress can help these students by
increasing federal student aid and helping to restrain rising college costs.
The
final major financial challenge facing current college students and their
families is the issue of rising student debt.
Over the past decade, as more of the cost of college has been passed
onto students, borrowing has significantly expanded. Nearly two-thirds of four-year college
students borrow to pay for college, and the average student graduates with
approximately $19,000 in loan debt. Some
recent reports suggest that fear of debt dissuades some segments of the
population from attending college. While
the impact of student debt on access is being explored, debt’s impact on
affordability and the choices that students make during college and after
graduation is increasingly well documented.
Student debt dictates the career paths that students can follow. According to a recent U.S. PIRG report, 23%
of student borrowers at public colleges would have unmanageable debt on a
starting teacher’s salary. High student
debt may dissuade graduates from starting a family or persuade them to delay
major investments like purchasing a home.
A college degree
should be about opening doors for students, providing them with new
opportunities whether intellectual, economic or occupational. As student debt expands and as more students
turn to private loans to pay for college, we risk undermining that
fundamental. Congress should reform and
expand the income contingent repayment system for students to ensure that they
can manageably repay their student loans without undermining the opportunity of
their college education. We are support
proposals such as the Income-Dependent Education Assistance Act introduced by
Representative Petri and the language included in Senator Kennedy’s Student
Debt Relief Act under the heading “Fair Payment Assurance.” Beyond simply helping students manage debt we
must take concrete steps to reduce the burden of borrowing facing recent
graduates including meaningful increases to need-based grant aid.
A college
education remains an incredibly important personal accomplishment, associated
with greater wealth, better health and increased civic participation. An educated populace remains a critical
priority for our national civic, social and economic health. I have outlined some of the key challenges
and issues facing students. I would
encourage you to adopt key changes to the Higher Education Act to both help our
nation’s students and families and to keep our nation strong.
