Speeches & Floor Statements
Opening Statement: Alexander on Making College More Affordable: Simplify Loans, Cut Red Tape, Encourage Innovation and Accountability
Posted on February 6, 2018
The Senate Committee on Health, Education, Labor and Pensions will please come to order.
This is another in a series of hearings reauthorizing the Higher Education Act. This committee has held 22 hearings over the last four and a half years including five this year in preparation for reaching a bipartisan result by early spring that we can recommend to the full Senate.
Senator Murray and I will each have an opening statement, and then we will introduce the witnesses. After the witnesses' testimony, senators will each have 5 minutes of questions.
At the end of World War II, just five percent of Americans had bachelor’s degrees. When Congress enacted the Higher Education Act in 1965, that number had increased to ten percent, and today, 35 percent of Americans have a bachelor’s degree. That is a remarkable story.
Today, there are over 20 million students attend that 6,000 colleges, universities, community colleges and technical institutions.
This is our fifth hearing this Congress in preparation for reauthorizing the Higher Education Act. I hope to reach a bipartisan result by early spring that we can recommend to the full Senate.
Today’s hearing is about the cost of going to college.
While it is never easy to pay for college, it is easier than many think, and it is unfair and untrue to suggest that for most students college is out of reach financially.
Each year, 32 percent of students – those from low-income families – qualify for up to $5,920 in a Pell grant that they do not pay back.
According to the College Board, the average tuition at a two-year community college is about $3,600 for the 2017-2018 academic year – so a maximum Pell grant would more than cover tuition. Almost 40 percent of undergraduates attend a community college.
In 2015, Tennessee became the first state to offer two years of tuition-free education at community colleges and technical institutes to every high school graduate through Tennessee Promise. According to U.S. News and World Report, 12 states have now passed laws providing some free community college.
The average tuition at a four-year public college is just under $10,000 for the 2017-2018 academic year, according to the College Board – so a maximum Pell grant would cover about 60 percent of tuition. About 40 percent of undergraduates attend public four-year colleges, which include many of the best universities in the world.
Federal aid does not take into account other scholarships a student may receive.
For example, at the University of Tennessee, Knoxville, one-third of students have a Pell grant. In addition, 92 percent of in-state freshmen receive a state Hope Scholarship, which provides up to $3500 annually for the first two years and up to $4500 annually for the next two. If a student receives both a Pell grant and the Hope Scholarship that would nearly cover the full cost of tuition.
On top of these scholarships that students do not pay back, taxpayers loan students $92 billion that students must pay back, but on generous terms. For federal loans, there is no credit check, and in some cases, students may elect to pay loans back based on their income, and after 20-25 years, the loans may be forgiven.
At one of our previous hearings, Dr. Susan Dynarski testified: “In the United States, typical undergraduate debt is less than $10,000 for those who don’t complete a four-year degree and about $30,000 for those who do.”
So, for most students, an education at a public college or university is affordable.
Many members of this committee believe taxpayers should send even more on federal aid to college students. To the extent that is true, whether there will be additional federal dollars will be decided by the Appropriations subcommittee, where Senator Murray is the ranking member.
As we continue to consider the cost of college, I would suggest we consider what is known as the “Bennett hypothesis.”
In 1987, then U.S. Education Secretary Bill Bennett said: “If anything, increases in financial aid in recent years have enabled colleges and universities blithely to raise their tuitions, confident that federal loan subsidies would help cushion the increase. In 1978, subsidies became available to a greatly expanded number of students. In 1980, college tuitions began rising year after year at a rate that exceeded inflation. Federal student aid policies do not cause college price inflation, but there is little doubt that they help make it possible.”
In 1987—thirty one years ago, when there were almost 13 million college students —taxpayers spent $3.7 billion on Pell grants; today, there are 20 million college students and we spend $28 billion.
In 1987, taxpayers backed $11.3 billion in student loans; last year, taxpayers directly made $92billion in new loans to students.
31 years ago, average tuition at a four-year college was $3,200; today it is $10,000.
To the extent that the Bennett hypothesis is true, research suggests that the loans are more of a cause of tuition rising than the grants.
So, as Congress considers increases in the amount of grants and especially loans, we should also consider whether those increases have an effect on rising tuition.
Despite this, there is no doubt college costs are rising and that a growing number of students are having trouble paying back their debt.
Our work over the last four and a half years has produced a number of proposals to reduce the cost of going to college and making it more affordable—that do not necessarily including asking the taxpayer to spend more money on student aid.
First, simplifying the FAFSA—the burdensome Free Application for Federal Student Aid that 20 million families struggle to fill out each year—to remove it as a barrier to college and help students better understand the range of schools they can afford.
To receive a Pell grant, or any other federal financial aid, a student must complete the FAFSA.
After hearing testimony at our November hearing, Senator Bennet and I are now finalizing a proposal to reduce the number of questions from 108 to 15-25.
The former president of Southwest Community College in Memphis told me he believes that he loses 1,500 students each semester because the complexity of the FAFSA discourages them from applying for Tennessee’s free tuition program.
Our proposal would also mean that students are able to apply for financial aid earlier in their senior year and could know about how much college aid they are eligible for and which schools they could afford when they enter high school.
So simplifying the FAFSA will make it easier to apply for a Pell grant, which in turn will help more low-income students unlock money to pay for college.
A second way to make college more affordable without appropriating additional dollars is to simplify the existing two grant programs, five loan programs, and nine repayment programs and redirect some of those dollars to higher priorities. For example, creating additional Pell grants.
This complex system confuses students about aid and repayment options and makes it harder for them to receive the aid that can make college affordable.
At our hearing three weeks ago, Dr. Matthew Chingos testified that any money we save from simplifying the student loan system should be put into increasing the number or size of Pell grants.
Third, more competency based education would allow students to more rapidly complete degrees based on knowledge and learning, not time in the classroom. Completing a degree faster saves the student money.
Fourth, it makes no sense to spend taxpayer dollars helping students earn degrees that are not worth their time and money.
At our hearing last week, witnesses testified that accountability measures that hold schools accountable for their students’ ability to repay their loans would help make sure college programs are worthwhile and loans are repaid.
I believe these are all ways that Congress can make college more affordable.
The Appropriations Committee will consider whether Congress should appropriate more taxpayer dollars for student aid, but in the meantime, Congress can also help students afford college by better spending the $28 billion in grants and $92 billion in loans we spend annually.
This would mean simplifying student aid, redirecting existing dollars for more Pell grants, helping students complete their degrees more rapidly, and making colleges more accountable for students repaying loans.
I believe that simplifying programs and regulations to make college more affordable and make it easier for students to apply for financial aid and pay back their loans will help higher education become more financially in reach for students.