Speeches & Floor Statements

Opening Statement: Federal Student Aid System Needs to be Simplified, More Effective

Posted on January 18, 2018

Our nation’s first higher education institution was Harvard University, founded in 1636 – just 16 years after the Mayflower arrived in Plymouth.

There was, of course, no federal role in higher education at that time – there was no federal government.

During Abraham Lincoln’s presidency the federal government enacted the Land-Grant College Act 1862.

A century later, at the end of World War II, just 5 percent of Americans had bachelor’s degrees.

The federal government’s major role in higher education only dates back to 1965. 

By 1965, when Congress enacted the Higher Education Act, that number had increased to ten percent, and today, is 35 percent.

Today we have 6,000 colleges and universities, and the federal government’s role primarily is to help 20 million students pay for their education at a variety of institutions – graduate schools, four-year colleges, community colleges, and technical institutions.

These all form a higher education system that has often been called the best in the world.

This involves a huge amount of money – there were $28 billion in Pell grants last year that students don’t have to pay back. That number was over $30 billion just a few years ago. In addition, there was $92 billion in new federal loans last year that students do have to pay back. 

The last time we took a comprehensive look at our higher education system was 2008.

Since then, Congress and the president did something that I did not agree with by making the federal government the provider of nearly all loans to students. I did not believe that the federal government had the capacity to be one of the largest bankers in the world and the Department’s performance to date has demonstrated that I was correct.

We began thinking about this reauthorization four and half years ago when we held our first hearing on the reauthorization of the Higher Education Act in September 2013. Since then, we have had 18 hearings.

These hearings have produced a large number of proposals, mostly bipartisan, ranging from simplifying student aid to improving the accreditation system.

The House education committee approved their updated Higher Education Act late last year.

It is now time to bring our process to a conclusion and present our recommendations to the full Senate for action.

Senator Murray and I are working to do this as we have done with other large issues– the law fixing No Child Left Behind, the 21st Century Cures Act, and our reauthorization of the FDA user fee agreements – in a process based on bipartisan consensus.

It is our goal for the committee to mark up a comprehensive set of recommendations and send them to the full Senate by early spring.

The consensus that I see emerging is student focused: Simpler, more effective regulations to make it easier for students to pay for college and to pay back their loans; reducing red tape so administrators can spend more time and money on students; making sure a degree is worth the time and money students spend to earn it; and helping colleges keep students safe on campus.

One area of consensus that has emerged – something we have heard over and over from students, parents, and administrators – is that the federal financial aid form itself is overly complicated and needs to be much simpler.

As a result of our hearings we have figured out we can drastically shorten the Free Application for Federal Student Aid, or the FAFSA, from 108 questions to a 15-25 questions, using information the government already has.

This will be a welcome relief for the nearly 20 million students that complete the FAFSA each year. 

The president of Southwest Community College in Memphis told me he believes that he loses 1,500 students each semester because of the complexity of the FAFSA.

A woman who has mentored with Tennessee’s free tuition program, Tennessee Promise program, said the complex form has a ‘chilling effect’ – intimidating parents who may themselves never have attended college, and have no experience navigating the process.

Over and over families have asked me, “I’ve already given most of this information to the federal government when I paid my taxes, why do I have to do it again – once is enough.”

We also consistently hear from students, parents, and administrators that students looking for federal financial aid to go to college need a much simpler system for the nearly $30 billion in grants, roughly $100 billion in new loans, and the repayment plans for those loans—so that the financial aid system isn’t a barrier to college for the very students it’s intended to help.

Today’s hearing is to see if we can reach a result on making a more effective system of grants, loans and repayments plans.

Currently we have:

  • 2 Grant programs
  • 5 Loan programs
  • 9 Repayment plans

This is a complicated system for students, which leads to confusion about the aid and repayment options they are eligible for and ultimately makes it harder for them to get that aid. 

The federal financial aid system is so complex that even those in the higher education system can have trouble navigating it.

At a roundtable at the University of Tennessee–Martin, a Tennessee college president told me it took him months to figure out how to help his daughter pay off her federal student loans in full, even with the money in hand.

And as one of our witnesses, Laura Keane, today will describe, many students can’t tell the difference between a grant and a loan when they receive their financial aid letters from institutions. According to Ms. Keane, some letters do not clearly identify loans as loans while other letters refer to the same federal loan with different names, causing even more confusion when a student tries to compare the aid they might receive.

Senator Bennet and I, along with Senators Burr, Booker, Isakson and King, introduced a proposal last Congress —to streamline federal aid and repayment – to “one grant, one loan”:

  • It would combine two federal grant programs into one grant program, and reduce five different federal loan programs into three: one loan for undergraduate students, one loan for graduate students, and one parent loan.
  • It would also simplify repayment options by streamlining complicated repayment programs into two simple plans, an income-based plan and a 10-year repayment plan.

Today, I hope to hear from our witnesses about our one grant, one loan idea as well as other proposals.

In addition to Ms. Keane, our witnesses include an advisor who counsels students on how to repay their loans after graduation, a community college president who has worked to enroll low-income students and keep them in school, and experts who will lay out their own research into simplifying federal financial aid. 

We have several proposals introduced by Senators to discuss with our witnesses—all reflect a consensus that our grants, loans and repayment plans need to be simpler.

  • Senator Enzi has the Transparency in Student Lending Act that would provide the annual percentage rates of federal loans on student aid letters so students can compare public and other loans more easily.
  • Senators Grassley, Cardin, Coons, Gillibrand, Warren, and Whitehouse have the Understanding the True Cost of College Act, which would address the lack of uniformity of financial aid letters, so if you receive letters from the University of Tennessee and Vanderbilt University, it would be easier to compare aid packages.
  • Senators Grassley, Coons, and Kaine have the Net Price Calculator Improvement Act that would streamline the net-price calculator on college and universities websites some families use to predict the cost of the school.
  • Senators Grassley and Ernst have the Know Before You Owe Federal Student Loan Act that would provide students with a monthly letter updating them on how much federal aid they have borrowed, and what their monthly repayment will be after graduation. 
  • Senators Burr and King have the Repay Act to simplify federal repayment plans into two programs.
  • Senators Warner and Rubio have the Dynamic Student Loan Repayment Act that would streamline repayment by taking your loan payment, based on income, out of your paycheck automatically, similar to payroll taxes.

As we continue to work on reauthorizing the Higher Education Act, I hope we can work together in a bipartisan way to make it clearer to students what grants they are eligible for, how much they are able to borrow and provide simpler and manageable ways to repay their loans.