**CHALLENGES TO MAINTAINING ACCESS**

**IN THE TWENTY-FIRST CENTURY:**

**A ROUND TABLE MEETING OF**

**THE ADVISORY COMMITTEE ON**

**STUDENT FINANCIAL ASSISTANCE**

**UNIVERSITY OF MISSISSIPPI**

**OXFORD, MISSISSIPPI**

**APRIL 1999**

table of contents

OPENING REMARKS 1

INTRODUCTION 2

ROUND TABLE DISCUSSION 4

EXHIBIT 5

SYNOPSIS OF COMMITTEE MEMBER DISCUSSION 29

APPENDIX A: INFORMATION REFUTING MISPERCEPTION 33

THE COMMITTEE MEMBERS 36

the PANELISTS 38

**OPENING REMARKS**

**APRIL 27, 1999**

**CHANCELLOR ROBERT KHAYAT**, **UNIVERSITY OF MISSISSIPPI**

Good morning and welcome to the University of Mississippi. As we in the
higher education community approach the turn of the century, I think you
will all agree that it is important to review carefully where we stand
on our fundamental commitment to maintain and enhance access for
low-income, disadvantaged, and minority students. The purpose of this
meeting is to begin to do just that. While we have come a long way over
the last three decades in making *some* kind of postsecondary education
accessible to the majority of American youth, I think you will all agree
that there is still considerable room for improvement---especially for
the nation's very lowest income students.

As you will hear today, there are many competing voices suggesting that
perhaps it is time to look at other issues along with, or instead of,
access hot issues like affordability for middle-income families, the
growth in merit-based student assistance, and the great opportunities
offered by distance education---to name just three. While very exciting
and important in their own right, these issues can serve to divert our
focus and attention from perhaps the most important education issue that
will still face our nation in the twenty-first century---access to
quality higher education for all Americans. Accordingly, it is very
important that we as a community have an open and honest dialogue about
the condition of access in 1999 before we refocus our attention on other
matters. As a community we have yet to truly solve the access problem.

This morning, we will hear a distinguished panel of experts discuss the
challenges to access in the twenty-first century. The hope is that all
of us in attendance will leave the meeting with a much clearer
appreciation for where we stand in the struggle to provide access and
what more we need to do.

For those of you who have not attended an Advisory Committee meeting
prior to this one, I would offer this simple guidance: our Committee
looks at every issue through the lens of access. That is what Congress
has charged us to do, and we take the charge very seriously. Thus, you
will hear one question from our members, over and over, regardless of
the specific issue being discussed: what's the likely impact on access?
Whether we're discussing the level of college costs, or the wonders of
technology in distance education, or the value of merit-based aid, or
finding ways to help parents save for college, to our Committee the
bottom line is always the same: what's the likely impact on access?

We have asked you to join us today in Oxford because you have the
knowledge and expertise that might help us fulfill our legislative
charge. We need your help because it will take a large and concerted
effort, on the part of the entire higher education community, to reach
the goal of equal educational opportunity.

**INTRODUCTION**

**PRESIDENT JULIET GARCIA, UNIVERSITY OF TEXAS-BROWNSVILLE**

Good morning and welcome to the University of Mississippi. As Dr. Khayat
has said, the most important charge of the Advisory Committee on Student
Financial Assistance is to make recommendations to Congress and the
Secretary of Education that will lead to the maintenance and enhancement
of access to postsecondary education for low- and middle-income
students.

In fulfilling that charge, our Committee makes regular formal
recommendations in the form of yearly reports, legislative proposals,
and comments on proposed regulations. However, just as often, the
guidance we provide is informal, taking the form of briefings, meetings
like this one, and data analyses designed to inform and enhance the
federal student aid policy making process. Regardless of venue, the
Committee's ultimate goal is always the same, maintaining and improving
access for low- and middle-income students through the expansion and
improvement of the need-based Title IV student aid programs.

Let me describe very simply what our Committee means by the term,
"access." We do not mean absolute equality in college-going rates by
family income level. While that might be our long run goal, for policy
purposes, our Committee uses a more practical and conservative
definition of access. *Maintenance* of access, to our Committee,
means---at a minimum---doing *no harm* as measured by the out-of-pocket
expenses facing low-income students. *Improvement* of access means
*lowering* those expenses. Our Committee fully understands that there
are other important dimensions of access like "access to what?" and, of
course, persistence. But, quite frankly, it has been so difficult just
to hold the line on the out-of-pocket expenses facing low-income
students and families that we have and will continue to focus primarily
on that.

Using that simple concept of access that is, keeping what is termed "net
price" as low as possible for low-income students---there is a broad
consensus in the community that the Title IV programs have been
immensely successful. That is, they have provided "access" to tens of
millions of Americans over the past two decades. Despite that consensus,
however, Congress and the higher education community were confronted
during the 1998 reauthorization with assertions that the programs were,
in fact, fundamentally flawed---that they produced serious negative
consequences for higher education. These assertions were based on
fundamental misperceptions that persist today and will likely affect
access‑related federal policy well into the twenty‑first century.

This morning we will discuss several of these misperceptions and their
implications for federal policy. With the popular press leading the way,
families and legislators alike regularly express the belief that
postsecondary education is simply not affordable for most middle-income
American families. There is a very strong feeling that college costs are
out of control, and that one of the major culprits is federal student
aid. The argument by now is a familiar one, college is beyond the reach
of most American families, and federal student aid, including
unsubsidized loans, is largely self-defeating, merely driving up
tuition. This is true, the argument goes, especially in the private
college sector because colleges raise tuition in order to capture more
federal dollars.

Three additional themes exacerbate public disillusionment about
affordability in general, rising tuition in particular, and colleges'
apparent insensitivity to the plight of the middle class:

first, the lowest income, lowest ability students get all the subsidies;

second, scarce need-based aid funds are being wasted on students who are
unprepared for college---especially those taking remedial courses; and

third, merit is not rewarded nearly enough.

All of these are undermining the quality of higher education. Further
eroding public confidence in, and support for, need-based student aid is
the impression that the very process of determining need discourages
middle-income families from saving for college by taxing their assets
too heavily.

It is easy to see why all this seems so intolerable to a public that
*assumes* the full need of the lowest income students is being met in
both the public and private sector through *need-blind* admissions and
*full-need* financial aid policies.

We have brought together today a panel of experts to discuss these
misperceptions:

Dr. James V. Koch, President of Old Dominion University, Norfolk,
Virginia;

Dr. David Breneman, Dean of the Curry School of Education, University of
Virginia;

Dr. William Troutt, President of Belmont University, Nashville,
Tennessee; and

Dr. William Hiss, Vice President for Administrative Services, Bates
College, Lewiston, Maine.

Dr. J. William Wenrich, Chancellor, Dallas County Community College
District.

**ROUND TABLE DISCUSSION**

**Juliet Garcia, President, University of Texas-Brownsville**

> Let me begin the discussion by directing your attention to the list of
> statements in front of us (see Exhibit 1) and asking you,
>
> Dr. Koch, a two-part question. One, is college, in general, affordable
> for most middle-income families, and two, how about at Old Dominion
> University?

**James Koch, President, Old Dominion University**

> It is interesting that in Virginia this year, by action of the
> Governor and the General Assembly, the tuition portion of tuition and
> fees has declined by 20 percent. So we are actually going to be
> quoting much lower tuition to students this coming year than we ever
> have in the past. That will mean about a \$500 per year decline in net
> tuition. There has not been a comparable decline in fees, in fact,
> they have risen. I am referring to fees that support auxiliary
> activities, such as athletics, residence halls, and things of that
> sort.
>
> However, if one looks at the Fall of 1999 and compares that to Fall of
> 1994, it is actually less expensive now, in actual dollars, to attend
> Old Dominion University than it was five years ago. If one looks in
> real terms and factors in price inflation, we are talking about
> something in the range of 12 to 15 percent less expensive. This
> reflects a variety of factors such as action of the Virginia General
> Assembly, increasing competition in the higher education marketplace,
> political pressure, and changing demographics. I think it is a very
> complex mosaic.

***"it is actually less expensive now . . . to attend Old Dominion
University***

***than it was five years ago . If one looks in real terms . . . we are
talking about something in the range of 12 to 15 percent less
expensive."***

> A place like Old Dominion University is simply more affordable now
> than it was five years ago, and I think this trend is likely to
> continue simply because of increasing competition from distance
> learners and for-profit institutions. I don't really see this changing
> for four to five years.

**EXHIBIT 1**

**MISPERCEPTIONS UNDERMINING**

**MAINTENANCE AND IMPROVEMENT OF ACCESS**

**(See Appendix A: Information Refuting Misperceptions)**

***About College Costs***

Postsecondary education is not affordable for most American families.

Title IV student aid serves to drive up tuition, especially in the
private sector.

Colleges have raised tuition primarily to capture federal student aid.

# About Student Aid

The lowest income, lowest ability students get the largest educational
subsidies.

Need-based student aid is inefficient because it increases remediation.

Merit-based aid is a better investment of taxpayer dollars than
need-based aid.

# About Family Contribution and Unmet Need

Federal need analysis discourages saving for college by taxing assets
heavily.

Public institutions regularly meet full need for the lowest income
students.

Private colleges have "need-blind" admissions and "full-need" aid
policies.

**Juliet Garcia** Dr. Koch, let me ask you, in general, do you think
what is happening at Old Dominion University is reflective of what is
happening at other schools similar to your institution?

**James Koch** No, it is not generally reflective, but I think there has
been a moderation in prices nationally. The data I have seen suggest
that tuition and fees are not rising as rapidly now as in the past. I
think that is true across the board in higher education. And, again, I
would point to the same factors: political pressure, rising competition
in higher education, changing technology in distance education, the
appearance of "for-profits," and more and more institutions reaching out
and doing things in other locations.

> But also, I would point to changing demographics. Over 50 percent of
> the college students in the Commonwealth of Virginia now are
> part-timers. These individuals tend to be very price-sensitive. They
> tend to look, within limits, for the best deal financially. And as
> long as that is so, I think that we are likely to see moderating
> prices not just in the public sector, but in the private and
> independent sectors as well.

**Juliet Garcia** Dr. Breneman, would you care to address the same
questions, please?

**David Breneman, Dean, Curry School of Education, University of
Virginia**

> Thank you. Yes, I actually believe that two other states may have led
> the way. In California, Governor Pete Wilson bought back five percent
> of the tuition increase at the University of California and the
> California State University systems. Recently, Massachusetts has done
> some tuition reduction.

But I would like to focus on the issue of misperception. I spend a lot
of time talking to newspaper and magazine reporters. It has become
almost a joke---this perennial parade of calls from someone doing a
great story on trends in college costs and why they are out of control.
Every newspaper and magazine writer in America seems to be rediscovering
this issue.

***"I then realized that "affordability" was a code word***

***for middle- and upper-income family assistance."***

> I began to realize that if the national press is calling, you can
> almost bet that either the reporter or the editor has a junior in high
> school who is looking at the Ivy League. And that is the only interest
> that they have. All of higher education is then summed up in why
> Princeton, Penn, or Dartmouth is so expensive. These articles really
> drum that message.

I worry a great deal about this issue. It was brought home to me
recently at the state level. We had just gone through the tax credit
legislation, which was arguably based on the notion of middle- and
upper-income plight. I was invited to a midwestern policy summit funded
by the Kellogg Foundation. There were about 160 people there, presidents
of colleges and universities---public and private----and state
legislators from 12 midwestern states. They had invited three of us to
do short papers in advance. Mine was on the topic of affordability. I
addressed many of these issues with data and clearly indicated that we
still have a continuing problem with access for low-income students.

> It was amazing; I could have been talking to a brick wall. They
> thanked me and turned to the question of how they could do something
> for the middle- and upper-income constituents in their states. I then
> realized that "affordability" was a code word for middle- and
> upper-income family assistance. But that is what they were interested
> in: savings plans, tuition prepayment schemes, loan schemes, you name
> it.
>
> So I think we have a really serious problem in this country. And I see
> this Committee as one of the very last defenders of access. I think
> that, politically, the game has almost been lost, and I do not know
> whether you can recapture it. It does trouble me. We are in a
> combination of politics and ideology. For example, remediation is now
> being used as an ideological club to pound on these issues.
>
> And I am not sure that facts and evidence rebut people who are
> prepared to believe certain things. So the question is this, how do
> you respond to people who believe and assert things that are not
> backed by evidence? Data does not seem to make any impact on many of
> these folks.

**Juliet Garcia** How would you respond, Dr. Troutt?

**William Troutt, President, Belmont University**

> Thank you. Much of what I believe about college costs was informed by
> my service on the National Commission on the Cost of Higher Education.
> For the record, I would like to say that I was appointed by a
> distinguished graduate of the University of Mississippi, Senate
> Majority Leader Trent Lott.

***Price is what we ask students and families to pay. Net price is
price***

***minus grant aid and subsidy---the difference between cost and
price.***

> We began our work on August 11, 1997. We received a two-fold charge
> from Chairman "Buck" McKeon, first, to provide a clear picture about
> college costs, and, second, to offer some innovative recommendations
> for keeping college affordable. Trying to provide a clear picture of
> college costs is quite a challenge. It is a topic that has been
> oversimplified by the media. It is a topic that has been overly
> politicized at both the state and the national level.
>
> We entitled our report, "Straight Talk about College Costs and
> Prices," because, in fact, there has been little straight talk about
> college costs and prices. The four basic concepts that we think are
> very important for understanding college finance are cost, price, net
> price, and subsidy. Cost is what institutions spend to educate
> students. Price is what we ask students and families to pay. Net price
> is price minus grant aid and subsidy---the difference between cost and
> price.
>
> Wouldn't it be great if every policy maker understood those basic
> concepts? Wouldn't it be great if every university trustee understood
> those basic concepts? Wouldn't it be great if every university
> president understood those basic concepts?
>
> When you look at net price what most American families pay from 1993
> to 1996 there was a *cumulative* increase of about 10 percent in the
> public sector. In the private sector, the *cumulative* increase was
> 4.2 percent. And that is fairly good news.

***"When you look at net price . . . from 1993 to 1996 there was a
cumulative***

***increase of about 10 percent in the public sector . . . In the
private sector, the cumulative increase was 4.2 percent. And that is
fairly good news.*** "

> We also looked at cost and found a bit different picture. In fact,
> there has not been a significant moderation in increase in cost what
> institutions spend to operate. That gave us some concern. What will
> happen? Will this result in prices going up, or will it result in some
> erosion in the quality of higher education? We think academic
> institutions do need to pay a great deal of attention to cost. We did
> come down hard in stating that price controls will not work. They
> would be destructive to the very quality of academic offerings.
>
> Instead, our Commission offered a five part action agenda grounded in
> the concept of shared responsibility. One of the agenda items was a
> set of recommendations for improving market information and public
> accountability. It is terribly important that we do a better job of
> getting the word out about cost, price, net price, and subsidy.
> Several other recommendations are already being enacted, from the
> American Council on Education's (ACE) *College Is Possible* campaign
> to the National Association of College and University Business
> Officers' (NACUBO) *ad hoc* committee on making college cost more
> transparent.
>
> We asked every campus to begin to make distinctions to their various
> stakeholders between cost and price. At Belmont University, we used
> Gordon Winston's formula, which can be found in the report of the
> Commission. We try to tell all our families that while they pay a
> price of \$10,800 for a year at Belmont, the institution spends about
> \$21,000---the cost of education.
>
> The primary recommendation the Commission offered was strengthening
> institutional cost control. We have encouraged the recognition of a
> number of best practice efforts around the country. We asked every
> institution in the country to conduct its own efficiency review. We
> did so at Belmont University and launched several initiatives,
> including curriculum management, nonacademic cost reductions,
> partnerships with neighboring institutions, and review of scholarship
> support.

**Juliet Garcia** How do we take the code of academia and communicate
that more clearly to the public? Or to a reporter?

**William Troutt** I think we need to get on the mantra of cost, price,
net price, and subsidy. We are working so hard against some common sense
images. When most Americans look at our price, they are thinking of cost
inflated by poor management plus some kind of profit. But our price is
really cost *minus* subsidy.

While they sound like technical terms, we have to continue on our own
campuses---with families and students---to communicate the difference
between cost and price.

***"We have encouraged the recognition of a number of best***

***practice efforts around the country. We asked every institution***

***in the country to conduct its own efficiency review."***

**Thomas Dillon, Advisory Committee Member**

> Can I ask a question? From what you have said, there are two senses of
> subsidy, the difference between price and net price, and the
> difference between cost and net price.

**William Troutt** Yes, there is a general subsidy that almost every
student receives. In fact, students receiving the largest, general,
subsidies are those at the higher price institutions. But then, of
course, most undergraduate students receive additional grant and
scholarship aid.

**Charles Terrell, Advisory Committee Member**

> Dr. Troutt, I wonder, in explaining cost, price, net price, and
> subsidy, how do you work in the reality of debt?

**William Troutt** The Commission was certainly concerned about rising
debt levels. So---given our charge---when we dealt with the concept of
net price, we stayed away from thinking of loans as diminishing net
price.

**Charles Terrell** It has been my experience that families who have had
the least access to higher education are disproportionately affected by
the thought of debt. If you do not deal with the concept early on, what
happens to these people who are so frightened by debt?

***"It has been my experience that families who have had the least
access to***

***higher education are disproportionately affected by the thought of
debt."***

**William Troutt** Exactly, you are touching on a larger problem that
needs to be addressed comprehensively early on. ACE has shown through
their recent survey that families need much better information about all
aspects of college financing.

> Studies have put diplomas on a table and asked people to make a guess
> about price. Whether it was a community college diploma, a public
> university diploma, or a private college diploma, they always overshot
> the actual price. When it came to available aid, they always thought
> that there was less than there really was. And the people who need
> that aid the most know the least about it, and it is implausible to
> them that enough is available. Much more work needs to be done in this
> area.

**Juliet Garcia** Dr. Hiss, what is the context against which this is
all playing out? What are the implications for access?

**William Hiss, Vice President, Administrative Services, Bates College**

> I would offer several observations. First, have the so-called aid
> wars, or packaging wars, helped low-income students gain access? The
> evidence on unmet need suggests, no. Because they have no grant funds
> to speak of, one of the places we may want to look to see if
> low-income students are being hammered is in non-flagship public
> universities. Second, challenges from conservative groups over
> affirmative action will require some of us to start thinking about
> proxies for race and what we mean by affirmative action. Third, at
> institutions favoring or forced to move to merit-based aid, the
> percentage of the budget used for student aid is going up over 25
> percent, and one-third, forty percent is not uncommon. Save a deep
> endowment, there is simply no way this can be sustained without
> drastic adjustments. Fourth, our public K-12 system, still the
> principal engine of improvement in our society, is based upon the most
> regressive tax system we have, the local property tax. State formulas
> bring us up to only a lowest common denominator, leading to a
> continuation of the uneven playing field. Fifth, I worry about the
> unaccounted for costs of low-income non-success---like incarceration
> costs. As we fail to succeed with these students, we pay other costs
> down the line that have to be factored into all this.

***"at institutions favoring or forced to move to merit-based aid,***

***the percentage of the budget used for student aid is going up***

***over 25 percent\--a third, forty percent is not uncommon."***

> So, the educational and social context for maintaining access for the
> very lowest income students is very complex.

**Juliet Garcia** How do you decode the complexity of the environment
for the Congress and state legislators? How do we communicate, for
instance, that it is a misperception that student aid has been driving
up costs? And that more support for student aid does not work against
access?

**William Troutt** Well, it is a problem. Few policy makers will take
time to understand the complexity. I tried to put it in a West Tennessee
context for the Cost Commission. I'm from Bolivar which is not far from
here; college costs are sort of like Tennessee goat meat. The more you
chew on it, the bigger it gets. That is, it has an expansive quality to
it.

> This is partly a self-inflicted wound. We have not done the job of
> analyzing costs that we do in other areas of university research. I am
> very hopeful about the NACUBO *ad hoc* committee on college costs,
> trying to provide policy makers more clarity about college costs.
> Let's face it, there is deep suspicion about college costs. And until
> we take more of a lead as an industry, and be more transparent about
> it, we are going to continue to have people suspicious about us. And
> you have legislative staff at the state and federal level who are
> unencumbered by any self doubt---staff with deep, preconceived notions
> about what drives cost. Our Commission did document that federal grant
> aid is not a driver of cost.

We all just have a tremendous job ahead of us to educate policy makers.

**David Breneman** About three weeks ago**,** I had a call from a Wall
Street Journal reporter who observed that higher education now is
virtually the only sector where prices are rising faster than inflation.
I'm not sure what he thought about pharmaceuticals and other services.
But his question was, why are other sector prices holding steady and
yours are not?

Part of the dilemma is that, for the foreseeable future, tuition will be
going up at only five percent per year. We may feel good about that, but
that doesn't play very well with the public.

> In the public sector, during the downturn in the late 1980s and early
> 1990s, states cut appropriations dramatically. We responded, in what
> might be considered a rational way, by raising our tuition for a
> couple of years at double digit rates. Then, we got horse-whipped by
> the next governor for raising our prices---when, arguably, it was a
> reduction in appropriations that caused it. We seem to be in a
> sucker's game that we can't get out of.
>
> Yes, there is a self-inflicted dimension to this, but it isn't
> anybody's fault, and it will be hard to work our way out of it.

**James Koch** Over the last couple of years, I have found something
very useful. I write all my students and their parents responding to the
question, are you getting your money's worth? I point out to them what
they are paying vis-a-vis what it is we are using to support them. For
in-state students at Old Dominion, there is a \$6,000 per year subsidy.
For out-of-state students, of course, the subsidy is much less because
we are required by state law to charge them the full out-of-state costs
of their education.

***"Are you getting your money's worth? I point out to them what***

***they are paying vis a vis what . . . we are using to support them . .
. it has changed the tenor of discussion on parents' days."***

> I have found this to be very useful, and it has changed the tenor of
> discussion on parents' days. I recommend that to other people, because
> there is a tremendous lack of understanding about what we are actually
> spending in colleges and universities to educate people versus what
> they're paying us.

**Charles Terrell** If Boston University is any example, no one,
particularly faculty, really understands these issues except those in
student aid, perhaps some in admissions, and the president. And not many
students and parents will come in contact with the president. I wonder
how we can do better at educating our own community to communicate the
real sense of these issues?

**William Troutt** I think you are right. I think everyone has to start
with their own colleagues on the faculty. The faculty often have no
sense of cost versus price. In many cases, no one has ever explained it
to them. At Belmont University now, everyone knows the difference
between cost and price; we now have that down. We even let a Chronicle
of Higher Education reporter run free on campus a few weeks ago.

> This Committee may want to urge that institutions drive down in the
> organization a better knowledge of cost and price. A student is not
> likely to be asking the president; he or she is more likely to be
> asking a faculty member in class about why tuition has risen by four
> percent. I think that is a very perceptive notion that the people who
> may be most knowledgeable about these issues are not the people to
> whom students are most likely to talk.

**Toni Larson, Distance Education Panelist**

> I lobby for the private colleges in Colorado. Often, one of my
> frustrations is the difficulty of finding someone on campus to help
> with an issue before the state legislature. Following up on Bill's
> \[Troutt\] remarks, it would behoove us all to do more educating about
> these issues on our campuses.
>
> In higher education, we want to be sure we are speaking accurately. We
> bend over backwards to do that. Sometimes we have to put some of the
> detail aside and do the sound bite to get the message across. Often
> this requires identifying flag bearers in the legislature who will
> listen to the details and take the message forward for us. And we need
> to be persistent. We move forward in education in the legislative
> process by half gains or quarter gains---and sometimes no gain at all
> in a given year. But we have to keep after the issues and not pull
> back when we don't experience victory right away.

***"these misperceptions . . . affect not only the Texas or Colorado
legislature***

***but also the Congress of the United States . . . (and) can determine
national policy . . . we need to be very concerned about how to
communicate our message."***

**Juliet Garcia** I think those are great points. Let's not forget the
primary reason our Committee is focusing on these misperceptions is
because they affect not only the Texas or Colorado legislature but also
the Congress of the United States. Insofar as a misperception can
determine national policy on student aid, we need to be very concerned
about how to communicate our message. So we're not merely talking here
about a "how-to manual" for dealing with our state legislatures, but how
these misconceptions can impact need-based aid *nationally*.

**Susan O'Flaherty, Advisory Committee Member**

> I am curious to follow up on what the Cost Commission did in terms of
> defining costs. In the last quarter century, I have been at five
> different institutions and have had several discussions about what it
> costs to educate a student. I am interested in spreading the word on
> campus about these matters, but we first have to agree on what cost
> is. How did your Commission get to common ground on cost?

**William Troutt** Good question. In Appendix B of our report, "Straight
Talk about College Costs and Prices," you will see the work of Gordon
Winston of Williams College---work that tries to come to grips with
capital costs. That's pretty good work, and we would all do well to
apply that formula on our own campuses.

> Back to what Toni Larson said, we worry so hard about being precisely
> right. As the \"Chairman of Omaha,\" Warren Buffet, said recently in
> his stockholder newsletter, sometimes it is better to be roughly right
> rather than precisely wrong. We have to work harder with policy makers
> to be roughly right.
>
> For example, how precise do we have to be, especially at research
> universities, to describe in detail the complex issues of cost
> accounting? We may be better served by being approximately right with
> policy makers. I am not sure that extreme precision always serves us
> well in getting our message across.

Once again, Gordon Winston's formula is easy to calculate and served us
well on the Cost Commission.

***"Higher education is a trust market . . . Somehow, during the period
from***

***1985 to present, we have reached the point where some people don't
trust us."***

**David Breneman** One final point--- at root core, our dilemma on the
cost issue results because we have in some way lost public trust. Higher
education is a trust market. Anyone who is a college administrator knows
if he or she ever loses the faculty's trust on what you're telling them
about the budget, you're dead in the water. You can never go back and
recapture that trust by showing data and analyses. Either you've got it,
or you don't.

> Somehow, during the period from 1985 to present, we have reached the
> point where some people don't trust us. So they are going to nit-pick
> with us. I am not sure the response that will be effective is
> countering with ever more detailed cost analyses. That's the
> fundamental dilemma.

**Thomas Dillon** Isn't the picture made even more complicated by the
huge difference between private institutions and public institutions? I
think at the University of California the average family income is
higher than at private institutions in California. This means that the
wealthy at UC are being subsidized more than are middle and low-income
students. I think that complicates the issue.

**Marc Glenn, Advisory Committee Student Member**

> From the student viewpoint, the concern is not *where* or *why* there
> are cost increases, but rather to stop the increases. I would like to
> ask Dr. Troutt three questions: first, has student aid played any role
> in tuition increases over the last decade; second, if student loans
> had been unavailable over the last two decades, would tuition be so
> high; and third, isn't it true that the less you subsidize middle- and
> upper-income students, the more money you have to provide aid to lower
> income students?

**William Troutt** As the parent of a graduate student at the University
of Virginia, I must say it is a great deal, and I am happy to have it.
But those are very important issues to talk about.

***"Where we came down as a commission is that the data are***

***simply not there . . . not enough conclusive data to***

***say loan availability drives price."***

> The Commission was asked to look at eleven proposed cost drivers, and
> one of those was student aid. Clearly, it is easy for this Committee
> to see that there is no connection between grant aid and cost. We
> spent a long time on the Commission looking at whether loan
> availability had been a driver of cost or price. Clearly, it has been
> a driver of access. But has it somehow been a driver of cost?
>
> We commissioned multiple papers. You can debate both what data are
> available and you can debate the underlying assumptions. Where we came
> down as a commission is that the data are simply not there. That's not
> to say that further study might not give some more conclusive
> evidence. It was a point of fervent conversation, but at the end of
> the day, every Commissioner voting felt there were just not enough
> conclusive data to say loan availability drives price.

**Brian Fitzgerald, Advisory Committee Staff Director**

> Marc, the staff has taken a very close and detailed look at these
> issues. One risk is to examine highly aggregated data, chart the
> increases in prices and plot the growth in student loan volume, and
> see an inescapable correlation. But correlation is not causality. In
> other words, it is very easy to draw a conclusion at the aggregate
> level that is just not supported at the institutional or student
> level.
>
> One has to ask what incentive institutions could possibly have to
> raise tuition when the loan limits have been frozen since 1986? A
> freshman who is already at the \$2,625 maximum does not get one dime
> more aid. That is, no one gets any more federal student aid because of
> the very powerful effect of loan limits. Also, the majority of
> increased loan volume has been in *unsubsidized* loans. I don't think
> that anyone is asking, does the *existence* of mortgages at market
> rates drive up the price of housing? Or does the *existence* of car
> loans at market rates drive up the price of automobiles?

***"Would tuition be lower today in the absence of loans . . . if you***

***eliminated those loans, would tuition go down? . . . they are***

***more likely in fact to go up if loan capital is restricted."***

> Perhaps the best way to look at this is to turn the question around,
> would tuition be lower today in the absence of loans? And in
> particular, if you eliminated those loans, would tuition go down?
>
> I think an extremely strong argument can be made that they are more
> likely in fact to go up if loan capital is restricted. And that is
> what these critics are arguing for---not a reduction in subsidies or
> an interest rate increase, but decreasing the *availability* of loan
> capital to students and families.

**Marc Glenn** I am not by any means advocating the restriction of
student loans, but I would come back to the point that the less you
subsidize higher income students at higher priced institutions, the more
you can subsidize lower income students.

**James Koch** As an economist, I would like to point out that there are
plausible models that student financial aid *can* increase tuition and
fees. It depends on what kind of student aid you are examining. If you
are talking about loans, perhaps not, probably not---or if so, not very
much.

> But if you begin to talk about grants, the probability of that
> occurring is higher, and if you consider institutional merit-based
> aid, probably so. Not only in theory, but my own experience at Old
> Dominion indicates that's true when one considers what it might take
> to attract students to the institution. It really depends on the
> element of the financial aid package we are talking about. One of the
> problems is that public officials do not differentiate between
> institutional merit-based aid and loans. With respect to public
> policy, it makes a big difference whether we are talking about student
> loans, which are innocent or mostly so versus institutional,
> merit-based aid.

**Juliet Garcia** These issues (see Exhibit 1) overlap considerably. Can
I ask you to turn your attention to those under student aid? One that is
most interesting to me is the perception that merit-based aid is a
better investment of taxpayer dollars than need-based aid. What do you
think?

**James Koch** Setting aside issues of equity and justice, need-based
financial aid is economically very efficient. The rate of return to
societal investment in need-based financial aid is simply much higher
than it is for merit-based aid, or aid that is not need-based. Over the
last 15 to 20 years, in several economics journals, some very persuasive
evidence has been presented that need-based aid is really much more
efficient than other kinds of financial aid.

***"The rate of return to . . . need-based financial aid is simply
much***

***higher than it is for merit-based aid . . . Giving financial aid to
people***

***who would have gone to college anyway is not . . . very
efficient***."

> Intuitively, what it boils down to is this: giving financial aid to
> people who would have gone to college anyway is not societally very
> efficient. Yes, when we do give need-based aid, we sometimes give aid
> to individuals who do not graduate or drop out, but in an overall
> sense, it is very efficient. This is something we should defend, and
> we ought to do that from the standpoint of economic efficiency, even
> if there were not equity or justice arguments in favor of it as well.

**Juliet Garcia** I think we can all agree with that assessment. Let me
now raise the issue of remediation. The Texas Higher Education
Coordinating Board did a study this last year in which they traced the
growth of remedial education over the last decade. And, looking only at
that piece of evidence, the study raised great concern among our
legislators about what we were doing in higher education, and whether or
not remediation is part of our mission as institutions of higher
education.

Putting justice and equity back on the table, how does that fit into
whether or not federal public policy should be looking at the issue of
remediation. How does it fit in to that discussion? Bill?

**William Wenrich, Chancellor, Dallas County Community College
District**

> In Texas, the Texas Academic Skills Program requires that you pass it
> before taking collegiate courses. About 46 percent of the first-time
> freshmen who come to Dallas County Community Colleges need to be
> remediated. About 56 percent of those coming from the Dallas Public
> School District require remediation. And yet, about 56 percent of the
> students who graduate from one of our colleges have a remedial course
> on their transcript. And when they transfer, they do better at the
> universities than people who began at the university.
>
> This tells me that people are not getting quality education in the
> secondary public school system. If we fail to allow them to be
> remediated, they would be thrown out of the mainstream and lose the
> opportunity for access to higher education. So, while it is a major
> political problem with the legislature as Juliet has indicated,
> fundamentally if your concern is access, remediation is one of the
> major issues. And it is not Texas alone, by any means. In fact, I
> would ask the university representatives here if they do not have,
> somewhere at their institution, a remedial program?

***" . . . until someone comes up with a better way . . .***

***we should stick with remediation. I strongly believe these***

***programs would pass a well done cost-benefit analysis . . ."***

**David Breneman** About a year and a half ago, Diane Ravitch was
putting together a book at the Brookings Institution and called to ask
if I had seen any data on the national costs of remediation. I said that
I had not and agreed to try to come up with an estimate. We have now
pretty thoroughly surveyed the states on this issue and the data are
just awful. But I was able to make a stab at an estimate of budgetary
expenditures and came up with a figure for the mid 1990s of about \$1
billion in the public two-year and four-year institutions. And the
question arises, is that a big number? That is probably an underestimate
because a lot of the four-year institutions do not want to divulge that
number. So let us say it is about \$2 billion.

> Total expenditures in higher education in that year were about \$115
> billion. So one way of looking at it is this: it is about one percent
> of public outlays. If you considered outlays for only the first two
> years of college, the percent of course would be larger. But my
> conclusion after looking at the issue is that the number is not huge,
> and that we ought not be incensed about this. We are not going broke
> in the universities paying for it. Really, the technology is simple,
> and the people teaching are part-time adjunct faculty. As I understand
> remediation at most institutions, you are not getting degree credit
> for remedial work, but rather institutional credit, which does count
> as part of your course load allowing you to receive federal student
> aid.
>
> This has flared up, for example at CUNY, and is a hot issue. I keep
> coming back to the question, what is the alternative? Do you slam
> doors on these young people? In fact, they are not all young people.
> Our work shows that perhaps up to half of the people doing remedial
> work in our colleges are actually returning adults. This is not just
> 18-year olds entering college. That is a misperception. And I think
> you have to distinguish between remediation of poor reading skills and
> brush up courses in mathematics. The latter strikes me as something we
> should not get exercised about.

***"Certain groups of people just do not receive their fair***

***share of resources. If we could reframe the concept in this***

***way getting away from 'remediation'---we might do better"***

> My conclusion is that until someone comes up with a better way to deal
> with the problem, we should stick with remediation. Personally, I
> strongly believe these programs would pass a well done cost-benefit
> analysis, which is the correct way to do it. What troubles me again is
> that this is a topic that is ripe with ideology right now. People
> *know* the answer, and they are ready to implement it without any
> concern for social consequences.

**Charles Terrell** Let me follow up Dr. Breneman's remarks, Juliet, by
suggesting that we need to look at the essence of remediation
differently by looking at educational needs and resource allocations.
Certain groups of people just do not receive their fair share of
resources. If we could reframe the concept in this way getting away from
"remediation"---we might do better, not only in traditional higher
education but in job retraining as well. As long as the issue is framed
as "remediation," there will be a big problem.

**Carolyn Sabatino, Advisory Committee Member**

> Based on my own experience at Ohio University and ten years experience
> also at the community college level, I think this issue has been
> oversimplified as well. Dr. Breneman addressed that. When one looks at
> numbers in the aggregate, they seem overwhelming.
>
> It really would be interesting to see how many courses are taken to
> refresh one's knowledge of that material as opposed to an 18-year-old
> who has been poorly prepared by the K-12 system. Too often, this issue
> becomes a whipping boy for the K-12 issues. The way it is presented in
> the media is very simplistic. It is a far more complex issue. If the
> average age of students in this country is in the mid-20s, then surely
> a significant proportion of those courses are really taken for
> purposes of trying to ease your way back into a higher education
> setting---so that one has a better chance of succeeding. So it would
> be interesting to see if there are any data on how many of these
> courses are taken by first-time students coming straight out of high
> school versus older, returning, nontraditional students.

***" remediation is a serious problem but it is also an opportunity
for***

***higher education to partner with local . . . schools---not only to
reduce the need***

***for remedial courses . . . but also to improve . . . quality and
standards . . ."***

**Frank Holleman, Advisory Committee Member**

> Juliet, I think that this issue---remediation---does offer the higher
> education community an opportunity to partner with the K-12 system.
> For example, I know that in my community, our local community college
> started a program with local high schools. They administer a test to
> juniors in high schools that have had a number of students who needed
> remediation. They explain the score to the student and then work with
> those students during the remainder of their junior and senior years
> to take the courses they need, and have the tutoring they need, so
> that when they graduate, they will be able to move right into the
> community college course work.
>
> So it is true that remediation is a serious problem, but it is also an
> opportunity for higher education to partner with local K-12---in this
> instance high schools---not only to reduce the need for remedial
> courses once the student reaches the community college, but also to
> improve the quality and standards of high school education in
> communities. So it is a serious problem, but one that offers
> opportunities for creative solutions that both improve the public
> school system and the local community colleges.

**Juliet Garcia** I think we can all agree on that, Frank. Let me return
for a moment to the interesting way that Charles suggested we look at
remediation. It is not unpopular today to say that a worker needs to be
retrained---eight to ten times in their lifetime! As a matter of fact,
it has become a strong agenda to support politically. Is not that, in
fact, what remediation is for adults? For the older person, is not
worker retraining remediation?

> If we allowed that same positive view to be borrowed by remediation or
> developmental education perhaps we would raise it to a new plane of
> discussion, and eliminate some of those negative constraints.

**Charles Terrell** Just one last word on what I will now call "resource
allocation." I do think that historically black colleges and
universities (HBCUs) can serve as a wonderful role model for higher
education in this area.

> Traditionally, HBCUs have taken a population that has come to them
> prepared at very different levels, but have not made learners feel
> that they are second class citizens if they needed more work in a
> particular area. So I think that higher education could look at this
> subset of institutions for guidance.

***"we found that remediation, even in schools that do a lot of it,***

***is a "mile wide and an inch deep . . . those students taking remedial
courses were taking only between one and two classes."***

**Brian Fitzgerald** Let me follow up with some information that may be
helpful to the discussion. It seemed as if the issue of remediation was
going to be a big one in the last reauthorization. Anticipating that,
about two years ago, we did a quick, purposive survey to find
institutions where we thought remediation would be greatest. So we
looked especially at inner-city colleges, HBCUs, and tribal colleges. We
found some very interesting and, from the standpoint of common
perceptions, counterintuitive information. First, we found that
remediation, even in schools that do a lot of it, is a "mile wide and an
inch deep." When we surveyed these institutions, we found that on
average those students taking remedial courses were taking only between
one and two classes. There is a perception among some that students are
retaking their high school curriculum and spending years in remedial
training.

> Second, we found that remediation is effective. One of the studies we
> found most enlightening was by the Texas Coordinating Board. As Bill
> Wenrich indicated, all students are tested before they can take
> collegiate courses and programs. If they fail, they must take
> remediation. Those students who successfully complete those courses do
> as well as students who require no remediation.
>
> We anticipated that remediation would be a very contentious issue in
> reauthorization. Fortunately, it did not become one I think, in some
> regards, because of the position this Committee has taken. Following
> up on what Dave Breneman has said, the data certainly belie the common
> perception that this is high school by another name---very expensive
> and wasteful. We concluded, that from an access perspective, funds
> spent on remediation may be the most efficient dollars spent because,
> without them, most of those students would not be in college or get
> through college.

**David Breneman** As a defensive strategy, assuming this issue may
arise again, I would say this: The two factors we could not get much
good information on were the age distribution of those taking remedial
courses and success measures. We could not find hard documentation. It
seems to me that if you had those two pieces of information, you could
deal with almost any attack.

***"We know that students who successfully complete***

***remediation perform better in basic freshman composition***

***than do those who are not mandated for remediation."***

**William Wenrich** Just one more point, we do follow what happens after
remedial English. We know that students who successfully complete
remediation perform better in basic freshman composition than do those
who are not mandated for remediation. We believe remediation does work.
But we all have to work together to be successful.

**Oscar Porter, Early Intervention Panelist**

> May I make one brief comment? We are waltzing around an important
> issue: Part of the agenda on opposing remediation is about exclusion.
> It is about telling people they do not belong, they should not be
> there, and not making space for them. It is a way to keep out the
> people we have always kept out. And we cannot have a political
> discussion about remediation that does not acknowledge that reality.

**Juliet Garcia** With that in mind, let me return for a moment to Dr.
Breneman's point about the costs and benefits of remediation and share a
story about what happened in our community, Brownsville, Texas. Our
campus is one block from Mexico. We are a predominantly Hispanic
community and, at half the per capita income in Texas, with the lowest
educational attainment in the state, one of the poorest communities in
the nation.

> We are a community college in partnership with a university. We are in
> the ninth year of our experiment to eliminate barriers for students
> between community colleges and universities. As a result, we must act
> as both a university and a community college. So when it comes to
> issues like a crisis requiring worker retraining, we must be flexible.
>
> We had a very large company go out of business. When this happened, we
> had 600 plus women out of work within six months. When tested in
> mathematics, reading, and writing, these women had, on average, a
> third- to fifth-grade educational attainment. One of the options is
> say too bad, these companies are going further south or offshore to
> get cheaper labor, and no more welfare for you after a year. You did
> not learn while you were in school, so too bad. Or you have the option
> of worker retraining.

***"How does a low-income Hispanic student from***

***Brownsville, Texas afford Bates College?***"

> Let me give you the success story. These ladies were the most studious
> students we ever had. They attended class 38 hours per week. After one
> year, they were trained in three different areas: as nursing
> assistants, as computer specialists, and as office computer
> assistants. Of the students that took the nursing assistants exam, 96
> percent passed that state board exam within one year.
>
> Let me return to the issue of college costs, and ask Bill Hiss the
> following question: how does a low-income Hispanic student from
> Brownsville, Texas afford Bates College?

**William Hiss** Our commitment would be to meet that student's full
need for four years. The average Bates College grant now is about
\$15,000. The student you are asking about would receive a much higher
Bates grant, let's say \$22,000. With federal aid, and campus
employment, we would strive to minimize that student's loan burden,
hopefully, keeping it to zero if possible.

> We began eight years ago looking at the issue of how we would bring
> more diversity and quality simultaneously to our institution. We
> wanted unquestioned quality to stay at the top of the list---feeling
> that in the long term, that was the best way for us to go. We wanted
> our graduation rates to stay between 85 percent and 90 percent. Those
> graduation rates are the same no matter what the socioeconomic
> background or race of the student.

**Charles Terrell** Bill, what is unquestioned quality?

**William Hiss** We wanted to increase diversity but continue to admit
superior students based on their entire portfolio of achievements,
strengths, and talents. And I think it has worked. Over the last twenty
years, the cost has gone up fivefold but the applicant pool has doubled.

**Brian Fitzgerald** What has been the reaction to your efforts?

**William Hiss** There are two groups of people we are not reaching very
successfully: first, in general, those who look at sticker price, feel
they simply can't afford it, and don't even apply; and, second,
specifically, the low-income students who don't know how the system
works. With regard to the latter, once we get the aid package to them,
you hear an audible sigh of relief as they realize we *can* do this. But
the labor to bring those young people to consider high cost places is
very great, first, to convince them that the college has an outcome that
will do them some good, and, second, leading them through all the
details of the process.

***"There are two groups . . . we are not reaching very successfully:***

***those who look at sticker price . . . and don't even apply; and***

***. . . low-income students who don't know how the system works."***

**Donald Vickers, Advisory Committee Member**

> Bill, what percentage of tuition revenues does Bates College put into
> its own grant aid?

**William Hiss** It has gone from 15 percent to 18 percent in the last
ten years.

**Donald Vickers** One of the arguments we often hear is that a private
institution will put a higher percentage of its revenues into student
aid than a public institution. Share your thoughts on that. Should
public colleges be able to make a similar commitment? How do you see
that entering into getting the right students?

**William Hiss** That is an institutional decision; I would hope they
would. The young people I am worried about are those who head toward a
public institution, assuming it will be a lot cheaper, when it can in
fact turn out to be more expensive. My sense is that the public
flagships have the flexibility to prevent this.

**Juliet Garcia** Two of the remaining issues that are of great interest
to me relate to whether or not institutions meet the full need of the
lowest income students.

**William Hiss** I should point out that Bates College meets full need
for four years, but we are not fully aid-blind in admissions. When we
reach the later stages of the reading session---because we are committed
to full need for four years---that puts a cap on how many low-income
students we can handle. To some extent, those students who are
wait-listed represent unmet need.

**Juliet Garcia** I would tell you that most of our students are having
to work even with Pell Grants and loans. We try to discourage the taking
of loans if possible, but it is hard to tell someone, don't feed your
family or quit school.

**William Irwin, Advisory Committee Member**

> I am not sure my experience at my institution, Lockhaven University,
> agrees with some of the information presented. We try to call our
> institution low-cost. Our unmet need group is neither the high end or
> the low end. The lowest-income students have about 65 percent of their
> hard costs met out of federal and state aid. It's the student from the
> family with \$40,000 to \$60,000 income that will have the highest
> level of unmet need. I would suggest that is not a typical in the
> public sector. In our situation, we are serving the low-income student
> very well.

***"Two . . . issues that are of great interest to me relate to whether
or not***

***institutions meet the full need of the lowest income students . . .
most of our***

***students are having to work even with Pell Grants and loans."***

**Susan O'Flaherty** My experience at Western Michigan University hasn't
been quite the same. I do agree that for some time that the
middle-income group had the largest unmet need. I think some things have
occurred that have helped that.

> But what I see at our public institution is that low-income students
> are actually taking out more loans than our middle- and upper-income
> students. They have absolutely no place to turn for additional
> resources. When they receive a \$3,000 Pell Grant and a \$1,000 SEOG,
> what is left on a \$11,000 to \$12,000 budget? And we call our
> institution low cost. We actually find it necessary to offer, in
> addition to a \$2,625 loan, a PLUS loan to families who have a zero
> family contribution.
>
> I feel very strongly that the low-income student is at great
> disadvantage. They do not benefit from the tax credit. On the state
> level, new initiatives for scholarships are all drawn for middle- and
> upper-income families without regard to need. So while I understand
> that middle-income students can have unmet need, I feel that unmet
> need is very serious at the low-income level.

***"I feel very strongly that the low-income student is at great***

***disadvantage . . . while I understand that middle-income students can
have unmet need, I feel that unmet need is very serious at the
low-income level.* "**

**Donald Vickers** Going back to what Bill Hiss said, there has been a
trend in New England that a qualified low-income student will not get
admitted to the school of his or her choice because admissions are not
in fact need-blind.

> What I am really concerned about is the low-income group. We are
> seeing students from families making less than \$25,000 a year
> packaged with a \$4,000 to \$5,000 PLUS loan per year.

**Thomas Dillon** Don, you said that low-income students are not getting
admitted to the school of their choice; are they getting into college at
all?

**Donald Vickers** Yes, they are getting into college. But often when
the student is not admitted to a private school with the resources and
commitment to full need, and falls back to the public school, we have
the very problem that Sue articulated---excessive loans.

**Carolyn Sabatino** A lot of the issue has to do with how middle-income
is defined and the exact structure of the state program. In Ohio, the
state grant is capped at \$32,000 income. So a family with an income
over \$32,000 is out of range of the state grant. At Ohio University,
our student budget is about \$11,000.

> We have the good fortune to be able to protect students from really
> low-income families to ensure there is no "gapping." Those families
> can't make up even a \$500 gap. At our institution, the low-income
> student is for the most part fully funded. Then there is a
> middle-income bubble, exactly like Bill was talking about. Those
> students' packages will be predominantly employment and loans
> including a PLUS loan. While a good resource, a PLUS loan is
> unreasonable for our low-middle income families.
>
> It is amazing the length to which parents will go to borrow in order
> to make that education possible. There is a lack of recognition of the
> cost to families, particularly loans to parents with more than one
> student in the family. Even at the publics, it is quite large.

***"It is amazing the length to which parents will go to borrow . . .
There is***

***a lack of recognition of the cost to families . . . particularly with
more***

***than one student in the family . . . Even at the publics, it is quite
large***.

**William Irwin** What we are also seeing is the willingness for
students to borrow in the expanded unsubsidized program when the parents
are rejected, further increasing student debt burden.

**Juliet Garcia** Our time has been exhausted. I thank all of you for
your time and contributions. They will greatly benefit our Committee in
making recommendations to Congress and the Secretary.

**SYNOPSIS OF COMMITTEE MEMBER DISCUSSION**

**APRIL 28, 1999**

**Robert Khayat, Advisory Committee Chair**

> Good morning. The purpose of this morning's session is to review and
> discuss what we learned from our distinguished panelists yesterday. I
> would like to ask our Vice Chair and session moderator, Juliet Garcia,
> to lead the discussion.

**Juliet Garcia** Thank you. I thought the speakers yesterday helped us,
from their own perspectives, take a look at important perceptions that
the public has about higher education. This will allow us to fine tune
and qualify our message as we go forward. I also felt that the
explanation that we heard from Dr. Troutt on college cost, price, net
price, and subsidy was excellent but also worrisome. I think it is
important that we begin to decode these things for the public.

***"these issues are being driven by . . . people on the street . . .
saying that***

***college costs too much, too much aid is going to low-income students,
the middle-income family isn't getting any assistance, what are you
going to do about it? As an advisory committee, we need a simple,
effective message.***

> We should not expect the public to allow us the privilege of a
> thirty-minute detailed analysis of how we come to understand each of
> those terms. We are not going to get it. And, if we are not going to
> get it, it is not going to be communicated and it is going to affect
> national policy. So while Dr. Troutt's analysis is very helpful in
> understanding the issue, we have to find a way to communicate it
> better to the public as well as to Congress. As you know, perceptions
> may not have anything to do with facts.

**Donald Vickers** This is a very complex issue from my perspective. The
ice can be very thin for us on this particular pond. With regard to the
issues discussed yesterday, the U.S. Congress goes home and these issues
are being driven by their constituents and people on the street. They
are saying that college costs too much, too much aid is going to
low-income students, the middle-income family isn't getting any
assistance, and what are you going to do about it? As an advisory
committee, we need a simple, effective message.

**Charles Terrell** In addition to cost, price, net price, and subsidy,
we must look at debt comprehensively to assess its impact on families at
different income levels. A \$3,000 debt to a low-income family might be
much more onerous than a \$15,000 debt would be for a higher income
family. Unless debt is built into these concepts, we will not be able to
communicate a realistic picture of the entire issue of cost.

**Juliet Garcia** Good point. Perhaps we could, as a Committee, work
toward painting a picture of the positive outcomes of our current
policies. That *is* easy to communicate to a member of Congress. That, I
think, would have more impact.

**Frank Holleman** In our advocacy for making the case---which is
compelling---for need-based aid, I think it is a mistake to pose it as a
conflict between middle-income and low-income families. That should not
be the way we cast the issue. For one thing, there is the confusion over
what is meant by those terms. So I don't think it's wise or convincing
to make it a choice between middle-income and lower-income aid.

***"In our advocacy for making the case---which is***

***compelling---for need-based aid . . . it is a mistake to pose it as a
conflict between middle-income and low-income families."***

> And trying to convince people who consider themselves middle-income
> that they are not having a problem paying for college will not be a
> successful way to persuade the public or elected officials of the need
> for continued need-based aid. I am not sure that's good policy.
> Instead of trying to pit one group against another, we need to show
> the public good of need-based aid.
>
> An example from yesterday's discussion is remediation. There is a
> compelling case for why that's so important for individual
> communities, families, states, and the country as a whole. We should
> not shy away from our basic, strongest point. That's why the programs
> were established to begin with, and that's the function they
> serve---to make big differences. Pitting one group against another, I
> think, is a losing battle.

**William Irwin** There is another phenomenon I think is important here:
the move in the public sector, particularly at the state level, toward
merit-based aid. It is couched in terms of targeting the best and the
brightest. And it's very hard to argue with that. But as Bud Hodgkinson
said, the one thing that SAT scores are a predictor of is family income.
So we know what population will be served by increased merit-based aid.
I think that is an important factor.

**Brian Fitzgerald** I think it is an extremely important point and was
underscored yesterday by David Breneman recalling his experience with
midwestern legislators.

**Frank Holleman** Let me add to what I said before. One thing we need
to convince people of is that college is affordable. ACE's data has
shown how widespread the misperception about affordability really is for
many families.

**Brian Fitzgerald** Following up on Frank's comments, if there is a
college cost crisis, it is largely one of perception, in my view. There
is a component of that that unfortunately did not get discussed
yesterday as directly as we need to talk about it. There really is a
crisis not so much in ability to pay but in *willingness* to pay. The
big reauthorization battle in 1992 was over need analysis, particularly
the elimination of the consideration of home equity. This was just one
example of how, in fact, over time, expected family contributions have
gone down. Even the Ivy League schools have done so for families they
consider middle-income.

***"There really is a crisis not so much in ability to pay but in***

***willingness to pay . . . Many families who consider themselves***

***middle-income are paying full freight at public institutions."***

> But in conversations with aid administrators, I have learned that
> families are as shocked as much with their expected family
> contribution as with "sticker" price. One issue, for the long term, is
> how we deal with family contribution which, though relaxed, is not
> believable to many middle-income families. That leads these families
> to ask why are other families getting grants and we're
> not?---particularly at public institutions. Many families who consider
> themselves middle-income are paying full freight at public
> institutions.
>
> States are beginning to deal with this by launching tax-advantaged
> savings programs and prepaid tuition programs. But the willingness to
> pay issue may be a hard nut to crack. And the message that public
> higher education is a good deal may not be enough. Even at an
> institution likes Bates College, which, as Bill Hiss indicated
> yesterday, is very successful at minimizing loan burden for its needy
> students, as many as one third of the families will still request a
> review of their aid package which is to say they want to be considered
> for more aid. The other aspect that is important to consider is the
> sectoral one. The issues are different for publics and privates. And
> the information campaign must work for all of higher education, and
> not play one sector off against another.

**Robert Khayat** Let me try to summarize. I think we all agree that the
session yesterday was extremely productive for our Committee. Juliet
started the discussion today with the theme that we have to develop a
simple, understandable message. Frank added that we should communicate
that college is affordable. I think we all agree with those two
propositions.

> I would like to emphasize Brian's point that all of the participants
> in this enterprise must cooperate in delivering those messages in
> order to avoid making one sector look affordable or not affordable
> relative to the other sectors. Juliet, do you have a final thought?

**Juliet Garcia** I would add only this: we need to be clear about why
we are doing this in the first place. We must communicate why we are so
intent on maintaining need-based aid, and what would be the effects on
the nation if we do not succeed.

**Appendix A: Information Refuting Misperceptions**

**About College Costs**

> "After a period of decline in the 1960s and 1970s, average tuition,
> room, and board at public institutions rose to 15 percent of median
> family income in 1993 and has remained stable ever since." ***The
> Condition of Education.***
>
> "Despite the concerns we have noted about the impact on access of the
> recent rise in college costs for low-income students, the high overall
> rates of college attendance in recent years point to considerable
> success in making at least some form of postsecondary education
> financially accessible to a very wide range of Americans."

***McPherson and Shapiro, The Student Aid Game.***

> "In our study on tuition increases at four-year public colleges and
> universities for school year 1980-81 through 1994-95, we found that
> the two major factors associated with these increases were the rise in
> schools' expenditures and schools' need to increase tuition revenue to
> make up for smaller increases in state appropriations."

***GAO, page 1.***

> "The Commission finds no evidence to suggest any relationship between
> the availability of federal grants and the costs or prices in these
> institutions . . . The Commission has found no conclusive evidence
> that loans have contributed to rising costs and prices."

***The Cost Commission, page 11.***

**About Student Aid**

> "The American system of selective admission to a competitive set of
> institutions tends to sort students with the highest academic
> qualifications and promise into the institutions with the most ample
> resources with which to subsidize the students' education."

***McPherson and Shapiro, The Student Aid Game.***

> "The considerable increases in net tuition for low-income students
> have led to a growing gap between enrollment rates for high-income and
> low-income students and to an increased concentration of low-income
> students at the least costly institutions. With merit aid increasing
> at a faster rate than need-based aid, these trends seem likely to be
> exacerbated in the future."

***McPherson and Shapiro, The Student Aid Game.***

> "Remediation is a core function of higher education . . . There is no
> evidence that remediation is expanding in size or scope . . . The
> financial costs of remediation are modest."
>
> ***Institute for Higher Education Policy, College Remediation, page
> 5.***
>
> "We believe that remedial education would pass the basic cost/benefit
> test required of any efficient social program. True, it would be far
> better if all high‑school students with college aspirations prepared
> themselves adequately for college‑level work while in high school . .
> . But, in the short run, what is the alternative to remediation?"

***Breneman and Haarlow, page 3.***

> "Admitting a low-income student to Bates does not mean a federal aid
> windfall. It means an initial \$20,000 commitment from our own
> scholarship budget."

***William Hiss, page 2.***

> "We found no evidence that . . . private institutions increased their
> tuitions when they received more federal student aid . . . Given the
> tuition increases that have occurred since (the mid-1980s) . . . we
> would not be surprised to discover that the effect of federal aid on
> public tuition has been substantially attenuated by now."

***McPherson and Shapiro, The Student Aid Game, page 84.***

> "Using more recent data, the Coopers & Lybrand LLP report could not
> find evidence to support . . . (the) finding that federal student
> assistance resulted in tuition increases at public four-year
> institutions."

***Pearson and Baldi, page 95***

> "We found that private institutions tended to increase their spending
> on institution-based aid when federal student aid increased."

***McPherson and Shapiro, The Student Aid Game, page 84.***

**About Family Contribution and Unmet Need**

> "Average unmet need was about \$6,200 (\$3,800) for full-time
> dependent undergraduates from low income families attending private .
> . . (public) 4-year institutions."

***The Condition of Education, page 4.***

> "The prevalence of large amounts of unmet need\--net prices frequently
> exceed EFCs, especially for students in the lower income
> categories\--suggests that net prices may be rising faster than most
> families' ability to pay."

***Institute for Higher Education Policy, Grants, page ix.***

"Differential treatment of students within the aid-eligible population
is very common (including) making admissions 'need-aware' . . .
'differential packaging' . . . 'gapping' . . . 'admit-deny' . . . (and)
need-aware second review."

***McPherson and Shapiro, The Student Aid Game, pages 94-95.***

> "Families with incomes of \$70,000-79,999 had an average EFC of
> \$12,300, enough to cover the price to attend a public 4-year
> institution without aid. Families with incomes of between \$100,000
> and \$124,000 had an EFC about equal to the price to attend a private,
> not-for-profit 4-year."
>
> ***The Condition of Education.***
>
> "When Congress decided to write the need analysis rules directly into
> the 1992 legislation, it made those rules significantly more lenient
> with respect to middle- and upper-middle-income students."

***McPherson and Shapiro, Priorities, page 143.***

> "In 1993-94, the net value of the principal residence and the net
> value of a family farm on which the family resides was eliminated from
> all EFC formulas . . . The formulae for calculating the EFC provide
> for asset reserves that 'protect' a portion . . . of assets when
> determining the contribution from assets."

***End of Year Report, page 75.***

**Dr. Thomas E. Dillon** was appointed by the Speaker of the House in
August 1996 and reappointed to serve another three-year term that
expires in September 2001. He is currently the President of Thomas
Aquinas College in Santa Paula, California. Dr. Dillon has more than 20
years of experience at Thomas Aquinas, which has acquired a reputation
as an outstanding institution of higher learning under his tutelage, and
has worked to advance and sustain Catholic liberal education. He holds
memberships in several professional organizations and currently serves
on the National Association of Independent Colleges and Universities
(NAICU) Commission on Campus Concerns. Dr. Dillon earned his B.A. in
Integral Liberal Arts from Saint Mary's College of California in 1968
and his doctorate in 1977 from the University of Notre Dame.

**Dr. Juliet V. Garcia**, Vice Chair of the Advisory Committee, was
appointed by the Secretary of Education in 1997 and recently reappointed
to serve a three-year term which expires in September 2002. Dr. Garcia
has 25 years of teaching and administrative experience in higher
education. Since 1992, Dr. Garcia has been the President of the
University of Texas at Brownsville and Texas Southmost College. Prior to
her current position, she served as Dean of Arts and Sciences. She is a
board member of the White House Initiative on Educational Excellence for
Hispanic Americans, the Ford Foundation\'s Campus Diversity Initiative,
and the Carnegie Foundation for the Advancement of Teaching, among other
appointments. Dr. Garcia received her B.A. and M.A. degrees in
Speech/English from the University of Houston, and her Ph.D. in
Communications and Linguistics from the University of Texas at Austin.

**Dr. Henry Givens, Jr.** was appointed by the Speaker of the House in
February 1998 to serve a three‑year term that expires September 30,
2000. Since 1979, Dr. Givens has served as the President of Harris‑Stowe
State College in St. Louis, Missouri. At the request of the Governor of
Missouri, Dr. Givens served as Interim President at Lincoln University
in Jefferson City in 1987, while continuing his presidential duties at
Harris‑Stowe. He is a member of a number of professional organizations,
including the American Association of State Colleges and Universities
(AASCU) Board of Directors, the Missouri Coordinating Board for Higher
Education, the Council on Public Higher Education (COPHE) and the
National Association for Equal Opportunity in Higher Education (NAFEO).
Dr. Givens earned his baccalaureate degree at Lincoln University in
Missouri, and received a master\'s degree at the University of Illinois.
He received a Ph.D from Saint Louis University and has participated in
post‑doctoral studies in higher education administration at Harvard
University.

**Mr. Marc Douglas Glenn**, was appointed by the Secretary of Education
in October 1997 to serve a three-year term which expires in September
2000. He is a recent graduate of the University of Virginia School of
Law in Charlottesville, Virginia, where he was founder and
editor-in-chief of the Virginia Journal of Sports and the Law. Mr. Glenn
currently works as an attorney at the law firm of Powell, Goldstein,
Frazer & Murphy, LLP in Atlanta, Georgia. Mr. Glenn earned a B.A. from
the Plan II Honors Program at the University of Texas at Austin in 1996.
He also interned at the White House in the summer of 1995.

**Mr. Frank S. Holleman III** was appointed by the Secretary of
Education in October 1997 to serve a three-year term which expires in
September 2000. Mr. Holleman is a member of the law firm of Wyche,
Burgess, Freeman & Parham, P.A. in Greenville, South Carolina. Prior to
his current position, Mr. Holleman served as Chief of Staff to Richard
Riley, Secretary of the Department of Education from 1994-1997. Mr.
Holleman is a board member of Success by Six, a project of the
Greenville Community Planning Council. He holds a B.A. from Furman
University, a J.D. from Harvard Law School and a M.Sc. from the London
School of Economics and Political Science.

**Dr. William A. Irwin** was appointed by the Speaker of the House in
August 1996 to serve a three-year term that expired in September 1999,
however, he will continue to serve until reappointed or a successor is
named.

Dr. Irwin is the Director of Student Financial Aid at Lock Haven
University of Pennsylvania in Lock Haven, Pennsylvania. Before joining
Lock Haven, he served as Director of Financial Aid at Urbana College in
Urbana, Ohio, and Administrative Assistant in Financial Aid at Ohio
State University in Columbus, Ohio. Dr. Irwin has been an active member
of several professional associations, most recently serving as the
1995-96 National Chairman of the National Association of Student
Financial Aid Administrators. He earned his B.S. in Personnel
Management/Business Administration and M.S.Ed. from Indiana University,
and his Ph.D. in Student Personnel/Higher Education from Ohio State
University.

**Dr. Robert C. Khayat** currently serves as Chair of the Committee. He
was appointed by the President Pro Tempore of the Senate in 1996 and
recently reappointed to serve a three-year term which expires in
September 2002. Dr. Khayat is the Chancellor of the University of
Mississippi in Oxford, Mississippi. Prior to his current position, he
served in numerous positions at the University of Mississippi, such as
Professor of Law and Executive Director of the Sesquicentennial
Celebration, Professor of Law and Interim Director of Athletics, and
Vice Chancellor for University Affairs, respectively. Dr. Khayat holds
several memberships in professional and community-based organizations
and is the author of several publications. He earned his B.A.E. and J.D.
from the University of Mississippi and his LL.M. from Yale University.

**Ms. Susan O\'Flaherty** was appointed by the Secretary of Education in
October 1995 and was reappointed to serve another three-year term which
expires in September 2001. Ms. O\'Flaherty is Director of Financial Aid
at Western Michigan University in Kalamazoo, Michigan. Prior to joining
Western Michigan, Ms. O\'Flaherty was Associate and then Acting Director
of Financial Aid at the University of Colorado at Boulder. Ms.
O\'Flaherty has held several positions at California Polytechnic State
University in San Luis Obispo, California, including Assistant Director
for Financial Aid, Financial Aid Counselor, and Financial Aid
Technician. She is a member of a number of professional organizations
and is active in the National Association of Student Financial Aid
Administrators. She completed her bachelor\'s degree at Adelphi
University, and she received a master\'s degree from the School of
Education at California Polytechnic State University.

**Ms. Carolyn M. Sabatino** joined the Advisory Committee in July of
1995 and was reappointed by the Secretary of Education in October 1995
and September 1998, respectively, to serve another three-year term which
expires in September 2001. Ms. Sabatino currently serves as Project
Director for Administrative Systems at Ohio University. Prior to
accepting her current position, she served as Director of Financial Aid
and Scholarships at Ohio University from 1991 to 1998. Ms. Sabatino also
served as the Director of Financial Aid and a Microbiology Instructor at
Parkersburg Community College. Ms. Sabatino has been very active within
both the Ohio and West Virginia Student Financial Aid Administrator
associations, and she has done a number of presentations on financial
aid issues and direct lending. Ms. Sabatino received her bachelor\'s
degree from the University of Connecticut and a master of science degree
in microbiology from Ohio University.

**Mr. Charles Terrell** was appointed by the President Pro Tempore of
the Senate in October 1997 to a three-year term which expires in
September 2000. Mr. Terrell serves as the Associate Dean for Student
Affairs at Boston University Medical Center in Boston, Massachusetts.
Prior to his current position, he served as Assistant Dean for Student
Affairs from 1980 to 1987. He also served as Director of Financial Aid
from 1978 to 1980. Mr. Terrell is the author of numerous publications
and a member of several professional associations, including the
Coalition of Higher Education Assistance Organizations and the National
Association of Financial Aid Administrators. Mr. Terrell holds a B.A.
from Colby College and a M.A. from Boston University. He is currently a
doctoral candidate in higher education at Nova Southeastern University.

**Mr. Donald R. Vickers**, the Committee's newest member, was appointed
by the President Pro Tempore of the Senate in February 1999 to serve a
three-year term which expires in September 2001. Mr. Vickers serves as
President and CEO of the Vermont Student Assistance Corporation (VSAC).
Prior to his current position, he served in numerous positions at VSAC
such as Interim President, Associate Executive Director, and Director of
the Grant and Scholarship Division, respectively. From 1969-1971, Mr.
Vickers served as Director of Financial Aid and Student Placement at
Johnson State College in Johnson, Vermont. He is a member of numerous
professional organizations, including the Stern Center for Language and
Learning, the Robert A. Ellsworth Educational Trust, the Eastern
Association of Student Financial Aid Administrators, the National
Council of Higher Education Loan Programs, the National Association of
State Scholarship and Grant Programs, and the Vermont Association of
Student Financial Aid Officers, among others. Mr. Vickers received his
B.S. degree from Johnson State College and has participated in graduate
studies at the University of Vermont and Northeastern University.

**Dr. David W. Breneman** is the Dean of the Curry School of Education,
University of Virginia, Charlottesville and former Visiting Professor at
the Harvard Graduate School of Education, Senior Fellow at the Brookings
Institution, and President of Kalamazoo College. He has written
extensively, including five books on the financing of higher education
and higher education policy.

**Dr. Brian K. Fitzgerald** has served as the Staff Director of the
Advisory Committee on Student Financial Assistance since 1988 and has
conducted policy research in the private sector. He is a former Dean and
Lecturer at Bates College and currently serves as an Adjunct Associate
Professor in the School of Public Affairs at American University in
Washington, D.C.

**Dr. William C. Hiss** is Vice President for Administrative Services at
Bates College in Lewiston, Maine and a former member of the Advisory
Committee. Dr. Hiss is widely considered an expert on admissions and
federal and institutional aid policy and practice, and has written
extensively on these topics.

**Dr. James V. Koch** is President and Professor of Economics at Old
Dominion University in Norfolk, Virginia and former President of the
University of Montana. He has had a distinguished career in teaching and
research, and is the author of five books on economics.

**Ms. Toni E. Larson** serves as Executive Director of the Independent
Higher Education of Colorado and has played a leading role in the
National Association of Independent Colleges and Universities (NAICU) on
the issue of distance education. Ms. Larson's member institutions
include Regis University, which sponsors extensive distance education
programs.

**Dr. Oscar F. Porter** is a nationally recognized expert on access,
college/school partnerships for early intervention, and the relationship
of student financial assistance to college persistence. He currently
serves as Associate Director for Research, Evaluation, and Information
Management for the Mathematics, Engineering, Science Achievement Program
(MESA) at the University of California. Prior to joining MESA, he served
as Assistance Executive Director of the National Institute of
Independent Colleges and Universities in Washington, D.C., the research
arm of NAICU.

**Dr. William E. Troutt** is the President of Belmont University in
Nashville, Tennessee and served as Chairman of the National Commission
on the Cost of Higher Education. Belmont University, like fellow members
of the Associated New American Colleges, is a teaching university
offering a comprehensive liberal arts education with real-world,
professional application. Affiliated with the Tennessee Baptist
Convention, Belmont offers six undergraduate degrees in 56 major areas
of study and nine master's degrees.

**Dr. J. William Wenrich** is the Chancellor of the Dallas County
Community College District, the largest undegraduate institution in the
State of Texas and is comprised of seven colleges located strategically
throughout Dallas County with an enrollment of 50,000 credit and 45,000
non-credit students per semester. Previously, Dr. Wenrich served as
Chancellor of the San Diego Community College District and has written
extensively on student aid from a community college perspective.