U.S. DEPARTMENT OF EDUCATION

OFFICE OF POSTSECONDARY EDUCATION

PUBLIC REGIONAL HEARING ON

NEGOTIATED RULEMAKING

Lipman Room, Barrows Hall\
University of California, Berkeley

Berkeley, CA 94720

Tuesday, September 19, 2006

9:00 [a.m.]{.smallcaps} -- 4:00 [p.m.]{.smallcaps}

![](media/image1.png){width="0.9in" height="0.8604166666666667in"}UNITED
STATES DEPARTMENT OF EDUCATION

OFFICE OF POSTSECONDARY EDUCATION

# ADDENDUM

Public Regional Hearing - Transcript

University of California -- Berkeley

Berkeley, California

September 19, 2006

Note to Constituents:

The first 12 minutes of the Berkeley, California Public Hearing were not
recorded due to technical difficulties. However, we have inserted the
written opening remarks of: Genaro Padilla, Vice Chancellor for Student
Affairs at the University of California-Berkeley; and David A. Bergeron,
Director, Policy and Budget Development Staff, Office of Postsecondary
Education, U.S. Department of Education. We have also included the
written presentations of the first 2 presenters: Patricia Kapper, Chief
Academic Officer, Career Education Corporation; and Nancy Coolidge,
Office of the President, University of California.

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[PANEL]{.underline}

**David Bergeron**\
Director of Policy and Budget Development Staff

Office of Postsecondary Education

**Harold Jenkins**

Division Director for Postsecondary Education

Office of General Counsel

**Gail McLarnon**

Program Analyst

Office of Postsecondary Education

**Mary Miller**

Program Analyst

Office of Postsecondary Education

Genaro Padilla

Vice Chancellor for Student Affairs

University of California -- Berkeley

Opening Remarks

September 19, 2006

U.S. Department of Education

Regional Hearing Hosted by

University of California - Berkeley

Good morning everyone. My name is Genaro Padilla. I'm the Vice
Chancellor for Student Affairs here at UC-Berkeley and it's a pleasure
to welcome all of you here today, to our beautiful campus. I understand
that some of you are visiting from out-of-state, including those of you
who have come from Washington, DC, welcome. I want to thank all of you
for coming here today to participate in this important process and to
thank the Department of Education for choosing UC-Berkeley to host the
first of their four regional hearings. Before you begin your work, I
just wanted to tell you a little bit about the public institution of
higher education where you are sitting, in case this is your first time
here.

The University of California, (Berkeley being the first of the system's
campuses) was chartered as a public trust in 1968 and set the stage for
excellence in higher education in the West. With more than 33,000
students and distinguished faculty, including 19 current and former
Nobel laureates, Berkeley ranks as one of the world's greatest
intellectual centers. A 1,232-acres scenic oasis in the midst of an
exciting urban environment, the Berkeley campus is just across the bay
from San Francisco, which you can see from here\-\--the birthplace of
the biotech industry. Less than an hours drive south is Silicon Valley,
California's famed epicenter of high technology. We think it is not a
coincidence that Berkeley has played a key role in the development of
those lucrative industries that keep our country globally competitive.

For many students, studying at Berkeley is the opportunity of a
lifetime. Twenty-eight percent of our freshmen are first generation
college students, and about one-third of all our undergraduates are
eligible for Pell Grants. Berkeley serves more of these economically
disadvantaged students than all of the Ivy League schools combined. Last
year, more than 9,000 undergraduates received a total of \$45 million in
scholarships.

We applaud the work of the Department of Education in continuing to make
possible federal student financial aid, in the form of Pell Grants, as
well as the new SMART grants, (National Science and Mathematics Access
to Retain Talent Grant Program) and the new Academic Competitiveness
Grant (ACG), which were added to the Higher Education Act by the
Reconciliation act of 2005.

Thanks again for being here. We hope you enjoy your time here on campus,
and in the area, and wish you a productive discussion today.

**David A. Bergeron**

**Director, Policy and Budget Development**

**Office of Postsecondary Education**

**U.S. Department of Education**

**Opening Remarks**

**September 19, 2006**

**Berkeley, California Regional Hearings**

-   Welcome. Thank you for coming.

-   As some of you may know, except in unusual circumstances (such as
    those that applied to the initial Higher Education Reconciliation
    Act of 2005 (HERA), Pub. L. 109-171 regulations), the Department is
    required to use the negotiated rulemaking process in developing
    proposed regulations for the Title IV programs.

-   This will be our fifth negotiated rulemaking session. We have found
    the process to be beneficial and believe that it has produced
    regulations that are more responsive and in tune with what really
    goes on out there.

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-   These regional hearings are the first step in the negotiated
    rulemaking process.

-   For those of you unfamiliar with negotiated rulemaking, I'd like to
    give a brief overview.

    -   The Department holds regional meetings to solicit public input
        on the agenda.

    -   We put together an agenda and select negotiators from the
        individuals nominated in response to the Federal Register
        Notice. These individuals are representatives of organizations
        or groups with interests significantly affected by the subject
        matter of the proposed regulations.

    -   We sit down and negotiate the policies and the exact regulatory
        language that will go into a Notice of Proposed Rulemaking.

    -   The process isn't finished when the negotiations are over. We
        publish the NPRMs and the public at large has an opportunity to
        comment.

    -   After considering all public comment, we publish a final
        regulation.

-   In May 2006, the Secretary announced that we would be conducting
    negotiated rulemaking to develop proposed regulations for the new
    Academic Competitiveness Grant (ACG) and National Science and
    Mathematics Access to Retain Talent Grant (National SMART Grant)
    programs, which were added to Title IV of the HEA by the HERA.

    -   Interim final regulations for these programs, with an invitation
        to comment, were published in the Federal Register on July
        3, 2006. The interim final regulations will be used to
        administer these programs for the 2006-2007 award year. The
        Secretary may, for the 2007-2008 award year, amend the
        regulations, as appropriate, in response to comments received.

    -   The regulations for these programs that will be developed
        through negotiated rulemaking would be in effect for the third
        and subsequent years of implementation of these programs (that
        is, beginning July 1, 2008).

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-   Beyond that, there is no set agenda. We understand that there has
    been some concern that we would use negotiated rulemaking to bypass
    required legislative action to implement recommendations from the
    final report from the Secretary's Commission on the Future of Higher
    Education. I assure you that we have no intention of acting on any
    recommendations from the Commission that require statutory changes.

-   We're here to listen to you. Individuals who have signed up to speak
    will be given 5 minutes to present their comments. If someone is
    unable to comment at one of the regional meetings, they may submit
    their comments in writing to <NEGREG2006@ed.gov> by November 9.

WRITTEN STATEMENT OF DR. PATRICIA KAPPER

CHIEF ACADEMIC OFFICER, CAREER EDUCATION CORPORATION

2895 GREENSPOINT PARKWAY, SUITE 600

HOFFMAN ESTATE, ILLINOIS 60169

DEPARTMENT OF EDUCATION PUBLIC HEARING

BERKELEY, CALIFORNIA

SEPTEMBER 19, 2006

Thank you for the opportunity to participate in today's hearing. I am
Dr. Patricia Kapper, and I am the Chief Academic Officer for Career
Education Corporation.

I joined CEC in 1997 as director of education and placement when the
company had eighteen campuses. CEC has grown significantly since then,
both in size and stature. I have overseen major changes in the academic
programs at CEC schools, which have evolved from having primarily
certificate and associate degree programs to offering a broad range of
bachelor's master's and doctoral degrees in career-focused curricula.
CEC is focused on five high-growth fields: visual communication and
design technologies; information technology; business studies; culinary
arts; and healthcare.

Our strength is in our dedication to the entrepreneurial spirit of our
students and our commitment to creating tomorrow's business leaders. To
compete successfully in today's demanding workplace, students require a
solid educational foundation that provides them with the knowledge and
skills they will use daily on the job.

We work very closely with local employers to create bridges from the
classroom setting to the workplace environment. Our curriculum is
developed in tandem with community business leaders to capitalize on
existing local employment needs and provide immediate placement
opportunities for our students. Employers ask for our graduates time and
time again.

CEC's design is unique in an educational environment of traditional
pathways. We celebrate our ability to custom tailor certificate and
degree programs to meet the needs of our largely non-traditional student
population and to do so quickly as the market demands. As proprietary
institutions, we are flexible and nimble enough to have the ability to
invest ahead of the curve in new technologies and education programs.

CEC's commitment to leadership in education extends beyond the classroom
to include all factors contributing to a positive student outcome.
Financial aid professionals help students access all available sources
of government and private assistance for financing their education --
including CEC's own scholarship programs. Innovative student retention
programs help students remain in school. And, our placement
professionals help students secure part-time employment while they are
in school and in the career field they have chosen once they graduate.

What makes the 80-plus colleges and universities of Career Education
Corporation "schools of choice" for students who have many educational
options?

-   We deliver a career-focused education the provide students with the
    knowledge and skills they need to compete successfully in today's
    job marketplace.

-   We prepare students for the technology-driven jobs of this
    millennium in high growth fields.

-   Many CEC schools are leaders in their markets with long operating
    histories -- more than 100 years, in some cases -- sterling
    reputations and well-known brand names such as Le Cordon Bleu
    Schools North America and California's own Brooks Institute of
    Photography.

-   Many faculty members at CEC schools are working professionals in
    their field of expertise, as well as educators, which enable them to
    bring a real-world perspective into the classroom.

Students can select a CEC school with confidence that they will receive
an educational experience that will fully prepare them to launch a
career in their chosen field.

We welcome the Commission's report and the challenges it presents. We
commend Secretary Spellings for having the courage to ask for concrete
and bold solutions to the problems facing students and post-secondary
institutions today. We may not all agree on the solutions proposed, but
it is high time we shine a light on a system that is failing so many
students. The obstacles to student success highlighted in the report are
ones we deal with every day. I think anyone who cares about students
must face the fact that this review is long overdue.

The students who are falling through the cracks of the existing system
are often caught by CEC. Seventy percent of our students are over the
age of 21 and 39 percent are minorities. Many of our students are the
first in their family to attend college. Others are returning to school
seeking new careers after being laid off or displaced from their jobs.
Our schools are often the first step to new lives for countless
students. We offer them the opportunity to tackle new technologies and
flourish in fields of study that didn't even exist ten years ago.

We pride ourselves on providing a welcoming environment to accommodate
all students and to get them ready to compete in the global marketplace.

Like other colleges and universities across the country, CEC schools
must address the deficiencies of an educational system that graduates
students from high school without the basic skill competencies required
for post-secondary education. Seventy-two percent of all colleges are
now offering remedial services, and we, like other schools, find that we
must provide substantial remedial classes addressing core competencies
for a growing number of students coming straight from high school.

Just as our K-12 system does not do the job it needs to do in preparing
students for college, the post-secondary schools and colleges, including
CEC, struggle to do a better job of adequately addressing these
deficiencies. The Commission could not be more correct in identifying
this issue as burdening both students and institutions.

Post-secondary schools like ours are forced to spend precious student
time teaching skills that should have been mastered in high school.
Resources must be diverted to remedial programs. These resources would
otherwise go to enhancing post-secondary programs to offer more in-depth
instruction and services that in turn provide students with skill sets
that allow them to succeed in the increasingly competitive global
marketplace. We must do better by our high school students in this
country.

Another obstacle for our students is one the Commission identified as a
problem for students nationwide -- barriers to the transfer of credit
between institutions.

The burden on students and institutions alike as a result of these
barriers is unacceptable at a time when many students are highly mobile
and may be completing their degrees in multiple states. A majority of
our students are non-traditional. Most of them will not complete their
studies in a linear fashion. Those students who are older and embarking
upon a career change or furthering their careers need every advantage
available to make their studies more efficient and cost-effective.

Our students are determined to see their coursework through to its
completion, and we need to make every effort to eliminate any obstacles
they face.

Our students have found the obstacles to transferring their hard-earned
credits to be twofold. First, they experience a bias toward our
operation as proprietary institutions. And second, they encounter
non-profit administrators and faculty who object to our national
accreditation and reject transfer credits without an objective
evaluation.

An objective examination of the accreditation process conducted by the
national bodies would demonstrate that it is just rigorous as the
process administered by the regional accrediting bodies. If our process
meets the standards of the Department of Education, it ought to be
sufficient for the institutions our students would like to attend.

We are encouraged by the Commission's serious look at the shortcoming of
the existing accreditation process. We support eliminating the barriers
between national and regional accreditations. Such a change will level
the playing field for our students across the country. Increasing access
for all students is crucial, and this type of innovation in the system
can only provide more student opportunity and choice.

To highlight the reason for our concern about transfer of credit
policies, I would like to share with you some stories of problems
students from our schools have encountered in the past 18 months.

-   Sergio graduated with an Associates' degree from Brooks College in
    Sunnyvale and wanted to pursue his Bachelor's at a local state
    university. He could not, however, even despite a 3.82 GPA, because
    the university dismissed his Brooks credits out of hand.

-   Jennifer graduated with her Bachelor of Fine Arts degree from the
    International Academy of Design and Technology in Detroit. She
    wanted to continue her studies in a graduate program. Only one of
    two state universities recognizes her degree.

-   Meagan successfully completed coursework toward her Associate of
    Applied Science degree in fashion design and merchandising at our
    International Academy of Design and Technology in Nashville. She
    moved out of state to be closer to family and when she applied to a
    local public university, the school advised that she would have to
    start all over.

-   And finally, despite the shortage across the country of qualified
    nursing staff, Linda, graduate of our Western School of Health and
    Business Career, could not apply any of the credits from her
    Associate's Degree program in Surgical Technology toward a
    registered nursing degree from a local community college.

We also have found situations where one of our instructors will teach
the identical course at a CEC school and at a public or private college,
yet students who take the course at our school and meet the same
requirements as students at the other institution still cannot transfer
the credit for the course.

Students should not be required to navigate each institution's
particular transfer of credit policies, and they should not be required
without cause to repeat coursework in which they have demonstrated
proficiency.

Career Education Corporation schools work closely with local and state
institutions to facilitate the transfer of credits for our students
where needed. This means going above-and-beyond to provide extensive
documentation about our faculty, coursework requirements, and
accreditation.

Arbitrary and ambiguous of credit policies waste precious resources -- a
student's ambition for educational excellence, the time needed to begin
a professional career, and critical, limited federal financial aid
dollars.

We recommend that the Department of Education, through its
implementation of the Commission's recommendations, pursue the following
with regard to transfer of credit:

-   Require all higher education institutions to create and make public
    their transfer

of credit policies and any articulation agreements they have in place;

-   Prohibit institutions from denying transfer of credit based solely
    on the accrediting body of the transferring institution;

-   Create incentives for schools that can demonstrate a fair transfer
    of credit process; and

-   Consider creating a national consortium that follows the lead of
    states like Illinois and Florida. These states have developed
    state-wide articulation models that support student transfer from
    one participating college/university to another in order to allow
    students to complete a degree.

Thank you very much for allowing me the opportunity to be with you
today.

**Testimony of the University of California:**

**Priorities for Negotiated Rulemaking 2006**

Submitted as oral testimony at Berkeley, California

September 19, 2006 by Nancy Coolidge

Office of the President

University of California

# ACG & SMART Grants

-   Rules about the eligibility to receive a grant should be structured
    to **maximize the benefit to students, keep the administration
    simple, and still protect federal taxpayer interest.** Areas that
    should be reconsidered in the Interim Federal Regulations to achieve
    these goals include the following

-   Regulations about **receiving a Pell Grant at the time of
    disbursement of an ACG or SMART GRANT -- being eligible to receive a
    Pell Grant during the same year should meet the legal requirement.**

-   **"Academic year"** in the context of ACG/SMART should comport with
    legislative intent, not the rigid interpretation based on "term of
    art" in some, but not all, other Title IV regulations.

-   Until a student graduates from high school, **enrollment in college
    level coursework** should be considered an augmentation to their
    preparation, not render them ineligible for an ACG award.

-   Students who earn college credit from AP and IB exams should not be
    penalized when competing for ACG or SMART grants; these programs
    should foster, not discourage, rigor and high achievement.

-   Schools should have the same standing as the Department to **require
    documentation from students** to establish eligibility for ACG.

-   **Calculation of the size of an ACG/SMART grant for which individual
    students are eligible** should mirror existing Title IV rules.

-   The **definition of approved CIP** (Classification of Instructional
    Program) codes that qualify as eligible majors should be negotiated,
    particularly in certain science and language majors. The current
    approved list does not include some majors that are clearly within
    the statutory definition of the eligible disciplines.

-   The Secretary should allow institutional **flexibility in
    identifying students who have declared majors in eligible
    disciplines**, both because the method and timing of these
    declarations vary by institution.

-   Definitions from the Pell Grant program, such as the **notion of a
    "scheduled award,"** should only be incorporated into ACG/SMART
    rules when necessary.

-   The rules of ACG/SMART should **conform to existing rules for
    consortium agreements.**

-   The Secretary should explore ways that **the federal government
    could monitor continued eligibility of ACG/SMART grants** on behalf
    of institutions.

*Loan Issues*

-   Guarantee agencies should be required to use any excess cash **to
    buy down the 1% guarantee** fee on student loans, reducing the cost
    of borrowing for students, prior being allowed to use the money for
    marketing their brand or that of their lenders.

-   As currently regulated, **the burden of proof outlined in the
    interim final regulations is too great for victims of identity
    theft** with respect to student loans taken out in their name that
    were not theirs.

-   Borrowers should be entitled by regulation to obtain an
    Income-Contingent Repayment in lieu of other, more demanding
    repayment options at any point during repayment.

-   Students who have had their student loans rehabilitated by a
    guarantee agency should be **allowed to seek Income Contingent
    Repayment in Direct Loans** rather than being forced to have their
    loans purchased by a lender. Complete rehabilitation should not be
    dependent on the good will of a lender buying back the
    newly--rehabbed loan.

-   Schools lending through the **"School as Lender" provisions** in
    FFEL should be allowed the same flexibility as other lenders to
    **buy down the loan fees for all their borrowers, not** just the
    borrowers with federal "need."

-   **"Estimated Financial Assistance"** should be defined more clearly.

-   **Certification of military deferments** should be easier to
    administer in the Perkins program -- the school lenders are not
    going to be able to support the veterans in timely and appropriate
    ways without significant support from the military and Department of
    Education.

-   **Maximum negative amortization** should be calculated using the
    disbursed loan amounts rather than the principal at the time the
    students enter repayment.

-   The Secretary should choose the most **borrower-friendly** options
    when trying to **align FFEL and Direct Loan repayment options**
    rather than restrict the options to the most limited in either
    program as the interim final regulations have chose to do.

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**NANCY COOLIDGE:** . . . identifying eligible students should have the
same right to documentation as the department itself. We are struggling
to identify eligible students who did not --- and probably in the future
won't always --- identify themselves as possibly eligible. So we're
doing the investigations to find these students.

Because we're your partners in trying to figure out which ones of these
kids could get this award we need to have at least the level of access
to their records as the Department itself can demand. And we don't think
that's quite the case at the moment.

The size of the ACG and SMART grant for which individual students are
eligible should mirror existing Title IV rules. At the moment, at least,
given the discussions that have taken place on some of these conference
calls, these webinars, there is confusion on that point and we believe
that there's campuses that are administering these with somewhat
different rules of just exactly what a maximum size grant could be given
other aid. And we want to clarify that, because we believe students are
being disadvantaged by that understanding.

And finally, a big issue for the University of California is the
definition of approved CIP codes. We've had several of our faculty and
deans writing to the Secretary on this point, in both science and in the
language area. We believe that the choices made for the interim final
regulations are too restrictive and do not reflect the full
possibilities of the statute with respect to certain science courses,
particularly very serious science courses that --- if you look at the
syllabus and the curricula requirements of them --- we think should
qualify. And the CIP code should be expanded. Likewise, our languages;
the University of California teaches many of these languages that are
considered strategic, and yet very few of our Pell recipients who study
these languages are actually included --- because the CIP code is
broader; it goes to area studies rather than just the language major.
And we want to ask that there be another look at which of the majors are
recognized for the languages.

We want to ask for flexibility in majors; who is in a major at different
times. Because I think some of the most rigorous and demanding schools
do not permit identification of a major until certain prerequisites are
finished, and that's excluding students who are, in fact, eligible ---
or should be eligible --- because they have not actually been allowed to
declare a major, and they miss opportunities during their third and
fourth year. This goes, again, in combination with the academic year
definition --- it's excluding eligible students. If we could fix the
academic year definition this would be less of an issue.

Scheduled award notions that are existent in the Pell Grant program
don't actually work well here, and we want to ask for a revisiting of
the notion of scheduled awards with respect to ACG and SMART grants;
that that doesn't translate well into this program.

Consortium agreements. It's suggested, at least in the interim final
regulations, that consortium agreements have a slightly different set of
rules with respect to these grants; maybe that's a misunderstanding, but
we'd like to clarify that the basic consortium rules that apply to other
Title IV aid should apply to these as well and not be different.

And finally, with respect to these two grants, the federal government
should monitor --- explore ways that the federal government could
monitor. We want the federal government to be a partner in seeing who
has gotten two years of a \[unintelligible\] ACG grant and who has
gotten \[unintelligible\] years of a SMART grant --- so that we can
reduce the element of academic year definition in terms of the different
definitions that institutions give it should be less of an issue at the
federal level, as long as no one gets more than their \[unintelligible\]
share, as \[unintelligible\] no more than two years of an ACG and no
more than two years of a SMART grant. That could be controlled, because
you'll have all the data on who has gotten these disbursements. We could
control it by a combination of your information and our definitions of
what year these students are in.

With regard to loan issues, we want to ask that guarantee agencies ---
before they spend their money on marketing their brand --- that they
help buy down the fees that students are being required to pay. You
require that one percent of the volume be remitted to the Secretary, but
we are interested in having --- after that amount --- that the marketing
not be a big ticket item at guarantee agencies that are financed on the
backs of students who are poor enough to have to borrow; and that that
money be used to buy down some of their costs, rather than spent on
guarantee agency marketing. It's not as though students have any serious
option as to using a guarantee agency if their school is in the FFEL
program; they have to use one. And since they're captives, we feel that
it's appropriate for you to regulate some of the direction of their
. . . any largesse that they have should be directed at student welfare
before it is spent on other things.

The burden of proof for the interim final regulations, with respect to
students who become victims of identity theft, is too strict. It would
be nigh on impossible for someone who has just been victimized in this
way to actually get relief. We believe that the documentation
requirements and the sequence of information is so strict and so
demanding that these students who have already had something bad happen
to them are going to . . . it's going to be months --- maybe years ---
before they get relief, given the rules. And we're concerned that it's
too strict and too demanding.

I don't have this in my written list of things, but I want to mention in
connection with the demand or the hope that income-contingent repayment
can be flexed so that more students can take advantage of it when they
need it, we also need --- as others will testify --- that the economic
hardship deferments, which have been the subject of negotiated
rulemaking in the past, still are not sufficient. They are too
restrictive. They are too hard to get; the application is very hard for
students to negotiate --- very hard for those of us who help them. And
furthermore, the rules governing who gets it have a cliff effect; so
that students with one dollar here or there in income are ineligible
entirely, whereas people with one less dollar are completely eligible.
We want to see that changed so that it is more gradual and that students
have more opportunity to take advantage of that when they truly need it.

Schools lending through the "School as Lender" program should be allowed
some flexibility as others. We're understanding that the interpretation
of the new statute on this point is so restrictive that campuses are not
permitted to buy down the fees as their competitor lenders are, and this
puts school lenders at a significant disadvantage with respect to
treating students well. We have only one interested party at the moment
--- the law school at UCLA --- but they would like to use some of their
profits to buy down the fees for their students, and they're being told
that they can only do this insofar as there is federal need and not for
all the borrowers who find themselves having to borrow.

"Estimated financial assistance" is defined in these loan programs in
such a way that there is still confusion on the point. We are struggling
to understand different campuses have different understandings of what
estimated financial assistance consists of, and we feel that needs
attention.

The certification of military deferments is particularly troublesome for
us in the Perkins program. The way our programs are administered, we do
not have available the records that would be necessary. We're doing
manual searches on each of the borrowers who apply for these, and the
suggestion that we can differentiate students who borrowed before a
certain date and after a certain date, and how much of their loan was
before that date is very expensive. The overhead is very expensive. And
we feel it doesn't serve the veterans very well. That the intention of
Congress in setting a date was to save money. But because it's in the
Perkins program it doesn't actually save the federal government money.
It's because it's a school-based program --- a campus-based program ---
it doesn't have the result of limiting cost to the federal government.
And so we think that we could look at Perkins differently than perhaps
is the case with the FFEL and direct, where they do have better records
and can show amounts before and after. The administration is more
practical there; it's not so in the Perkins program.

The maximum negative amortization with respect to students who are
getting loans that enter repayment, we want to actually look at this
based on the amount that they borrowed rather than the principal at the
time that they go into repayment. We believe that anything we can do to
minimize the borrower's interest should be done, and there is, I think,
legal room within the statute to look at the amounts borrowed and
dispersed rather than the amount owed at the point of repayment as the
basis for the amortization \[unintelligible\]. And so we'd like to take
another look at that. Obviously we're grasping at straws here because
the statute is so unfriendly to students here.

And finally, the Secretary; we are hoping that the Secretary will look
at borrower-friendly options when trying to align FFEL and Direct Loan
repayment options. Because in the interim final regs the choices made
were the least friendly to students and the most restrictive. We want
them to go the other way, so that if the Direct Loan program has more
flexible options; we want both the FFEL and Direct programs to adopt
those and not go in the direction of reducing student options --- which
we think is what happened here. We'd like to see that changed.

Thanks for your attention this morning. Happy to answer questions ---
I'll be here most of the day.

**DAVID BERGERON:** Thank you, Nancy. The next speaker is Helene Lecar.
As she comes to the microphone let me --- I didn't do this at the
beginning because I wanted to get us started --- but let me introduce
myself. I am David Bergeron; I'm Director of Policy and Budget
Development in the Office of Postsecondary Education. Harold Jenkins is
the Division Director for Postsecondary Education in our Office of
General Counsel. Gail McLarnon is a Program Specialist who works with me
in my office, as does Mary Miller --- who has been signing you in. So
just to let you know who we are. And with that, Helene?

**HELENE LECAR:** Helene Lecar. And I'm here on behalf of the California
League of Women Voters. We did a two-year study of the community college
system in California and adopted a position in 2003 which has remarkable
parallels to the conclusions and recommendations in the Commission's
report. And I was thrilled to see that the Commission made adequate and
repeated reference to the need to accommodate nontraditional students.
The Commission's waterfront is much larger than ours; it was looking at
all of higher education. We only look at the community colleges. But in
fact, it's as if the universe of the community colleges is now expanding
into all sectors of postsecondary education. So we were especially
pleased to see that the notion that a term and a seminar and a semester
are negotiable under the Commission's viewpoint. So we're very happy for
that; that federal financial aid should take into account the fact that
there are more than one way to skin a cat. There are more than one way
to get an education. And they don't all fall into semester breaks and
they don't all happen on campuses. And that's especially true of
community college students who are pursuing career options where
internships and outplacements are an essential part of their education.

Okay, given the speed at which the Commission had to move I was very
impressed what \[unintelligible\] accomplished, but what I really want
to focus on in my five minutes is the pieces that still need work.

One is the question of funding year to year. We are all agreed that
support for students, support for institutions is inadequate on its
face. But even more damaging to the people we interviewed --- which
included administrators up and down the state; we had almost 30 units of
league members up and down California talking to administrators on site.
And their remarks were painful, because there was no time to plan. There
was no confidence in planning --- not only on their parts, but on the
parts of their faculty. So the notion of experimenting with innovative
new ways of teaching and new ways of managing were a joke, when you
couldn't get enough money in the bank to pay people's salary for next
month. Because this year's budget has nothing to do with next year's
budget. And whatever you plan this year disappears the minute the
State's revenue --- or the Federal revenue --- vanishes. In fact, the
commission is talking about the urgent need to expand financial
need-based aid at the same time that the Congress is taking \$12 billion
out of next year's aid budget. What's the possibility of moving forward
when it's one step forward, two steps back?

So we recommend that any incentives the Department issues should be
coupled with predictable, multi-year financial commitments of
institutions are to attempt serious statewide or campus-wide change. We
further recommend that if such funding is not allocated there should be
some phase out funding to enable the institutions to bring whatever
programs are being phased down to a reasonable closure instead of just
dropping things like a hot potato.

Okay. Then there's going to be trade-offs that the Commission's report
emphasized, and we think that some of them are very necessary; the
Commission looked at the management costs with a sharp eye for budget
cutting. But if you look at the community colleges we are not allowed in
California to spend more than 50 percent of our budget on non-classroom
purposes. But the very students we're trying to bring in --- if we want
to increase the college going rate --- are students who need a great
deal of support; people who provide the kinds of services that you
provide in accessing federal grants, in providing guidance and
counseling on career paths, in administering grants and reporting on
grants --- every new program has its own recording requirements. And
they are responsible for doing all of this stuff under a budget that is
very, very small in community colleges. And since the colleges are the
source of education for 40 to 50 percent of all of our higher education
students, this is a critical matter.

We therefore recommend that any recommendations aimed at reducing the
administrative overhead of colleges and universities acknowledge the
importance of fully staffing student support services, which will be
essential in promoting the success of the non-traditional students we
want to attract.

The same issue arises with the matter of funding the growth in the
number of students. Everybody knows about the demographic bulge from
baby boomer two, and it's estimated that there will be an increased
demand of 25 percent --- even if the college going rate stays the same.
If exactly the same percentage of people who are now seeking higher
education continue to seek it, there will still be 25 percent more
people seeking education. In California the community colleges have a
cap on growth, which is a limit on the number of additional students the
state will pay for. The feds have a cap on the number of scholarships
that are available to support nontraditional students; that's that \$12
billion I'm looking at. But in fact the cap in recent years has been
about three percent in California, while growth has been 6.5 percent.
It's not evenly distributed through the state. But that means that the
impacted college campuses have no choice either to turn away students or
to take money to support them out of general operating funds. Since they
don't have enough general operating funds to begin with, there were
30,000 unfunded additional students in the year 2003. That's a lot of
students to come out of general operating funds.

We recommend --- if we are serious about expanding access and increasing
the college going rate --- that funding needs to be sufficient not only
for the outreach efforts to attract new students, but also to support
them as the enrollments go up.

We want to talk for a second about pre-collegiate remedial education,
which is a major issue at the community college level; almost half of
the students coming in need help. They need basic math. They need
English --- either as a second language or as basic collegiate English.
And in California the funding for those courses is only about 60 percent
of the funding available to support full credit courses. So we recommend
that the fiscal support of pre-collegiate courses be on par with that of
for-credit courses, because many of the students we're hoping to
increase in their educational opportunities are going to need just those
kinds of courses.

Lastly I want to talk about accountability a little bit. We're concerned
that when you talk about how institutions are ranked --- and that
completion rates are a significant portion of that --- community
colleges have a very extensive mission that includes a lot of people who
don't really care about getting a piece of paper; they're there to get a
competence. So one course in improving a computer science background to
upgrade workplace skills is all they are looking for. If there are
life-long learning questions and I want to brush up on my French before
I go to Paris next summer, that's all I'm looking for. So when
assessments are made about evaluating colleges and campus we need to
have an understanding that colleges serve different purposes for
different students, and that graduation is not necessarily the only goal
people pursue when they enroll.

Lastly, the accountability section of the report focuses on
institutions. We would like to suggest that there is a reciprocal
accountability requirement of the legislators and the budget decision
makers who are responsible for how well the institutions get funded. In
the interest of creating greater public awareness of the choices and
trade-offs that must inevitably be made, we recommend that the
Department encourage legislative and governing bodies to report to the
public every year --- just like the institutions --- about their value
added in the ways in which their decisions and budges serve to foster
the educational opportunities available to our citizens.

And lastly, we would like to thank you for undertaking to define and
obtain that 800-pound gorilla we're all living with. Thank you.

**DAVID BERGERON:** Thank you. Our next witness is Bob Shireman.

**ROBERT SHIREMAN:** Good morning, and thank you for the opportunity to
testify. And thank you for asking the public for help in setting the
agenda for the rulemaking and having the regional hearings. I'm Bob
Shireman; I'm the Executive Director of the Project on Student Debt ---
which is a project of the nonprofit Institute for College Access and
Success, which is based here in Berkeley.

One of our major efforts at this time is to address the issues of rising
student debt and the implications that that has for our society and for
our college graduates --- and particularly those who are thinking of
attending college and looking at what their financial options are. There
are two ways to address the burdens of student debt: one is to reduce
the amount that students have to borrow in the first place, and the
other is to make sure that the terms and conditions of the loan are such
that students who are borrowers in their later lives are not placed in
difficult situations and difficult circumstances.

On the first point I just wanted to make one non-regulatory suggestion,
because I know that right now is the time when there is back and forth
between the Department of Education and the Office of Management and
Budget about some of those big picture budget issues. And one of the
ways to reduce the burden of student debt, particularly on lower income
students, is to put some kind of a substantial down payment on the
increase in the Pell Grant that was recommended in that draft report of
the Commission. We were very pleased to see that the Commission came out
in strong favor of need-based aid, of including something in the budget
for the Pell Grants \[unintelligible\] substantial increase. I think
people are going to be watching for that, and I think to the extent that
. . . I think that's critical to making sure that we continue to have
access to college in the country.

On the second issue, fortunately, on the terms and conditions and loans
the Department of Education does have substantial authority, because the
definitions around economic hardship and income contingent repayment ---
all of those details are in regulatory language rather than statutory
language. And I've included in the written testimony the specific
citations to authority.

It's interesting to look at campuses and the advice they give on how
much can I borrow if I'm going to college. Because the first question
that they ask is, "Well, how much are you going to make after you
graduate in a salary?" And that's not really a question that a student
can answer with any kind of certainty. We have general answers, that
people who have bachelor degrees make x percent more than people with
just a high school diploma. But one of the visual aides that I brought
is the actual distribution of salaries of people with bachelor's
degrees. So these are earnings of 25-34 year olds, all working
full-time. And sure, there's some percentage --- five to eight percent
--- who are making in the \$95,000 to \$100,000 category. But there are
substantial numbers that are making less than the median, in that
\$5,000 to \$30,000 category. And it's really those at this bottom end
\[unintelligible\] we need to make sure that our loan repayment is such
that . . . thank you, Nancy.

It's really those who at the left end of that distribution
\[unintelligible\] need to make sure that when they're making payments
on their student loans they're not looking at a huge payment that they
need to make relative to the amount that they are earning. Earlier this
year two economists --- Sandy Baum and Saul Schwartz --- looked at how
would you look at the question of the burden of repayment; the payment
the borrower needs to make, and design a system where you expect a
manageable payment but not an excessive payment. And basically what they
said was that at very low income levels . . . when someone is in poverty
or up to maybe 150 percent twice poverty, there is a low payment or
basically a token payment that can be expected. And then after that
point for each additional dollar earned some amount can be expected. So
if you take a particular payment level and draw a line at that payment
amount you end up with a gold area here that is basically the area of
unmanageable payments; payments that are difficult to make, in that gold
area. And you want to have a system that addresses people's issues when
they are in that zone --- it might be a long-term period, it might be a
short-term period. You want to address the problems that they have when
they are in that zone. And the system we have has some provisions that
are intended to do that, and the problem is that they do not accomplish
it very well.

The next slide I'm going to zero in on that particular zone. And part of
the reason I show the whole thing and then zero in is sometimes when you
zero in you think it's a whole lot of people, like it's all of the
borrowers. In fact, it's a relatively small subset of people. But that's
the area that we need to address with these policies. Our current
economic hardship rules cover this blue area of that gap. And as Nancy
Coolidge said earlier, it is an all or nothing kind of situation where
if you're in the blue area you have . . . if you have subsidized
Stafford and Perkins loans your interest is fully covered and if you're
one dollar out of that area --- either by income or by the payment
amount which then adjusts from here to here based on interest rates ---
if you're one dollar out of it, suddenly none of your interest is being
paid. So our suggestion in terms of changes to economic hardship is that
that gap, that gold area that is left, be covered through a sliding
scale of changes in the economic hardship rules.

So the gaps need to . . . We have gaps in the coverage for economic
hardship. We have these perverse incentives, where --- and I provide a
couple of examples in the written testimony --- where a preschool
teacher would actually be better off not accepting a raise, because it
puts her out of the zone of receiving interest help. Or a medical
resident would be better off earning \$39,000 rather than \$42,000
because they lose \$5,000 of interest assistance. So addressing that
cliff and the perverse incentives that exist there. There's also an
issue with full-time and part-time work that I describe in the testimony
and then in more detail in some of the other materials.

There's also confusion and inequity, and Nancy mentioned the form ---
the seven pages that are required to figure out whether you should get
economic hardship relief. But with income contingent repayment and
economic hardship, trying to predict --- it again puts student in the
situation, borrowers in the situation where they are being asked to
predict a future that they can't possibly know. Are you going to be low
income relative to your debt for 25 years? Well, I hope not but I don't
know that for sure. Is it going to be limited to just three years, in
which case maybe you should put yourself in this box. We shouldn't be
making people predict the future in order to figure out which box to put
them in to help them when they're having difficulty making their
payments on those loans. So we need to address that confusion and
inequity.

You'll hear from others today as well, but basically we're suggesting
five changes.

One, that there should be an overall limit based on income, percentage
of income, that can be dedicated to student loan payments; it should
essentially follow the red line that I showed you.

Second, it should be sensitive to family size. So to recognize that
someone with \$30,000 of income who is single may be in okay shape, but
if you've got a couple of children there is a different amount of
discretionary income that's available.

Third, we should limit the extent to which interest charges build up. So
for Stafford Subsidized and . . . Subsidized Stafford and Perkins loans,
when they qualify for either this economic hardship or partial economic
hardship any unpaid interest should be covered, rather than added to
their debts.

Cancellation after currently 25 years in income contingent repayment ---
basically anyone who is paying along that red line, is making that
manageable payment; we're suggesting for 20 years should be able to get
the cancellation of any further amount due. Usually that would be
interest, generally, by that time. They will have paid everything that
they borrowed, but it will have been build up of interest --- perhaps on
unsubsidized loans that caused them to be in that long-term debt
situation.

And finally, the process for applying. The application process should be
simplified. Made online. Make use of the ability to confirm income
figures with the IRS, rather than filling out seven pages of forms.

I will be available today to answer any questions. And again, I very
much appreciate the opportunity to appear here today.

**DAVID BERGERON:** Thank you, Bob. Our next witness is Jamienne
Studley.

**JAMIENNE STUDLEY:** Good morning. My name is Jamienne Studley. I am
President of Public Advocates, a public interest civil rights legal
advocacy group here in San Francisco that promotes equity and
opportunity, and a greater voice in public decision making for
low-income communities and communities of color. Today we join TICAS and
the Project on Student Debt to highlight specific opportunities to
improve higher education access, program clarity, and fairness in the
federal student aid programs --- especially for the lowest income and
most vulnerable borrowers.

I commend Secretary Spellings' attention to access, affordability,
learning, accountability and transparency in higher education, and
welcome this opportunity to help the Department shape the issues for
negreg. I developed a great deal of respect for the negreg process when
we used it in the early '90s for the first time in higher education
rulemaking while I was Deputy General Counsel for regulations and
legislation. It's good to be back, and it's good to see so many people
still working on these issues.

My appreciation for the openness and exchange promoted by this process
has deepened from my vantage point as an educator, president of
regulated entity --- Skidmore College --- and now as an advocate for the
interests of very low-income students, borrowers, and prospective
students from preschool through college.

As a nation we encourage students to pursue their educations regardless
of wealth and expected post-college earnings. The federal student aid
system exists to increase opportunity for students whose financial
resources are insufficient to finance their investment in higher
education. This investment serves not only the national interests in
learning, competitiveness, productivity, and an educated citizenry ---
but also individual learners' intellectual and economic interests.

The proper balance of grant and loan aid and levels is for other forums.
Federal help for low-income students has shifted increasingly to loan
assistance on the theory that borrowers will be able to repay their
loans with the higher incomes that result from a good education. The
economic returns have proved high enough that this scenario has worked
reasonably well for most people, and that now with some more substantial
care most are able to manage their loans. But for individual graduates
the financial benefits of their education investment can be variable,
unpredictable, and --- increasingly often now --- crushing.

We need to improve repayment policies that affect college going and
subsequent economic survival. Protections for borrowers who struggle in
good faith to repay their loans is a fair and necessary corollary of the
government's choice of a loan-driven aid system. The risks of crippling
repayment, bankruptcy and other consequences fall most heavily on
borrowers affected by industry upheavals, poor local economies, and
intractable racial and ethnic discrimination.

Reasonable protections for borrowers experiencing financial hardships or
very low incomes are important not just for the borrowers themselves;
the next generation of borrowers, too, must have confidence --- indeed,
the courage --- to assume debt that is now necessary to assure an
education. Students need to see that investing in education is a wise
strategy and that there is a safety net. Without that students will
under-invest in higher education, avoiding the risk of borrowing that
will destroy their family's financial position --- and the next
generation of people will be afraid to go to school, as the House
Committee on Education and Labor worried when it passed the Higher
Education Act Amendments of 1992. This is especially true for low-income
students most daunted by the cost of education, least familiar with the
concept of long-term debt, least likely to have the security of family
capital to fall back on, and most sensitive to the fragility of economic
circumstance.

The federal loan system includes provisions to ease repayment burdens,
but they are inconsistent, sometimes irrational, highly complex, and too
narrow compared to legitimate needs. Borrowers in similar situations are
treated vastly differently in repayment obligations. Policies do not
always provide clear and meaningful protections, and sometimes are
ineffective or very hard to figure out. Sensible economic hardship and
ICR provisions would better serve borrowers who experience change as a
result of job market volatility, crisis, and career change. Even people
who expect to be able to repay their loans comfortably at the outset may
need relief at certain times.

For all of these reasons I urge the Secretary to amend the student loan
repayment regulations along the lines recommended by the Project on
Student Debt to protect borrowers from unmanageable payments and
indefinite repayment obligations. The Secretary has broad authority to
do that under the FFEL program and under the ICR program as well.

I recognize --- as you do --- that many fixes are statutory and that
those are not within the scope of these regulations. And second, I have
a great deal of humility about the fact that some of these solutions
were not identified in prior rounds, and even that sometimes with
positive intentions unintended consequences or limitations appear. So I
respect the complexity of the job that you have ahead of you. I would
ask you to look at my more extended testimony that I provided you for
the specifics about some of these provisions related to the two
programs. The partial economic hardship opportunity under the economic
hardship rule and the recognition --- as we read it --- that the
Secretary could extend the current three-year restriction on the period
of economic hardship benefits, allowing a proportional arrangement or
multiple three-year periods for each borrower should they fall into the
qualifying conditions more than once. Those are the kinds of things that
could help these lowest-income borrowers a great deal.

Under ICR, when income contingent repayment was passed and we developed
the first regulations the Department anticipated that it would be used
by 15 to 30 percent of borrowers to allow them to plan wisely for their
futures. As we all know, it has not been used nearly that extensively
and has not fulfilled its laudable purposes of facilitating public
service and assisting borrowers to integrate planning for debt
management and career choice. Even law school graduates, for whom debt
of \$150,000 and above is increasingly frequent, avoid the onerous terms
of ICR. The Secretary can make many changes here as well. Shorten the
period of repayment from 25 down to 20, even less. One of the things
that scares off the greatest number of borrowers and changing the
formula and making ICR available in both the FFEL and direct lending
programs.

In closing, the current loan repayment regulations are well intentioned,
but flawed --- leaving too many borrowers without adequate protection.
Loan dependence demands a reasonable safety net. I urge the Secretary to
address these shortcomings. The changes would advance the nation's
promise of equal educational opportunity in higher education --- and we
stand ready to help. Thank you.

**DAVID BERGERON:** Thank you, Jamienne. The next witness is Tommaso
Boggia.

**TOMMASO BOGGIA:** I am Tommaso Boggia and I am a student at UCSC. And
I'm the chair of the California Student Public Interest Research Group.
My testimony --- first of all, I want to thank you guys for coming out
here and listening to what we have to say. My testimony is mainly
regarding my role as a student organizer and activist on my campus. I
feel that a lot of students don't go to universities only to get a piece
of paper that said that they studied for four years; they do go there to
reach a sense of community, to get a whole education, to learn to be
adults. And I feel that the increasing amount of debt is not letting
students achieve this result. I have \[unintelligible\] countless times
where people are really interested in what we're doing, really want to
contribute --- really want to make our campus a better place for other
students to learn --- but they have no time to do this because they have
to work three jobs so that they can keep their . . . so they don't go
into too much of a debt.

So basically I just want to thank you guys for coming again. I know you
guys don't have the authority to increase the amount of financial aid
that these people get, but I hope that you use your influence as the
Department of Education to influence the people that can increase the
amount of financial aid. And I know that you have the best intentions at
heart, and I hope you use them well. Thank you.

**DAVID BERGERON:** Thanks, Tommaso. Amazingly, we have timed this
perfectly for getting to our first break. We're going to take a
ten-minute break. And after that break Zebah Pinkham is going to be
testifying, followed by Alex Ding. So just so you know, we will
reconvene at 10:10. Thank you.

***\[BREAK\]***

**DAVID BERGERON:** If I can have everybody's attention, we are going to
reconvene. If people want to continue to have conversations I'd suggest
you go out on the balcony and have a conversation --- that's what I
would do, having walked out on the balcony once today already. And then
if you are up to testify we will make sure that somebody yells out on
the balcony to find you. Otherwise, glad you're back in. Our next
witness is Zebah Pinkham. Good morning.

**ZEBAH PINKHAM:** Good morning. My name is Zebah Pinkham and I am a
sophomore at the University of Southern California. And I'd like to
start off by saying thank you for coming here and getting input.

I am a double major in film production and \[unintelligible\] studies,
and film was the reason that I went to USC. USC is one of the most
expensive schools in the nation, and my parents and I are doing whatever
we can so that I can pay for this. I am going to have to be there for
another four years because of my double major, which means that I'm
taking out loans for the next four years --- everything. So I don't know
how I will be paying that back \[unintelligible\], but I know that my
field of study \[unintelligible\] known for making a lot of money
afterwards unless you're Steven Spielberg. So I'm just representing
myself and many other students who are passionate about certain things,
but can't always pursue these fields because they'll be worried about
paying back for the rest of their lives. And so that's who I'm
representing.

And another thing that I think is really important is that
\[unintelligible\] solve the problem now because if all of us are
hanging \[unintelligible\] for the next 20 or 30 years, we want to have
our kids and we want to send them to school --- but we'll still be
paying our loans. I know my dad just finished like five years ago paying
back his loans for grad school. So rather than allowing problems to
build up, I think that it's really important to solve this now, which is
why I'm here. And hopefully we can change it so that people can pursue
fields they're passionate about and not have to . . . not be burdened by
\[unintelligible\] for so long. Thanks.

**DAVID BERGERON:** Thank you. Our next witness is Alex Ding. Good
morning, Alex.

**ALEX DING:** Good morning. My name is Alex Ding, and I'm a senior
medical student at the University of California, San Francisco School of
Medicine. I am also here as a counselor on legislation and a former
Chair of the Subcommittee on Medical Education Debt of the American
Medical Association. I'd like to first of all thank you, the Department
of Education --- and you, it's officials --- for your time and
consideration in holding these hearings. I come before this committee to
urge you to consider the inclusion of the medical student and resident
physician community in your discussions. I am here to provide you a
perspective on the current state of medical education financing.

Medical students often incur huge debt to finance their education.
Medical student loan debt continues to be a tremendous hardship,
especially during a physician's residency training program which can
last anywhere from three to nine years after the four years of medical
school which follows a traditional undergraduate degree. I myself have
spent nine years of higher education schooling to get my MD, and intend
to spend another six years in residency training. In 2005 the typical
medical student in this country graduated from medical school with an
average student debt of over \$120,000. Medical student tuition has
risen an average of 4.5 percent per year above inflation over the last
20 years. When I started medical school my tuition was only \$9,000.
However, in the five short years that I've been at my University of
California institution, tuition has nearly tripled --- now at \$25,000;
and this is not a unique circumstance across the country.

There is a misperception that doctors often make more than enough to
cover such debt upon graduation --- much like their business or law
student counterparts. However, during residency training physicians work
at lower paying jobs but are obligated to start repayment of their
exorbitant debt. In fact, the average starting salary of a resident
physician is slightly over \$40,000. Most undergraduates from this
university probably make more than that at an entry-level job right out
of college. In fact, I went to this university and I personally
graduated from here and went into investment banking --- and made double
what a resident physician makes, which I will become in the next year.
But I changed careers and went into medicine because I wanted to help
the sick and the vulnerable. My profession --- and those of us who enter
it --- are altruistic and have the best intentions to help those who are
in need of a helping hand, caring heart, and a compassion for healing.
However, with the debt burden rising we begin to note that the
difficulties of \[unintelligible\] debt not only start to affect the
practitioners in the system, but also start to take a toll on the public
health. Studies have shown that medical students with high debt burdens
are often deterred from entering the public health service, practicing
medicine in underserved areas, prevented from practicing primary care
medicine, or entering a career in medical education or medical research
--- and instead flock toward higher paying private practice, medical
specialties, or medical subspecialties. Even this Department's own draft
report conceded that too few students are going into the health care
profession. This unfortunately will leave a negative lasting impact on
America's access to care and the public health.

In conclusion, it is vital to the health of this country that the debt
of those of us who decide to undergo medical education remain
manageable. Several proposals have been considered during the
reauthorization of the Higher Education Act, and I hope that this
committee will continue such considerations and dialogue. The U.S.
Department of Education consider policy changes to medical education,
including --- one: ensuring that the availability of sufficient
subsidized federal loans be available; two: minimizing interest rates
for borrowing and providing the opportunity to consolidate; three:
extending deferment of repayment of at least throughout the entire
length of residency training --- and I really emphasize that point.
Four: ensuring that scholarships and loan repayments are not taxable.
And five: continuing to ensure that the total interest paid on our loans
be tax-deductible.

I want to thank this committee for its time, and hope you will consider
my comments in your deliberations. Thank you.

**DAVID BERGERON:** Thank you. Our next witness is Brice Harris.

**BRICE HARRIS:** Good morning. My name is Brice W. Harris, and I serve
as Chancellor of Los Rios, a four-college system of public community
college in the Sacramento region --- currently enrolling more than
75,000 students. I also serve as Commissioner of the Accrediting
Commission for Community and Junior Colleges of the Western Region.
Thank you for this opportunity to comment on the Secretary of
Education's possible creation or modification of rules associated with
the Higher Education Act and the report of the Secretary's Commission on
the Future of Higher Education.

My comments today concern the proposed rulemaking committee intended to
address accreditation. I certainly underscore many of the concerns
identified by the Spellings' Commission. Although American higher
education has accomplished much of which we can all be proud, most of us
are quick to admit that we are struggling with underprepared students,
rising costs, and inadequate student outcomes. What troubles many of us
even more is that our institutions are too often failing those who need
us most. Although I could participate in a spirited debate over the
causes of these failures --- some of our making and some we are
powerless to control --- I prefer to focus on what we can do to move
American colleges and universities back to the top of the global ladder.

As CEO of a large, urban and suburban community college system I am
extremely proud of what our faculty and staff have accomplished with
nearly one-half million students in the last decade. But we must also
admit some failures. My brief remarks today will focus on the concept of
rulemaking prior to the renewal of a Higher Education Act, and on the
continued pressure for increased accountability in higher education.
Although many of us involved in regional accreditation agree that
ongoing review and reform are necessary, proposed changes to federal
involvement in our system are complex and quite controversial. If
changes are to be made, we believe strongly they should be done with the
approval of Congress and only after the passage of the Higher Education
Act. American higher education accreditation is undergoing reform and
the Spellings' Commission is right to call on those of us involved to
speed up the needed change. All of the regional commissions have now
embraced student learning outcomes, which will ultimately provide sound
information on student success. And we are continuing to work on the
areas insuring access and controlling costs. However, another process of
rulemaking prior to finalization of the Higher Education Act seems
burdensome.

This brings me to my second concern about accountability in general.
Most of us in higher education are experiencing accountability fatigue.
This document lists the nearly 550 accountability reports required of
the colleges in my system. My finance staff estimates that the cost of
completing these reports is conservatively \$4.5 million a year. As the
Department considers rulemaking for higher education I strongly
encourage you to please consider regulatory relief. Contrary to what
some believe, the current system of regional accreditation based on self
and peer evaluation is working quite well. The last thing my employees
need is another form to fill out or another box to check.

Please focus instead on what you want our colleges to accomplish.
American higher education includes tremendously different institutions
with vastly differing missions. Creating a system that lines up colleges
from very bad to very good will certainly result in institutions
abandoning those students that need the most help in order to bulk up
their beauty rate. If we are truly concerned about access, then forcing
institutions to get rid of students who are challenged in order to make
their graduation, transfer, and retention rates look better will have
exactly the opposite result.

Instead, make the goals clear. Help us find the necessary resources. And
I promise you we will deliver. Hold me personally accountable for
reaching the targets in my colleges and get rid of me and hire someone
else if I fail. No requirement for another report is going to improve
the success of students in my classrooms. Clear goals that drive
self-improvement will. Thank you.

**DAVID BERGERON:** Thank you, Brice. Brice --- could I ask you a
question? One of the concerns that I've heard is that our current
accreditation rules don't encourage the regionals in the national
associations to focus on continuous improvement; that our rules seem to
set a bar --- and that bar then becomes the current and steady state and
not really encourage further ongoing continuous improvement. Do you see
our rules as impeding that, or do you think our rules currently give the
accrediting agencies sufficient flexibility?

**BRICE HARRIS:** Regional commissions are in a transformation right
now, and the current standards in our western region --- brand-new
standards --- absolutely set a bar and then encourage self-improvement
of institutions. And I think with student learning outcomes we're going
to see that happening. In fact, I've been on the Commission for five
years, and just in the last year or so since these new standards have
been in place we've already begun to see institutional improvement
driven by those standards. So it is an ongoing process.

I just authored an article for the accreditation newsletter the other
day that says we sort of in the Commission feel like we're in a race; on
the one hand, we have the federal government sort of pushing us to
nationalize this process, and on the other hand we have local
institutions who are fatigued by accountability and say "enough is
enough." And so the Commission is in a tough spot, trying to get the
accreditation process reformed fast enough to satisfy the feds while at
the same time keeping our colleague institutions along with us. And it's
a challenge. But I think that what you're seeing all over the country
with student learning outcomes as part of the accreditation standards is
driving us to self improve.

**DAVID BERGERON:** Thank you, Brice. We've got a couple of minutes
before the next witness, so I was wondering --- Nancy --- if you could
come and let me ask you a question. I was looking for blocks of time so
that we didn't cut into other speakers to ask questions. That's why I'm
going to do this for a couple of minutes. And others may have questions
or comments from up here.

Nancy, you made a comment about not having access to the same
information that we do at the federal level in implementing the new
Academic Competitiveness and National SMART Grants. And I was wondering
if you could speak a little bit more about that question --- what access
do you feel that you need that you don't currently have, that we could
work together to make available?

**NANCY COOLIDGE:** Well, clearly we're struggling because this isn't
true the first year --- because there is no one with too much, but
eventually we're going to need to know, especially with regard to
transfer students who got these awards with ACG and SMART before? How
much did they get? What do they have in remaining eligibility? And we
can't rely strictly on the student. We're going to have to have
information from you. In fact, our suggestion is that the whole system
of determining eligibility really be as Pell is a federal
responsibility; that you monitor the disbursements that have taken place
that are labeled according to which year in the ACG or SMART program
these awards were given, and that you tell us on the ISIR just exactly
what's remaining for this student if they otherwise qualify. We can
figure out if they otherwise qualify, but you're going to have to tell
us where they are with respect to getting these awards.

There are going to be issues of students having been enrolled before.
And they tell us where they've been enrolled before, but we don't have a
complete transcript of what happened. So it's essentially about awards
that have previously happened, so that we don't accidentally give them
an award that they're not deserving of. That's the big one.

**DAVID BERGERON:** Okay, so if we were to make that information
available through NSLDS or some other tool ---

**NANCY COOLIDGE:** Well, the trouble with NSLDS for us is that we
cannot do this on a onesie-twosie basis. The workload is too great. What
we want you to do is to build this into your ISIR response to an
application to a FAFSA, so that it comes automatically to us --- so we
would know. If the student gets a Pell, that you would give us this
information automatically.

**DAVID BERGERON:** Okay. Thank you. Harold? Gail? Do you have any
questions for anyone we've heard from?

**HAROLD JENKINS:** I guess I would just comment that this is a good
example of something we need to worry about when Congress enacts a
provision and requires that an institution know what's going on before
for a student who may have attended a different school. I think it's
quite valuable for us to come to a meeting like this and hear this type
of concern expressed.

**DAVID BERGERON:** Cassandra Trombley-Shapiro. Close enough. I have a
last name that everybody slaughters.

**CASSANDRA TROMBLEY-SHAPIRO:** Okay, so I'm Cassie Trombley-Shapiro,
but close enough --- that works. I unfortunately don't know all the
inner workings of the loan system or anything, and I apologize for that.
But hopefully that doesn't make ---

**DAVID BERGERON:** You don't need to. But you have something you want
to say to us, and we want to listen. Okay? And we'll figure out where it
fits in.

**CASSANDRA TROMBLEY-SHAPIRO:** Okay. All right. So there are two main
problems with the increasingly difficult government loan system in the
United States; first, and most importantly, those who cannot afford to
attend college on their own are often not able to attend at all. Second,
debts requiring decades to pay off create disincentive to pursue careers
that furnish lower incomes, in turn creating even further problems down
the road as fewer individuals become teachers, social workers, etc.

I work with middle school girls at Longfellow Middle School in southwest
Berkeley as part of a mentoring program called "Women and Youth
Supporting Each Other." We work to give these girls information and
resources so that they can make the best decisions possible for
themselves in all realms of life. Here is where the problem lies. We try
to create relationships with these girls based on our being relatable
women, similar to them in age and experience --- but being that we are
college students and so many of them won't be able to even afford to go
to college, their exists a huge divide. These girls' families do not
have the resources to provide on their own for their daughters'
secondary educations. When the main difference between me and these
girls is my ability to pay for college --- something that clearly should
never stand as a true difference between us --- it is really
discouraging to see that become such an important difference. When,
according to the Institute of Education Sciences --- an offshoot of the
US Department of Education --- approximately 10.7 percent of high school
students from low-income families are dropping out of high school, as
opposed to 5.4 percent of students from middle-income families and 1.7
percent of students from high-income families. I have a really hard time
telling these girls that better alternatives exist when they potentially
do not even have access to those alternatives. These girls are bright.
They are optimistic and they are motivated. But that potentially means
nothing in a system where a college degree is necessary for so many
careers, but is inaccessible to those without a financial head start.

I have worked with a multitude of high school teachers, because I work
as a high school debate coach and judge. A personal friend of mine
working in California as a high school teacher is in his 30s, has a wife
and two children --- and is still paying off his college debts, as is
his wife. With an already devastatingly low supply of teachers, a system
that chains them practically for life to debts wracked up when they were
teenagers only furthers this crisis. What's more is the fact that the
schools that are getting fewer and fewer teachers are those like
Longfellow Middle School --- public schools in at-risk, low-income
neighborhoods --- where, to finish the cycle, students are unlikely to
be able to afford to go to college.

It's easy to cut aid --- and I don't just mean monetary financial aid
--- it's easy to cut aid to a generation that votes in such considerably
low numbers. This is just another cycle, though. A disenchanted group
sees no reason to participate in a system that ignores them. The system
ignores them because they fail to participate. Why listen to and support
a subset of the population that plays such a minor role in the election
process? But that's exactly why hearings like this are where change
needs to happen.

We are not mobilizing ourselves, unfortunately. We are not fulfilling
our part of the process. But we shouldn't be ignored. We are still
greatly affected by your part of the process. And when I look around
Sproul, down by Sather Gate on any given day and see the masses of
students handing out flyers and trying to get the word out for their
various volunteer organizations I know we do care. And we definitely do
still matter. Thank you very much.

**DAVID BERGERON:** Thank you, Cassie. Our next witness is Van Nguyen.

**VAN NGUYEN:** Van Nguyen.

**MS. GARCIA:** Hi, I'm \[unintelligible\] Garcia.

**VAN NGUYEN:** So thank you. It's a really good opportunity for us to
speak here on behalf of the students here at UC Berkeley. I'm a third
year student here. I'm also a director in Bridges Multicultural Resource
Center.

**MS. GARCIA:** I'm a fourth-year this year, and I'm also a director for
the Bridges Multicultural Resource Center.

**VAN NGUYEN:** So we're here to talk to you about . . . See, I'm not
really good at the numbers, to be quite honest. And I'm just going to
put that out there. But I do know that we work one-on-one with a lot of
different students all across the state of California. And what we do
know in the individual conversations that we have with thousands of
students that want to pursue higher education is that even before they
step into their first class in their ninth grade year, even before they
begin to apply for college the prospect of achieving a higher education
is completely out of the story. It's not even on their radar, because
the cost is so much.

**MS. GARCIA:** Bridges Multicultural Resource Center \[unintelligible\]
to promote diversity in higher education, and it really inhibits our
goal when students of color and students of low-income feel that they
can't achieve higher education because it costs too much and they feel
that they can't afford it. I myself am not on financial aid because
apparently the government thinks my parents make too much money, or
enough to support one child. Little do they know that they have two
other children at home. But that's a different story. But I'm just
saying I'm struggling and I don't feel it's right for other students for
future generations to have to struggle or go on academic probation
because they have to go to work and they choose to work to help their
families as opposed to their academics.

**VAN NGUYEN:** I think it's important to note, also, that there are
many students on this campus --- and there's many students in this room
--- that are struggling to pay for a higher education. But the stories
that a lot of you all probably won't get today aren't happening because
students are working. Students are at their jobs right now. Students are
in classrooms trying to learn as much as they can, trying to pay off
their loans, and trying to support themselves as independent individuals
in order to . . . with the prospect of actually achieving something in
life. Just to paint a picture for you all, there's a problem that
tuition is too high. Well, not here tuition; we pay student fees ---
we're supposed to actually get a free education, supposedly. Tuition is
too high. There's not enough financial aid and support in that respect.
And then that results in high levels of debt. And so you can see that
cycle happening.

And I also think an important thing to note is the opportunity costs.
People from low-income families, low-income students of color have an
obligation not only to achieve a higher education, but an obligation to
their parents to support them. Many students don't have the opportunity
to come to college because they have to work to support their family.
And that trade off is a real choice that students have to make, and
which they shouldn't have to make. Achieving a higher education
shouldn't be the choice between whether you're going to put food on your
table or be able to pursue greater goals in life.

I also think that while we were talking about students that higher
education isn't even on the radar, for students that are actually in the
system and are in higher education --- they're full-time students. They
work 20 hours a week. And they are the people that hold the burden of
fighting to increase Pell grants, to increase funding for financial aid.
And this burden is not carried by wealthy students; this burden is
carried by low-income students that have no else but to fight for these
for their communities. Not fight for themselves, but fight for their
brothers and sisters, cousins that will one day hopefully be in the
system and that they want to ensure higher access for.

And something also that I wanted to add was that to make higher
education more accessible for all students I think it's important to
make the process of applying for financial aid easier. I think that
being a part of higher education and coming to college is much . . . it
has a lot to do with how hard you work and how you smart you are, but
besides that it's about how well you can navigate a bureaucracy. And
people here know how to navigate a bureaucracy. So making it easier to
apply for financial aid is going to create a whole bunch more access for
students that haven't had that institutional knowledge to apply for
financial aid. First-generation students, students that are low-income
don't have that knowledge to navigate bureaucracy. So making that
process easier is super important.

Also, giving more opportunities for recent immigrants, because I know
that the FAFSA, you have to be a citizen to apply. Undocumented
immigrants should not be denied the ability to fund their education
because they don't have citizenship. Having opportunities for students
to get federal funding is critically important for the success of people
all across the United States. That's all I had to say. Thank you for the
opportunity to speak here today. I hope to talk to you all individually.
Have a great day.

**DAVID BERGERON:** While you're both standing there, how do you feel
about the application process today? Obviously you don't have experience
with it five years ago. Do you find FAFSA on the Web something ---
students that are out there --- do you find FAFSA on the Web if you use
it easier to navigate than the old paper form? What is your sense? Are
we on the right track with those kinds of administrative reforms?

**MS. GARCIA:** I think for me personally it would be, because I have
access to internet and computer. But there are a lot of high school
students that don't have that access and the library isn't open all the
time for them to have enough time to fill out the FAFSA. So having the
option of doing both would be better. Just like we say, it would be
better to have applications for UC's online and offline as well.

**DAVID BERGERON:** But would it be better to have a really very simple
application for the students who do it by paper? Really, really simple?
Okay.

**MS. GARCIA:** Simple is better.

**DAVID BERGERON:** Simple is better, right.

**VAN NGUYEN:** I also think that --- just to add --- the organizations
like Bridges Multicultural Resource Center, that goes out to those
communities to help students navigate that bureaucracy are critically
important to the survival of students that want to apply for the FAFSA.
And when you get into the high schools many times \[unintelligible\]
three counselors for 1000 students. Those counselors --- their job is to
help students do that, but there's not enough resources for them to do
that.

**DAVID BERGERON:** So maybe it would be helpful if when we provide
training, maybe we should try to find ways reach out to these kind of
student-based organizations to provide them with the kind of training we
provide to financial aid professionals about how to fill out the FAFSA?

**VAN NGUYEN:** I think so.

**DAVID BERGERON:** An interesting idea. I like that idea. Because I
know that we do that with our federal \[unintelligible\] programs --- we
provide the same kind of training. But maybe we should open it up to a
broader array. We've got a couple of good suggestions of administrative
things that we can do that don't require regulatory, statutory change.
That's very helpful. Thank you. Dagny Brown is our next witness. \[no
response\] Then we'll go to Paul Tao.

**PAUL TAO:** Hi. Good morning.

**DAVID BERGERON:** Good morning. Thank you.

**PAUL TAO:** First of all, thank you guys, of course, for holding the
hearings. My name is Paul Tao. I am a senior at the University of
Southern California. I'm here to offer my thoughts on the situation as I
know it. As a country America is often noted for the wide variety of
talents and abilities that its citizens possess, as well for being a
country that is dedicated to the cause of equal opportunity. Because of
this, it pained me to see Congress take measures such as the one earlier
this year to cut funding from student loan programs to the millions of
young adults in America such as I and the several other students here
who have talked to you guys today. Student loan programs represent the
only opportunity really to go to the universities and colleges in order
to receive the higher education that nowadays seems like a prerequisite
to any kind of career where you want to have any semblance of a
reasonable living, reasonable income.

I attend USC as a political science major with an international
relations minor, and one day I hope to attend law school in order to
pursue a career in law or politics --- something like that. However,
considering that I already --- trust me --- I'm very, very deeply in
debt from student loans. And law schools are definitely much less
lenient and generous when it comes to financial aid that I have come to
count on now to be able to attend school. I have been forced to
compromise my goals in order to face this reality. The prospect of
facing untold tens of thousands of dollars in debt in the future and a
bleak future of living life around a loan repayment schedule isn't
really something I'd like to do, and has definitely made me not only
reconsider what field I should enter once I have graduated, but also
whether or not I even have the resources to be able to attend law school
and pursue my dreams.

As a student that has to pay all of my tuition, housing and books by
myself without any sort of financial help from my family I must
prioritize and take into account in choosing the path I perceive
\[unintelligible\] for my future what I can do in order to best pay off
my current and future loans instead of choosing something I'd like to do
or to capitalize on the areas that I am best at or that I am extremely
interested in. I know I'm definitely not the only student who is in the
similar straights because as I'm sure you guys have heard testimony all
day today and for the rest of the day, a lot of my friends personally
face the same choices.

Establishing more reasonable student loan repayment rules is something
that the Department of Education can --- and should --- do in order to
help these students become the educated model citizens that we know the
government wants them to be. As much as I'd like to avoid the catch
phrase and all that kind of stuff you guys hear all the time, really we
are the future America and we are what is here today. Enabling students
to attend institutions of higher learning seems like an obvious choice
for our country. Students should be able to achieve the education that
they want and that their natural ability affords them to without having
to constantly worry about how their lack of financial resources will
affect them.

The Department of Education has a chance to make an impact on the lives
of countless students and future business leaders, lawyers, doctors and
the like. To institute more fair loan repayment rules is a good step in
the right direction, and is not only the right thing to do for American
students but it is also something that makes the most sense for the
country. Students should not be forced to choose between doing what it
is that they're most passionate about and what it is that will make them
the most money in order to pay off interest rates on student loans. And
the Department of Education can do what it can to prevent this from
happening. Thank you.

**DAVID BERGERON:** Dagny Brown, again? We're just running a little bit
ahead of schedule, so ---

**DAGNY BROWN:** I'm ready.

**DAVID BERGERON:** Okay.

**DAGNY BROWN:** I'm the CalPIRG Statewide Higher Education Coordinator,
as well as a third year UC Santa Cruz community studies major, which is
a prep major to go into the nonprofit sector. Big paycheck. And also
graduating with over \$20,000 in student debt when I graduate.

I think the biggest problem is the penalization of students for taking
out loans, is what it boils down to now. I just consolidated my loans in
a program that gives me as much time as I need to pay them off because I
need to be able to make small payments so I can still afford to live.
But that means I'm probably going to be paying off my loans for 30
years, 40 years --- something like that. And I'm not the only person in
this situation. Just in my work I would go and do grassroots and talk to
students on campus all around; and there are film majors, art majors,
journalism majors --- and they were all concerned about it. They were
all like, "Yeah, \$20,000 in debt; what am I going to do with my major?"
But students want to go to school to do what they want to do; they don't
want to have to go and get a degree in business if all they want to do
is be a journalist or be a teacher.

And so I think that it's really kind of cruel to penalize students for
wanting to do those things, especially since they give back to the
community so much. So I think my solution for that would be to, after 20
years --- just cut it. You paid your debt for 20 years. You need to
recognize that the return on an education that the government has
invested in isn't simply financial. If somebody is a teacher for 20
years they have probably given back enough, you know? They don't need to
keep on forgoing family vacations or buying houses, or going and seeing
their family back east for holidays. They don't need to keep forgoing
that in order to pay back the debts. I think they've done enough.

And then the other thing is just the deferment of loans and charging
people. People aren't sitting on their couches, generally, doing nothing
and asking for loan deferments. They're working hard. They're being
social workers and they're teaching children. They're out trying to make
change and improve everybody's lives. So I think that it's not right to
charge people for deferment of loans. So just cap that, and try and help
people to become more financially stable so they can pay back those
loans.

And then also, just as a little side note, I wanted to address the whole
FAFSA financial aid application process. I actually went to Washington
and met with the Higher Education Commission, and they were talking
about making simple things --- like a postcard that says, "I would like
financial aid," because it boils down to the fact that it's easy for
different governmental \[agencies\] to share the numbers, you know?
Check a number on the income tax return that says we would like
financial aid --- please share this with the education. That alleviates
the problem of people having to understand the questions that I have to
call my mom every year and say where do I fill in this box? My mom
graduated from school. I'm in college. I still can't figure it out, so I
can't imagine other students having to do the same thing who their
parents don't speak English or they're first generation. So anyway,
thank you for your time.

**DAVID BERGERON:** Thank you. Still way ahead of schedule. Cheryl Resh.

**CHERYL RESH:** Good morning. Thank you for being here today. As the
Director of Financial Aid here at UC Berkeley --- with over 9,500
graduate students and over 23,000 undergraduates; and of those
undergraduates about 7,600 of them being Pell recipients --- I want to
thank you for hearing that students have additional needs and for
Congress and you addressing them with the three new federal programs
that were created when President Bush signed here into law last
February.

It was unfortunate, however, that each of these new programs needed to
be implemented in time for fall 2006, because this created a myriad of
implementation issues for the Department as well as the entire education
community that we're still addressing today. There is still much
confusion out there, especially with the grant programs --- as to who is
eligible. Many of the headaches and confusion in the education community
across the nation could have been avoided if Congress would have written
the legislation for these new programs to begin in fall 2007. And I'm
not sure if they could ever hear what the problems they really created
for all of us.

At the same time I want to say that the much-needed grant and loan funds
became available this fall and we were able to give this money to our
needy students now rather than later. The new Graduate PLUS loan program
will typically be used by our graduate students at Berkeley in the
professional schools and for those graduate students who are having to
be assessed nonresident tuition, because their budgets are so much
higher than the maximum Direct Loan that the student can take out on a
yearly basis. So this is much better than the old alternative loan
choice that they used to have. As of today we have \$3.5 million in fall
loan funds to 337 graduate students on the Berkeley campus already in
their hands.

If Congress decides to eliminate what they consider an inadvertent
discrepancy in interest rates between the Direct Loan PLUS and the FFEL
PLUS programs, it's important that we not let them disadvantage the
Direct Loan program. I suggest that if this comes up again that it's
important that we argue that the Direct Loan PLUS rate should stay at
the 7.9 rather than be increased to the FFEL rate, and that the FFEL
rate be the one that's reduced. Because well before we realized that
there was a discrepancy the FFEL lenders were already offering interest
rates at lower than the 7.9. So we know that the FFEL community can
really afford to keep the lower rates. And it's important to keep these
interest rates as low as possible for our students and our parents, as
you've been hearing from our students today --- as we now have the
rising interest rates it's going to be a real challenge as they have to
pay these loans back. So anything we can do to keep the rates lower
makes sense.

And fair competition on a level playing field between these two loan
programs is best for students. It's important that we are sure that both
federal programs continue to co-exist and thrive as true options for
students, institutions, and taxpayers. UC Berkeley is very strongly
committed to the Direct Loan program.

The important new federal grant programs for the full-time Pell students
who are citizens was really also very welcome. I am really sorry that we
couldn't make it to all of the Pell recipients. On our campus 24 percent
of our Pell recipients are eligible non-citizens with green cards, and
they're not eligible for this --- this is more than an oversight on
congress's part and I wish we could rectify that at some point. But to
date over 1300 Berkeley undergraduates have the new Academic
Competitiveness Grant or the SMART Grant, and that means that more than
a million dollars in additional grant funds came to Berkeley students
this fall. We're still going to be awarding probably 200 to 300 more
Academic Competitiveness Grants this fall as we work our way through the
paperwork to figure out who gets to be manually certified. And probably
another 100 SMART Grants once the students actually declare their
majors, or we work through again reviewing the manual pieces that are
harder to implement.

I want to note that these grant programs are the most labor-intensive
federal program ever implemented, and anything that can be done to
simplify the multiple reviews that our financial aid offices are going
to be required every academic year would make these programs better
understood by everyone. Campuses typically package their aid recipients
in the spring term for the next academic year, and use the previous fall
GPA for awarding their own scholarship funds for that entire next
academic year. This should be good enough for the SMART Grants. Instead
we have to wait until after spring grades are available to give them
their fall awards, and we won't be able to pay their spring SMART Grant
until after their fall grades are in. That is not the way the campus
works, and it really delays them getting their much-needed funds. These
new programs require a level of complexity that is absolutely
unnecessary \[unintelligible\] the intent of the legislation, and I
encourage you to consider simplifying the process.

Within these new grants the issue of counting or excluding Advanced
Placement units on the transcript is most relevant to otherwise-eligible
students when they reach that 120 unit ceiling on a semester campus, or
180 quarter units. The intent of Congress was that students should not
receive more than two years of a SMART Grant, but the regulations need
to be revised to eliminate the ceiling and to really simplify it to say
that SMART Grants could be awarded for a maximum of two years --- and
let the financial aid community make sure they don't award them for more
than two years. Many of our students at Berkeley are in double majors,
and most of our students graduate in four and a-half years. So our
seniors --- our fifth year seniors --- are all excluded from receiving
these SMART grants. And I know that was not the intent.

Also, the SMART grant program was designed to encourage more students to
choose majors in math, sciences, and the critical foreign language
programs. There's a myriad of them, like Urdu, Russian, Arabic, and
Gaelic. Although Berkeley offers intensive language programs that are
very rigorous for almost every critically defined foreign language that
this law allows, only Japanese and Chinese majors on our campus are
qualified for the SMART Grant, and that's because they have a unique
major code. All of the other majors that would qualify are all
sub-majors under Slavic Languages and Literature, Near Eastern Languages
and Literature, South and Southeast Asian Studies, and East Asian
Languages and Culture. None of them qualify, and these are critically
defined languages and cultures that are very intensive, comprehensive,
and were designed --- I believe --- by this legislation to be included,
and these students should be eligible for this program. I am going to be
turning in a document; a letter from the Dean of Arts and Humanities,
who has already sent a letter to the Secretary asking that this issue be
looked at. And I want to ask again that you really seriously look at
expanding the programs in the foreign languages.

Finally, when the Secretary of Education chose which majors in the
sciences to be eligible for SMART Grants the Berkeley campus was really
disappointed --- and especially myself, who had already figured out who
the students would be --- that the Berkeley majors in public health,
forestry, nutrition, and environmental sciences were excluded. The
Secretary really needs to reconsider these critical science majors. We
need to be expanding students in these programs to help solve the major
health, water, and resource problems facing the work in this 21^st^
century. Thank you for listening to my concerns and suggestions this
morning.

**DAVID BERGERON:** Thank you. Cheryl, can I ask a couple of questions?
You commented that you wished we had more time to implement these new
programs, and those of us who had been working on this in the Department
would share that view. That said, as we thought about it I think we came
to the same place you did --- which is we wanted to get the grant aid in
the hands of students as quickly as possible. And I think that's what
Congress was thinking when they had such a quick implementation date. Do
you have an estimate of what the impact of that has been on debt burden
for the first- and second-year students, and third- and fourth-year
students at this point? Do you think it would be the full amount that
you are awarding those programs, or some part of that?

**CHERYL RESH:** Okay. On the Berkeley campus the \[work and loan?\]
expectation that we have of all of our needy students is \$8,200 this
year. With these new grants freshman entering, instead of having an
\$8,200 had \$750 less than the \$8,200. For the SMART majors, rather
than \$8,200 they have a \$4,200 work and loan expectation this year. It
absolutely makes a difference. And when we had to take away the grants
from some students because of the 120-unit ceiling, or because of the
majors that were not allowed, you can tell that it absolutely will
change students' way of choosing majors --- because they are still
looking . . . some of them are still trying to figure what major they'll
go into to get that \$4,000 back. So for sure it's going to reduce work
and loan for these neediest students. Again, it's only some of the Pell
students. I have a lot of eligible non-citizen Pell recipients that
aren't going to have this ability, which is going to be an issue in the
same major. They're both in the same major, but one Pell student can get
it and the other one can't.

**DAVID BERGERON:** Right. That particular item is clearly statutory.

**CHERYL RESH:** And you can do nothing about that one.

**DAVID BERGERON:** Through regs we can't do anything. The other
question I was going to ask is do you have a sense of what the benefit
is to students of the Grad PLUS compared to the private loans? Do you
have a sense of the interest rate differences and repayment term
differences for your students? I presume your students were always
fairly attractive in the private loan market, and ---

**CHERYL RESH:** But it's easier to . . . if you have them all as
federal loans they'll be easier to consolidate into one. You have the
forgiveness of the loans if the person dies. I mean, there's real
benefits for them being in the federal program rather than these bank
alternative loans.

**DAVID BERGERON:** I just was curious whether there were differences in
interest rates that you've seen; the private loans were at 8.25 last
year and now they're 7.9 --- you don't see ---

**UNIDENTIFIED FEMALE:** She's right. The other benefits are the value
down the road, not the ---

**CHERYL RESH:** Right. It's not the interest rate. I mean, that's . . .
it's going to be when you're paying it back. That's the real key,
because that goes . . . the interest rate does matter, but the real
issue is going to be what's available for consolidation, for . . . The
ease in which you can change your terms. And you have all those options
on the federal program and it's not easy to change your terms with the
alternative loans. And they're better under the Direct Loans as well,
than they are under the community overall.

**DAVID BERGERON:** Thank you. Barbara Beno. We continue to be way ahead
of schedule, yes. \[Unintelligible\]. We hadn't planned on answering
questions. \[Unintelligible.\] We'll see.

**BARBARA BENO:** Good morning. My name is Barbara Beno and I serve as
President of the Accrediting Commission for Community and Junior College
of the Western Association of Schools and Colleges, a regional
accrediting commission. I am also the Chair of the Council of Regional
Accrediting Commissions. The Council --- known as CRAC --- is comprised
of the seven higher education regional accrediting commissions in the
country, including the Commission on Higher Education of Middle States,
the Commission on Institutions of Higher Education with the New England
Association, the Higher Learning Commission of North Central, the
Northwest Commission on Colleges and Universities, the Commission on
Colleges of the Southern Association, my Commission, and then the
Accrediting Commission for Senior Colleges and Universities of the
Western Association.

I thank you for this opportunity to comment on the Secretary of
Education's possible creation or modification of rules associated with
the Higher Education Act, as well as on the report of the Secretary's
Commission on the Future of Higher Education. My comments today reflect
the views of the Council of Regional Accrediting Commissions and concern
the proposed rulemaking committee intended to address accreditation
issues found in Part H, Subpart II of Title IV. The Council has been
engaged in discussion over the past two years related to reauthorization
of the Higher Education Act, as well as the most recent deliberations of
the Spellings Commission. The Council's recommendations to both bodies
have been comprehensive, addressing issues related to student learning,
transparency, public disclosure, and assessment of institutional
equality.

The regional accreditors have appreciated the opportunity to submit
testimony and written commentary on the ideas being deliberated by the
Spellings Commission. We believe our viewpoints have been heard. We
really appreciate the changes to the comments made about accreditation
in the final draft of the Commission's report --- and we look forward to
the final report being released on September 26^th^. The Council intends
to participate in negotiated rulemaking when it occurs, and we'll
nominate individuals to serve and to represent the Regional Accrediting
Commissions in those negotiations. The regional accreditors agree that
there are important issues in higher education practice that should be
addressed. We also believe that the higher education and accreditation
communities have already benefited and will continue to benefit from the
deliberations and discussions at the national level, as well as the
debates and the actions within institutions and within institutions and
within the accrediting community that have really resulted from those
federal or national discussions.

However, the Council believes that a better way for the Department,
accreditors, and institutions to address the important issues that have
been raised is through a single set of negotiated rulemaking sessions
following passage of a Higher Education Act. That act is not likely to
be passed before spring 2007, and negotiated rulemaking is not likely to
begin before late spring or summer. The current House and Senate bills
both contain proposed changes to the legislation that will affect
accreditation, so it's rather certain that there will need to be
negotiated rulemaking following passage of the Higher Education Act.
Higher education is a complex endeavor, and efforts to initiate change
and practice require a good deal of energy and focus. The changes are
undoubtedly coming, and they'll require a substantial effort on the part
of accreditors and institutions alike.

Some of the broad changes suggested by the Spellings Commission may
require legislation --- additional legislation. And some of the efforts
to implement new regulations may require adaptations of multiple
sections of the regulations that affect accreditation. There remains a
good deal of detail to be worked out with respect to the respective
roles of institutions and of accreditors in making the changes to meet
the objectives of the Department and of Congress. The Council believes
that it will be difficult --- and perhaps counterproductive and
expensive --- to engage in two sets of negotiated rulemaking in such a
short timeframe. The Council respectfully suggests that the Department
delay negotiated rulemaking on accreditation issues until the Higher
Education Act has passed and all changes can be made at once. By
suggesting that rulemaking be delayed until passage of the Act, the
Council does not want to lose the opportunity to work with the
Department staff on the important issues that it has raised. By
continuing to work collaboratively on these issues, regional accreditors
and the Department will be all better prepared to undertake negotiated
rulemaking in a few months, once the Higher Ed Act has passed.

Nevertheless, we do know the Secretary is authorized to initiate
negotiated rulemaking on existing legislation at any time. Should the
Department conclude that there are compelling reasons to proceed now
with negotiated rulemaking the regional accreditors would like to just
hear more specific information from the Department on what aspects of
current regulation it intends to open. That will help us prepare for the
negotiations.

Thank you for your kind attention and for considering these requests.
The Council of Regional Accrediting Commissions looks forward to working
with you. Thank you.

**DAVID BERGERON:** Thank you, Barbara. Let me make one observation.
When we began the process that led us to be here --- back in May or so
--- our view was at that time, and it's noted in the Federal Register
notice that announced this hearing, that it was possible that the
Congress would enact HEA before we were seating in a negotiating
committee, which we likely will do in November, December kind of
timeframe. So our view at that time and our expectation --- or at least
hope at that time --- was that we would have an HEA activity that would
be concluded and we would be able to merge that into this process,
rather than having to wait an additional year before we implemented
those regulations. Because if we don't have a final rule in place by
November first of 2007, it goes further off into the future. And that
was our hope at the time we noticed the public about this hearing; was
that that process would have concluded and we would have more that we
would have available to talk about. So thank you.

**BARBARA BENO:** We understand. We shared that hope with you. Thank
you.

**DAVID BERGERON:** Next on our witness list is Laura Kerr.

**LAURA KERR:** Good morning. My name is Laura Kerr. I'm the Director of
Governmental Relations with the California State Student Association.
CCSA represents California State University students --- over 400,000 of
them. We're a student-run, student-driven organization. Our board of
directors is made up of the student body presidents from the 23 CSU
campuses. Our mission is to increase access and affordability, and so
we're here today to talk about the student loan issues.

A little bit more about CSU students. We're unique, I think, compared to
some of the traditional college-going population. Two out of five of us
have dependents or children, so taking children into account when
determining loans is really important to us. Thirty percent of us work
over 20 hours a week, which is significant. And 50 percent of us receive
financial aid. We also serve a lot of nontraditional first-generation
college students to whom lending and debt management is difficult to
understand and to navigate.

We find the trend of increasing debt burden and decreasing grant aid to
be very troubling. And at the statewide level we've been working with
our administration and a whole coalition of people to reform our local
CalGrant program. We have a bill on the Governor's desk and we hope
he'll sign it in the next two weeks.

At the federal level we stand in solidarity with the United States
Students Association, the UC Student Association --- which is state ---
CalPIRG, and the Project on Student Debt, \[unintelligible\] on the
five-point plan to reform the student loan program, or the federal loan
program.

So with that we believe that you should limit the student loan payments
to a reasonable percentage of income, number one. Number two, we believe
that you should recognize that borrowers with children have less income
available for student loan payments --- and again, that goes back to the
fact that we have a lot of students with dependents within our system.

We believe that you should protect borrowers from high interest charges
when they face hardship situations, and that you should cancel remaining
debts when borrowers have made regular payments for over 20 years ---
things that you've heard.

The final thing --- we think that you should simplify the application
process for hardship deferrals and other repayment options.

So thanks for coming out. Thanks for making your only stop on the West
Coast California; we appreciate it. Have a good day.

**DAVID BERGERON:** Thank you, Laura.

**HAROLD JENKINS:** Just one comment on the timing of negotiated
rulemaking. Several witnesses have suggested deferring negotiated
rulemaking until after reauthorization. We don't know when
reauthorization will occur. We don't know, for example, if it will occur
in the spring of 2007. And David has mentioned the fact that by statute
in order for regs to go into effect on July 1^st^ of a given year they
must have been published in final form by November 1^st^ of the previous
year. And in order to do that, of course, we have to start quite a bit
earlier than that to do negotiated rulemaking. I guess I would also note
that there have been a number of speakers who have suggested relief or
changes in current regs, and obviously that somewhat is in conflict with
the notion of putting off negotiated rulemaking until after
reauthorization is enacted. So these are just a few of the things that
we in the Department need to take into account as we set the timetable.

**NANCY COOLIDGE:** If I may respond --- I think most of the suggestions
for the delay in negotiated rulemaking have been by people concerned
with accreditation. I think there is less of that sentiment with respect
to other issues, particularly loan issues and ACG/SMART. So I think
you've heard it correctly, but not across the board.

**DAVID BERGERON:** I think that we have not heard general agreement of
witnesses that we hold off on all negotiated rulemaking; it's just if
you apply an argument that applies to accreditation, it applies to
everything else as well. Because Congress potentially could change any
of these things that we change in regulations. That's the conflict.
That's the tension here.

We have reached the end of our witnesses signed up for the morning, I
believe --- although Mary will tell us if we're wrong in a second. We're
done with the morning set of witnesses? Some had suggested that there
might be some questions of us that people would like to ask. I open up
that up with some trepidation.

Because I understand a couple . . . let me explain a couple of things
about who we are. We're all career folks here, sitting at this table ---
and Mary at the back. That is to says, we're not political officers of
the Department. And often when we get into these things we're speaking
as career folks, without having talked about the issues that somebody
might ask a question about, at a political level. And so to the extent
that we can answer we'll try to answer some questions for a couple of
minutes before we break for lunch. And then we'll break for lunch and
continue in the afternoon. I know Nancy has a question. At least one. At
least one. I'll let you go first, and you can break the ground for the
rest of ---

**NANCY COOLIDGE:** Right. I'm just actually --- and I think this is
appropriate to the sort of staff role we play. But I'm interested in
details about how will the Secretary this time go about setting the
dates for negreg, and presuming we go ahead with this winter --- which
is what was suggested in the Federal Register --- and how will they go
about electing or nominating, or having stakeholders represented?
There's been changes. I was involved in the early '90s in this, and
there were a different set of rules sort of in play in the late '90s
when they did this. So I'm interested in what do you have in mind this
time for the process?

**DAVID BERGERON:** That is actually an excellent question. Let me start
with how do we decide with what goes on the agenda. First of all, we
can't change anything in law through the regulatory process. So we can't
change the statute. We can't make otherwise eligible non-citizens
eligible for ACG and SMART Grants. So we . . . that's one of these
things that we'll have to factor in, in the process --- is things that
we can't . . . that really we can't affect because we can't make
statutory changes. So that really quickly throws some things off the
negotiating agenda.

The other two issues are whether or not the Congress is likely to act to
change something that we have just negotiated around, and so we
generally would avoid putting on the agenda something where we expected
legislative action to overcome what we do through regs. And the last
thing is whether or not we can reasonably expect to achieve consensus on
the issues being negotiated within the timeframes that we've established
for the negotiating process. What we want to accomplish is to have . . .
is the notice \[unintelligible\] seat between one and four negotiating
committees. The clear agenda that we know we have is around Academic
Competitiveness and National SMART Grants, and you've heard some of the
issues that will likely be on the agenda to talk about in that area.

The rest of the . . . there is really no commitment to anything else,
except to hear from the public what it is they think we should be
considering and talking about through this process. This is just the
first of those series of hearings. And so we expect that we'll be
hearing more as we make our way around the country, and we will conclude
in Washington. And right after we conclude with the hearing in
Washington we will close the public comment period the next day and we
will also close nominations for committees.

We have a tension when it comes to committees in terms of membership. We
want to include everyone we need at the table, but we can't have so many
people at the table that we can't . . . that it can't manage the process
well to achieve the results we want. And that has been the tension we've
had as we've tried to improve the process. So that's an issue that
really we will face when we sit down with the agenda and the nominees.
And we will . . . that will be in the . . . right before Thanksgiving we
will be putting that together.

We hope to seat the negotiating committees in mid-December, which will
start about a month earlier than our traditional process. Our goal in
doing that is twofold; one is to have a little bit more time between the
negotiating sessions --- not so much necessarily for the Department to
do what we need to do to prepare for that; although that clearly is a
part of it. But really for more conversation to take place away from the
table. We've used listserves and other tools to allow both the federal
and, more significantly, the non-federal negotiators to talk.

And we think that that has improved the process, and so we want to leave
a little bit more time for that conversation to occur between the
negotiating sessions --- but not have so much time between that we don't
make progress. So there is a balance there, and we're trying to . . .
that's a challenge for us, and we'll see how that all works. And then if
HEA does get done and we are able to move forward to another round of
negotiating rulemaking we'll take everything we've learned through this
process and apply it to make the next process work even better. We are
in the continuous improvement mode, too, with regard to negotiated
rulemaking. We've learned a lot about the process and how to use it.

So we would be doing that, finishing negotiating by early March, NPRM by
spring or late, maybe early summer at the latest. And then NPRM out for
60 days of public comment, finalized by November 1^st^. I think that
answers all of Nancy's questions. If not, we'll talk some more. That's
kind of the sense of where we're going. Yes?

**HELENE LECAR:** One of the things that's been very pleasing to us is
to see the increase in information available on the Web to families. And
one of the things I would love to see the Department address is
educational information for parents that is not bureaucratized. Looking
at the instructions on filling out FAFSA forms, looking on instructions
about how to choose a college presupposes a college education on the
part of the reader. So the folks we want to bring into the system, A:
are not so likely to be accessible to Web information and B: need to
have it in several forms. So California at least has such a problem with
high ratios of students to counselors that the counselors have not been
able across the state to fulfill their jobs.

So I was wondering whether the Department could not prepare packets for
the very many community-based organizations that do tutoring, that have
access to the Hispanic community and the black community in particular
--- to enable people within those communities to turn the information
around. Because if we could educate parents about opportunities for
early college enrollment while the kids are still in school and what
opportunities there are and how to apply for aid, a lot of the anxiety
and the fear that rests in those communities about. "I don't want to
think about college because that's scary," might be allayed. I just
recommend that as something for which you have evident competence to do.
You just need to direct the information outward more than it is right
now.

**DAVID BERGERON:** One of the things that several of the student
witnesses made the point of saying was that they're out working in their
communities in providing tutoring and outreach, and to the extent that
they don't have the tools that they need to help --- and that kind of
amplified the point that you just made, which is target the information
to those parents in a way that they can understand and grasp, and use
it. Very good point.

**\[off-mic\]:** David?

**DAVID BERGERON:** You have to use a microphone, otherwise it isn't
getting recorded --- and this is transcribed. It's the only part of the
process we transcribe --- the public hearings. Why? I'm not quite sure.

**UNIDENTIFIED MALE:** The question I have is one that . . . has the
Department contemplated that as you go through these you start to . . .
you know, you gave the litmus test of the various things that either are
not going to be eligible because of statutory requirements, Congress
might be pending doing something with them \[unintelligible\] litmus
test of really whether you can do that. Has the Department contemplated
any kind of publication so that people know --- and I'm thinking about
this for duplication of effort, because obviously you don't want to have
people come to you in Chicago or in Orlando, or then again in DC with
issues that you know are not going to be eligible to be on the table. Is
there going to be some way for people to gauge or to see what literally
might be working its way towards the agenda versus those things that
will not?

**DAVID BERGERON:** The thing for me --- and that's a very good question
--- is I think we want to hear all the things that potentially should be
on the agenda, and then we have a positive obligation to sort it out.
And then when we report back out again --- either through our final
rulemaking process or along the way as process checks --- explain why
we've excluded it in a very clear way that the public can understand.
Because I do think there's a need for transparency in this process so
that people don't see things that were recommended and we drop them and
no one know why.

When we went through this negotiated rulemaking process the last time
--- which was as little bit different because it was driven off of a
Congressional effort called Fed Up, which was basically about
deregulating in the student aid area --- and in that process we were
very careful to keep the public informed as to why we took things out of
the process. And I envision something more like that than for us to say,
"Well, don't bother coming to Chicago and telling us this, because we're
not going to consider it anyway." I'd much rather hear it and then sort
it out. A couple of the things that I've heard today are things that
it's important for us to hear, even though they might require statutory
change to effect.

**GAIL MCLARNON:** And I think it's important for us to realize if it is
a statutory change that Congress, I am hoping, will be monitoring this
to some degree and that they'll realize that maybe it is a statutory
change that they need to make. So it will provide them . . . If they
hear it again and again and again, that they will realize that maybe
it's something that they can do. That we can't --- our hands are tied;
it's a regulatory issue. It would send a message up to the Hill.

**NANCY COOLIDGE:** I realized you don't make the laws. But you are
closer to the people who do, and I'm interested in understanding --- did
Congress, in excluding permanent residents who get Pell Grants from
being even potentially eligible for the ACG and SMART Grants --- was the
idea that we should be in the business of promoting transitions to
citizenship? Or was this a cost-saving measure that was not related to
that desire? Can you give us any insights into what the motive was?
Because if we want to address this issue politically we need to know
sort of what was the thinking behind it in the first place.

**HAROLD JENKINS:** Well, there was no legislative history for this
program. So we have no . . . In other words, there's no formal
indication anywhere of what Congress intended for this provision, or for
any of the other provisions that are in the law. So I think the short
answer is we really can't answer that question. And we don't know for
sure that they even focused on it.

**NANCY COOLIDGE:** They're very specific.

**HAROLD JENKINS:** Very specific, but we don't know why those words got
---

\[voices speaking off-mic\]

**DAVID BERGERON:** Something about 3:00 in the morning has been
mentioned. It's the rational . . . But as Harold said, normally we have
an extensive legislative history --- there are committee reports,
conference committee reports. With regard to the Higher Education
Reconciliation Act there is very little. Several people have mentioned
the \$12 billion that has been taken out of the student loan programs
and . . . and that whole issue. Let me make one comment about that, and
that is that some of where that money went was into the new grant
programs. And some of that money went to raise loan limits for first-
and second-year students. And some of that money went to reduce fees in
the student loan programs and authorize Grad PLUS. So the money ---
there was a net savings of whatever it was; and I don't remember the
numbers off the top of my head.

\[voice speaking off-mic\]

**DAVID BERGERON:** Yeah. Some of the savings went back into the aid
programs overall. If you talk to the student loan community --- and
there may be some of those folks in the room today --- they would say
that they're the ones who the savings came out of, because it was really
targeted at reducing subsidies to lenders and the loan programs. So
there's a lot of ways you can discuss those issues, depending where you
are and where you sit.

With that, I think we're going to adjourn for lunch. Unless there are
other public witnesses before we break. Otherwise we will reconvene at
1:00. Thank you all.

***\[BREAK\]***

**DAVID BERGERON:** We're ready to begin again, I believe. Our first
witness this afternoon is Chang Cai, if she's here. If Chang Cai is not
here, is Iluvia Rodrigues here? Take your time.

**ILUVIA RODRIGUES:** Good afternoon. I would like to thank the
Department of Education for the opportunity to speak about these issues
that affect me and my fellow students all over the country. I sincerely
hope that all of our voices are heard loud and clear so that changes can
be finally made in the higher education system. My name is Iluvia
Rodrigues, and I am a second year student at the University of
California, Riverside. At UCR I am the Vice-President of Finance for
ASUCR, my student government and I also serve on the Board of Directors
for USSA..

Today I want to open your eyes to two issues that, although well known,
are sadly always ignored \-- recruitment and retention. These two words
may not mean a lot to many people, but for a student like myself who
comes from a low-income community and has seen --- and continues to see
--- an immense amount of students not go to college because of a lack of
guidance and recruitment programs, it means a lot.

In order to achieve greatness within a university a variety of ideas and
perspectives are required. This, of course, can only be achieved through
the minds and backgrounds of different people --- including minds of
different people from lower-middle class communities. I come from a high
school with a graduating class of only a 13 percent rate to college,
including community colleges. Academic preparation programs to help
students not only become admitted but also help finance a higher
education were not noticed by students who were not from college-bound
families or, in my case, from \[unintelligible\] program. Budget cuts
and lack of outreach in my opinion are the number one reason why so many
students are unaware of the opportunities that lie ahead for them in a
college campus.

As far as retention goes, these lower-income students --- predominantly
students of color --- are not allowed to finish their degree or finish
worry-free for one reason alone. And that is debt. Some students just
don't receive enough financial aid from the government due to ridiculous
regulations and therefore are forced to do either of three: drop out;
work more than the recommended hours; or get an immense amount of loan
debt. All of these three have a negative outcome. Due to debt, students
are either not given the opportunity to finish their education, not
allowed to obtain the grades they are capable of obtaining due to
unmanageable work hours, or forced to graduate with immense amount of
loan debt --- and this amount of loan debt is probably more than the
first two years of their salary combined. Recruitment and retention
programs have been a political football for too long.

Although the Department of Education does not have a complete control of
the legislative policy, it can do something to ensure the strength and
life of these vital programs. It is time to take responsibility and take
these programs seriously, and see them for the greatness that they have
to offer --- a future for our youth and our country.

Being of lower income should not mean being denied a college education.
I urge for a bigger commitment for these programs in order to ensure
quality, equality, and greatness within the universities of this nation.
Thank you.

**DAVID BERGERON:** Thank you. Chang Cai?

**CHANG CAI:** Hi, my name is Chang. I am a student from Berkeley, and
an intern at CalPIRG. And as an international student I am not allowed
to get federal loans. But as one of the lucky kids my parents can afford
my education. But I am very aware of the issue of loan debt, because my
friends are facing it. I have a friend whose name is Anna, and she is
just this really talented little girl who plays piano really well and
she composes and everything. And she got into the UC, but she went to a
community college instead because the kind of loan debt she would have
to face if she goes to UC. So I hope that you will make an effort to
mitigate the problems that people like my friend have. That's all. Thank
you.

**DAVID BERGERON:** Bill Shiebler.

**BILL SHIEBLER:** I wanted to start out by saying that one out of every
four students must work more than 20 hours a week to afford their
education at the University of California, and the average student
across the country works 23 hours a week in that same respect. And when
that's happening it's clear that our government is failing our future
and our potential. My name is Bill Shiebler, and I am currently the
President of the University of California Student Association and also
on the Board of Directors for United States Student Association. UCSA is
a coalition representing over 200,000 undergraduate, graduate, and
professional students at the University of California. It's the official
voice of UC students to the regents, the state legislature, and the
office of the Governor. UCSA's mission is to empower students to
advocate on their own behalf for the accessibility, affordability, and
quality of the University of California system.

It's through that mission that I am here today to announce that while
students across the University of California system are in class or work
we appreciate this hearing and the opportunity to speak to you today.
But I cannot be pleasant or happy about the serious problems that
students are currently facing. In California our student fees have
priced thousands out of eligibility to access the University of
California. Our university is keeping out some of the best and the
brightest students with some of the most potential because a lifetime of
debt with an inadequate paying occupation of public service is not a
manageable route for many of them, despite their passion. The average
community college student pays about \$16,000 in student loan debt after
they graduate, and the average four-year student pays about \$19,000 in
loans. And in California the cost of living continues to rise, where our
financial aid packages and federal aid don't match or keep up with the
incidental costs of education that students face.

I know that the voices of the future in California are not alone in this
struggle. The University of California Student Association works
strongly with the United States Student Association --- USSA --- to
connect these issues that we are facing with greater ones affecting the
entire student population across the country. We cannot continue to
allow Congress to pass provisions, enact policy, or legitimize their
actions as benefiting our country's future when so many are being left
behind.

So what is it that students want? I was talking to my friend the other
night about this hearing and about the opportunity to speak to you all
today, and I spoke to her about the issues that we were going to be
addressing, and she told me, "Well, do you have solutions? Or are you
just going to go and complain or whine?" And I told her frankly that I
definitely don't have all of the solutions and I want to make that
clear. But I also want to be clear that when I say the following
recommendations are definitely steps in the right direction to alleviate
the increasing burden students and, more importantly, working students
have to face every day while attempting to achieve an education.

First, the Department of Education should improve the manageability of
student debt burdens. The Department should make regulatory changes to
help protect borrowers from unmanageable payment expectations or
indefinite repayment obligations. It needs to make sure that loan
repayment is not excessively burdensome given the important role of
loans in making it possible to attend and complete college. Reducing
debt is an issue that the Commission on the Future of Higher Education
identified as a priority, and more can be done to help those borrowers
who are having real difficulty in managing their student loan payments.

The Project on Student Debt will tell you that we need to limit student
loan payments to a reasonable percentage of income --- less than ten
percent for most borrowers and never more than 15 percent. We need to
recognize that borrowers with children have less income available for
student loan payments. And also, we need to prevent added interest from
making the problem even worse when borrowers face hardship situations.
We need to cancel remaining debts when borrowers have made income-based
payments consistently for 20 years, and simplify the process of applying
for hardship deferrals. We support the Project on Student Debt's
proposal to assist borrowers, and it should be considered in the
upcoming rulemaking process.

I want to thank you for your time today, and let you know that students
plan to be present at all of these hearings held across the country
through a coordinated effort with the United States Student Association.
Education is a right, and we intend to further that mandate until
education is truly accessible by every student. Thank you very much.

**DAVID BERGERON:** Jennifer Pae.

**JENNIFER PAE:** Good afternoon. How are you all doing? Thank you for
having us. My name is Jennifer Pae, and I am the elected President of
the United States Student Association. USSA is the nation's oldest and
largest national student association representing millions of students
across the country. We are a coalition of student governments and
statewide student associations, and we are here today to express our
concerns in high hopes that they will be adopted in the negotiated
rulemaking process.

Now, the federal government --- as you may well know --- is in a path of
divestment from higher education at an alarming rate. The Pell grant
hasn't been increased in over four years --- not even accounting for
inflation. The \$12 billion cut in the student loan programs enacted by
Congress will make it significantly more expensive for students in their
repayment periods. And finally, the president's budget cuts crucial
academic outreach programs such as Talent Search, Upward Bound, and GEAR
UP --- while cutting significant state matching programs, such as LEAP
and the Thurgood Marshall Fellowship program. The federal government's
actions are leading us in a direction away from the interests and
priorities of our country's students and families. Furthermore, the Pell
grant and SEOG have once again been proposed for level funding --- which
unfortunately is just as harmful.

In this current state, higher education has developed into an
unreachable goal for many families and students. The commitment to
provide quality and affordable higher education for our country has
become a distant memory. Every year 400,000 qualified students are
turned away from higher education due to increasing costs and student
loan debt burdens. These constraints can extend 20 or even 30 years
after graduation, threatening the financial security and success of our
country's future.

We therefore look forward to the Department of Education ensuring that
the best interests of students is a priority during the negotiated
rulemaking process. As we see this dramatic shift in priorities and
jeopardizing the success of today's college students and our future you
have the unique ability to reverse this change for the better. When the
average student is working, as Bill has said, more than 23 hours a week
--- and a student could work a minimum wage job full-time for an entire
year and still lack several hundred dollars to afford a single year of
public education throughout the year --- we are not adequately providing
the opportunity to break the cycle of poverty.

We, the students of the University of California and the California
State University System, as well as students from across the country
affirm that more should be done to help student borrowers who are having
difficulty with unmanageable debt burdens. The tools that are supposed
to assist borrowers with payments on federal loans are inadequate,
confusing, and inconsistent, and too often providing wrong incentives.

The Department of Education should make regulatory changes to help
protect borrowers from unmanageable payment expectations or indefinite
payment obligations. We must recognize that borrowers with children have
less income available for student loan payments. We must simplify the
process for applying for hardship deferrals, and we must cancel
remaining debts when borrowers have made income-based payments for 20
years.

In addition, low-income students are likely to pass up available federal
loans that could enable them to attend and succeed in college because
they see loans as a financial risk. By improving protections for student
loan borrowers you reduce the risks which often keep students from
taking advantage of loans that could help them, and you broaden access
to and affordability of college.

Given the important role of loans in making it possible to attend and
complete college, it is our responsibility to ensure that loan
repayments are not excessively burdensome. In addition, by providing
adequate federal financial need-based grant aid we can greatly ease
these financial burdens and provide affordable higher education for our
students.

Through the pending reauthorization of the Higher Education Act and now
through the negotiated rulemaking process we look forward to a positive
and reinforcing discussion to expand opportunities and access for
students through federal grant aid and preserving good programs, such as
academic outreach programs.

This is why we are here today and why we will continue to be present at
each of the public hearings for the Department of Education. We need
your help to save our students from drowning in debt. We are here today
asking you not only to hear us, but to take our statements as words of
fact and continue providing for our future. Our future rests in your
hands.

And on a more personal note --- this isn't in my testimony, but I just
wanted to share a little bit about my story. I am a first-generation
college student. Had it not been for these federal financial aid
programs and the student loans I wouldn't be here as a graduate from the
University of California, San Diego. My sister is a recent graduate from
here, at Cal. She graduated last May and she took it upon herself to
decide to go to a junior college for two years, thinking that it would
save her money. Unfortunately, due to the process of FAFSA and through
just distribution of the student loan programs and federal aid she had
to resort to private loans --- and she is now a graduate of UC Berkeley
with just as much loan debt as if she had been here for four years.
That's extremely unfortunate. I do not want this to be the occurrence
for not only this year and this generation, but I'm more concerned about
my younger sisters who are now at four and ten --- and what the future
of higher education is going to look like ten years from now when
they're going to be applying. I hope that the Department of Education
through this negotiated rulemaking process --- considering that the last
time around that we were here was quite a bit of time ago --- that at
least this year that we look into this and take on the proposals that
the Project on Student Debt has proposed, as well as we at USSA.

As the demographics of today's students are drastically changing,
education and our country's success is greatly suffering. USSA is going
into its 60^th^ year leading the fight to make education a right, and we
are here once again --- since the last negotiating rulemaking process
ten years ago --- to reaffirm this right. This belief should be
practiced not only in policy, but in implementation as well. We are here
today to reach out to you because it is now time for the Department of
Education to lend us a hand in our success. Students need your help to
reframe this debate. Education needs to be a priority because it is our
country's expressway to quality jobs and life. We encourage this
dialogue to continue, and urge that our proposals be including in the
upcoming rulemaking --- and we look forward to continue working with you
as we have in the past, and greatly appreciate this opportunity. Thank
you for your time.

**DAVID BERGERON:** Hector Jimenez Cardenas.

**HECTOR JIMENEZ CARDENAS:** Good afternoon. Today I would like to echo
the message that my fellow students across the nation have shared with
you in regards to students' concern about unmanageable debt due to the
federal government's divestment in funding for higher education. My name
is Hector Huge Jimenez Cardenas, a student studying international
relations, and I currently serve as the Vice President of External
Affairs at San Francisco State University, as well as a board member for
the California State Student Association. Now entering into my fourth
year in higher education I have become aware of the difficult situations
that my fellow students find themselves in regards to that. Students who
are entering four-year colleges direct from high schools have little to
no knowledge on managing a long-term loan and how debt will affect their
future. Furthermore, many students do not have a career of their choice
secured for them after graduation, which increases uncertainty and a
feasible plan to be able to be able to pay back loan debt and still
manage to pay for their living expenses. A plan for a safety net by the
Department of Education is desperately needed.

This year I talked to a migrant student who approached me about loan
consolidation questions she had and to try to figure out how she could
potentially deal with her increased student loan interest rates which
she incurred this past summer. This student had no idea what this change
meant for the amount of debt that she would accumulate after her
graduation. This is a problem in the system. Additionally, many students
--- including myself --- were confused as to whether we needed to
consolidate our federal subsidized loans or not. The reality is that
many students are just beginning to understand the process of taking out
a loan for education. This is a dangerous position for a student to be
in when college costs have risen more than 50 percent since 1990 and
Congress hasn't increased the Pell grant, the most common direct
need-based aid for low-income students, since 2003. Students are clearly
being presented with no other choice than to borrow more money and
increase their amount of debt after graduation for them to be able to
pursue a higher education.

We ask that you help advocate for access to higher education, and not
just an illusion --- but to truly hold the mission of aiding students
financially through their education. Not at the expense of unmanageable
levels of debt and for our future success. Thank you.

**DAVID BERGERON:** Charlie Friedman. I don't know if Charlie is here.
Is Charlie Friedman here? We'll come back. Daniel Buch? I understand
Daniel is between things and needs to get to something else after this.

**DANIEL BUCH:** Yeah. My name is Daniel Buch. I am a graduate student
here in sociology. I don't have any written comments. I just heard about
this hearing today, and I just briefly wanted to come and say to you
that as a graduate student instructor teaching students here, I see the
effect of a broken system of student loans. I have a student right now
who can't buy his books for my course, and is having trouble . . . he's
already behind. We're only in the third or fourth week of the semester.
And it's because of problems with the administration of the loans. He
can't get access to the money. I don't know all the details. What I do
know is that it's broken. I have another friend, a student who was
forced to withdraw from the university because --- I don't know if this
is part of what you're listening to today, but --- because of a minor
drug violation he's gone. He's an incredibly gifted, bright young man
and he can't get an education now. So all I really came to say was that
you all really need to fix this and you need to think of the students
first. I know that there are some interests out there; the private
corporations that are making loans and making money. And I'm not opposed
to private business and making money, but you need to put the students
first in all of this. Student loans are not about making money for
financial corporations; they're about getting students the degrees that
they need, the knowledge that they need for all of us. That's all I
wanted to say. Thank you.

**DAVID BERGERON:** Rowan Cota. Got to you faster than we expected,
didn't we?

**ROWAN COTA:** Yeah, \[unintelligible\]. I was expecting to have a few
more minutes to get ready. Good afternoon. I'm okay; Bob's prepared me.
Good afternoon. My name is Rowan Cota. I work for the Project on Student
Debt, but I am actually here today because I am also a student at
Berkeley Community College. I had a lovely time with the financial aid
department this summer. First I went three or four rounds about what was
going to be required of me to verify all of the information on my FAFSA,
which I filled out at the very beginning of the year on the internet.
Let me just say for a really complicated piece of paperwork --- doing it
on the internet is the way to go. But I really believe that there are a
lot of things in this document that could be gotten from other sources,
could be somehow integrated more into maybe an interview experience in
the school. Something that is a little easier for people to navigate. I
work with Bob Shireman, who is one of the most brilliant people I've
ever met, and he looked cross-eyed at some of the questions when I
brought them in.

But after filling all of this out I had the experience of going to my
financial aid department three or four separate occasions to bring them
the various pieces of verifying documentation --- things like tax
documents, earning statements, that kind of thing. Information which I
know the IRS has and which honestly I would have rather had some way to
just communicate between the two offices and not have to take time out
of my work day. I'm working full-time in addition to taking 14 credits
this semester, so time is a very, very important thing to me. After all
of that the financial aid department then returns me a letter which said
I would be receiving zero dollars in financial aid, even though I know
full well that I qualify for a Pell grant. They asked me to sign this
document, promising me that they would change the amount some time
before they cut the check. This was not in May. This was not in June.
This was not in July. This was two weeks before school started in
August. There is a problem with that. There is a problem with the
disbursement system.

I believe, in addition to simplifying the FAFSA, that there should be
some sort of regulation that people should know before classes start how
much money they're going to get so that they can plan how to buy their
books, they can plan how to pay their rent, they can plan how they're
going to get to school. In both of the classes which I am taking
physically on campus we have had various students falling behind because
they didn't receive financial aid payments during the first or second
week of school and the books cost three times what the classes do. We're
privileged in California that at the community college level our classes
only cost \$26 a unit, but when a book costs \$150 and you're not
getting your financial aid check until the third week of school --- not
a lot that privilege does for you. So that's what I had to say. Thank
you very much.

**DAVID BERGERON:** While you're standing there, since you raised the
issue of the FAFSA --- we've been trying, just so you know, to get
access to the IRS information and have submitted legislative proposals
both jointly with the Department of Treasury and the IRS. So that's
something that we have been thinking about. But in trying to simplify
the process we're also looking at other ways whereby, for example,
instead of our current regulations require the financial aid office to
do exactly what they did --- get the tax return, get the other
documentation --- would a process that would have that information
coming to the Department and being reviewed once be something that would
work better for you? Where you just fax the documents to a . . .

**ROWAN COTA:** I definitely feel that being able to fax the documents
or perhaps to have the option if you efile your taxes to just be able to
send a copy of that to the Department would help. In addition --- as I
said --- I believe that having an interview process with the financial
aid person, where they can give you a checklist at the very beginning
and say these are the things that we expect the Department to need from
you, so that you could bring them all in at one time, would be another
option that would help simplify things.

**DAVID BERGERON:** Thank you. That's helpful. Dallas Cole.

**DALLAS COLE:** My name is Dallas Cole. I'm a UC Davis third-year
student and I'm the UC Davis Chapter Chair of CalPIRG and I've been
running the Higher Education Campaign, which is Student Debt Alert, for
the past year. I actually have a testimony, but before I do that this is
a report of a task force that happened at UC Davis last year. We
submitted it to the Commission on Higher Education. This is an exact
copy of what we submitted, so we're going to submit that here as well.
This is from the Los Angeles City College --- the same type of task
force, I believe. And from UC San Diego. So we're going to hand in all
these things; just different ideas on how to approach the position and
what each campus believes is the most important way. We have student
government officials, financial aid officials, administration officials
sitting in on these meetings and helping us.

Earlier this year I, along with many other students, spoke with members
of the Federal Commission on Higher Education. We went to Washington, DC
and spoke with them between their hearings. We presented them with
numbers, information, and stories about students sinking further and
further into debt. I am really proud of my work there. It is clear that
the members of the Commission appreciated the input from students, and
that they used the information in the final report.

However, one thing particularly sticks out in my mind about what
happened and our experience with them. Repeatedly the Commissioners said
that before hearing from us they had no idea how much debt students all
over the country were suffering from. They didn't know the figures of
\$16,000 graduating on average from college or community college, and
\$19,000 from four-year colleges. This is the biggest obstacle facing
the reformation of the student financial aid program --- the lack of
awareness about the issue. During the last year I worked on the Student
Debt Alert campaign; we held media events, released reports, and worked
with various organizations to warn the country, students, and just the
general population about the ever-increasing pressure on college
students to graduate with more and more debt. Yet, from our interactions
with the Commissioners it was clear that this kind of information had
not penetrated and was not available to many people.

I do not fault the Commissioners. They are intelligent professional
people. They listened to our arguments and our information and released
a report that accurately depicted our situation. What is clear, however,
is that any attempt to tackle the problem of student debt has to be made
with the full involvement of students. Students and student
organizations bring unique perspective to the issues --- we know what
it's like with different solutions; what impact they'll have on us and
our lives more than anyone else can. I ask that you create committees to
look at the rules surrounding loans and the rules surrounding grants,
and I firmly believe that in order for these committees to succeed at
providing solutions that work for student loan program and help
alleviate the student debt problem we have to have students and student
organizations represented and active on the Commission.

You've heard the students today present different solutions, present
different ideas, present different problems. And if we're there every
step of the way presenting and saying how this impact
\[unintelligible\], this is what my friend would say if they had to do
that you guys can come up with a much more effective end result.

Many people today say that college tuition is something that students
should handle themselves because it has such a huge benefit for them in
the long run. And we don't deny that. But investing in students is an
essential part of a society. Following World War II the United States
made the largest commitment to higher education in history and our
country boomed. In the 1960s California created the "master plan of
higher education" and our state prospered. It is time for a new
commitment to higher education --- a comprehensive plan made with the
help of students to prepare our state and our country for the coming
decades. Thank you very much.

**DAVID BERGERON:** Dallas, one thing that you should know is that the
Higher Education Act requires us to include students on the negotiating
committees, and it has been one of the real pleasures we've had working
through the negotiated rulemaking process; working with those students.
They do add a tremendous amount to that conversation, that if it's just
the lenders and the institutions speaking to us it's not nearly as
significant and helpful as having students part of that process. So we
always enjoy that part of this activity.

**DALLAS COLE:** So the next committee process after this, you guys are
breaking into committees to address different issues there will be
students and student organizations represented?

**DAVID BERGERON:** Students have to be represented on all the
committees.

**DALLAS COLE:** Oh, okay. I was just speaking from my experience with
the Commissions. I know they don't have any students \[unintelligible\].

**DAVID BERGERON:** When we do negotiated rulemaking it's one of the
requirements of the statute --- that we have students represented.

**DALLAS COLE:** That's great to hear.

**DAVID BERGERON:** We have worked our way through to everyone until
2:30, which is when we called for a break. And I suspect our 2:40 isn't
even in the room. So my suggestion at this point is that we take a
break. I don't know that it will be all the way to 2:30, because if any
students come or any other public witnesses come in the interim we will
reconvene and allow that person to testify as soon as they come. Yes,
sir?

\[unintelligible\]

**DAVID BERGERON:** What is your name? Nicholas, come on. Gail tried to
tell me I was missing somebody. I was thinking I was further than I was.
Sorry.

**NICHOLAS SMITH:** No problem. Sorry for that popping your break there.

**DAVID BERGERON:** It's okay, we have plenty of time. Plenty of time.
But thank you.

**NICHOLAS SMITH:** Thank you so much. Members of the panel, good
afternoon. My name is Nicholas Smith, and I am a fourth-year student at
Berkeley, and also a city policymaker working with the city council. I
would love to speak off the top of my head like everyone else did, but I
think my statement here is so well-written \[interrupted by laughter\]
that I will try to kind of summarize it, with your indulgence. Thank
you.

As a senior at the University of California, Berkeley and as someone
involved in local --- but certainly interested in national --- policy I
want to take the time to thank you, first of all, and your department
for taking the time to have this public hearing regarding student loans
across the country. I think they are crucial, considering the fact that
many current and future students will have increased loan burdens and
that approximately \$12 billion, as you know, federal aid has been
reduced. For the sake of our students, the leaders of our country ---
the future leaders of our country, that is --- I highly encourage the
Department to do what it can to create fair student loan repayment
rules. And here is the thrust of my statement.

The Chancellor of Berkeley, Robert Birgeneau, is quite known for saying
that Berkeley has one of the highest levels of federal Pell grant
recipients across the country compared to other universities --- and
this is a fact that I am actually very proud of, because it proves that
your Department, the federal government, acknowledges the expensive
nature of higher education and the burdens that could possibly be placed
on students without this help. For that, again I thank you.

However --- there's a caveat --- I think it is incumbent upon me to
point out that while these efforts have indeed gone a long way to
opening up the doors of higher education to a wider array of American
citizens, the action taken in the previous respect is only one part of
that solution. If you will, I would like to give you the perspective as
this affects students on a general basis, and then share with you my
personal anecdote. I hope that after being imparted this information
which I am sure is not necessarily new to you, that the Department will
make the changes that I suggest at the end of the letter, and of course
that other students have made as well.

The nature of public education in America according to the many hundreds
of thousands of students and of its stewards is to produce a class of
American citizens who are well informed about the world around them and
thus understand more about themselves. This system --- esteemed
worldwide --- has produced leaders of all stripes; from presidents of
the U.S. to the greatest philosophers, to composers of symphonies and
jazz, to the greatest inventors of the newest innovations. As time goes
on the cost of the education system has increased as well. And there are
many a grandparent --- I'm sure in the room, maybe --- who has imparted
upon young people like myself that tuition used to be in the range of
hundreds of dollars. And as you know, those days are long gone.

Today's college students face new and difficult financial challenges.
And I'm sure as you know, Berkeley is America's --- and arguably the
world's --- finest public educational institution. Behind this phrase,
"public educational institution" is the word access. In the early 1900s
college used to be an exclusive enterprise attended by a seemingly
monolithic sector of American citizens, and in recent decades the system
has been opened up greatly. Diversity as we have never seen before. Good
diversity, should I say. While students of yesteryear represented the
upper class elites, students of today don't necessarily reflect the same
typology.

I opened with Chancellor Birgeneau's statement about Pell grants to show
that we want to pursue higher education, but with the increasing cost of
attending college it's getting less and less financially feasible. While
the student loan program is without a doubt the vehicle by which so many
American citizens are able to afford to attend college --- and it's been
a benefit since its inception --- the new challenge confronts all
borrowers in terms by which money is paid back. And at this point I find
it appropriate to give you my personal perspective, after giving you the
general perspective here.

I have always been an ambitious young man never knew anything else but
attending university. My parents from day one instilled in me the
importance of gaining a quality education with the ultimate end of not
simply sustaining myself financially, but as a means of uplifting those
who need a voice --- whether in my hometown of Inglewood, California or
whether in the fields of Darfur, Sudan. Attending college has allowed me
to realize my true place in the world, and given the sense that although
mankind faces a seemingly never-ending stream of difficulties --- not
discounting its benefits --- with the right knowledge about the world
around me, many of these problems can be cured.

I mention my parents as an allusion to the issue of money. It is true
that I am not ashamed to say that I come from relatively humble roots,
and without the assistance of the federal government's Pell grants and
student loans I honestly couldn't see myself being able to attend such a
world-class institution. And I've got to throw in an endnote here from
my friend, Barack Obama, who says that, "my presence here is unlikely."
Love that line.

I mentioned that my generation's grandmothers and grandfathers tell us
that that their tuition was in the hundreds of dollars and ours has not
only doubled, tripled, quadrupled . . . you get the point, but it has
increased almost to an unimaginable amount. The lower range of this
tuition scale was definitely astounding to me when I first began to
research the cost of college and researching what college I would go to
while I was a junior and senior in high school. I must admit that I was
never afraid of this, because I knew that I had the ability to earn
scholarships and student loans, and eventually get a pretty good job
when I graduate. I much appreciate the fact that just about half of my
tuition is covered by scholarships and by other loans. However, when my
undergraduate work is complete I will find myself in approximately
\$37,000 in debt. And when my law school career is complete, I will be
\$130,000 in debt. And this debt amount underlies the problem that I
speak to you today about.

This amount, \$130,000, is an extremely large price tag to bring about
academic achievement in this country --- particularly starting out in
America's premier public institution. This is not only a personal
observation, but one that I think applies to hundreds of thousands ---
and perhaps millions --- of America's college students. Honestly, the
cost of education can mean the difference between continuing to earn a
professional degree --- as I wish to --- and ending one's academic
career at the undergraduate level. I have heard many times about the
heavy risk of even considering law school --- or any graduate school,
for that matter --- on the sole grounds of its cost.

But I believe that you know that there is a problem, and will do what
you can to fix this problem. While your Department nor any of us here
today has the ability to reduce the cost of higher education in general,
I know you have the power to make repayments of student loans more
manageable and more fair. What this means is not only continuing to
increase --- excuse me, decrease --- the interest rate on these loans
outside of inflation, which would only increase the length that students
must repay these loans. For myself, this means choosing a career path
which I am most passionate about --- public service and politics --- or
choosing a career that simply lines my pocketbook so that I can even in
part repay the huge loan that I will have accrued by 2010. I would love
nothing more than to engage in a career that I love most, without the
excessive burden placed on me by the repayment schedules of loans. I am
sure that my colleagues have the same feeling.

And I'm sure you've heard this earlier, but I want to simply recommend
the five-point plan that the Project on Student Debt has recommended.
And the five-point plan reads, in part, that we recommend that you limit
student loan payments to a reasonable percentage --- between 10 and 15
percent of income; recognize that borrowers with children have less
income than others for loan payments; prevent added interest from making
the problem even worse when facing hardship; possibly cancel remaining
debts when borrowers have made income-based payments for 20 years; and
simplify the process for applying for hardship deferrals.

For the sake of not only students, should I say, but for the sake of our
country that we love so dearly --- please do your part to make our jobs
that easier. I know you will do the right thing. I thank you for having
these hearings across the country, and Godspeed. Thank you very much.

**DAVID BERGERON:** Thank you, Nicholas. Abdi Soltani.

**ABDI SOLTANI:** Good afternoon. Thank you for making this forum
available. My name is Abdi Soltani. I am the Executive Director of the
Campaign for College Opportunity. We're a California nonprofit
organization focused on expanding and broadening access to our community
colleges and universities. Our organization was founded by an unusual
coalition that's broad-based and bipartisan --- we were founded by the
California Business Roundtable, the Mexican American Legal Defense and
Educational Fund, and the Community College League of California. We
work with business and employer associations throughout our State, labor
unions, community groups --- all of us who have a stake in ensuring the
affordability and access to our colleges.

The couple of key points that I want to share with you are very basic.
The first is that any investment --- whether it's from a state or the
federal government --- in college going is an investment in the future
of our country and our communities. Our organization commissioned a
study called "Return on Investment" and we found that for each dollar
California taxpayers invest in getting students into and through college
those same taxpayers reap a return of \$3 on that investment. The
equivalent analysis for Pell grants or for federally subsidized student
loans would be similarly robust. The state and federal governments
invest, those students gain greater earnings, they work more years. The
costs of incarceration and social services go down substantially. So
when we look at the repayment that students make on their loans it's not
just in the loan payment; but it's also in the greater economic benefits
that accrue to the federal government and to the federal treasury. I'll
share that study with you. It's a California analysis, and certainly we
think the findings would probably extend to the federal investments in
student aid.

The second point deals with the nation's workforce. As you know, we're
part of a global economy, and so the question of the marginal difficulty
of students attending college affects the marginal productivity of our
workforce in the future. If our country slips --- and we're beginning to
slip --- in our advantage educationally compared to other countries, the
economic impacts are much larger than the opportunities afforded to
those individual students. The California Business Roundtable
commissioned a study with our organization, looking at what are the
growth industries. And what we find in California and across the country
is that those occupations which require a college education are growing
faster than the workforce as a whole. And, in fact, for example --- each
engineer that we produce, that translates to three other jobs in the
economy that are supported by the economic activity produced by that
engineer. So I'm sure you've heard today a lot of testimony about the
importance of this issue for students and for families. With both the
idea of return on investment and the preparation of workforce, I want to
impress to you the importance of this to the well being of the society
and the country as a whole.

We want, and encourage --- and thank --- the federal government for its
involvement in investments in college going. And as you deliberate on
these policies related to federal student loans and student financial
aid, we support the recommendations of the Project on Student Debt to
provide that five-point recommendation that makes college student loans
as affordable as possible, gives students some reasonable flexibility to
make their payments back, account for the fact that some families have
children, and the other recommendations that are put forward.

I'll share with you these materials and leave them for your
consideration, and I do thank you for your time.

**DAVID BERGERON:** Thank you. If there are no other public witnesses
who want to testify right now, we will adjourn until our next witness,
which is currently scheduled for 2:40. But as I said, if anyone wants to
testify in the intervening time just let Mary or I know and we'll
continue. So otherwise we'll spend some time chatting informally, I am
sure. Thank you.

***\[BREAK\]***

**DAVID BERGERON:** We're going to reconvene a couple of minutes earlier
than we had planned. We're going to reconvene now. A couple of minutes
earlier than we had planned, because our next witness has arrived. Kriss
Worthington. You've got a hard act to follow. You've not been here,
hearing all of the students who have been coming to testify. I noticed
you know Nicholas, but all those students who have come and testified
have done a remarkable job. And so you've got a lot to follow now.

**KRISS WORTHINGTON:** Thank you. First, my name is Kriss Worthington,
and I am a member of the Berkeley City Council. And I want to welcome
you to the City of Berkeley, and I'm thrilled that you have chosen to
hold this hearing in the first place; I think it's a very momentous
occasion to have such a hearing. And the fact that you chose to hold it
in Berkeley I think is an honor to Berkeley, and to the students who
have been working so hard on this issue. I never try to stop the
students --- to top the students --- at UC Berkeley, because most of
them are much smarter than I am, and they're very articulate and very
well researched.

So my role as a city council member --- like many city council members
in Berkeley --- is actually to run as fast as we can to try to keep up
with the innovative ideas that come from UC Berkeley students, and to
support them and to help take their ideas and sort of push them a little
bit into reality.

\[Laughter\]

Not to suggest that they're unrealistic, but they are idealistic and
visionary --- and they ask for a lot; and if you can give them just 50
percent or 75 percent of what they're asking for I think the people of
Berkeley would be very thrilled. And sometimes we're satisfied if we
only get 25 or 30 percent. But in this case I think the things that the
student coalition --- especially what the Project on Student Debt --- is
proposing are actually things that are not just in the interest of
students, they are in the interest of the business community. I think
they're even in the interest of the investors and the banks that are
making the loans. I think these suggestions are very practical and will
avoid a lot of problems down the line where I . . . As someone who is
long past my academic years, I have known a lot of people who have
struggled very hard to pay their student debt. And the percentage of
money that they owed for debt was so astronomical and it influenced
their career decisions in a very negative way. They really had their
heart set on doing a certain job --- like teaching, for instance, and
other sort of serving the community type jobs. And there are some small
steps that can help people with their student loans, if you take a
certain career. But so many people that I know end up becoming
investment bankers when their heart is not into that. And we are losing
so much of a resource to our country that students who really want to do
the jobs that we are urgently looking for people to do --- there's not
enough people to do these kinds of jobs --- and the students who want to
do those kinds of jobs can't do it because they have to pay back all
this money.

Now, there's nothing wrong with being an investment banker. It's a
perfectly legitimate, reasonable job. But do we really have to force so
many of our students into doing jobs that they're not going to enjoy,
they're not going to be giving back to society. So I think it's very
critical that we find a way to limit the percentage of student loans.
It's extraordinarily important for people who have multiple kids. If you
have a bunch of kids, these kinds of loans can really be devastating to
your family. So if there is a way to structure it so that, as the
Project on Student Debt suggests, recognize borrowers with children have
less income available for student loan payments. To me, a family that
has multiple kids --- they struggle so hard to get them into college; we
want those kinds of families to succeed.

And the biggest battles here are not about helping the poorest of the
poor. You know, to some extent the poorest of the poor are doing
relatively okay. But it's really lower-middle class and middle-middle
class kids who are the ones that are getting --- in my experience ---
astronomical debt. And those are the people who we as a society need to
help them to become successful in their careers. And we don't need to
thrust this gigantic debt burden onto them that could put them into
bankruptcy or that could stop them from having a fulfilling career. So
those are just a few brief comments.

I don't know how long you're gong to be here in Berkeley for this
evening. In case you didn't make reservations at Chez Panisse before you
got here I want to bring to your attention that right in this
neighborhood we have some incredibly outstanding restaurants where you
can come and spend your money and support the Berkeley economy. One of
them is The Unicorn Restaurant, at 2533 Telegraph, with pan-Asian
cuisine. Another one, if you have a different food preference --- the
Bateau Ivre, or the Drunken Boat, has wonderful French and American
cuisine. And these are phenomenal restaurants. And just taking a stroll
down Telegraph Avenue --- it is an incredible street with all kinds of
funky and unique services and products. And you might enjoy a brief
stroll down while on your way to one of these restaurants to have a
wonderful meal before you disappear from the City of Berkeley. Thank you
very much.

**DAVID BERGERON:** Thank you. Molly James, are you ready?

**MOLLY JAMES:** Hello.

**DAVID BERGERON:** Hello, Molly. How are you?

**MOLLY JAMES:** What do I do with this?

**DAVID BERGERON:** We'll take it.

**MOLLY JAMES:** Hello. Thank you so much for letting me speak before
this board. I just wanted to kind of tell you my story and why it
affects me directly. I am the youngest of five kids in a family that is
like just above the tax-bracket line to not be able to receive really
good financial aid. So as a result, I --- being that I am going to take
on not only an undergraduate degree, but a graduate degree and maybe
even a law degree --- am going to be looking at some pretty serious debt
by the time I'm done with my educational career. And this is incredibly
ineffective for me, because I am most likely going to go into a
nonprofit realm when I graduate. So it's very likely that I'm going to
be paying debt for a really long time. And as a result, it is not only
incredibly to me personally but also to me as a principle that we make
it a serious priority to help people like myself --- as well as others
--- who are currently literally drowning in student debt. So I really
think it's a priority. It needs to be made a priority that we establish
a workable way for students to pay off their debt in both a timely and
. . . a timely manner, which is not detrimental to their potential way
of life. Okay. Thank you.

**DAVID BERGERON:** Thank you, Molly. Michael Reagan.

**MICHAEL REAGAN:** Hi. Thank you for letting me speak. I'm kind of
winging this. I actually have a story to tell about \[unintelligible\]
and his name is James Schwab. He is the leader of the Progressive
Coalition at our University. He actually started up this group so that a
lot of like-minded organizations that he's doing a lot of great work.
And it's really fun to see him work. And he actually just last quarter
he wanted to run for president of the university \[unintelligible\] and
to do so he needed to get financial aid, because he didn't have time to
take on another job and do his AS work. He was denied financial aid
because he was making too much money --- money he was using to spend for
his college education. So he had to take on another job, and he wasn't
able to accomplish his dream of running for president of AS. Well, his
small dream.

It's just depressing to see that the richest the nation in the world,
that we don't have enough means to support people that really want to
make a difference in the world and really want to make great change. So
I was actually working for a nonprofit group last summer, and one of the
things that . . . I talked to people in the street, and one of the
things that they always said is we need education; that's the one thing
that can help people level the system and get people to equal out. The
problem is that we're not really looking out for the people that need it
the most. When people graduate with \$20,000, \$30,000 in debt and
they're paying off their loans, and they're still in their 40s and 50s
and they can't go into occupations like teaching or nonprofit work. And
it's depressing to see people that want to make a difference and they
just can't. And that's what I wanted to say. So thank you so much.

**DAVID BERGERON:** Thank you. Kenan Wang? Kenan?

**UNIDENTIFIED FEMALE:** I think he might be coming after class.

**DAVID BERGERON:** Okay. Is Nan Zhang here? If neither of them are
here, and we don't have any more witnesses . . .

**UNIDENTIFIED FEMALE:** \[Unintelligible\]

**DAVID BERGERON:** Hi, how are you?

**VIVIENNE NGUYEN:** Good afternoon. My name is Vivienne Nguyen, and I
am \[unintelligible\] here for the ASUC at Cal. I am also a resident
assistant here at Clark Kerr. And so I'm coming here before you today to
talk about loans. Unfortunately, I come from --- well, not unfortunately
\[unintelligible\] I come from is upper middle-class family. And so I
was not given need grants or \[unintelligible\] zero dollars. I have no
financial aid whatsoever. And so it's hard for me, because I want to be
so involved in this campus and in so many different \[unintelligible\].
But considering the fact of all the loans I will have to pay in a few
years, that's kind of overwhelming for me because I want to be involved
in the ASUC, I want to get to know residents, I want to reach out to
students --- but how can I do that when I know I have so many loans to
pay off later? And so what I am just asking you today is just for the
Department of Education to re-look or review the \[unintelligible\]
system so that it is more fair for students and so that the loans can be
repaid in a more fair manner. I'm not saying loans are bad --- they're
wonderful. But the way the repayment system is right now I believe it's
not fair, and that's all \[unintelligible\].

**DAVID BERGERON:** Thank you. We don't have any other witnesses
scheduled until 3:10. Correct? Yes?

**UNIDENTIFIED FEMALE:** I'm just curious --- I know you're recording
this; will it be available in audio version, or \[unintelligible\]?

**DAVID BERGERON:** Generally the transcribed version of this is
available at the Department if somebody wants to come in and review that
transcript. We generally have not published it to the Web or something
like that. Although we certainly will think about that. That was not
something that was feasible the last time we did this, because the
technology has changed so dramatically. So we will . . . we're going to
look at how best to keep that information available to the public.
Whether we'll just do it in the paper form in the office or think about
doing something else with it. A summary will appear, though, when we do
the Notice of Proposed Rulemaking that arises from this. So we will take
another little break until 3:10, unless any other students or any other
witnesses come.

***\[BREAK\]***

**DAVID BERGERON:** I think we're ready to reconvene. I hope we're ready
to reconvene. Kenan Wang is our next witness. Is Kenan here?

**KENAN WANG:** Yeah.

**DAVID BERGERON:** You have time to put your shirt on. It takes longer,
though, when everybody is watching you! I know that because I have one
under the table somewhere here, and it took me awhile to put mine on,
too.

**KENAN WANG:** All right. Thank you for \[unintelligible\] and I am
personally very invested in the subject of education and specifically
\[unintelligible\]. My parents were raised in . . . come from very
humble backgrounds. Both of them lived in poverty in China before they
came here. And the reason that we are . . . that \[unintelligible\] is
because of education. Because my parents got educated, and my dad
\[unintelligible\] got a scholarship to go to grad school in America.
And \[unintelligible\] relatives that live on farms in China, doing
backbreaking manual labor for a few dollars \[unintelligible\].

I don't think that anybody here would argue the fact that education is
one of the most important things that a person can \[unintelligible\].
We all \[unintelligible\]. But time after time politics puts the
education system on the backburner, and as a result many public
education systems --- including the UC system, which used to be free ---
are steadily increasing their tuitions. This \[unintelligible\]. Because
fees continue to rise and financial aid does not, we're leaving many
deserving students in the dust. And other students that go to college;
many incur so much student debt that it limits the options that they
have coming out of college.

\[Unintelligible\] programs like Teach for America and Peace Corp, but a
lot of my fellow students won't be able to do things like this because
they'll be paying off student debt. In fact, I read the other day that
around a quarter of students come out of public universities with too
much debt to lead a life as a schoolteacher. And of course, we all know
that many law students come out of law school with no choice but to
practice corporate law and not necessarily do what they went into law
for. Of course, these are just a few examples and I'm sure you've all
heard many \[unintelligible\] stories over the past few hours.

But the bottom line is that we as a society need to put our actions and
our money where our words are, and create \[unintelligible\] and
\[unintelligible\] options for deserving students. So thanks.

**DAVID BERGERON:** Thank you. Our next witness is Nan Zhang.

**NAN ZHANG:** Hi, my name is Nan Zhang and I am a junior
\[unintelligible\], and this is my first semester at UC Berkeley.
\[Unintelligible\] this semester I was \[unintelligible\] education
advocacy and \[unintelligible\], and I feel that I have the obligation
to \[unintelligible\] concerns of the students on campus and what
they're facing nowadays with the loan payment system.

I have talked to over 100 students --- half of whom shared with me their
personal stories regarding their own situations with loan repayments and
also I \[unintelligible\]. Those who \[unintelligible\] have loans from
\[unintelligible\] nor how much they might have to repay after
\[unintelligible\] --- all they know is that they might have to pay
\[unintelligible\]. Though the amount that they owe may not be the same,
their goal is the same --- and that is to pay off their loans as soon as
possible, and not \[unintelligible\]. The girl who I talked with about
four days ago told me that she was trying to find a \[unintelligible\]
while she \[unintelligible\] \$16,000 in debt. And I also
\[unintelligible\] she wanted to \[unintelligible\] and she said she
couldn't \[unintelligible\]. She just can't \[unintelligible\]. And so
another guy that I met on campus was also telling me how he owes about
\$14,000 in loans, and this is only his second semester here. I just
feel that we as students have the right to a higher education and that
\[unintelligible\] should be a primary \[unintelligible\]. And so we all
know that everybody \[unintelligible\] but it is becoming ever more
difficult \[unintelligible\] \[unintelligible\].

And like all the students on campus I want to receive a decent education
and then to go to grad school without having to repay my loans
\[unintelligible\] for the rest of my life. And so on that note I would
also like to share my own experiences. I don't \[unintelligible\], but I
receive grants and \[unintelligible\]. But because I have access to
these resources I believe \[unintelligible\] others who should have this
access to these kinds of resources, too. And so that is a primary reason
why I am director \[unintelligible\]. And \[unintelligible\]. And
\[unintelligible\] that students have to \[unintelligible\]
\[unintelligible\]. And adding to the burden of larger interest rates
and longer loan \[unintelligible\] we're not only \[unintelligible\] but
also discourage those who \[unintelligible\] higher education. And
therefore I am \[unintelligible\] solution to this loan crisis now and
\[unintelligible\]. Thank you.

**DAVID BERGERON:** Thank you. Our next witness is Christina Maslach.

**CHRISTINA MASLACH:** Thank you for the opportunity to speak. I am
Christina Maslach; I'm Vice-Provost for Undergraduate Education here at
the University of California, Berkeley. And I'm also a member of the
Accrediting Division \[unintelligible\] Colleges and Universities in the
Western Association of Schools and Colleges, now called WASC
\[unintelligible\]. The Senior Commission accredits 152 four-year
colleges and universities and graduate schools in California, Hawaii,
and the Pacific Islands. And these institutions serve nearly 800,000
students.

My colleagues and I follow the work of the Commission on the Future of
Higher Education with great interest. Representatives of WASC and other
regional accrediting agencies have submitted testimony and contributed
to the important conversations stimulated by the work of the Commission.
I share some of the Commission's concerns about education in this
country and support many of the ideas in the Commission's report ---
especially initiatives to improve preparation for college and
accessibility to higher education.

I do have comments concerning the Commission's efforts to improve
accountability and transparency, and \[unintelligible\] accreditation.
In its dual role of holding institutions accountable and promoting
institutional improvement, the WASC Senior Commission has been requiring
institutions in this region to assess student learning for more than ten
years. As a result, throughout this region setting clear student
learning outcomes and measuring the learning that takes place are part
of every college's ongoing work.

Along with mandating assessment, accreditation encourages a kind of
innovation and quality improvement that \[unintelligible\] report
advocates. The accreditation process is rigorous; the standards mandate
quality \[unintelligible\] a cycle of continuous evaluation, innovation,
and improvement, and the involvement of stakeholders including employers
and the public.

Measuring student learning is a very complex task. Using a single
standardized test for a method of measurement is neither desirable nor
effective. Quite frankly, no such instrument exists. The differences
among our students, among our institutions defies such standardization.

The innovative and productive work that is being done in colleges
throughout the country to develop effective methods for measuring
student learning should be encouraged so that best practices and the
identified, refined \[unintelligible\] shared and emulated. The work of
building \[unintelligible\] tools for assessment should not be cut short
prematurely, \[unintelligible\] government \[unintelligible\] mandated
program that prescribes standardized \[unintelligible\] tools of
measurement.

WASC and other accrediting agencies provide information to the public
about the status of \[unintelligible\] institutions and strive to make
this information accessible to the public within the bounds of the law.
Further, the public four-year colleges and universities in this region
--- and UC is one of them --- educate about 70 percent of students in
this region. We are required by law to make extensive information
available to the public. Transparency and public accountability are a
part of the life of these institutions. The Senior Commission of WASC
looks forward to continuing a dialogue about these important issues as
you move forward in your deliberations. And I want to thank you for the
opportunity to speak to you today.

**DAVID BERGERON:** Thank you, Christina. One question. Earlier in the
day I asked this question on the issue of accreditation
\[unintelligible\] basically you. One of the criticisms I have heard
about our current regulations as they relate to accreditation is it
doesn't foster continuous improvement approaches; that it basically sets
a bar and then if you meet the bar you're okay and if you don't meet the
bar you're subject to sanctions. But it really gives no incentive in the
current system, regulatory framework for continuous improvement. You, in
your testimony, made the point that that's not true; that is something
that is built into your process. Could you speak a little bit more about
that?

**CHRISTINA MA**S**LACH:** Sure. I think the mandates --- the standards
that are put in there, continuous improvement, \[unintelligible\]
innovation, \[unintelligible\] to it. And that's what we're looking to
see in these institutions. So it's something . . . it's not just about
bean counting, if I can say that. You know, \[unintelligible\] standard
--- check, check, check. But it's really more of a process of what I
will call a self-study strategic planning for the future. And how an
institution is going to be \[unintelligible\] in achieving those goals.
And so the Commission is really looking for, given the nature of the
institution --- where they are, who they're educating, what their
educational goals are --- how are they moving forward in that? And there
are . . . it's not just about meeting the bar or failing. It's also
about meeting the bar in a way that the accreditation . . . you know,
that WASC says you're doing wonderfully and we don't even need to come
back and talk with you for another ten years. In other cases it might be
for a shorter amount of time. So there are things \[unintelligible\]
going not just well in terms of the minimum, but that you've really got
the kind of processes in place which are going to yield real
improvements in \[unintelligible\] these things. That this is what the
commission is looking for and encouraging.

It also brings together representatives from all of these institutions
\[unintelligible\] at a meeting to discuss and compare, and share so
that they're really talking to each other about these issues. And then
we also have workshops throughout the year to really . . . So it's not
about kind of coming in and just waving our finger at it
\[unintelligible\] saying here is the source of things and here's how,
as you think about it \[unintelligible\] what's going on in your
institution --- what is the information you're looking for? What are
your goals? What are you trying to do to really enhance the learning?
That's the basis on which \[unintelligible\] accreditation
\[unintelligible\]. So I've been on the commission now for three years
and sort of seen this process with a wide range of \[unintelligible\]
institutions \[unintelligible\]. And many of them are doing various
things and different kinds of things. You know, what's happening in
Berkeley is not even \[unintelligible\] UC system. But given the goals
that we are setting for the students, it's really I think quite
impressive how these institutions are stepping up to the plate and
\[unintelligible\] they haven't thought about these issues in this way
before. The accreditation actually gives them a process now, support in
doing \[unintelligible\] proactive \[unintelligible\].

**DAVID BERGERON:** Thank you. Is Danny Herrera here? Danny.

**DANNY HERRERA:** Good afternoon, commissioners and \[unintelligible\].
I'd like to take this opportunity \[unintelligible\]. So I'm a
fifth-year student here at the University of California, Berkeley. And
I'd like to actually apologize \[unintelligible\] this
\[unintelligible\].

\[People noting difficulty hearing Mr. Herrera.\]

**DANNY HERRERA:** So I'll start over. I'm a fifth-year here at the
University of California, Berkeley. I just wanted to share my story with
the commissioners regarding my experiences with student loans. After
graduating high school I was admitted to all the universities to which I
had applied, but I was initially . . . I refrained from attending
college because of student loans. I was afraid of student loans. I
didn't want to get them. So I opted to go to community college instead,
which was a much cheaper option. Things went well in community college
and I ended up transferring to the University of California, Berkeley.

I am currently a fifth year, right? So since the two years that I've
been at this university I currently have acquired nearly \$40,000 in
debt for student loans. Also, by the time I graduate --- which is in May
--- I will surely be over the \$50,000 mark. Now, this is a very
burdensome debt for a recent graduate to have, especially considering
that I come from a low-income minority community. I just wanted to
express to the Commission that the type of repayment plan that I . . . I
guess the choices that I will have in terms of repayment will be very
important in terms of whether or not I attend graduate school and also
which career choices I pick. Many of the careers that are in social
sciences --- which is my field --- are low-paying jobs. And so students
that go into these kinds of jobs usually don't want to go into them
because they don't pay enough; and so they want to go elsewhere. With
that, I just wanted to recommend to the Department of Education to find
less burdensome ways to fund students' education, as they will be making
a valuable contribution to the future of this nation. And I want to
remind the Commission as well that my story is only one of thousands on
this campus, as well as --- I'm sure --- hundreds of thousands across
the country. Thank you very much.

**DAVID BERGERON:** Thank you. That is the last scheduled witness that
we have. We have to stay until 4:00 to see if there are other witnesses
that come. So we will be staying around. You are welcome to, or you can
assume --- based on the fact that there is no one else signed up ---
that we're done for the day. Under that assumption I will make my
closing comments now. And then if my colleagues have anything they would
like to say in conclusion I'll let them do that.

I have appreciated very much all of the testimony that we received. As
you probably have heard as I've talked to folks around the room, I very
much appreciate particularly the students who have come to testify;
you've done a remarkable job representing yourself and your fellow
students here in California, and we appreciate your coming and spending
the time with us. What you have to say is important to us, and we look
forward to continuing to work with you.

I will also say to everyone else that I appreciate their coming. I
always feel like I need to make special comment about students, because
so often in these processes we forget that they're our primary customer
--- and I try to remind myself every time I interact with students that
they are why we do what we do. I appreciate everybody else who testified
and I appreciate very much the folks who came from Washington to listen
with us.

I want to also thank the folks here at the University of California at
Berkeley, again, for their hosting this event. It has meant a lot to us
that it was on a campus and the support and cooperation we've gotten has
been tremendous. Thank you. Make sure that everybody here at UC Berkeley
knows how much we appreciate it. When we made the phone calls and said
we would like to do it on campus, what can we do? Immediate positive
response. So we really do appreciate everything they did to make this
possible and make this work --- and make it so that we could have as
much student participation as we could. Anything either of you would
like to say?

**GAIL MCLARNON:** Yeah. I'd like to mirror David's remarks, and also to
thank you as well. I think one of the recurring themes I heard was you
appreciated us coming out to listen to you. I appreciate you coming out
and sharing your experiences with us. I think a dialogue between federal
agencies and the folks who implement the rules that we develop, and the
folks that receive the aid that we provide is essential to our
understanding and trying to improve the programs that we --- and you ---
administer. I especially feel privileged to hear the students speak and
participate in the process. I was just so floored by the level of
articulation and passion, and involvement that the students showed
today. And I would like to thank you especially for coming out and
sharing with us.

**HAROLD JENKINS:** Yes, I agree with my colleagues' comments. As I have
mentioned to several people today you might think that we at the
Department of Education see students more frequently than we do. In
fact, I myself almost never see them. And so this is valuable. Again,
it's not just a matter of personal enrichment; I think the comments and
the perspectives that we've heard today will really help to inform our
work as we proceed towards the development of policies and rules for the
student aid programs. I think --- as has been mentioned --- certainly
the shirts made a strong statement. And so it was a good gesture.

**DAVID BERGERON:** So again, thank you. As I said, we will be staying
until 4:00 in case anyone else comes, but didn't want people to wander
away without having said thank you to everyone for their participation
and their help in making this as productive as it has been. So thank
you.

\[chatting\]

**DAVID BERGERON:** We have someone who would like to testify, so we're
going to go back to that. Did Mary get your name? If she didn't get your
name, as you're leaving make sure she gets your name and contact
information.

**JELENA SIMJANOVIC:** No problem.

**DAVID BERGERON:** Go ahead and introduce yourself.

**JELENA SIMJANOVIC:** Okay. My name is Jelena Simjanovic, and you don't
have to attempt to write that because it's a long and Slavic name. I am
a recent immigrant. I moved to the States two years ago, and my husband
is also a recent immigrant and he moved to the States a couple of years
ago, too --- which makes it very hard for us to finance our education
because it's kind of different when you come from a traditionally
middle-class background in the States or . . . I guess you could compare
yourself to low-income residents. I'm not sure how to phrase that. I am
in my late 20s; he is in his early 30s. So when we talk about how we're
going to organize our lives, we plan to have children at some point. But
with the amount of student loans that are piling up it's kind of hard to
imagine that we're going to have any children, ever. Or buy a house or
something like that.

So another thing is that I think that recent immigrants are kind of
. . . they don't qualify. We don't have our box to tick off. We are not
any traditional minority or anything like that. But if we are allowed to
move to this country we should be allowed to have access to education.
And I know a lot of people who finished their . . . who have
undergraduate degrees from universities abroad, but then they come here
and they're like swamped with life and getting used to being here. And
just the fact that education costs as much as it costs, they never dare
to cross that line and apply for graduate school or for another degree,
or anything like that. So basically they end up being worker class, or
blue-collar forever. Although they could be doctors or lawyers, or
psychologists, or whatever. And I know a lot of people like that.

But I was brave. I was like --- whatever, I'll just owe this money and
do that. So I'm in the graduate school for public policy. And when I
wanted to apply for scholarships a lot of scholarships were for U.S.
citizens only. I know that's not a problem of the federal government,
but foundations would give scholarships to students, to U.S. citizens or
foreign students. And I'm in this in-between category and there is one
single scholarship I can apply for. And I keep my fingers crossed that I
get it for next year, because otherwise it's getting crazy. And then you
try to do all these jobs on the side. But then you don't have enough
time to study. And then you're like --- okay, what is the point of me
being here if I'm having 80 hours a week but I study \[unintelligible\]
30? Well, not 30 but 50.

So that's what I want to say. Think of our lost little immigrants. I
don't know. I know it's a touchy topic lately. But . . . yeah. That's
what I have to say.

**DAVID BERGERON:** Thank you very much.

\[off-mic question\]

**JELENA SIMJANOVIC:** Yes, I am taking a lot of loans. When I went to
financial aid office I didn't understand the process, and they were
like, "Let me see what your needs are; you can borrow as much as your
needs are." And he started laughing, "Oh, don't worry, you're not even
close to your limit --- you have a lot of needs unmet." And I'm like ---
yes, I know. And we have to pay a professional fee. But that's the
university's problems, not yours.

**UNIDENTIFIED FEMALE:** Is your issue then that you feel burdened by
your loans for repayment?

**JELENA SIMJANOVIC:** My issue is that I'm going to take so many loans
that with my public policy degree I will have to pay them, to repay them
for the next 30 years. My husband is doing a PhD in history, and there
is not much financial aid for that. So altogether we're looking into
good \$80,000 to \$100,000. And you know, that's not fun.

**DAVID BERGERON:** Thank you.

\[whispering/unintelligible conversations\]

**\[END OF RECORDING. END OF TRANSCRIPT.\]**