in present the committee will come to order i want to welcome everybody to the committee this morning the meltdown in our economy as a result of the financial scandals has made the growing college affordability crisis worse for many american families escalating situation prices and college loan payments have become even more burdensome in the face of lost jobs and common benefit students are graduating with too much debt we as a congress need to refocus our efforts back on grant date rather than loans twenty years ago the maximum pell grant award covered about half of the in state tuition today it covers about thirty percent over the last three years we worked hard to reverse this trend by increasing the maximum pell grant award by fifteen hundred dollars but work still needs to be done today our committee will examine how we can continue to make college more affordable by significantly increasing granted for students we can do this at no cost to taxpayers by transforming the way our student loan programs operate first it's important to take stock of how we enter twine credit markets credit and economic crisis have altered the student loan landscape for years the department of education is operating two programs that provide borrowers with the same federal college loans at the same interest rates terms and conditions one was a federally guaranteed student loan program or the cell program as it's known under which private companies make loans to students and receive federal subsidies these loans are virtually risk free for lenders because they get reimbursed by taxpayers when borrowers default on their loans the other is a direct loan program under which the federal government offers loans directly to students using treasury capital it's subsidy free and cheaper for taxpayers last year as a credit markets froze many failed owners had trouble financing their lending activity some chose to take discontinue making loans while others became highly selective about whom they would lend to with many students in families deeply worried about their student loan availability congress stepped in to perform emergency trio our goal was to make sure the famil no interruption in the access to loans we enacted temporary program that today has been successful it allows the secretary of education to finance and purchase loans from lenders using treasury funds but this was never intended to be and isn't a permanent solution meanwhile seeing that the direct loan program remain insulated from the turmoil in the economy hundreds of colleges and universities which is a direct loans for the first time to undeniable lessons emerge from the past year first the economic crisis exposed serious vulnerabilities to the current structure and students shouldn't have to worry about whether the rollercoaster fluctuations of the financial markets will hurt their college opportunities second fellow currently is on life support in fact the federal government through both the direct lo program and its emergency program are now funny six out of every ten dollars in federal student loans made this year in short the status quo has become impossible to defend students and families are not being served well as they could be and taxpayers are spending billions of dollars annually to finance a broken system the momentum is building for reforms that will deliver aid to families in a more sustainable way shielded from many ups and downs in the markets there is already several proposals on the table and we will take a close look at today this two thousand and ten budget president obama propose increasing pell grants scholarships by ending lender subsidies and instead using the federal funds to originate new federal student loans beginning in two thousand and ten the congressional budget office estimates  this would save about ninety four billion dollars over ten years all of which is to be redirected back to the students i think this proposal sets the bar high yields an astonishing savings that will help students make makes and make the most sense to the taxpayers and harness the private sector innovation for the public good we also hear about other proposals to reform our nation's student lending while the me reforms may be different any workable plan must meet two basic benchmarks it must increase the efficiency of the loan program that we have more to invest for our students and must increase reliability so the students and families are never again left wondering whether or not where to turn in a difficult economy we will hear about the experience of one school that ended the direct loan program last year and what other schools might expect out of the president's proposal will learn more about students financial needs and how we can best reform these programs to work on their campuses now there are some who are who would like things the way that they are there already begun to fight this change but i think the students who have framed the issue candidly we either can continue sending billions of dollars to the lenders to act as intermediaries or we can start sending that same money to the students and their families who are trying to pay for college cost cost that continue to go up because the continue to go up faster than inflation and the family and more families find themselves struggling with it and i think that's a question that's before us today is how do we go about providing the best deal for the taxpayers the students their families and the institutions and i look forward to today's testimony and i welcome all of the all of the individuals who will be testifying and lending their expertise and their experience in this field and i would like to recognize congressman that the senior republican on our committee for the purpose of his opening statement thank you chairman miller on good morning education especially a college education is an engine that drives the american dream i would like to see this committee do what it can to help those american dreams come true and student loans are one tool that allow students and families to pursue that dream today we're going to hear about different student loan plans we will discuss whether it's better to have loans come directly from the government or through other sources such as private lenders and nonprofits i believe the american people have already made that choice in the federal family education loan program which features a public private partnership there are more than four thousand participating institutions students attending these institutions have received approximately sixty six thousand sixty six billion dollars this year in the direct loan program where the loans come directly from the government there are roughly seven thousand nine hundred institutions students attending these institutions have received approximately twenty two billion dollars this year there is this is clearly a case of schools voting with their feet much like the secretary told us families would do when it comes to picking an affordable college institutions have selected their loan program of choice they have moved to a program that provides the choice flexibility and options to make college affordable thanks to that public private partnership the administration has argued that fell program is on life support and does not provide a stable source of capital with all due respect this is like arguing that the federal government should directly manufacture and sell cars because the administration is now assisting chrysler and g m some of the administration may want to take fully to fully take over the automotive industry but i don't think the american people would agree let's just consider the facts our nation is in the midst of a global economic meltdown our credit markets became paralyzed and no one not mortgage lenders not small business lenders not consumer lenders and not student lenders was able to secure credit to keep capital flowing the federal government stepped in with a temporary measure to restore liquidity just like it did for the entire banking and financial system but you don't hear calls for the federal government to make mortgages or all small business loans at least i hope not or all car loans no it's only in the student loan market where political forces are taking advantage of economic peril to create a federal monopoly so to those who claim the pal program does not work i would only ask you to look back on the forty plus years before the credit crisis that crippled our entire financial system the private sector is a stable source of capital it's one that has served millions of students and families for decades instead of trying to keep private capital and innovation out of the student lending permanently perhaps we should be looking for ways to bring it back we've also heard a lot about lender subsidies and so called waste in this program so let me just take a moment to set the record straight this year the federal government is expected to make a profit on the felt program the only subsidies being paid are interest benefits so that low income students do not accrue interest costs while they're in school but on the whole the pell program is actually returning money to the u s treasury this year in a way that means the lenders are subsidizing the federal government and the administration's own budget clearly expects the programs included in the ensuring continued access to student loans act to continue to return money to the government it seems to me that we should consider these programs those programs as a viable alternative to a complete conversion to the direct loan program finally what about the four thousand plus institutions across the country who have decided that the felt program works well for their students don't they get a say in all of this in one thousand nine hundred three when the direct loan program was created it came about mainly because some institutions were not happy with the felt program and wanted another option if the more than four thousand institutions currently in the pell program or have with the program wish to keep but i think we should listen to their wishes just like we did in one thousand nine hundred three to the institutions who wish for change in that vein i have several letters from financial aid officers from all around the country who want to keep the options available to them today through the fell program i think this is one of the things that people really don't like when the federal government or any government local or state wants to take choice away from why would we want to do that i would like to see these  submitted into the record today mr chairman what's best for schools and the students they serve seems to be lost in this debate and i'm not the only one who thinks this morning inside higher ed published an op ed written by the director of financial aid tell us tallahassee community college the article is called why i'm sticking with bell and he begins by saying quote but for all the talk about budget numbers and politics the views of college financial aid administrators have been largely lost in the shuffle i would also like to insert this article into the hearing record i hope will think about people like this financial aid director as the debate unfolds with that i would like to thank our witnesses appearing today and look forward to learning more from them thank you mr chairman i yield back thank you and i'd like now to to introduce our panel of witnesses roberts chairman is the deputy undersecretary of the u s department of education a leading expert on college access and financial aid mr chairman has previously served as a gradual point to the federal advisory committee on student financial assistance and as advisor to senator paul simon a part of president clinton's white house national economic council chairman number of organizations including the board of the urban serving institutions of presidents roundtable for the national board of professional teaching on the board of the california chamber of commerce mr john f is a vice chairman and chief financial officer of sall mae prior to joining mr monti worked as a portfolio manager for park capital management a boston based private investment management firm mr monti will address sallie mae's alternative proposal to reform the student lending program which would allow the private thank you and welcome to the committee our final witness on this panel will be dr richard vedder who is a professor of economics at ohio university he is the author of a number of books including going broke by degree colleges cost too much welcome to all of you we look forward to your  testimony some of you have testified before congress but we do have a lighting system when you begin to testify in the small boxes in front of you a green light will go on we allow you five minutes we hope that you chairman miller mr mccann thank you very much for the opportunity to testify today in his speech to the joint session of congress in february president obama stablished a bold goal for america and that is to restore our place as a country with the most a large proportion of our adult population with college degrees and that was partly about the educate about education and the importance of education but it is also critical to restoring our economy and our place in the world economy to achieve that goal we need our graduating high school seniors to continue on to college we need our adults who are either working or perhaps unemployed right now to return to college we need both those populations to thrive in the programs and colleges that they attend focus on be able to focus on their studies and we need them to complete their degrees and that that is how we can reach that goal for america president  proposed number of tools to get there first the twenty five hundred dollar american opportunity tax credit which was adopted for two years in the recovery act and which is the school year ten budget would make permanent second strong secure pell grant entitlement this this is the core program for low and modest modest income families and we need to make sure that that money will be there not just for the folks w entering college in six months but we need to be able to tell students in middle school that this is this is a program that will be there and will be strong secure and will have enough money for them to help them pay for college so we've proposed increasing that cal grants that have having we've had a number of years where we've had just a flat pell grant we want to be able to increase that by the consumer price index plus one percentage point into the future third we need a reliable federal student loan program we really dodged a bullet last year with almost had a situation where schools had real trouble getting getting loans and in effect what what the department of education was able to do with the swift action of congress was in effect to make direct loans to lenders so that they could make fellow and students what president obama is proposing to do is to cut out the middleman make those direct loans to  to students and the school schools already have a very efficient system of drawing down held grant dollars for their campuses and it is that same system that is used for drawing down and reconciling pell grant dollars so the switch over from the perspective of a school is not a not a not all of it is new it is an add on to an existing system that works very well for colleges we want to tap the expertise of the private sector entities that are currently involved in the f s b l program to do the very important work of servicing student loans we want to have a performance based contract with these servicers that focuses on preventing the faults in delinquencies and making sure that we have high levels of satisfaction of the borrowers whose and whose questions need to be answered as well as the schools that are involved in the program by doing this we save billions of dollars and that money can be poured into the pell grant program we also will be able to maintain a viable and growing student loan program and i think there's a chart that will show the growth that we expect well the current f f portfolio will decline slowly over time and have been a lot of talk about jobs the felt the felt loans will decline slowly over time there will be a lot more loans overall so overall there will be more people employed in servicing in the united states than ever before another important element of the president's proposal is to reduce the amount of private student loans that students are having to take out this is where students really get in trouble non federal student loans no cap on the interest rate and our perkins loan proposal is designed to give college financial aid adminis the flexible loan funds they need to apply to those situations where students need more than what is available in the stafford loan program we also want to distribute that money in a way that encourages colleges to keep college affordable  finally we have proposed an access and completion innovation fund and there relate to important goals of this program one is to allow state agencies and nonprofit organizations that have been doing important work with the funds that they have earned in the felde program getting out to high schools providing information we want to be able to allow them to continue those activities we also want to encourage innovation at colleges and universities and in states  persistence and completion we have to do a lot better job helping students to complete those degrees thank you very much thank you welcome to the committee thank you for your service to the students  the sea issues the largest and most diverse four year university system in the country more than four hundred fifty thousand students fifty five percent of our students are students of color mostly from the under served communities of california and our mission is about the long term viability of participating in third previous concerns about the future viability of direct lending programs have been eliminated stability and reliability in a campus of student loan financial however thanks in part to programs supported by chairman miller and mr mckay most students with family incomes of seventy five thousand dollars or less no student tuition  debt compared to the national average of thirty three percent and the average debt in california of our students is a little less than fourteen thousand dollars a year well below the national average of twenty more than thirty is very supportive of this concept and would like to offer its experience in developing this new program should congress decide to authorize the c s u would also support including an incentive for maintaining state funding of higher education and that is to realize resurrect a concept that was authorized in one nine hundred seventy two which was the original pell invision direct institutional grants to colleges and universities to support the educational services necessary for the students the concept was known as the cost of education allowances and was similar to the concept contained in the elementary and secondary education act of one nine hundred sixty five a title one for higher education would provide a flat capitation grant lower income student for every institution and roman threshold at least twenty percent of the program could require that funds be used to support academic and student service programs designed to assist pell eligible it would create an for public and private institutions to not only enroll but to retain and graduate low or lower middle class income students here too the amount of the grant award could be moderately increased or decreased based upon the maintenance of effort for higher education if we're going to improve our nation's achievements in higher education and reach the president's goal we have got to reach out to the under served communities of this country thank you again for this opportunity and i'll be happy to answer your questions good morning chairman miller ranking member mccann and members of the committee my name is jackie monte and i'm the vice chairman and chief financial officer sallie mae on behalf of sallie mae's eight thousand employees in the more than twenty million college savings  student loan customers i thank you for the opportunity to testify on federal student loan reform and the opportunities it provides for increasing student aid the administration has made an important proposal to reform the federal student loan programs at the outset i want to underscore the significant agreement between sallie mae in the administration's objectives of reforming the federal student loan programs and increased funding for pell grants sallie mae proposes to build on this model with modifications that would preserve beneficial competition in the delivery of loans create incentives to materially reduce defaults and eliminate the risk of requiring more than four thousand schools to convert to a new loan delivery process within the next nine months we believe our suggestions would preserve the value added by loan originators including state and nonprofit providers help all students better manage their debt burden and increase the savings available for the pell grant program the president's proposal builds a solid foundation for a new federal student loan program by utilizing federal funding establishing common loan terms and replacing the subsidy model with the fee for service model we believe however that it could be made better specifically we recommend the following six enhancements one we would allow schools to choose the loan originator that works best for them in the students that they serve we would introduce risk sharing so that all servicers have skin in the game in loan defaults are minimised we would allow originating lenders to retain servicing regardless of their size and permit schools to choose their loan servicer we would require the department of education to set origination fees be a market mechanisms to preserve a broad participation of originators including state nonprofit service providers and finally we would require the department of education to fund a fall prevention issue to such as financial literacy programs and student counseling the benefits of these programs and these modifications are significant using the existing loan delivery infrastructure eliminates the rest and costs associated with the conversion of more than four thousand schools to a loan origination platform that they did not choose after sixteen years of felt in direct lending competing side by side it's fair to say that schools have chosen the lone delivery system or process that works best for them and their students great products and services result from consistent competition competition through the choice of loan providers and servicers will drive innovation and improvement in these programs mandating that all schools use a single loan originator will eliminate this competition in any incentives innovation for improvement today loan originators at significant value beyond the delivery of funds the new income based repayment program or i b r is a great example of how  adds value i d r will help lower income borrowers shrink their payments to a manageable portion of their income for students to benefit from this new tool however they need to know they need to be aware of it and know how to use it to make sure this is the case sallie mae has held school based workshops on i d r since january six months before the launch and has been asked by several direct lending schools to provide the same workshops for their students these efforts are an example of how competition creates enhanced services because we compete lender's secondary markets and guarantee agencies are all unscented to create value added programs and services these initiatives are particularly valuable to schools and families with limited resources and some of the examples include financial literacy programs and tools like paying for college calculators and seminars customized technology interfaces for schools and outreach programs that help families understand plan and pay for college including customized programs for hispanic latino and african american students and families a specific example is sallie mae's education investment plan or a free tool that helps students and families save plan pay for college i would also like t highlight the cost saving aspects of our suggestions some of which may not be captured by c b l models but a real nonetheless are rich area proposal would generate substantial savings a modest ten percent reduction in default rates only one third of the thirty percent that sallie mae has actually achieved would prevent more than a billion dollars in loans from defaulting sparing several hundred thousand students from the negative consequences of default lon the conversion of the more than four thousand schools into the department of education's loan origination system would materially reduce the savings and could potentially disrupt students access to loans by allowing schools to use the origina platforms that work best for them implementation is guaranteed in the savings would be realized finally using a market based process for setting fees will insure the lowest cost to the taxpayer year after year i hope i've been clear sallie mae supports the administration's objectives and reforming the federal student loan programs increased funding for pell grants we are not trying to preserve lender subsidies we are offering recommendations that build on the foundation of the president's proposal particularly the use of low cost treasury funding for all loans and with such changes we in our competitors can guarantee the seamless delivery of student loans and meet the financial objectives of the administration this committee in america students and families thank you and i'll be pleased to answer any questions you may have  good morning mr chairman and ranking member of the committee my name is anna griswold and i'm the assistant vice president executive director for student aid at penn state university thank you for the opportunity to be here today to talk about penn state's experience converting to the direct program dispatched year penn state university is a large public campus research university enrolling just over ninety thousand undergraduate graduate medical students at twenty three campuses seventy three percent of our students receive some form of financial aid twenty three percent of our undergraduate pell grants about one third of our undergraduates are first generation college students f the federal student loans represent over fifty percent of our student aid funding last year more than forty six thousand penn state students borrowed four hundred sixty six million dollars in federal loans to help pay for their education calls last year turmoil in the financial markets threaten to be stabilized both the federal student loans and our efforts to maintain any fission student friendly loan delivery model in the program if lenders are across the country began to terminate or suspend their participation this quickly became calls for alarm among our students and parents that relied heavily on stafford loans to allay their concerns we needed to act quickly and decisively to assure students that they would be able to get their loans in our case some thirty some thirty eight thousand current student borrowers with were with a single lender that announced it would have to suspend making loans last year given the uncertainty about future lender participation and the new restrictions that limit schools use of preferred lenders we knew this would be a challenge for our students so direct loans was really the logical solution for us in march two thousand eight penn state began implementing the direct loan program a core team of ten to twelve existing staff from several penn state offices started the conversion linking our systems to the department's common origination and disbursement system one already familiar to us for processing pell grants we also developed a communication plan to inform students and parents of the change in how they would secure their loans and the steps that they would need to take students readily accepted this change our existing staff did all the work we did not hire additional staff to convert to direct lending and the cost to convert with the normal budgetary calls required for any new student aid program implementation that comes along our circumstances were quite unique biased year first if i mention the need to move quickly when we learned in february that our primary lender would no longer be serving our students for the coming year so we needed to move quickly and convert to direct lending by july we have one of the largest student loan volumes in the country and we have a home grown computing environment our own programmers to run our student system we do not use vendor supported software most schools will not face the same circumstances and would not require the same resources that we use smaller schools with fewer resources will likely be able to convert to direct loans without too much trouble especially if they have  supported student aid systems or if they use the department's express software ample lead time may be necessary for most if not always something welcomed by aid administrator it is testimony to the streamlined nature of the direct loan process the single point of contact model it represents that we were able to convert fairly quickly it helps that direct loan uses the same cod system the schools use for we had excellent technical support from the department of education's direct loan and staff our first direct loan disbursements went very smoothly our bursars office reports great satisfaction with the  functions having reconciled summer two thousand and eight loans in four months ahead of the required deadline the cash drawdown system already familiar to us as well with other student aid programs has president of the nonprofit new hampshire higher education assistance foundation network organization does not need to participate in these discussions on behalf of the students and parents that we serve on behalf of the organizations dedicated and talented over two hundred new hampshire residen i've been asked to describe ideas for loan reform which increase student aid through cost saving making federal loan funding more reliable and preserve the best aspects of the existing program and d l programs i've dedicated thirty years of my life to making higher education more accessible through my work with the program still i see clearly that the student aid program is in need of transformation however to suggest that the federal government or big contractor located outside the all post secondary schools would utilize the department's current systems to administer all federal aid common origination disbursement system cause and g five website once the loan is approved to cause need to disperse funds to the school both technologies were built with taxpayers dollars and should be used to administer this new loan program biggest advantage for schools should be with this system includes managing payments and data across multiple programs from the local loan perspective it would provide a uniform way for agencies and schools to share information for more efficient processing and more importantly default diversion practices the credit crisis has made it clear that the federal student loan program would benefit from changes which ensure the availability of funding from the treasury then participate each loan fifteen days after the initial disbursement and then put the loan or sell the loan to the department after one hundred twenty days of final disbursement the key is that need continues to support schools and students with entrance and exit counseling financial literacy programs and local compliance expertise this leaves one loan program with standard terms conditions and administration it simplifies the process of students in schools while ensuring funding for program and guaranteeing excellence education and compliance while the students and school loans and period of grace in repayment are then service by the originating private lender in line with a department service servicing of pricing standards this creates a life of loan servicing which we credit in new hampshire to our achievements continuously load fall rate this dr service excellence with pay for performance pricing which will result in savings to the department and innovation and services moreover utilize existing infrastructure and knowledge at the state and nonprofit agencies and supports borrowers from application through final payment this is critical to successful default prevention the most recent draft default rate for nice is only three point one percent while the national default rate is six point nine percent it has been said that going to one hundred percent d l puts the taxpayer's interest first but the reality is that every category of loan f f e elda fall rates are lower than d l we need a plan that allows students to enjoy high levels of service and effective fall prevention programs offered by fellow agencies our reputation has been built on personalized service to students and our greatest strength is by far the dedicated new hampshire based employees who provide borrowers in repayment with expertise throughout the life of their loan there already exists this infrastructure to provide the case through twelve hour each entrance and exit loan counseling compliance for schools and community outreach programs under the new budget proposal no small nonprofit agency will qualify to service the direct loans only the big players i wholeheartedly believe that smaller well managed agencies can be most effective because they are nimble and can respond to rapidly changing national priorities by local realities finally this model allows agencies like ours to continue the commitment to creating a college going culture locally president obama has passionately expressed that expanding college access and success is a national priority new hampshire is well prepared to actualize this vision in fact increasing college aspirations is a nice highest goal we provide programs throughout the educational continuum for all populations of students adult learn a dislocated worker rules student grad students so they report that going one hundred percent would help students not lenders simply does not apply to nonprofit loan providers in new hampshire we serve thirty thousand individual individuals each year with direct personal service this plan incorporates the best aspects of d l web based administrative tools and reliable funding this plan also incorporates the best ass of f f l expert paul prevention practices personalized the local service and committing and commitment to creating a college going culture locally the f t l program has provided education funding to millions of americans since its inception i ask you to carefully consider the significance of eliminating cell nonprofit organizations like need and instead choose to imagine a loan program that upholds the best aspects of the public not for profit private partnerships which in so many ways has thank you mr chairman ranking member and members of the members of the committee my name is chris chapman and i'm the president and chief executive officer of access group inc a national nonprofit student loan provider and loan service or access group is mission based as i said where the non not for profit entity and mission based implies more than making loans with low rates and good terms and excellent service and as you've heard today from some of the other members of the panel there's much more that goes along with making loans to relight relating to outreach services education services for schools students parents these are done all in support of our programs and as a nonprofit who does student loans nothing else it is all that we do get as i said this isn't unique to access group but certainly within the nonprofit arena that more than three dozen nonprofit entities currently operate across all across the country and in many many states perform these services and as mr drew in mentioned there are adapted to local realities in my career as i have had the opportunity to work in a number of entities in different geographic locations the role we've played has been very localised very adapted to the circumstances in the problem not only of the geography but of the time but also like to thank this committee and  congress for moving swiftly on caswell last year the crisis that hit the financial world did not spare anyone including student lenders and do that quick action and the quick implementation by the department education and lenders getting together no student was left without a loan or no student was materially disrupted in the timing of that loan last year we also thank you for the extension of nine ten and we think this year will be even smoother but i'm here what i'd like to focus my testimony on primarily is kind of called phase two of a cash flow which is the asset backed commercial paper conduit that has just been implemented and gone into effect within the past few weeks as you may know the conduit is utilizing the federal liquidity of the federal financing bank coupled with a put program from the department of education to finance loans made under the federal family education loan program is structured because the whole idea of the conduit is that structured to utilize private capital in the program and not have to have the federal government borrow one dollar or utilize one treasury dollar in order to fund the program so it's only been up a few weeks this is extremely positive path within by june fourth about ten billion dollars will be funded in the program the program is executed at level pricing levels well within expectations and goals which are very similar to those prior to the credit crisis what this proves is the proves that student loans can be financed in the private markets even in today's environment given the right the right circumstances which in this case includes essentially a federal backstop ensuring investors that if they need to get out of the get out of their investment they can which is in a in a credit crunch in a credit crisis is the crux of the problem we're here to encourage continuation of the castle principles as a means of going forward and funding the funding to student loan programs under phelps the reason we say that is because we believe keeping private capital in the program ensures continuing a diversity of providers and a diversity of origination systems a diversity of service  worked with the conduit to ensure a broader participation but they're certainly workable within the changes necessary workable within the current structure and at no cost to the government i want to conclude by by just emphasizing that there aren't just two choices here there's not a choice one hundred percent direct lending or the status quo you've heard a number of options that have come along the table as we we've moved on here and in and i encourage the committee to look at them closely and i encourage you to retain the option that ensures that choice competition flexibility and superior service remain in the file program for years to come thank you thank you mr better thank you chairman miller belated happy birthday by the way and mr mccain  you'll be joining the medicare generation in another year and maybe partly for your opening remarks i have three points i want to make today the first the law of unintended consequences has led to outcomes far different than intended as federal student assistance has expanded over time proposed additional expansions will likely not have the intended effect on student participation access and equality of educational opportunity second the proposal to end the file program and replace it with direct federal student lending will have negative consequences on students is fiscal madness and the alleged financial benefits to the federal government are likely aleutian ery third the proposal to sharply expand the pell grant program and make it in title months is likewise fiscally responsible and potentially might add to already inflated college costs turning to the first point the rate of increase in educational attainment in the united states slowed significantly beginning in the mid seventy's from the mid fifty's to the mid seventy's for pell grants and large federal student loan programs higher education enrollments almost quadrupled their of exploding federal financial assistance has parallel in enrollment growth the notion that federal financial aid has promoted college access to the united states is a myth not a reality expanding these programs will not promote higher access moreover the air of greater federal aid is a period of declining the quality of educational opportunity when chairman miller completed his higher education in one nine hundred seventy two i've been reading up on you before the pell grant program persons from the top court trial in the income distribution had about six times as little lot likely a probability earning a bachelor's degree by age twenty four as persons in the bottom quarter while today the operation comes to know has eight times the probability of getting a degree regarding the second point it is highly debatable whether an expanded direct student loan program will choices to monopoly fedex u p s in the mail or booming while the federal postal monopoly wanes colleges have largely seans a direct lending program because of the additional choices and services audit offered by private providers as a financial aid person put it in an email to me yesterday the direct lending program is more like an a t m machine with very limited much needed personal contact with student private providers are not earning monopoly profit from federal subsidies as recent exit from the industry and falling stock prices along providers indicate moreover federal financing of student loans increases federal government borrowing precisely one were recklessly expanding public debt expansion those foisting a large burden on future generations of americans this is not only physically responsible budget and but immoral since the powerful stock hike the rear responsibility to add to that liability rather you should be working to reach finally expanded a significant expanding total federal student aid as proposed almost certainly will  and that again i don't want to but you've written testimony suggested it's worked for the institutions made decisions seems to work and as my colleague said it has gone very smoothly what we have found is it is not  an additional burden or cost to our institutions especially our institutions that are mid sized sixteen to twenty thousand students we have found that institution of forty thousand plus students have added one employee at about forty to fifty thousand dollars salary including their benefits so that's been our experience in the conversion i mean your testimony you spoke to a but you obviously believe that this tradeoff if we could increase pell as the ministrations suggests and you think will will in fact help those those those students absolutely we have an outreach program that goes out into the middle schools a two billion dollars student aid program about one billion in loans and one billion grants and we try to get that information out as early as we can in the middle school sharman the question of the fall made i think by mr chapman that in any category at any time the default rates are worse than in the d l program then they are in the failed program that accurate no it's not it's really the opposite if you look at my type of school default are looking at the whole direct loan program and the direct loan program does take in defaulted loans from the f e l program those are more likely to default again so some of the numbers can look like can appear as if there's a lower or higher default rate in the direct loan program for that reason jessa read mr chairman just to report in two thousand and six we had thirty of our institutions and file and their average rate was two point five six percent ten direct college cost crisis with a lot of talk here but no talk that i've heard is really talking about lowering the cost of education we're talking about putting more money into giving more money to students and you've written about that you understand the problem of how that's facing our country the chronicle of higher education recently published an article arguing that the higher education sector would be the next bubble to burst how should the higher education community reform itself the the cost of college has been rising three times the rate of inflation two times three times the rate of inflation for thirty forty years that's precisely the period by the way since the loan programs and  program began back in the early seventy's late sixty's we started into this the demand for education has been rising faster than the supply now part of the problem is that colleges and i'm not talking about charlie's colleges so much as other colleges universities he wanted me to say that by the way the elite universities put limits on you drop more money over harvard university or over the university of michigan or the university of california berkeley to get more money to kids and allows them to raise tuition more tuitions have gone up because they can and you have been part of you generically collectively have been part of the problem now you're trying to solve the problem you need to look at it from a different way how can we change the incentives the behavior of college administrators to get them to think small to think them to cut costs and so forth you need to look at a different paradigm thank you mr chapman the conduit saves the federal government money in the private capital in the program which means a win for students schools and employees who are hoping to keep their jobs past july first two thousand and ten as a member of the initial conduit advisory board and one of the members of the advisory board overseeing the implementation of the facility could you comment on whether you've been approached by secretary duncan or other high level officials at the department of education who've been interested in talking to you about the availability of a conduit as a more permanent financing structure today and to my knowledge no one on the committee has been as well if congress implemented some version of the conduit what changes in loan delivery of able ability of service services with institutions and students there and as compared to the changes they would experience if we went to one hundred percent direct lending well i'm not sure i can speak exactly to what changes would experience if they went to direct lending but what i can tell you is with respect to maintaining private sector financing and a diversity of lenders originators and servicers that exist today and a fix existed over the last forty years schools would be schools would see a continued great service and continue to add value added services that have been provided over all these years from a funding standpoint it would be seamless and blind schools today lenders today in the program finance loans in many different ways in the background and that's all for school perspective  a perspective for a parent perspective it seamless so they would see no no no change and in fact you know not only not a deterioration but a probably an improvement where if there was a consistent and reliable source of funding that we could see out into the future remember the meeting that we had with mr chairman and the secretary and the lady that was financial aid administrator university of maryland her comment how she's helping china now where they have one kind of one system where the government provides everything and they're there they want to reach out to bring competition into their lending market at the same time as we're talking about moving at all to the government you have any comments on that i will just note that she said those comments with a lot of irony in her voice but you know i you know i think i think  you know i think i think those comments get to again choice and i think you know what's critical to this discussion what's critical to the direct lending versus debate we can talk about savings in dollars and numbers and whether they're real or not but what's critical when i think about what the best deal for the taxpayers is is it's not all about dollars and cents it's about what the full package is best not cheapest and sometimes about isn't the cheapest and i think that financial aid officers point and i think the overarching point of the comments about keeping private capital in the program and keeping the diversity of lenders in the program is that in some taxpayers students schools are better served by maintaining that competition by maintaining that choice because it leads to better outcomes over the long term i think competition is good i thought direct lending when they first brought it in but over sixteen years now we've seen where the competition i think has made both programs better we have one side has four thousand institutions and one has seventeen hundred i think the people have accepted and understood and i think competition is better and i'm really sorry to see the government moving in so many areas but especially in this one to take over the whole program thank you mr chairman i'm glad to hear that my friend from california miss an irony overarching our discussion this morning i think it was brought out in mr sharma's testimony mr chairman i think i heard you say that sixty percent of the capital in the private bank program is coming from the taxpayers at this point is that right yes if you are providing care to participate the way this is working now that an institution gets taxpayer money lends it out and then we pay them a premium on top of what the student would otherwise pay to reward them for taking a risk with our money is that essentially right effectively a fake especially if they can keep it they have the option they can buy it from us also mentally or give it back to us and we pay them a fee for their work but in the meantime we could have just made the loans directly and that's really the point but either way that the taxpayers are absorbing the risk of that capital not not the person in the private sector anyway we do this it is a government program where we are run by sector with respect to sixty percent of what's being called private loans here this morning with respect to sixty percent of those loans the taxpayer is in fact absorbing  and we're paying someone a premium to take a risk with our money is that right exactly when they when they're leveraging our liquidity strength that means they're using our borrowing ability ranking member also in his opening statement talked about he made an analogy to the auto industry and it's easily the analogy falls apart in that although we did advance a substantial amount of money to some auto industries we did not supplement the price of the car did we if somebody buys a twenty thousand dollar car we don't pay the automaker twenty four thousand dollars that's exactly right we have a whole finance federal financial aid system for pell grants and student loans where the decisions about who can borrow what institution they can borrow at how much they can how much they can borrow and what the interest rate is are all a part of the federal financial aid system and we don't have that in auto loans home loans so the analogy does not really administrative costs it was a matter of shifting priorities and some pretty intense work for about a four month period to get up and running we did not hire additional staff and hire to hire anybody  cost associated with any time we implemented a program at the university of new financial aid process or a change in regulations there's always costs associated in terms of staff priorities used to work with them but qana must make mistakes and if you look at for example default rates can you predict rate my time is up i just want to be clear that you don't know whether that's true or not right i don't know that thank you very much agency coming to my office in response to a question saying that he has experience thought the guarantee program was wildly costly to the government and suggesting  direct type loan program which he thought would be much more efficient both for students and for the taxpayers we did try it out despite a lot of doubts on a three school basis including marquette in my own state nine billion dollars a year couldn't possibly obviously with that much money you can provide a few perks and a little extra tweaks and bells but i'm not sure it's worth it to the taxpayer when the  of the loans are the same to the to the students in the schools so i just would like to ask mr sharon if you could tell us how you're doing to to lay the groundwork for expanding the direct lo program i mean you're going to try to switch by july first two thousand and could you tell me how many schools do not have their participation agreements so they can move to the direct loan program if they choose to do that i also invited the higher education associations as well as members of congress to let us know about the schools they're most worried about the schools where there's maybe one staff person who's handling federal and it's important to get them in early talk with them about what the steps are origination side is not the biggest concern and the biggest concern is we have to ramp up the servicing capability to collect on those loans and we have the previous administration actually started that process with an r f p that we are in the process of completing and other countries have gone to a direct loan program i think great britain and australia and new zealand they have an additional feature which gives borrowers the option of repaying their  costs and so on by giving people the option of having up to fifteen percent of their income withheld from each paycheck and the loans automatically rescheduled through the the the withholding process of the of the s with the administration be at all open to looking at and exploring whether the us doing here in the united states what's already being done in the united kingdom and australian would make sense in those other countries which are very interesting very interesting programs all of the participants are paying off their loans as a percentage of their income and we've made a policy decision here that the majority of borrowers are probably going to be fine paying a flat  payment based on the amount that they borrowed but that they need income based repayment and that type of help so it's more on an exception basis here so it probably doesn't fit with the system that we that we have i'd be glad to go back and and one of their missions is to provide oversight over lenders is that an area where we should be exercising more oversight to make sure that they haven't gotten in bed with each other rather than  supervising well certainly there are some situations where there are close relationships between lenders or secondary markets and guarantee agencies there has been some increased oversight of that situation over the over the past couple of years and it is an area that we'll continue to continue to look at it is of of concern thank you mr chairman i enjoyed yesterday's hearing that you brought to us and this one seems to be just additional information that i am enjoying very much i  ant to direct my question first question to chance to read i am very happy to hear your statement and how your university system focuses on the most needy students and under served families helping them access higher education and you highlighted in your testimony that your system includes many enrolls many first generation college students those students who need the most support financial academic and social to successfully complete college what do you see as the core services that will help low income first generation minority students successfully manage their student loans and college financing mr innes one of the things that i have found is to reach out to the families and the students together  in california we have initiated an outreach program into the middle schools including the distribution of over three million posters that has financial aid information both grant and loan information and as you know the latino community does not have a history of borrowing money and one of the things that we try to reach into the middle school is to have super saturdays where we bring parents and students together to the campuses to share with them the different kinds of financial aid that they will be eligible for and let them know how to apply for when to apply for and give them the assistance that they need to read i come from a mexican american family and that practice is a european practice that you don't borrow money you save money and you pay for cash so i understand it very well and i'd like to direct my next question to secretary sharman in your testimony you said that it will be the department's job to build into contracts the proper incentives to get the best service for students and i couldn't agree more i like those incentives proper incentives and that there be competition amongst the universities to show that it can be done just as miss griswold shows in penn state that they didn't need to hire more people to get this direct student loan program in so let me say that in the state of texas  sector sharman our space guarantee agency and nonprofit secondary markets have provided valuable financial literacy education and outreach programming for students and families and technical support for colleges and universities so i'm going to ask you a question it was interesting to also hear c e o in a row and talk about one of the parts i think it was on page two  at number three it says the key is that your organization your foundation continues to support schools and students with entrance and exit counseling but natural literacy education programs and local compliance expertise so i ask you dr sharman will you agree with me that we in congress make this component of financial literacy education a mandatory as we are trying to finish out our legislation certainly as part of our college access and completion innovation and we want that to include that type of financial literacy education helping helping students know about college how to plan for college how to pay for college and so that can be a very important part of part of that program excellent the next question i want to ask the gentleman from the gentleman from that foundation the experience that you all have had in terms of minority students going to college  do you find that they are able to repay their loans or do they have a high percentage that are failing and cannot pay their loans congressman from the state in new hampshire are latino populations one of the fastest growing population within our state we have programs that we have designed specifically for our latino group and what we find is they again need early awareness and often and we find that when all of our are individuals i thank you  chairman there's a pretty amazing hearing the party of andrew jackson who oppose a national banks not only proposing another national bank and advocating common stock in existing national banks it is amazing turn of events that i find this hearing ironic in so many different ways as we're debating about fannie mae and how fann undergirding much of our financial crisis by not being fair all were proposing to in effect duplicate fannie mae and the problems that occurred in fannie mae at a time when california is begging on their knees were being held up as california as a model of how they did low income and affordability in college i'm sorry it's it's been a great university system it's not the only problem in california but i wouldn't hold it up as our economic model at a time that we're debating health care my friend from jersey said that there is an option on the table for public and private if you want to know why republicans have no trust whatsoever that the purpose of the public part isn't to drive out the part that's private just look at today just look at today if there is a single republican who will take the word of the other party that says when there is a public and private offered that the intent isn't to drive out the private look at this example seventy four percent of colleges chose the private that just can't be we just can't allow that the public side has to take it over i'd like to ask  it humiliating to have a duplicate public private and only twenty six percent take the private why would they choose you what is there a bias in the system is it rigged why do they choose the private sector over the public i would say is a is a general response to that question is private sector was chosen because of the service that was provided not only the service in terms of loan delivery in terms of customer service but in terms of value added services that we provided to their students these outreach services literacy services how do you pay back your loan when you when you get out you know  competition and admittedly when i got into this business and when direct lending first came about the private side of the student lending business was struggling as far as the service went  so but over time have been very quickly common standards it solved really most of the ministry of issues that schools were having with the private sector might come from ohio originally days are long over and they were long over probably by one thousand ninety three or ninety ninety four and the service improved benefits to students as far as lower prices quicker turnarounds for loan delivery happened and for those schools that have stayed in the private loan program that's what they that's what they flight schools are the joint direct lending to have you know they've made their decision and i'm glad they had a choice the ability to make that decision i'm glad penn state had the ability to make the decision they made but cutting off that choice we had we believe will be very problematic in one thousand nine hundred seventy basically the direct lending system failed and that led to a lot of trying to make sure there was diversification to be able to handle changing the loan amounts and the rigidity of the federal system basically collapsed in the private sector had to bail the federal sector out was that partly when and why a lot of people moved to the private sector there was eight months delay that unlike this where the federal government provided backup in tough times to the private sector to keep it moving smoothly when the federal government took over the whole thing and then had  had problems about eight months behind there was nobody they had to go back out to the private sector it took eight months to fix the problem that the risk of just one national system i was wondering were you involved at that particular point in time or from ilya with that well as far as a particular time i'm not sure i can speak to that but again it gets to for the same reason penn state and some other schools have been able in times of concern about availability of loan funds for their students which is the direct loan program at that time where the situation was reversed schools had the option to switch back to a more reliable source of funds at that time mr chairman i know my time's up i'd like to announce consent to insert into the record these are from usa funds indiana company on their default rates which were two work out the clock with yourself mr bishop how long you want to keep asking question but we're in the middle of a vote we have a series of votes i plan to recess the committee here so we can make the vote we will probably not be back before before twelve o'clock if some of that creates time problems for some of you i understand that and feel free to leave i would hope that those who can remain would remain because i think there's clearly questions that the members of the committee have this is this is an important clarification had we not passed what would have happened to student loan availability in the current academic year mr sharman many many schools would have shifted to direct lending and they would have program is a federal dollars that correct yes it may be originated privately but it's supported by iran and it's important to point out that both of these programs are public programs that involve the private sector doing the work and the difference is really how we pay  a lot of discussion this morning about choice and that certainly is a sort of a seductively argument i did student financial aid for seven or eight years back in the dark ages i was a college administrator for twenty nine years  every day practically that i was on my campus i dealt with students in terms of how to pay their bills i never once heard a student i wish i had a choice they were they were grateful to know that there was a source of money available to them they wanted to know how much they wanted to know what the terms and conditions of repayment were and they wanted to know that it was available to them as well is that your experience as well that's my exact experience that students are far more concerned about the banks participate in making the loans we we regularly got the question which one should i pick and the other the other thought you know the notion of competition with it's  before i've read much of what you've written and i have a lot i could engage you want to have about thirty seconds in one thousand nine hundred seventy four when the pell grant began the maximum award was fourteen hundred dollars is it your contention that had that award stayed at fourteen hundred or some reasonable variance that tuitions would not have increased it's my contention if we had not put in the paragraph or the student loan programs we would have as many students enrolled in american universities today as  interrupt if you so if you were constructing a student financial aid portfolio now federal state institutional what would it look like from your vantage point when you have a student if i were those are which i thank god i'm not i'm sort of thanking god  also pray every day for that i have not you should i would not the federal government would get out of the student loan business completely the federal government has corrupted higher education it recess i want to thank all of you for your testimony if you can remain i would hope that you would and will be will return as quickly as possible  either pell grants or student loan programs as expenditures i look at that as investments in america's future and those are very good government one of the things that you have tried in the last couple of years is to focus on making states maintain their effort and i think this is a partnership   part of their partnership effort so i don't look at this is an expenditure and breaking america's back i look at it making america stronger well thank you and  you know i don't think any of us have sat on this committee and we've listened to so many people certainly out of the out of the out of the business world and a cot khana missed you know that this investment we make in education probably returns more than any other investment we make we all know what it leads to and whatever field it is and the idea that somehow we within dismantling the program and it would return to the days when i was in school if you drive by the san francisco state or you drive by the universe of california davis it's a far different campus with far more opportunities available to the student body that student body is far different than when i went there certainly far different it's a very different law school today than when i went there and the diversity of people who have the opportunity now to pursue that education so that the idea that somehow we can we can return there if we just dismantle the federal student systems that giving very serious consideration and discussing it among members and staff but but i think there's sometimes a characterization that you're here saying no we just want to go back to where we were and i don't think that i want to clarify that's not your position that you recognize that whatever happens is going to be very different than in the past that's right and i think you know we the federal loan programs kind of mirror what was going on in the capital markets and as the capital markets continue to ratchet down credit spreads we were the beneficiaries of that and the federal loan programs kind of followed and tried to keep step with one sometimes often got ahead of the other in two thousand seven that that environment changed completely and credit spreads have widened to levels i don't think any of us could have predicted we used to raise money at about ten basis points over live or now that same bond would cost us about two hundred basis points over live  r obviously doesn't doesn't work with the economics that are built into the student loan program today but we also see that the funding environments not going to return to those same old levels and so if there i a predicted in consistently large spread between where the private sector can borrow money and where the federal government can borrow money it does create an opportunity to utilize that to create savings that can be used to expand the pell grant programs and we fully support you mr chairman and it's great to be here i think the number one issue for all of us regardless of where we stand is how do we make college more affordable i think that's the biggest concern i know it's the biggest concern with the middle class america right now because i have one heading that way and so those are the kind of parents that i thought to every day when i'm home at soccer fields and so forth but really concerned about the ability to send their children to college and so that's where we're going whatever program we do i think that's got to be our end result that's everybody's interest question and i kind of called on it monday when i was going to study and for this and mr chairman on the score for the ninety billion plus being able to borrow at lower rates and then also charging the same rate that the private industry does who are who are i guess middle class students who will be doing the student loans and then that money is used to subsidize the pell grants and i think this is the way to think about remember that these are fixed rate loans to students at six point eight percent and in some cases lower than six point eight percent so you've got a six point eight percent fixed rate loan over the next ten to twenty five years when our  economy that's an amount that comes to us when interest rates are high it's an amount that we actually pay to the participants depending on interest rates over the next twenty five years sometimes there will be some and i think honest people can disagree on where there should be an entitlement or people or the congress every year decide how much money is going to go into the bell program i think that's a reasonable area to discuss and debate but my understanding is though it's six point eight percent is the fix and we moderate and lower income or the pell grants want to give a lower interest rate to the to the per people going to college i can understand why we wouldn't have that and then when it goes up and then six point eight percent what we decide as as a congress and as an executive branch is the right level it is it is a decision that congress can make a few years ago we had a variable rate approach and the tradeoff is usually that a variable rate approach can go to a higher rate so we had a variable rate with a cap of eight and a half percent when we went to a fixed rate we went to congress decided to go to that six point eight percent so if there was a shift and obviously in the private student loan market non spelled non guaranteed they are almost all variable rate loans right no cap at all right now if we have interest rates of twelve fourteen eighteen or twenty five percent we don't want to have that kind of a variable rate program and so there are trade and there are trade offs there and the trade offs can involve some federal federal cost so that's the kind of decision that congress needs to make i should say i will say that you cannot get a personal loan at six point eight percent fixed rate right now so right from the standpoint of whether this is a good deal for students these are good these are good loans personal finance experts will say this is a loan to take and that's any good but it could be better it could be better because we're all the cost to make it better and that's the kind of those are the kinds of decisions that congress but in the score isn't the difference that six point eight percent  versus what congress can borrow for or what the programmer can borrow for isn't that the score of the ninety billion dollars number that six point eight is a long term rate so we're going to see interest rates whether it's next winter or next year or five years from now we're and that money is a video current that money is used to create relatively low interest rates into the into the future what doesn't really change that much is the fact that there's a gap so the gap exists whether we're above the fixed rate and paying money out or below the fixed rate and having money come in not times what we could have we could loan money to students at the cost of the federal government borrowing money plus servicing or whatever kind of it would be cheaper than six point eight in today's numbers it would involve a car you could work with figure out what that would cost and compare that to  investing and tell grants instead of the students in current times that money would subsidize well so they're getting a lawyer moving and students are getting a loan at a rate that they cannot get in the private sector right now at at the could you please explain to me i have some questions about the program there in your testimony you talk about nice life alone service could you please explain in greater detail what you meant by this and the benefits  congresswoman from our standpoint the state of new hampshire we've never sold alone outside the state in the answer since a secondary market came into existence we've got about one point five billion outstanding right now in the student loan program on that side we should be that to the  and where they when they make their final payment on the student loan it creates as far as i'm concerned a better if you will a better mousetrap if you will from the standpoint of looking at the student making sure that they understand who they can deal negotiated and so the amount that we can talk about some of those services will be able to talk more about that in coming months but i would say that a lot of we have seen a lot of state it's it will be exactly the same type of entity i think there will be change and there already is change because of what we what we have seen in the market but having state agencies that are involved in helping students not just with their student loans but with understanding college financial aid generally is something we need we need more of and will organizations like me be at the table as you work out these details and decide what direction you want to tell you we've been meeting with all of the different being purchased by the department over the coming months at least at the start will need to be serviced by entities that we have contracts with by the end of this summer and those would be the ones that are in the current procurement that was begun by the prior administration the question of whether beyond that there might be there might be more and more opportunities is something that we will entertain when the current procurement is done in the next month or so thank you they wouldn't get the subsidies and they wouldn't be getting guarantees so we really want to competition allow them into the game and give those subsidies and give them guarantees how would that change the competition will people stay in the business or would they get out six point eight percent rate congress could change that rate which would mean that the borrowers student would actually get a benefit pay less when you talk about there being a cost what you really need to be less revenue into the government that you would put money out of pocket the less revenue in a  of financial means to get that student into to a colleague i gad had to he couldn't borrow from the bank i didn't have any value to the bank that anything that they could university of michigan has used it very very very well and extracting students not only to its campus in ann arbor where i went to school but also its campus in flint but  i do think that we have an enormous responsibility to make sure that the bottom line by this is what go on program programs will best serve the students and  the taxpayers of this country and i what we read in the testimony to try to learn more about that time thank you for the hearing this morning thank you earlier on i referred to a chart that we had that sort of demonstrates where we've where we've been and what we've tried to do in the last couple years and that was really a transfer of money from the felt program to  pell program that was that we did last two years and then you see where that where the president wants to take us i don't think anybody involved in education and again understand the opportunity we're trying to extend in this country to all qualified students to go and pursue a college education cannot appreciate how serious of a decision this is that's a significant amount of resources to be made available to those who struggle most financially and again we have a fair amount of evidence good evidence that a significant number of those students are deciding not to pursue a college education because they don't believe that they can that they can afford it i think i can persuade most of them certainly in this state of california that they can knit together the resources to do that and receive a first class education but as we've talked with  th various universities and colleges and community colleges around the country i don't think there's anyone that has suggested this would not be a major boost to attracting those individuals to to college spilled over into every facet of financial life in this in this country and where reeling from those those activities that were undertaken but the fact of the matter is we now have to decide since we're the the only real player in the game here with certainty what we do and you know where we're still discussing with what what these various programs and changes would mean or not mean and that but the idea that we could just leave money on the table here when we know that the struggle of the students and families are engaged in to try to pay for an education is not a minor decision and the administration is given us  proposal where they want to go whether it's an entitlement or not an entitlement over certainly over the next ten years you can see your way clear to very significant addition of resources and we you know what we don't want to have happen is where we're back to the left of the chart there where we're sort of on a flat line but the cotton the the cost of college never never broke a sweat you know and going above that and we saw the the ability to afford that get continued to be diminished  for these individuals or well diminished and they ended up taking on much more debt and i think there's sort of a consensus in the country that this more and more debt is not the answer the chance to read and i had a lot of other people this table agree something more has been buck mckeon has been a leader on this something more has to be done to get support we need some partners with these with these institutions especially the public institutions where the states for a whole host of reasons walked away from from maintaining that that effort that they had ten years ago and fifteen years ago we somehow have to recreate that partnership but i know that th e you know there's been some suggestion that the this is all a done deal that this is all been very cavalier this is a this is a very big important question we are moving from a system that in many ways worked very well i thought we thought it was too expensive and i was always stunned every year when george bush's budget said well you know here's the money on the table if you guys want to do something about it fine it happened but i mean i think there's agreement that there's a serious cost to the way this program has been run whether what we do with that is an important question for the members of the committee i think you saw that in the attendance in the first part of this year unfortunately we were interrupted by a vote but what we'd like to do is to stay in touch with you obviously as we wind our way through this  resources that we can put behind those most financially challenged to educate their children it's just not much more complicated than that and we're talking about young people who are fully qualified to take advantage of  a college education and that's what this committee exists for is to try to expand that opportunity to thank you for your time your expertise my apologies for the for the interruption i know some of my colleagues that i was talking to him on the floor they had scheduling conflicts that i think they may have some